<PAGE>
As filed with the Securities and Exchange Commission on March 10, 2000
Registration No. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Naviant, Inc.
(Exact name of registrant as specified in its charter)
Delaware 7389 23-2889732
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
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Naviant, Inc.
14 Campus Boulevard, Suite 200
Newtown Square, Pennsylvania 19073
Telephone: (610) 355-7040
Facsimile: (610) 355-2428
(Address, including zip code, and telephone number, including area code, of
the registrant's principal executive offices)
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Dr. Charles W. Stryker
President Chief Executive Officer and Chairman
Naviant, Inc.
14 Campus Boulevard, Suite 200
Newtown Square, Pennsylvania 19073
Telephone: (610) 355-7040
Facsimile: (610) 355-2428
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Kevin J. Lavin, Esq. Julia K. Cowles, Esq.
Brobeck, Phleger & Harrison LLP Davis Polk & Wardwell
701 Pennsylvania Avenue NW, Suite 220 450 Lexington Avenue
Washington, DC 20004 New York, NY 10017
Telephone: (202) 220-6000 Telephone: (212) 450-4000
Facsimile: (202) 220-5200 Facsimile: (212) 450-4800
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended, 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, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]__________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]__________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Price (1) (2) Registration Fee
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<S> <C> <C>
Common Stock, $0.01 par value.......... $50,000,000 $13,200
</TABLE>
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(1) Includes shares of common stock that the Underwriters have the option to
purchase to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment that specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to such Section 8(a), may determine.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS.
All capitalized terms used and not defined in Part II of this
registration statement shall have the meaning assigned to them in the
Prospectus which forms a part of this registration statement.
Item 13. Other Expenses of Issuance and Distribution.
The following table sets for the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of common stock being registered. All amounts are estimates
except the SEC registration fee and the NASD filing fees.
<TABLE>
<S> <C>
SEC Registration fee........................................... $13,200.00
NASD fee....................................................... 5,500.00
Nasdaq National Market listing fee............................. *
Printing and engraving expenses................................ *
Legal fees and expenses........................................ *
Accounting fees and expenses................................... *
Blue sky fees and expenses..................................... *
Transfer agent fees............................................ *
Miscellaneous.................................................. *
Total........................................................ $ *
</TABLE>
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* To be provided by amendment.
Item 14. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware empowers a corporation to indemnify any person who was or is a
party to any threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that such person
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 expenses (including attorneys' fees), judgements, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interest of the corporation, and, with respect to any criminal action
or proceeding, had no reasonably cause to believe his or her conduct was
unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted in
any of the capacities set forth above, against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made
in respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
of Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of
a corporation has been successful on the merits or otherwise in the defense of
any such action, suit or proceeding referred to in subsections (a) and (b) of
Section 145 or in the defense of any claim, issue or matter therein, he or she
shall be indemnified
II-1
<PAGE>
against expenses (including attorneys' fees) actually and reasonably incurred
by such person in connection therewith; that the indemnification provided for
by Section 145 shall not be deemed exclusive of any other rights which the
indemnified party may be entitled; that indemnification provided by Section
145 shall, unless otherwise provided when authorized or ratified, continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of such person's heirs, executors and
administrators; and empowers the corporation to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify such person against such
liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law or the State of Delaware
provides that a certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the liability of the director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders. (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper personal
benefit.
Article of our Amended and Restated Certificate of Incorporation
provides that, to the fullest extent permitted by the Delaware General
Corporation Law as the same exists or as it may hereafter be amended, no
director of the registrant shall be personally liable to the registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Section of our Bylaws further provides that the registrant shall, to
the maximum extent and in the manner permitted by the General Corporation Law
of Delaware, indemnify each of its directors and officers against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the registrant.
The registrant has entered into indemnification agreements with each of
its directors and executive officers that provide for indemnification and
expense advancement to the fullest extent permitted under the Delaware General
Corporation Law.
The registrant maintains officers' and directors' liability insurance.
Reference is made to Section 6 of the Purchase Agreement filed as Exhibit
1.1 hereto, indemnifying officers and directors of the registrant against
certain liabilities.
Item 15. Recent Sales of Unregistered Securities.
Since inception, the registrant has issued and sold the following
unregistered securities:
1. The registrant issued and sold 712,600 shares (net of repurchases) of
its common stock to employees and directors for an aggregate purchase
price of $712,600 pursuant to exercises of options under its 1997
Stock Option Plan.
2. The registrant issued and sold 3,616,614 shares (net of repurchases)
of its common stock to employees and directors for an aggregate
purchase price of $3,704,614 pursuant to exercises of options under
its 1999 Stock Option/Stock Issuance Plan.
3. On March 9, 2000, the registrant agreed to issue 11,000,000 shares of
its Series E convertible preferred stock to SOFTBANK Content Services
Inc. (which does business under the name of "Softbank Marketing
Solutions") in exchange for substantially all of the assets of such
company. This acquisition is subject to regulatory approvals.
II-2
<PAGE>
4. On March 9, 2000, the registrant agreed to issue and sell 9,259,259
shares of its Series F preferred stock to SOFTBANK Capital Partners
LP, and sold to a group of 22 investors 9,237,551 shares of its
Series F preferred stock.
5. On February 24, 2000, the registrant issued 3,625,926 shares of its
Series C preferred stock to Webcraft, Inc. in exchange for the stock
of Webcraft's Impco Enterprises, Inc. subsidiary.
6. On December 22, 1999, the registrant issued, in connection with a
strategic relationship, a warrant to purchase 100,000 shares of
common stock at an exercise price of $3.00 per share to Dr. Martha
Rogers. Such warrant was exercised, and 100,000 shares of common
stock were issued, on February 14, 2000.
7. On November 17, 1999, the registrant issued and sold to a group of
four investors (i) 2,962,963 shares of Series C preferred stock and
(ii) warrants to purchase shares of common stock equal to 0.291% of
the number of shares in this offering at an exercise price equal to
the initial offering price, for an aggregate purchase price of
$4,000,000.
8. On November 5, 1999, the registrant issued, without consideration, a
warrant to purchase 778,000 shares of common stock at an exercise
price of $2.00 per share to MP3.com, Inc.
9. On September 13, 1999, the registrant issued and sold to a group of
17 investors (i) 39,074,074 shares of Series C preferred stock, (ii)
8,888,889 shares of Series D preferred stock and (iii) warrants to
purchase shares of common stock equal to 4.709% of the number of
shares in this offering at an exercise price equal to the initial
offering price, for an aggregate purchase price of $64,750,000.
10. On October 26, 1998, the registrant issued and sold 1,500,000
shares of its Series B preferred stock at a price of $1.00 per
share to MRJ Group, Inc. and a group of three investors.
11. On May 14, 1997, the registrant issued and sold 3,375,000 shares of
its Series A preferred stock at a price of $1.00 per share to a
group of three investors.
12. On May 2, 1997, the registrant issued 10,125,000 shares of common
stock to MRJ, Inc. in exchange for certain assets used to form the
registrant.
These issuances were deemed exempt from registration under the Securities
Act in reliance upon Rule 701 promulgated under the Securities Act or Section
4(2) of the Securities Act. In addition, the recipients of securities in each
such transaction represented their intentions to acquire the securities for
investment only and not with a view to, or for sale in connection with, any
distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
<TABLE>
<C> <S>
1.1* Form of Purchase Agreement.
3.1* Certificate of Incorporation, as amended.
3.2* Bylaws, as amended.
4.1* Specimen common stock certificate.
5.1* Opinion of Brobeck, Phleger & Harrison LLP
9.1 Naviant Technology Solutions, Inc. Voting Trust Agreement
10.1 Lease Agreement dated June 1, 1998, by and between the Registrant and
Brandywine Operating Partnership, L.P.
10.2 Lease Agreement dated October 28, 1999, by and between the Registrant
and Spring Street, L.L.C.
10.3 Lease Agreement by and between MRJ, Inc. and Teachers Insurance and
Annuity Association of America
10.4 Lease Agreement dated December 15, 1999, by and between the Registrant
and Barrister Executive Suites, Inc.
II-3
<PAGE>
</TABLE>
<TABLE>
<S> <C>
10.5 Lease Agreement by and between the Registrant and Zoro LLC
10.6 Lease Agreement dated July 1, 1998 by and between IMPCO Enterprises, Inc., a Subsidiary of
Webcraft, Inc. and Richard R Lefrois
10.7 Lease Agreement dated April 1, 1998, by and between IntelliQuest Information Group, Inc. and
475 Park Avenue So. Co.
10.8 1999 Stock Option/Stock Issuance Plan
10.9* 2000 Stock Incentive Plan
10.10* Employee Stock Purchase Plan
10.11 Form of Non-Employee Director Stock Option Grant
10.12 Form of Non-Employee Director Stock Option Agreement
10.13 Form of Non-Employee Director Stock Purchase Agreement
10.14 Employment Agreement dated September 15, 1999, by and between the Registrant and
Raymond T. Butkus
10.15 Employment Agreement dated September 15, 1999, by and between the Registrant and
James M. Flynn
10.16 Employment Agreement dated September 15, 1999, by and between the Registrant and
William J. Tobia
10.17 Employment Agreement dated September 15, 1999, by and between the Registrant and
Charles W. Stryker
10.18* Form of Indemnification Agreement with Officers and Directors
10.19 Form of Secured convertible Promissory Note made by certain officers and directors in favor of the
Registrant
10.20 Form of Pledge Agreement by and between Messrs. Butkus, Becker, Flynn, Stryker, Inscoe, Tobia
and Hodges in favor of the Registrant
10.21 Note and Pledge Agreement dated September 13, 1999, by and between the Registrant and
Dr. Stryker
10.22* Series B Preferred Stock Purchase Agreement
10.23 Preferred Stock Purchase Agreement dated as of September 13, 1999, by and among the Registrant,
TL Ventures III L.P., TL Ventures III Offshore L.P., TL Ventures III Interfund L.P., TL Ventures IV
L.P., TL Ventures IV
Interfund L.P., GE Capital Equity Investments, Inc., First Union Investors, Inc., At Home
Corporation, 24/7 Media, Inc., BCI Growth V, LLC, BCI Investors, LLC, XL Ventures LLC,
Catterton Partners IV, L.P., Catterton Partners IV Offshore, L.P., Citicorp and Charles W. Stryker
10.24* Series F Preferred Stock Purchase Agreement
10.25* Amended and Restated Registration Rights Agreement
10.26* Amended and Restated Stockholders Agreement
10.27 Form of Common Stock Purchase Warrant issued to purchasers of Series C and Series D preferred stock
10.28 Asset Purchase Agreement dated as of July 22, 1999, by and between the Registrant and IntelliQuest
Information Group, Inc.
10.29 Exchange Agreement dated February 18, 2000, by and among the Registrant, Impco Enterprises, Inc.
and Webcraft, Inc.
10.30 Purchase Agreement dated March 7, 2000, by and among the Registrant, SOFTBANK Content
Services, Inc. and SOFTBANK Holdings, Inc.
10.31* Database License Agreement by and between the Registrant and Young & Rubicam Inc.
10.32* Mutual Business Agreement by and between the Registrant and Young & Rubicam Inc.
10.33 Joint Database License Agreement dated September 30, 1999, by and between the Registrant and
infoUSA, Inc.
10.34* Professional Services Agreement by and between the Registrant and Convergys Corporation
10.35 Database Development Agreement dated September 7, 1999, by and between the Registrant and
24/7 Media, Inc.
10.36* Consulting Service Agreement by and between the Registrant and 24/7 Media, Inc.
10.37 Customer Acquisition and Advertising Agreement dated September 10, 1999, by and between the
Registrant and
At Home Corporation
10.38* Processing Agreement by and between the Registrant and eData.com, Inc.
10.39 Data Sublicensing Agreement dated October 1, 1999, by and between the Registrant and
eData.com, Inc.
10.40* Mutual Business Agreement between the Registrant and Webcraft, Inc.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
11.1* Statement regarding computation of per share earnings
21.1 Subsidiaries of the Registrant
23.1 Consent of PricewaterhouseCoopers LLP with respect to Naviant, Inc.
23.2 Consent of PricewaterhouseCoopers LLP with respect to SOFTBANK Content Services, Inc.
23.3 Consent of PricewaterhouseCoopers LLP with respect to IQ2.net and Austin Registration
23.4* Consent of Brobeck, Phleger & Harrison LLP. Reference is made to Exhibit 5.1
24.1 Power of attorney (See page II-6).
27.1* Financial Data Schedule
</TABLE>
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* To be filed by amendment
(b) Financial Statement Schedules.
Not included because the information required to be set forth therein is
not applicable or is shown in registrant's Financial Statements or the related
Notes.
Item 17. Undertakings.
The registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Purchase Agreement, certificates in such denominations
and registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of the registrant, the Purchase Agreement, 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
hereunder, 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Newtown
Square, Commonwealth of Pennsylvania, on this 10th day of March, 2000.
NAVIANT, INC.
/s/ Charles W. Stryker
By: _________________________________
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Charles W. Stryker, James M. Flynn,
Robert L. R. Munden and William J. Tobia and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution, 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 to sign any registration statement for the same offering covered
by this registration statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-
effective amendments thereto, and to file the same, with all exhibits thereto
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents 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 said attorneys-in-fact and agents, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
/s/ Charles W. Stryker Chairman, Director, March 10, 2000
______________________________________ President and Chief
Charles W. Stryker, Ph.D. Executive Officer
/s/ William J. Tobia Senior Vice President and March 10, 2000
______________________________________ Chief Financial Officer
William J. Tobia
/s/ J. Kenneth Driessen Director March 10, 2000
______________________________________
J. Kenneth Driessen
/s/ David A. Finley Director March 10, 2000
______________________________________
David A. Finley
/s/ Ted A. Gardner Director March 10, 2000
______________________________________
Ted A. Gardner
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
/s/ George L. Hashbarger Director March 10, 2000
______________________________________
George L. Hashbarger
/s/ Mark E. Hastings Director March 10, 2000
______________________________________
Mark E. Hastings
/s/ Robert E. Keith, Jr. Director March 10, 2000
______________________________________
Robert E. Keith, Jr.
/s/ Jeffrey M. Killeen Director March 10, 2000
______________________________________
Jeffrey M. Killeen
/s/ David J. Moore Director March 10, 2000
______________________________________
David J. Moore
/s/ Kristopher A. Wood Director March 10, 2000
______________________________________
Kristopher A. Wood
</TABLE>
II-7
<PAGE>
EXHIBIT 9.1
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT (this "Agreement") is entered into as of
September 7, 1999 among Naviant Technology Solutions, Inc., a Delaware
corporation (the "Company"), MRJ Group, Inc., a Delaware corporation
(individually and collectively, together with any successors and assigns, the
"Stockholder") and J. Kenneth Driessen (together with any successors, the
"Voting Trustee").
RECITALS
--------
WHEREAS, the Stockholder owns 10,125,000 shares of the common stock, and
1,125,000 shares of the Series B preferred stock (the common stock and Series B
preferred Stock of the Company being referred to collectively herein as the
"Capital Stock"), of the Company; and
WHEREAS, in consideration of certain consents and approvals given by TL
Ventures III, L.P. and its affiliates to a dividend by the Stockholder, the
Stockholder has agreed to subject all of the Capital Stock in the Company held
by the Stockholder to this Voting Trust Agreement.
AGREEMENTS
----------
In consideration of the mutual covenants and obligations set forth in this
Agreement, the parties hereto agree as follows:
1. Creation of Voting Trust.
------------------------
1.1 Deposit of Shares. The Stockholder hereby assigns and
-----------------
transfers, and agrees to assign and transfer, to the Voting Trustee all shares
of Capital Stock owned by such Stockholder and all shares of Capital Stock at
any time hereafter held by it during the term of this Agreement, however
acquired, and shall immediately deposit with the Voting Trustee the certificates
for such shares now held by it, or which it may receive, duly endorsed in blank,
or accompanied by a proper instrument of assignment duly executed in blank,
together with any requisite transfer tax stamps attached thereto for an amount
sufficient to pay all federal, state and local taxes or other governmental
charges, if any, then payable in respect of such deposit or transfer.
1.2 Delivery of Voting Trust Certificates. Upon receipt by the
-------------------------------------
Voting Trustee of the certificates for any shares of Capital Stock of the
Company, the Voting Trustee shall hold such shares subject to the terms and
conditions of this Agreement and shall deliver or cause to be delivered to the
Stockholder one or more
<PAGE>
voting trust certificates ("Voting Trust Certificates") representing the shares
so deposited by the Stockholder in the form provided for in Section 2.1 hereof.
1.3. Issue of Stock Certificates to Voting Trustee. All certificates
---------------------------------------------
for shares of Capital Stock transferred and delivered to the Voting Trustee
pursuant to this Agreement shall be surrendered by the Voting Trustee to the
Company and canceled, and new certificates therefor fully paid and non-
assessable shall be issued by the Company to and in the name of the Voting
Trustee. Such new certificates and any other certificates for shares issued to
the Voting Trustee pursuant to Section 2.2 hereof shall be endorsed by the
Company with a legend to the effect that they are issued by the Company pursuant
to this Agreement and a similar notation shall appear in the appropriate place
in the transfer books of the Company.
1.4 Acceptance of Trust. The Voting Trustee accepts the voting
-------------------
trust created hereby in accordance with all of the terms and conditions
contained in this Agreement.
2. Voting Trust Certificates.
-------------------------
2.1 Form; Legend. The Voting Trust Certificates to be issued and
------------
delivered by the Voting Trustee under this Agreement in respect of any shares of
Capital Stock of the Company shall be substantially in the form of Exhibit A
---------
attached hereto, with such changes therein consistent with the provisions of
this Agreement as the Voting Trustee may from time to time deem appropriate. In
addition to legends necessary or appropriate to comply with applicable
securities laws, each Voting Trust Certificate shall have the following legend
stamped, typed or otherwise legibly placed on the face or reverse side thereof:
Sale, pledge or other disposition or transfer of this Voting
Trust Certificate and the shares of stock of Naviant Technology
Solutions, Inc., a Delaware corporation (the "Company"),
represented hereby, is restricted by the terms of a Voting Trust
Agreement, dated as of September 7, 1999, which may be examined
in the offices of the Company, which offices are located in
Newtown Square, Pennsylvania and at its registered office in
Delaware, Corporation Service Company, 1013 Centre Road,
Wilmington, Delaware.
2.2 Restrictions on Transfers; Registered Holders; Transfer Books.
-------------------------------------------------------------
(a) The Voting Trust Certificates shall not be transferable by
the holders thereof without the prior written consent of the Voting Trustee,
which may be granted or withheld in his sole, absolute and non-reviewable
discretion; provided, however, that Stockholder shall be permitted to transfer
all of its Voting
-2-
<PAGE>
Trust Certificates in a single transaction, or a series of related transactions
to its stockholders, including without limitation the MRJ ESOP, and the MRJ ESOP
may thereafter "spin-off" the Voting Trust Certificates from the MRJ ESOP to the
Company's 401(k) Plan and the Company's 401(k) Plan shall be permitted to
transfer Voting Trust Certificates to Company's 401(k) Plan participants to the
extent required by the terms of the Company's 401(k) Plan (the "Permitted
Transfers") and provided, further, that the Voting Trustee shall not refuse his
consent to the transfer of Voting Trust Certificates in a situation where such
refusal would constitute an unreasonable restraint on the alienation of the
Voting Trust Certificates. The Permitted Transfers shall occur on the books of
the Voting Trustee upon surrender of such Voting Trust Certificates (duly
endorsed in blank or accompanied by a proper instrument of assignment duly
executed in blank, together with all requisite transfer tax stamps attached
thereto and an amount sufficient to pay all federal, state and local taxes or
other government charges, if any, then payable in connection with such transfer)
by the Stockholder in person or by the Stockholder's duly authorized attorney.
Upon the surrender of the Stockholder's Voting Trust Certificates for transfer,
the Voting Trustee shall cancel such Voting Trust Certificates and shall issue
new Voting Trust Certificates to the assignees in the same form and representing
the same number of shares of Capital Stock as the Voting Trust Certificates
presented for cancellation. The Voting Trustee may not alienate or dispose of
any of the Voting Trust Certificates without the consent of the holders of
Voting Trust Certificates representing a majority of the outstanding shares of
Capital Stock of the Company beneficially owned by all holders of Voting Trust
Certificates.
(b) The Stockholder represents and warrants that it is acquiring
the Voting Trust Certificates for investment purposes and not with a view to
their resale or distribution.
(c) The Voting Trustee may treat the registered holder of each
of such Voting Trust Certificates as the absolute owner thereof for all purposes
whatsoever, and accordingly shall not be required to recognize any legal,
equitable or other claim or interest in each such Voting Trust Certificate on
the part of any other person, whether or not it or they shall have express or
other notice thereof.
3. Dividends.
---------
3.1 Cash Dividends. The Voting Trustee shall receive and hold,
--------------
subject to the terms of this Agreement, any dividends or distributions declared
and paid on the shares deposited hereunder and shall distribute directly any
such dividends or distributions to holders of Voting Trust Certificates in
proportion to their respective interests therein as shown on the books of the
Voting Trustee, such distribution to be equivalent to the dividends or
distribution which each respective
-3-
<PAGE>
holder would have been entitled to receive had it not deposited its shares
hereunder.
3.2 Money Need Not Be Segregated. No moneys received by the Voting
----------------------------
Trustee need be segregated in any manner except to the extent required by law,
and the Voting Trustee shall not be liable for any interest thereon.
3.3 Stock Dividends. The Voting Trustee shall receive and hold,
---------------
subject to the terms of this Agreement, any voting securities of the Company
issued in respect thereof by reason of any capital reorganization, stock split,
combination, stock dividend or the like and shall issue and deliver Voting Trust
Certificates therefor to the holders of the Voting Trust Certificates in
proportion to their respective interests therein as shown on the books of the
Voting Trustee.
4. The Voting Trustee.
------------------
4.1 Voting of Shares. Until the re-transfer of certificates for
----------------
shares of Capital Stock in exchange for Voting Trust Certificates pursuant to
Section 7.2 hereof, the Voting Trustee shall possess and be entitled in his
discretion to exercise all rights and powers to vote such shares and to give
consents with respect to any lawful corporate action. No holder of Voting Trust
Certificates shall in such capacity have any rights or powers to vote such
shares or to give consents with respect to or otherwise take part in any
corporate action.
4.2 Voting Trustee; Freedom from Stockholder Control. The Voting
------------------------------------------------
Trustee shall be permitted but not required to seek the advice of the
Stockholder before exercising such voting rights. This authority of the Voting
Trustee shall include, without being limited to, the selection of suitable
persons as directors of the Company. In no event shall the Stockholder have any
claim against the Voting Trustee for any vote cast or not cast by the Voting
Trustee or for the failure of the Voting Trustee to seek the advice of the
Stockholder before exercising such voting rights or for the failure of the
Voting Trustee, if he elects to seek such advice, to follow such advice.
4.3 Removal. Subject to the requirement that a successor trustee be
-------
appointed in accordance with Section 4.5 hereof to replace the Voting Trustee
whose removal is effected pursuant to this Section 4.3, any Voting Trustee may
be removed at any time for "cause" (which shall be limited to misfeasance,
malfeasance or nonfeasance) by the affirmative vote of, or a written instrument
or instruments signed by, the holders of Voting Trust Certificates representing
a majority of the outstanding shares of Capital Stock of the Company
beneficially owned by the Stockholder.
-4-
<PAGE>
4.4 Resignation. Any Voting Trustee may resign at any time upon
-----------
giving 30 days prior written notice of such resignation to the Company and to
the holders of the Voting Trust Certificates. Such resignation shall take effect
upon expiration of such 30 day period, whereupon all powers, rights and
obligations of the resigning Voting Trustee under this Agreement shall cease and
terminate.
4.5 Successor Trustee. Promptly upon (a) receipt of a notice of
-----------------
resignation from the Voting Trustee in accordance with Section 4.4 hereof, (b)
removal of the Voting Trustee in accordance with Section 4.3 hereof, or (c) if
any vacancy shall occur in the position of the Voting Trustee by reason of the
loss by the Voting Trustee of his status as a citizen of the United States, the
death of the Voting Trustee, the bankruptcy of the Voting Trustee, the inability
or refusal to act of a Voting Trustee or any other reasons, (i) the successor
trustee shall be William J. Milligan (unless he is, at that time, the Voting
Trustee or is unable or unwilling to serve), in which event (ii) the successor
trustee shall be Edward P. McMahon (unless he is, at that time, the Voting
Trustee or is unable or unwilling to serve), in which event (iii) a successor
trustee shall be appointed by the special trustees with respect to the Voting
Trust Certificates under the Company 401(k) Plan. Such successor trustee shall
assume all powers, rights and obligations of the Voting Trustee hereunder
immediately upon the later to occur of the resignation or removal of the Voting
Trustee becoming effective and the appointment of the successor Voting Trustee.
If there is at any time a vacancy, the holders of the Voting Trust Certificates
may not exercise the voting power of the stock evidenced by such certificates
and that said voting power will accordingly remain suspended during such
vacancy.
4.6 Fees. The Voting Trustee shall not be entitled to compensation
----
for serving as Voting Trustee.
4.7 Voting Trustee Acts as Trustee. In accepting the voting trust,
------------------------------
the Voting Trustee acts solely as trustee hereunder and not in any individual
capacity, and all persons having any claim against the Voting Trustee by reason
of the transactions contemplated hereby shall not have any recourse to the
Voting Trustee in his individual capacity. In addition to, and not in limitation
of the immediately preceding sentence, to the extent permitted by applicable
law, the Voting Trustee shall not be liable for monetary damages for breach of
fiduciary duty as Voting Trustee or otherwise liable, responsible or accountable
to the Stockholder for monetary damages or otherwise for any acts performed, or
for any failure to act; provided, however, that this provision shall not
eliminate or limit the liability of the Voting Trustee for his own individual
malfeasance. In the event that at any time the Voting Trustee is the owner of
one or more Voting Trust Certificates, in addition to the other limitations of
liability contained in this Agreement, the Voting Trustee shall have no
liability for any action taken or not taken which may affect his interest in the
voting trust or the Capital Stock subject to this Agreement
-5-
<PAGE>
differently than other beneficiaries of the voting trust so long as such action
or inaction was taken or not taken, as the case may be, in good faith.
4.8 Voting Trustee as Attorney-In-Fact. The Stockholder (and each
----------------------------------
future holder of a Voting Trust Certificate, by virtue of his acceptance
thereof) hereby expressly authorizes and appoints Voting Trustee (and each
successor Voting Trustee) its attorney-in-fact to take the following actions on
behalf and in the name of the Stockholder and each such future holder, all in
the sole and unqualified discretion of the Voting Trustee: (A) to exercise all
of its rights under (i) that certain Shareholders' Agreement dated as of May 14,
1997 by and among the Company, Stockholder, and TL Ventures III, L.P., a
Delaware limited partnership, TL Ventures III Offshore, L.P., a Cayman Islands
limited partnership, and TL Ventures III Interfund, L.P., a Delaware limited
partnership (collectively, the "TL Entities") as amended as of October 26, 1998
and as of the date hereof (the "Shareholders' Agreement"); and (ii) that certain
Registration Rights Agreement dated May 14, 1997 by and among the Company and
the TL Entities, as amended on October 26, 1998, on which date Stockholder
became a party, and further amended as of the date hereof (the "Registration
Rights Agreement"); and (B) to execute, deliver and enter into all amendments,
modifications, restatements and replacements of the Shareholders' Agreement and
the Registration Rights Agreement including, without limitation, any new
shareholders agreements or registration rights agreements or similar related
agreements, or any other agreements or arrangements relating or with respect to
the Capital Stock. The power of attorney hereby granted in this Section 4.8
shall be irrevocable and shall be deemed to be coupled with an interest.
4.9 No Expenses for the Trustee. The Voting Trustee shall not have
---------------------------
any obligation by virtue of this Agreement to spend any of his own funds, or to
take any action which could, in the judgment of such Voting Trustee, result in
any cost or expense being incurred by the Voting Trustee other than in
connection with his own obligations hereunder. The Voting Trustee shall not be
required to take any action or refrain from taking any action under this
Agreement unless he shall have been indemnified by the Stockholder in a manner
and form satisfactory to such Voting Trustee against any liability, cost or
expense (including counsel fees) which may be incurred in connection therewith.
No provision of this Agreement shall be deemed to impose any duty on the Voting
Trustee to take any action if the Voting Trustee shall have been advised by
counsel that such action would expose it to personal liability, is contrary to
the terms hereof or is contrary to law.
5. Indemnification of Voting Trustee by Company and Stockholder.
------------------------------------------------------------
Stockholder (jointly and severally if more than one) hereby agrees to assume
liability for and do hereby indemnify, protect, save and keep harmless the
Voting Trustee, in both his individual and trust capacities, and his successors,
assigns, agents and servants from and against any and all liabilities,
obligations, losses,
-6-
<PAGE>
damages, penalties, taxes, claims, actions, suits, costs, expenses or
disbursements (including legal fees and expenses) of any kind and nature
whatsoever which may be imposed upon, incurred by or asserted against the Voting
Trustee. The indemnities contained in this Section 5 shall survive the
termination of this Agreement.
6. Holders of Voting Trust Certificates Bound. Every registered holder
------------------------------------------
of a Voting Trust Certificate, and every bearer of a Voting Trust Certificate
properly endorsed in blank or properly assigned by the acceptance or holding
thereof shall be deemed conclusively for all purposes to have assented to this
Agreement and the Shareholders Agreement (as hereinafter defined) and to all of
their respective terms, conditions and provisions and shall be bound thereby
with the same force and effect as if such holder or bearer had executed this
Agreement and the Shareholders Agreement.
7. Termination.
-----------
7.1 Termination Date. The voting trust created by this Agreement
----------------
shall terminate upon the occurrence of the first to occur of the following
events:
(a) delivery to the Company by the Voting Trustee of a written
instrument terminating the Voting Trust Agreement, provided that, at the time of
such action, the voting stock of the Company has been the subject of a public
offering registered under the Securities Act of 1933, as amended, and is
admitted for trading on a United States national securities exchange or over the
counter market or automated quotation system, including, without limitation, the
NASDAQ National Market System; or
(b) the expiration of twenty-one (21) years less one (1) day
after the date of this Agreement.
In addition, in the event of dissolution or total liquidation of the
Company, whether voluntary or involuntary, the Voting Trustee shall receive the
cash, securities, rights or property to which the holders of the Voting Trust
Certificates are entitled, and shall promptly distribute the same among such
holders, whereupon this Agreement shall terminate without further action by any
person. In the event that a holder of a Voting Trust Certificate would be
entitled to receive a fractional security in the distribution described in the
immediately preceding sentence, the Voting Trustee, in his sole, absolute and
non-reviewable discretion, may elect to round such fraction up or down to the
next whole number and make the distribution based on such rounding, and the
distribution made by the Voting Trustee as a result of such rounding shall be
deemed in compliance with his obligations under the immediately preceding
sentence.
-7-
<PAGE>
7.2 Exchange of Shares and Voting Trust Certificates. Upon
termination of this Agreement, the Voting Trustee, in exchange for or upon
surrender of any Voting Trust Certificates then outstanding, shall, in
accordance with the terms thereof and from the certificates for shares of
Capital Stock received and held by it hereunder, deliver to the holders of
Voting Trust Certificates endorsed in blank for shares of Capital Stock
representing the same number of shares of Capital Stock as are represented by
such Voting Trust Certificates (subject to any rounding done by the Voting
Trustee pursuant to Section 7.1), and thereupon all liability of the Voting
Trustee for delivery of such certificates shall terminate. The Voting Trustee
may require the holders of Voting Trust Certificates to exchange their Voting
Trust Certificates for certificates so received for such shares of Capital
Stock.
8. Notices. All notices in connection with this agreement shall be in
-------
writing and shall be given by registered mail, overnight courier, personal
delivery, cable or telefax, addressed as follows:
Company: Naviant Technology Solutions, Inc.
14 Campus Boulevard, Suite 200
Newtown Square, Pennsylvania 19073-3279
Attention: President
Telefax: 610/355-2428
Telephone: 610/355-7040
Voting Trustee: J. Kenneth Driessen
Chairman and Chief Executive Officer
MRJ Group, Inc.
10560 Arrowhead Drive
Fairfax, Virginia 22030-7305
Telefax: 703/277-1717
Telephone: 703/385-0700
Stockholder: MRJ Group, Inc.
10560 Arrowhead Drive
Fairfax, Virginia 22030-7305
Attention: President
Telefax: 703/277-1717
Telephone: 703/385-0700
With copies to: Hogan & Hartson
8300 Greensboro Drive
-8-
<PAGE>
McLean, VA 22102
Attention: Richard K. A. Becker, Esq.
Telefax: (703) 610-6200
Telephone: (703) 610-6123
or, as to any party, to such other address as such party shall from time to time
designate by written notice to the other parties. The effective date of any
notice given in connection with this Agreement shall be the date on which it is
received by the addressee.
9. Miscellaneous. The terms of this Agreement shall be binding upon and
-------------
inure to the benefit of and shall be enforceable by the Company, the Stockholder
and the Voting Trustee and their respective successors and assigns. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware (but not including the choice of law rules
thereof). In case any provision of this Agreement shall be held to be invalid
or unenforceable in whole or in part, neither the validity nor the
enforceability of the remainder of this Agreement shall in any way be affected.
This Agreement may be amended at any time by a writing signed by the Voting
Trustee and the holders of Voting Trust Certificates representing a majority of
the outstanding shares of Capital Stock of the Company beneficially owned by all
holders of Voting Trust Certificates. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
provisions hereof. Copies of this Agreement and of every agreement amending or
supplementing this Agreement shall be kept by the Voting Trustee and by the
Company on file in its offices, which are located in Newtown Square,
Pennsylvania, and in registered office located in Wilmington, Delaware, each of
which shall be open to inspection in accordance with the requirements of law.
10. Consent to Jurisdiction; Waiver of Immunities. The Company and the
---------------------------------------------
Stockholder hereby irrevocably submit to the jurisdiction of the Courts of the
State of Delaware or the United States Federal Courts sitting therein, in any
action or proceeding brought to enforce or otherwise arising out of or relating
to this Agreement. The Company and the Stockholder irrevocably consent to the
service of any and all process in any such process to the Company or the
Stockholder by registered or certified mail at its address designated in Section
8. In addition, the Stockholder and the Company hereby irrevocably waive to the
fullest extent permitted by law any objection which they may now or hereafter
have to the laying of venue in any such action or proceeding in the Courts of
the State of Delaware or the United States Federal Courts sitting therein, and
hereby further irrevocably waive any claim that any such forum is an
inconvenient forum. The Stockholder and the Company agree that a final judgment
in any such action or proceeding shall
-9-
<PAGE>
be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law.
12. Counterparts. This Voting Trust Agreement may be executed in
------------
counterparts, each of which may be deemed to be an original instrument but all
of which together shall constitute but one instrument and only one set of rights
and obligations shall arise therefrom.
[SIGNATURE PAGE FOLLOWS]
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Voting Agreement,
or have caused this Voting Trust Agreement to be executed as of the date first
above written.
COMPANY:
-------
Naviant Technology Solutions, Inc.
By /s/ James M. Flynn (Seal)
---------------------------
Printed Name: James M. Flynn
Title: President and CEO
TRUSTEE:
--------
/s/ J. Kenneth Driessen, (Seal)
-----------------------------
J. Kenneth Driessen, as Trustee
STOCKHOLDER:
-----------
MRJ Group, Inc.
By /s/ J. Kenneth Driessen (Seal)
-----------------------------
Printed Name: J. Kenneth Driessen
Title: Chairman and Chief Executive
Officer
-11-
<PAGE>
EXHIBIT A
VOTING TRUST CERTIFICATE
<PAGE>
EXHIBIT A
---------
to Voting Trust Agreement
----------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, PLEDGED, SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
Sale, pledge or other disposition or transfer of this Voting Trust Certificate
and the shares of stock of Naviant Technology Solutions, Inc., a Delaware
corporation (the "Company"), represented hereby, is restricted by the terms of a
Voting Trust Agreement dated as of _____________, 1999, which may be examined at
the offices of the Company, which offices are located in Newtown Square,
Pennsylvania and at its registered office in Delaware, Corporation Service
Company, 1013 Centre Road, Wilmington, Delaware.
NAVIANT TECHNOLOGY SOLUTIONS, INC.
No. __________ _________ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY THAT:
1. This Certificate is issued pursuant to, and the rights of the holder
hereof are subject to, the terms and conditions of a Voting Trust Agreement,
dated as of ___________, 1999 (the "Voting Trust Agreement"), by and among
NAVIANT TECHNOLOGY SOLUTIONS, INC., a Delaware corporation (the "Company"), MRJ
GROUP, INC., a Delaware corporation (the "Stockholder"), and J. KENNETH
DRIESSEN, as voting trustee (together with his successors, the "Voting
Trustee"). Copies of the Voting Trust Agreement are kept on file by the Voting
Trustee and by the Company, in its office in Newtown Square, Pennsylvania and
are open to inspection in accordance with the requirements of law.
2. By delivery of this Certificate, the holder hereof and every
transferee agree to be bound by the terms of this Certificate and of the Voting
Trust Agreement.
3. Upon the termination of the Voting Trust Agreement as provided
therein, the holder shall be entitled to receive a certificate or certificates
endorsed in blank for an aggregate of _________ shares of the Company's common
stock, par value $_______ per share and _________ shares of the Company's Series
B preferred stock, par value $_______ per share (the common stock and Series B
preferred Stock
<PAGE>
of the Company being referred to collectively herein as the "Capital Stock")
(subject, however, to the Voting Trustee's right on distribution to round any
fractional shares up or down to the next whole share, as more fully described in
the Voting Trust Agreement), and in the meantime from time to time to receive
payment equal to cash dividends, if any, collected by or for the account of the
Voting Trustee upon a like number of such shares standing in its name. If the
Voting Trustee shall receive any certificates for shares of Capital Stock issued
by way of dividend upon or in exchange for the certificates for shares
represented by this Certificate, the Voting Trustee shall hold such certificates
in accordance with the terms of the Voting Trust Agreement and shall issue
Voting Trust Certificates therefor.
4. Until the re-transfer to the holder hereof of certificates for the
shares of Capital Stock represented by this Certificate, the Voting Trustee
shall possess and be entitled in his discretion to exercise all rights and
powers to vote such shares as provided in the Voting Trust Agreement, and to
give consents with respect to any lawful corporate action, and no holder of this
Certificate shall in such capacity have any rights or powers to vote such shares
or to give consents with respect to or otherwise take part in any corporate
action.
5. This Certificate is not transferable without the prior written
consent of the Voting Trustee, which may be granted or withheld in his sole,
absolute and non-reviewable discretion, except in the event of a Permitted
Transfers (as defined in the Voting Trust Agreement). The Permitted Transfers
shall occur on the books of the Voting Trustee to be kept by him or his agents
upon surrender hereof (duly endorsed in blank or accompanied by a proper
instrument of assignment duly executed in blank, together with all requisite
transfer tax stamps attached thereto and an amount sufficient to pay all state
and local taxes or other governmental charges, if any, then payable in respect
of such transfer) by the registered holder in person or by such holder's duly
authorized attorney. Until this Certificate is transferred as above, the Voting
Trustee may treat the registered holder hereof as the absolute owner hereof for
all purposes whatsoever.
6. This Certificate is not valid unless signed by the Voting Trustee.
IN WITNESS WHEREOF, the undersigned Voting Trustee has caused this
Certificate to be signed this ______ day of _____________, ____.
Voting Trustee:
____________________________________(Seal)
J. Kenneth Driessen, as Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Reference Data........................................................ 1
2. Demise................................................................ 2
3. Construction by Landlord.............................................. 2
4. Term.................................................................. 4
5. Base Rent............................................................. 6
6. Rental Adjustments - Operating Expenses............................... 6
7. Security Deposit...................................................... 11
8. Landlord's Services................................................... 12
9. No Other Services by Landlord......................................... 13
10. Insurance............................................................. 13
11. Casualty.............................................................. 15
12. Condemnation.......................................................... 15
13. Tenant's Fixtures..................................................... 16
14. Alterations........................................................... 16
15. Mechanics' Lien....................................................... 16
16. Use of Premises....................................................... 17
17. Rules and Regulations................................................. 17
18. Governmental Regulations.............................................. 18
19. Signs................................................................. 18
20. Landlord's Entry...................................................... 18
21. Indemnification....................................................... 18
22. Curing Tenant's Defaults.............................................. 18
23. Default............................................................... 18
24. Quiet Enjoyment....................................................... 20
25. Assignment and Subletting............................................. 20
26. Subordination; Attornment............................................. 21
27. Tenant's Certificates................................................. 22
28. Acceptance; Surrender................................................. 22
29. Holding Over.......................................................... 23
30. Notices............................................................... 23
31. Broker................................................................ 23
32. Definition of Parties................................................. 23
33. Entire Agreement; Interpretation...................................... 23
34. Parking............................................................... 24
35. Condition of Leased Space............................................. 24
</TABLE>
Exhibits
- --------
A. Plan of Land
B. Space Plan for Premises
<PAGE>
AGREEMENT OF LEASE made this 1st day of June 1998, by and between
Brandywine Operating Partnership, L.P. a Delaware limited partnership, c/o
Brandywine Realty Services Corporation, a Pennsylvania corporation with its
principal place of business at 16 Campus Boulevard Suite 150, Newtown Square,
Pennsylvania 19073, Fax No. (610) 325-5622, ("Landlord"), party of the first
part, and Naviant Technology Solutions, Inc., a Delaware corporation, with its
principal place of business at 200 Four Falls Corporate Center, Suite 308, West
Conshohocken, Pennsylvania 19428, Fax No. (610) 940-1391, ("Tenant"), party of
the second part.
WITNESSETH THAT, for and in consideration of the rents, covenants and
agreements herein contained and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1. Reference Data. As used in this Lease, the following terms shall
--------------
be defined as indicated and refer to the data set forth in this Section 1.
LANDLORD'S ADDRESS:
c/o Brandywine Realty Services Corporation
16 Campus Boulevard Suite 150
Newtown Square, PA 19073
TENANT'S ADDRESS
ON COMMENCEMENT DATE:
14 Campus Boulevard
Suite 200
Newtown Square, PA 19073
PREMISES: that 15,000 square foot portion of Building to be located on Lot
# 13 (the "Building") owned by Landlord situated on certain land
(the "Land") in the Newtown Square Corporate Campus (the
"Business Park"), as further identified in Exhibit "A" attached
hereto and made a part hereof; the 15,000 square feet rentable
area of the Premises shall be determined by Landlord's architect
based on the final plan of the Premises, as built and in
accordance with "modified" (adjusted for floor location) BOMA
standards regarding the measurement of such space. (Base Rent and
Operating Expense Allowance to be adjusted accordingly).
TERM: Ten (10) years.
SCHEDULED COMMENCEMENT DATE: October 1, 1998.
<PAGE>
BASE RENT: First Lease Year - $15.10 per square foot, for a total of
$226,500.00 per year, in monthly installments of $18,875.00; the
aforesaid Base Rent shall increase on the Commencement Date of
each Lease Year after the First lease Year by an amount equal to
two (2%) percent of the Base Rent that was payable during the
Lease Year immediately preceding the Lease Year then commencing
and the monthly payments shall be adjusted accordingly.
OPERATING EXPENSE ALLOWANCE: $5.45 per square foot ($6,812.50 per month for
a total of $81,750.00 per year), subject to
adjustment as set forth in Section 6.
LEASE YEAR: Any twelve (12) month period beginning on the Commencement Date
or any anniversary thereof.
FIXED RENT: Base Rent plus Operating Expense Allowance.
ADDITIONAL RENT: Sums not including Base Rent which Tenant is obligated to
pay to Landlord from time to time pursuant to the terms of
this Lease.
SECURITY DEPOSIT: $51,375 (one half of which shall be applied toward the first
rental payment due under the Lease, and one half of which
shall be the security deposit), to be paid to Landlord on
June 1, 1998.
TENANT'S PROPORTIONATE SHARE: ______% (Shall be the quotient, expressed as a
percentage determined by dividing the area of
the Premises as determined above by the area
of the Building [______]).
PERMITTED USES: Tenant shall use and occupy the Premises for general office
and for no other purpose.
2. Demise. Landlord hereby demises and lets to Tenant and Tenant
------
hereby hires and leases from Landlord the Premises, TOGETHER WITH, appurtenant
to the Premises, the right to use in common with Landlord and other tenants,
occupants and visitors to the Building, the common driveways, parking lots,
walkways ,and sidewalks of the Business Park and the Land and whatever
facilities may be located in or about the Building (collectively, the "Common
Facilities").
3. Construction by Landlord.
------------------------
a. Landlord shall, without cost to Tenant, complete, alter or
improve the Premises in accordance with the space plan and Landlord's
construction specification memorandum indicated thereon, same to be initialed by
the parties prior to June 1, 1998 and attached hereto as Exhibit "B" and made a
part hereof (the "Space Plan"), all work to be done in workmanlike manner and in
compliance with applicable laws and ordinances governing same (including the
Americans with Disabilities Act). In connection with the Space Plan, in the
event that same is not completed by Landlord, reviewed and initialed by the
parties on or before June 1, 1998, the Tenant shall reserve the right thereafter
to terminate the Lease on ten (10) days
2
<PAGE>
prior written notice of its intention to do so and said Lease shall be deemed
terminated at the end of the ten (10) day period if the Space Plan is not
approved and initialed by the parties.
(i) At the 5/th/ year anniversary of the Commencement Date
of the Lease, Landlord shall contribute up to $15,000.00 toward a minor
refurbishment of the Premises. Should the cost of same exceed said amount, the
Tenant will pay the excess upon receipt of a statement therefor from Landlord.
b. If Landlord desires to make any changes, additions or
alterations in the Space Plan necessary in connection with the construction of
the Premises, such request for changes, additions or alterations shall be
submitted in writing to Tenant (along with Landlord's statement whether such
change will cause a delay in the scheduled Commencement Date) for approval,
which approval shall not be unreasonably withheld or delayed, and shall be
deemed to be given if not disapproved in writing within seven (7) days after
Landlord's submission of the same to Tenant. Any dispute as to the content of
such changes, additions or alterations may, at the option of either party
hereto, be conclusively determined by the independent architect or engineer
retained by Landlord for the construction of the Building.
c. Landlord will prior to the Commencement Date substantially
complete the construction of the Building (if not substantially completed as of
execution thereof) to the stage that the Building is operable for Tenant's
purposes, which shall be defined as occurring when the public entrances of the
Building, including ground floor lobbies and the public hallways of the floor
(s) containing the Premises (or portion of said lobbies and hallways necessary
to provide reasonable and safe access to the Premises) are substantially
completed, the heating and air-conditioning system (as required for the season
and then prevailing climate) and all other mechanical systems required for
service to the Premises are in regular operation so that the Premises can be
used by the Tenant for general office purposes and a certificate of occupancy
shall have been obtained to the extent necessary for Tenant's use of the
Premises and the Common Facilities of the Building for the purposes aforesaid.
d. The Premises shall be substantially completed on or before
the Scheduled Commencement Date, provided that the Scheduled Commencement Date
shall be extended for the time equivalent to any time lost by Landlord due to
strikes, labor disputes, governmental restrictions or limitations, scarcity of
or inability to obtain labor or materials, accidents, fire or other casualties,
weather conditions, or any cause similar or dissimilar to the foregoing beyond
the reasonable control of Landlord. Upon completion of the final space plan,
Landlord shall cause the actual usable square footage of the Premises and the
Building to be measured in accordance with modified BOMA standards, as certified
by Landlord's architect who prepared the plans and specifications for the
Building. The area of the Premises and building as certified shall be converted
to rentable square footage and shall be the figure used in calculating Tenant's
Proportionate Share in Section 1 of this Lease.
e. The Tenant shall have the option to increase the size of the
Premises by adding thereto the floor areas outlined on Exhibit "B" hereof as (a)
-----------
Adjacent Space - 5,000, square feet, and (b) Adjacent Space of 4,000 + (up to
approximately 5,000 square feet)square feet, provided, however, that if Tenant
intends to exercise its option with respect to the (a) and (b) space, it shall
notify Landlord in writing thereof no later than March 1, 1999 that
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it will lease the (a) space beginning October 1, 1999, and with respect to the
(b) space, it will lease the (b) space beginning April 1, 2000.
The lease of adjacent space shall have a Term equal to the remainder
of the Term hereof, shall have the same Fixed Rental Rate as provided for herein
for the Lease Year in which the option for adjacent space is exercised (subject
to the same increases), and shall be in the form of an Amendment to the herein
Lease and shall be executed by Tenant within ten (10) days after receipt of the
Amendment covering both adjacent spaces. If Tenant does not execute the Lease
Amendment within ten (10) days after receipt for any reason, then the Landlord
shall be free to lease such space to third parties, and this right shall be of
no further force or effect with respect to the adjacent space in question, i.e.,
(a) or (b). The Lease Amendment for additional space shall consist of a
modification of the herein Lease, basically to provide for the enlarged Premises
and the rental and other provisions consistent with such transaction, e.g.
change in pro rata share, etc. In the event that Tenant does not exercise the
option and/or execute the Amendment contained in this subparagraph (e), Tenant
shall reimburse Landlord for the cost of the construction of a corridor (approx.
$100,000.00) necessitated by the addition of other space tenants on the floor of
the Building containing the Premises. In connection with such costs, Landlord
shall verify same in reasonable detail and supported by bonafide source
documents at the time Landlord forwards Tenant an invoice for said
reimbursement.
In the event that Tenant does not exercise the option to lease the
Adjacent Space, the Landlord will nonetheless advise Tenant when Landlord has
its first active prospect for any of such Adjacent Space (active prospect being
an entity which, in Landlord's judgment, is interested in leasing a portion or
all of such space) and Tenant shall thereupon have five (5) days within which to
accept such space, such acceptance to otherwise be effected in the same manner
as if Tenant had exercised the above option except that the Base Rent shall be
at the same rate per square foot as being offered to the active prospect (if
higher than the $15.10 per square foot) coupled with the same 2% per annum
increases as are applicable to the Base Rent set forth in Section 1 hereof.
f. Landlord shall be responsible to make any repairs
necessitated by defective workmanship or materials in the aforesaid work,
provided that such defect appears and Tenant gives Landlord written notice
thereof during the first one (1) year of the Term.
4. Term. A. The Term shall commence on the earlier of (the
----
"Commencement Date"): (i) the date when Tenant, with Landlord's consent, assumes
possession of the Premises or any part thereof, or (ii) the seventh (7th)
consecutive business day following Landlord's notice to Tenant that the Premises
are substantially completed which shall occur when (i) the construction work and
other items of work for which Landlord is responsible under Section 3 hereof
have been completed (and confirmed by Landlord's architect)to the extent that
the Premises (and the Building per section 3(c) hereof) may be fully occupied by
Tenant for its general office use, subject only to completion of minor finishing
and adjustment of equipment, and (ii) Landlord has obtained at least a temporary
certificate of occupancy for the Premises. The commencement and expiration dates
of the Term, when determined as above provided, shall be confirmed by a
Commencement Date Letter. In the event that the Premises are not substantially
completed on or before October 1, 1998, Landlord shall pay up to $10,000.00 per
month of Tenant's costs including the holdover rents for its-existing leasehold
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premises as well as other costs arising out of the holdover leasehold those that
would not have been incurred in the normal course of relocating Tenants business
absent the holdover).
Landlord will diligently attempt to have the Premises ready for
Tenants' occupancy by October 1, 1998. In any event, however, Landlord shall
notify Tenant on or before July 1, 1998 with respect to the anticipated
Commencement Date. In the event that (A) the Commencement Date is anticipated to
occur after January 1, 1999 ("new Commencement Date"), or (B) if the Premises is
not ready for occupancy by the New Commencement Date, then the Tenant shall have
the right to terminate this Lease by forwarding notice to Landlord of its
intention to do so, if under (A) above, no later than ten (10) days after
Landlord's notice of the new Commencement Date, or if under (B) above, not later
than twenty (20) days after Tenant's notice on or after January 1, 1999 to
Landlord that the Premises was not ready for occupancy by the New Commencement
Date and it shall not be ready for occupancy prior to the end of said twenty
(20) day period. In the event of either such termination, this Lease shall be
deemed null and void as of the date of Tenant's notice in the event of A and 20
days thereafter in the event of (B)(i.e. if not ready for occupancy)and the
Security Deposit shall be returned to Tenant forthwith. If Tenant does not in
the event of (A) forward the notice of termination within the applicable ten
(10) day period then this Lease shall continue in full force and effect and the
Scheduled Commencement Date set forth in Section 1 shall be deemed changed
accordingly, i.e., as in Landlord's notice.
(B) Tenant shall have two options to extend this Lease for an
additional term of five (5) years on each such option provided that Tenant shall
not be in monetary default hereunder beyond applicable notice and grace periods
at the time Tenant exercises the option and further provided that Tenant shall
exercise each such option in writing not later than nine (9) months, and not
earlier than twelve (12) months, prior to the expiration of the then current
Term, such extension term to be upon the same terms and conditions of this Lease
(including, without limitation, the obligations to pay Operating Expense
Allowance) except that the annual Base Rent during the renewal term shall be 95%
of the "market" rental rate per square foot for similar space in the Newtown
Square Corporate Campus at that time, i.e., nine (9) months prior to the
expiration date of the then current term. As used in this Lease, the term
"market rental" shall mean and equal the prevailing market rent for new leases
of comparable space upon comparable terms and conditions (without credits or
allowances for improvements) for comparable periods of time in buildings in the
Newtown Square Corporate Campus for buildings of similar quality. Promptly, upon
receipt of Tenant's notice exercising the option, Landlord shall advise Tenant
of the market rental, provided, however, that in the event that the Tenant
disagrees with the market rental, it shall serve written notice thereof on
Landlord within twenty (20) days after the date the Landlord advises Tenant of
the market rental and thereupon the Landlord and Tenant shall each select a real
estate appraiser (MAI equal) knowledgeable in the Newtown Square submarket and
each said appraiser shall select a third appraiser knowledgeable in said
submarket. The three appraisers will then determine the market rental for the
Premises. In any event, the three appraisers' decisions shall be rendered within
forty-five (45) days following their appointment and such determination shall be
final, binding and conclusive as between Landlord and Tenant. The charges of the
appraisers selected by Landlord and Tenant, respectively, shall be paid by
Landlord and Tenant, respectively; the charges of the third appraiser shall be
shared equally between the Landlord and Tenant. In no
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event, however, shall the Fixed Rent for either option term be less than the
Fixed Rent payable for the last year of the Term then expiring multiplied by
105%.
5. Base Rent.
---------
a. Tenant shall pay to Landlord Base Rent during the Term
hereof, without notice or demand, in the monthly installments specified in
Section 1, in advance on the first day of each calendar month of the Term, at
Landlord's principal office as indicated in Section 1 above. If the Term
commences other than on the first day of a calendar month, then the installments
of Base Rent for the first and last calendar months of the Term shall be
adjusted proportionately. In the event that the Commencement Date does not occur
on or before October 1, 1998, the Base Rent (but not the Operating Expense
Allowance) for the first month shall be waived by Landlord.
b. Base Rent, Additional Rent and all other sums payable by
Tenant to Landlord hereunder shall be paid, without set-off or deduction, in
lawful currency of the United States of America to Landlord at the address set
forth in Section 1 hereof, or at such other address as Landlord may from time to
time designate in writing to Tenant. In the event that any such rent or other
sums shall be unpaid on the expiration or termination hereof, the obligation
therefor shall survive such expiration or termination of this Lease. In order to
partially compensate Landlord for the extra expense incurred in the handling of
delinquent payments, Tenant agrees to pay Landlord a late charge equal to the
product obtained by multiplying by ten (10%) percent each installment of Fixed
Rent or Additional Rent not paid within five (5) days after its due date
provided that Landlord gives Tenant written notice that such payment was not
paid when due, (such written notice not to be required more than once in a
calendar year).
6. Rental Adjustments - Operating Expenses. Tenant shall pay, as
---------------------------------------
Additional Rent to Landlord its prorata share of Operating Expenses (as
hereinafter defined) which prorata share shall be comprised of the Operating
Expense Allowance plus any adjustment thereto as a result of the Operating
Expense Adjustment (as hereinafter defined). The Operating Expense Allowance
shall be paid, in equal monthly installments. If the Term commences other than
on the first day of the calendar month, then the Operating Expense Allowance for
the first calendar month of the Term shall be adjusted proportionately, and the
aforesaid first installment paid by Tenant upon the execution of this Lease
shall be initially applied to the first partial month of the Term and the
balance shall be credited to the succeeding month's payment.
If Tenant's Proportionate Share of Operating Expense for any Operating
Year shall be greater (or less) than Tenant's total Operating Expense Allowance
for the same year, Tenant shall pay to Landlord as Additional Rent (or Landlord
shall credit to Tenant as hereinafter provided) an amount equal to the
difference (the amount of such difference is hereinafter referred to as the
"Operating Expense Adjustment"). If Tenant occupies the Premises or a portion
thereof for less than a full Operating Year, the Operating Expense Adjustment
will be calculated in proportion to the amount of time in such Operating Year
that Tenant occupied the Premises.
Such Operating Expense Adjustment shall be paid in the following
manner: within one hundred twenty (120) days following the end of the first and
each succeeding
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Operating Year, Landlord shall furnish Tenant an Operating Expense Statement
setting forth (i) the Operating Expense for the preceding Operating Year, (ii)
the Operating Expense Allowance for said Operating Year, and (iii) Tenant's
Operating Expense Adjustment for such Operating Year. Within fifteen (15) days
following the receipt of such Operating Expense Statement (the "Expense
Adjustment Date") (A) Tenant shall pay to Landlord as Additional Rent the
Operating Expense Adjustment for such Operating Year, or (B) in the event that
(ii) should exceed (i), the excess amount shall be divided by twelve (12) and
the resultant sum shall be credited against the monthly payments of the
Operating Expense Allowance for the Operating Year then commencing.
Commencing with the first month of the second Operating Year (and
continuing on the first month of each succeeding Operating Year thereafter
during the Term hereof), Tenant shall pay to Landlord, in addition to the
Operating Expense Allowance, on account of the Operating Expense Adjustment for
such Operating Year, monthly installments in advance equal to one-twelfth
(1/12th) of the estimated Operating Expense Adjustment for such Operating Year
which estimated figure will be included in the aforesaid Operating Expense
Statement or given to Tenant as soon thereafter as it is determined by Landlord.
On the next succeeding Expense Adjustment Date, Tenant shall pay to Landlord (or
Landlord shall credit to Tenant) any deficiency (or excess) between the
installments paid on account of the preceding year's Operating Expense
Adjustment and the actual Operating Expense Adjustment for such Operating Year.
As used in this Section 6 and Section 1 where applicable, the
following words and terms shall be defined as hereinafter set forth:
(1) "Operating Year" shall mean each calendar year, or other
consecutive period of twelve (12) months as hereinafter may be
adopted by Landlord as its fiscal year, occurring during the
Term.
(2) "Operating Expense Allowance" shall mean and equal the amount set
forth in Section 1 of this Lease.
(3) "Operating Expense Statement" shall mean a statement in writing
signed by Landlord, setting forth in reasonable detail (a) the
Operating Expense for the preceding Operating Year, (b) Tenant's
Proportionate Share of the Operating Expense, (c) the Operating
Expense Allowance, and (d) the Tenant's Operating Expense
Adjustment for such Operating Year, or portion thereof. The
Operating Expense Statement for each Operating Year shall be sent
to Tenant.
(4) "Operating Expense" shall mean the following expenses incurred by
Landlord in connection with the operation, repair and maintenance
of the Building and the Land:
(a) Real estate taxes and other taxes or charges levied in lieu
of such taxes; general and special public assessments;
charges imposed by any governmental authority pursuant to
anti-pollution or
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environmental legislation; taxes on the rentals of the
Building or the use, occupancy or renting of space therein,
less the amount of any tax abatement or exemption on the
Building for the applicable tax year;
Landlord reserves the right to bill Tenant for a "lump sum"
reimbursement for the taxes and assessments payable
hereunder which lump sum amount will be (a) payable within
thirty (30) days after receipt of Landlord's statement
therefor which will be forwarded at or about the times
during each operating Year that the respective taxing
authority issues its tax bill, and (b) comprised of Tenant's
Proportionate Share of such tax bill less the then accrued
monthly amounts already paid by Tenant in its Operating
Expense Allowance which are allocable to the real estate
taxes or assessments that are included in the bill issued by
the taxing authority. In the event that Landlord exercises
such right with respect to the tax bills that are payable in
any Operating Year, the monthly amounts due under this
subparagraph (a) will nonetheless be paid provided that no
such lump sum amount will be due thereafter unless the
accrual of such monthly amounts is insufficient to satisfy
the Tenant's prorata share of subsequent tax bills (i.e.
should real estate taxes increase), in which event the lump
sum shall be only that which is necessary to cover the
shortage. If a lump sum is paid by Tenant during the Term,
the unused portion thereof, if any, shall be, at Tenant's
option, refunded or credited to the Tenant upon the
expiration of the Term, unused being that portion of the
lump sum that is apportionable to a period of the time
subsequent to the expiration of the Term.
(b) Premiums and fees for fire and extended coverage insurance,
insurance against loss of rentals for space in the Building
and public liability insurance, all in amounts and coverages
(with additional policies against additional risks) as may
be required by Landlord or the holder of any mortgage on the
Building;
(c) Water and sewer service charges, electricity, heat, air-
conditioning and other utility charges not separately
metered to tenants in the Building;
(d) Maintenance and repair costs, including repairs and
replacement described in Section 8 below (but excluding
repairs resulting from an insured casualty to the extent
that Landlord shall receive insurance proceeds therefor);
repairs and replacements of supplies and equipment; snow and
trash removal; repair and maintenance of all Common
Facilities; janitorial services; landscaping, lawn and
general grounds upkeep, maintenance and repair; and the
costs of all labor, material and supplies incidental
thereto; major repair
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items that are capital in nature shall be amortized over a
period of five (5) years or such longer time as required by
generally accepted accounting principles.
(e) Wages, salaries, fees and other compensation and payments
and payroll taxes and contributions to any social security,
unemployment insurance, welfare, pension or similar fund and
payments for other fringe benefits required by law, union
agreement or otherwise made to or on behalf of all employees
of Landlord performing services rendered in connection with
the operation and maintenance of the Building and/or Land
including, without limitation, payments made directly to or
through independent contractors for performance of such
services or for the servicing of maintenance contracts;
(f) Management fees, all of which are not to exceed 5% of the
Fixed Rent payable for the Building irrespective of whether
such services are performed by Landlord, a company
affiliated with Landlord or an independent third party
contractor;
(g) Any and all assessments paid by Landlord for the repair,
maintenance and upkeep of Common Facilities located in the
Business Park. For the purposes of this subparagraph (g),
such assessments shall equal the product obtained by
multiplying the total assessments paid by Landlord by a
fraction, the numerator of which shall be the number of
square feet in the Building as set forth in Section 1 above,
and the denominator of which shall be the total number of
square feet in all buildings in the Business Park subject to
the assessment; and
(h) Any and all other expenditures of Landlord actually incurred
in connection with the operation, repair or maintenance of
the Premises, the Building or the Land which are properly
expensed (or regarded as "deferred expenses") in accordance
with generally accepted accounting principles consistently
applied in the operation, maintenance, and repair of a
first-class office building facility. Included herewith are
items of expense that result in a savings or reductions in
Operating Expenses as hereinabove described, in the event of
which, the corresponding items shall be deducted from the
Operating Expense Allowance for the Operating Year in which
the expenditure was made. If any improvements or
modifications are required to be made to the Building as a
result of future amendments to or subsequent regulations
under the Americans with Disabilities Act of 1990 (i.e.,
---
after the effective date of the Lease), the cost of each
such improvement or modification shall be amortized over its
useful life and included in Operating Expenses. The cost of
capital improvements shall be
9
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amortized over a period of five (5) years or such longer
period of time as is required by generally accepted
accounting principles.
(i) Tenant shall have the right, upon written notice to
Landlord, to review at Landlord's office, Landlord's books
and records relating to any expense, provided that such
notice (a) shall be forwarded to Landlord within thirty (30)
days of Tenant's receipt of the most recent Operating
Expense Statement and (b) shall not affect Tenant's
obligation to pay the Operating Expense Adjustment, if any,
as shown on the Operating Expense Statement. Landlord shall
make such books and records available to Tenant or Tenant's
agent. Tenant shall be responsible for any and all costs,
expenses and fees incurred by Tenant or Tenant's agent in
connection with such review. If Tenant or Tenant's agent
reviews Landlord's books and records, Tenant shall have the
right to give Landlord written notice stating in reasonable
detail any objection notice from Tenant. Landlord and Tenant
shall work together in good faith to resolve the discrepancy
between Landlord's statement of items and Tenant's review.
If Landlord and Tenant determine that the items of Operating
Expense for the period in question are less than reported,
then Landlord shall provide Tenant with a credit against
future rental payments in the amount of any overpayment by
Tenant and Landlord shall reimburse Tenant for the cost of
the audit (riot to exceed $300) if the overpayment exceeds
5% of the Operating Expenses for the year being audited.
Likewise, if Landlord and Tenant determine that the items of
Operating Expense for the period in question are more than
reported, Tenant shall forthwith pay to Landlord the amount
of underpayment by Tenant. Also, if any other Tenant in the
building performs an audit of any items of Operating Expense
and the Landlord agrees that there has been an overpayment
of any items of Operating Expense for the period in
question, then if pertinent, Tenant shall be entitled to the
same pro rata adjustment as the Tenant that performed that
audit.
Items of Operating Expense which are not exclusively incurred with
respect to the Building by reason of the nature of the items or otherwise shall
be equitably allocated by Landlord among the buildings to which the same relate
or for whose benefit the same have been incurred, and only the portion allocated
to the Building shall be included in calculating the Operating Expense for the
Building. The term "Operating Expense" shall not include depreciation on the
Building or equipment therein, mortgage interest, executive salaries, real
estate brokers' commission or the costs of services provided specially for any
particular tenant at such tenant's expense and not uniformly available to all
tenants of the Building.
In calculating the annual Operating Expenses listed in subsections
(c), (d), (e) and (f) above, if for thirty (30) or more days during the
Operating Year less than ninety-five (95%) percent of the rentable area of the
Building shall have been occupied by tenants, then the annual
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Operating Expense attributable to the four subsections listed above shall be
deemed for such Operating Year to be amounts equal to the like expenses which
would normally be-expected to be incurred had such occupancy of the Building
been at ninety-five (95 a) percent throughout such year, as reasonably
determined by Landlord and provided further that if during any Operating Year,
Landlord shall not furnish any item or items of Operating Expenses to any
portion of the Building because such portions are not occupied or because such
item is not required by the lessee of such portion, for the purposes of
computing Operating Expenses, an equitable adjustment shall be made so that the
item of Operating Expense in question shall be shared by tenants receiving the
benefits thereof.
During the calendar year in which the Term ends, Landlord shall have
the right to submit to Tenant a statement of Landlord's reasonable estimate of
the Operating Expense Adjustment during the period (the "final period")
beginning on the first day of the final Operating Year of the Term or, if later,
the date of the immediately preceding Operating Expense Adjustment, and ending
on the final day of the Term. Upon the earlier to occur of the thirtieth (30th)
day following Tenant's receipt of such statement or the final day of the Term,
Tenant shall pay to Landlord said estimated Operating Expense Adjustment minus
the total amount of payments previously made by Tenant pursuant to this section
during the final period. If requested by Tenant, Landlord shall submit to Tenant
a statement setting forth the actual amount of said Operating Expense Adjustment
after Landlord's final calculation of same, and within thirty (30) days after
Tenant's receipt of such statement, Tenant shall pay to Landlord the amount
shown thereon.
7. Security Deposit. Tenant shall deposit with Landlord a Security
----------------
Deposit of $51,375 in cash via its good check on or before June 1, 1998. This
deposit consists of the first rental payment due under this Lease and one month
security. One half of the sum shall be applied to the first rental payment under
this Lease. If, during the Term, Tenant's Tangible Net Worth (according to GAAP)
based on Tenant's certified financial statements, falls below $3.75 million,
Tenant will advance an additional $50,000 increasing the security deposit. If
Tangible Net Worth falls below $3.00 million, Tenant will again advance
additional cash security to bring the total security deposit to $200,000.
Security may be in the form of either a cash deposit or a letter of credit
provided that in the latter instance, it is in form and substance acceptable to
Landlord in its sole discretion. If security is a cash deposit, then it shall be
kept by Landlord in an interest-bearing account, with the interest thereon to be
added to the Security Deposit. The security deposit will be reduced to $75,000
once Tangible Net Worth is above $3.00 million and reduced to one month's rent
once Tangible Net Worth is above $3.75 million, provided, however, the
aforementioned advances will again be required in the event that the Tangible
Net Worth falls below the aforementioned levels (and returned to Tenant if they
again exceed such levels) -- it being the intention of the parties that such
increases in security will always be required during the Term if and so long as
the Tangible Net Worth is below the aforementioned levels. Furthermore, failure
to provide the security deposit and additional security shall be deemed a
material default under this Lease.
Landlord will hold the security deposit, if cash, in an interest-
bearing escrow in a segregated account as security for the faithful performance
by Tenant of all its covenants and agreements under this Lease, but in no event
shall Landlord be obliged to apply same to rents or other charges in arrears or
damages for Tenant's default hereunder, but Landlord may so apply
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the security deposit at its option. Landlord's right to possession of the
Premises for Tenant's default or any other reason shall not be affected by the
fact that Landlord holds said security deposit. The security deposit, if not so
applied by Landlord, together with accrued interest shall be returned to Tenant
within sixty (60) days after this Lease terminates, provided that Tenant shall
have vacated the Premises and delivered the same to Landlord, as herein
provided. In the event of any transfer of Landlord's interest in the Premises,
Landlord shall have the right upon notice to Tenant of transferee's identity to
transfer its interest in the security deposit to such transferee, and upon
transferee taking title to the Building, Landlord shall be released of all
liability with respect to such security deposit, and Tenant shall look solely to
such transferee for the return of the same.
8. Landlord's Services. So long as Tenant is not in default
-------------------
hereunder, Landlord shall:
a. Regularly on business days clean or cause the Premises and
the Building to be kept clean to the standards of a first-class suburban office
building, provided the same are kept in order by Tenant.
b. Arrange for all required utility services to the Premises;
provided, however, that Landlord shall not be liable to Tenant for any loss or
- -------- -------
damage arising from interruption in such utility services.
c. Provide the services referenced in subsection 6 (4) (d)
above.
d. Make all repairs necessary to maintain the plumbing and
electrical systems, windows, floors (excluding carpeting), and all other items
which constitute a part of the Premises and are installed or furnished by
Landlord, except repairs to the heat pumps servicing the Premises and Tenant's
trade fixtures and property and installations which Tenant is obligated to make
or which were performed by Landlord at Tenant's request; provided, however, that
-------- -------
Landlord shall not be obligated for any of such repairs until the expiration of
a reasonable period of time after written notice from Tenant that such repair is
needed. In no event shall Landlord be obligated under this paragraph to repair
any damage caused by any act, omission or negligence of Tenant or its employees,
agents, invitees, licensees, subtenants, or contractors.
Tenant shall take good care of the Premises and the fixtures and
appurtenances therein. Tenant shall; at its sole cost and expense and under
Landlord's supervision, repair and replace all damage or injury to the Premises
and the Building and to fixtures and equipment caused by Tenant or its
employees, agents, invitees, licensees, subtenants, or contractors, or as the
result of all or any of them moving in or out of the Building or by installation
or removal of furniture, fixtures or other property, which repairs and
replacements shall be in quality and class equal to the original work or
installations. If Tenant fails to make such repairs or replacements, the same
may be made by Landlord and such expense shall be collectible as Additional Rent
and paid by Tenant within fifteen (15) days after rendition of a bill therefor.
Heating, ventilating and air-conditioning ("HVAC") for the Premises
are supplied by an individual heat pump servicing only the Premises. If Tenant
requires maintenance, servicing, repair or replacement of the heat pump, such
maintenance, servicing, repair or
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replacement shall be made at the sole expense of Tenant to the extent such cost
is not covered by the heat pump maintenance contract maintained by Landlord,
unless the need for such repairs is caused solely by the negligence or willful
misconduct of Landlord, its agents or employees. Landlord agrees to provide for
the benefit of Tenant any manufacturer's' or installer's warranty issued to
Landlord covering the heat pump. Notwithstanding the foregoing, if during the
first five (5) Lease years of the Term (a) the maintenance or repair of a heat
pump serving the Premises involves in any instance an expense in excess of
$1,000.00 or (b) any heat pump compressor (s) need to be replaced, then the
Landlord will, in the event of (a) reimburse the excess cost to the Tenant or in
the event of (b)replace the defective compressor at its own expense. After the
fifth (5) Lease year, all such obligations shall be the Tenant's as above set
forth.
Landlord shall not be liable by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations, additions or improvements in or to the Premises or the Building or
to any appurtenances or equipment therein. Except as expressly provided in
Sections 11 and 12 hereof, there shall be no abatement of rent because of such
repairs, alterations, additions or improvements.
Landlord, at its sole cost and expense, shall comply with the
provisions of the Americans with Disabilities Act, and all applicable rules and
regulations, as they relate to the Building (other than the Premises) and common
areas.
9. No Other Services by Landlord. Landlord shall not be required to
-----------------------------
render any services to Tenant or to make any repairs or replacements to the
Premises, except as provided in Sections 3, 8, 11 and 12 hereof. Without
limiting the generality of the foregoing, it is specifically understood and
agreed that Tenant shall contract for an be solely responsible for all costs of
electricity consumed or used in the Premises. In the event that the electricity
provider is unwilling to bill Tenant directly for electricity consumed or used
in the Premises, Landlord shall have the right to submeter, at Landlord's sole
expense, the Premises and to bill Tenant monthly an amount equal to Landlord's
reasonable estimate of Tenant's electrical consumption against actual meter
readings for the prior three (3) months. In the event Tenant has consumed more
electricity than is reflected by the estimated monthly payments, then Tenant
shall pay for such excess electrical consumption within ten (10) days after
receipt of a bill therefor from Landlord. In the event that Tenant's monthly
installments exceed Tenant's actual electrical consumption, then the excess
shall be credited against the next estimated monthly payment due by Tenant.
10. Insurance.
---------
a. Tenant, at Tenant's expense, shall maintain in effect
throughout the Term, through insurance carriers reasonably satisfactory to
Landlord, insurance against claims for personal injury (including death) and
property damage, under a policy of general public liability insurance, in
amounts not less than Two Million ($2,000,000.00) Dollars combined single limit
in respect of bodily injury (including death) and Five Hundred Thousand
($500,000.00) Dollars for property damage. The insurance policy shall name both
Landlord and Tenant as insured parties. In addition, Tenant at all times shall
maintain fire and extended coverage insurance insuring its interest in all
furniture, fixtures, equipment, supplies and other
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<PAGE>
personal property located in the Premises or elsewhere in the Building and all
tenant improvements to the Premises, for the full insurable replacement cost
thereof.
b. Prior to the commencement of the Term, Tenant shall provide
Landlord with certificates of the insurance policies herein required of Tenant.
All policies shall provide that coverage thereunder may not be reduced or
terminated without at least thirty (30) days prior written notice to Landlord.
Tenant shall furnish to Landlord throughout the Term replacement certificates at
least thirty (30) days prior to the expiration date of the then current policies
and, upon request of Landlord, shall supply to Landlord copies of all policies
herein required of Tenant.
c. Landlord shall maintain and keep in effect throughout the
Term of this Lease insurance against loss or damage to the Building by fire or
such other casualties as may be included within either fire and extended
coverage insurance or all-risk insurance and such other insurance as Landlord
may desire or as may reasonably be required from time to time by any mortgagee.
Tenant shall pay to Landlord its Proportionate Share of the premiums to be paid
by Landlord for such insurance in accordance with Section 6 above.
If Tenant's leasehold improvements or other personal property,
fixtures or equipment, or any part thereof, is damaged by fire or other cause
against which Tenant is required to carry insurance pursuant to this Lease,
Landlord shall not be liable to Tenant for any loss, cost or expense arising out
of or in connection with such damage. Tenant hereby releases Landlord, its
directors, officers, shareholders, partners, employees, agents and
representatives, from any liability, claim or action arising out of or in
connection with such damage. Furthermore, Tenant shall maintain insurance
against loss, injury, or damage which may be sustained by the person, goods,
wares, merchandise or property of Tenant, its agents, contractors, employees,
invitees or customers, or any other person in or about the Premises, caused by
or resulting from fire, steam, electricity, gas, water, or rain, which may leak
or flow from or into any part of the Premises or the Building, or from the
breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of the same, whether
such damage or injury results from conditions arising within the Premises or
other portions of the Building,, or from other sources, and Landlord shall not
be liable therefor, unless caused by Landlord's negligence or wrongful act, and
in that event only to the extent not covered by the insurance which Tenant is
required to carry pursuant to this Lease. Landlord shall not be liable to Tenant
for any damages arising out of or in connection with any act or omission of any
other tenant in the Building or for losses due to theft or burglary or other
wrongful acts of third parties.
d. Each of the parties hereto hereby releases the other from
all liability for all injury, loss or damage which may be inflicted upon the
property of such party, even if such liability results from the negligence of
the other party; provided, however, that this release shall be effective only
-------- -------
(i) during such time as the applicable insurance policy carried by such party
names the other party as a co-insured or contains a clause to the effect that
this release shall not affect said policy or the right of the insured to recover
thereunder, and (ii) to the extent of the coverage of such policy. If any policy
does not permit such a waiver, and if the party to benefit therefrom requests
that such a waiver be obtained, the other party agrees to obtain an endorsement
to its insurance policies permitting such waiver of subrogation, if available,
and if
14
<PAGE>
an additional premium-is charged for such waiver, the party benefiting therefrom
shall pay same promptly upon being billed therefor.
11. Casualty.
--------
a. If the Premises are damaged by fire or other casualty,
Tenant shall promptly notify Landlord and Landlord shall repair the damaged
portions of the Premises (but not any of Tenant's property therein or
improvements or alterations made by Tenant), except that if, in Landlord's
reasonable judgment, the damage would require more than ninety (90) days of work
to repair, or if the insurance proceeds (excluding rent insurance) which
Landlord anticipates receiving must be applied to repay any mortgages
encumbering the Building or are otherwise inadequate to pay the cost of such
repair, then Landlord shall have the right to terminate this Lease by so
notifying Tenant in writing, which notice shall specify a termination date not
less than fifteen (15) days after its transmission. If Landlord is so required
to repair, the work shall be commenced and completed with due diligence, taking
into account the time required for Landlord to procure insurance proceeds, and
construction delays due to shortages of labor or material or other causes beyond
Landlord's reasonable control.
During the period when Tenant shall be deprived of possession of the
Premises by reason of such damage, Tenant's obligation to pay Base Rent under
Section 5 and Operating Expense Allowance under Section 6 shall abate in the
proportion which the damaged area of the Premises bears to the entire Premises.
12. Condemnation.
------------
a. If all of the Premises are taken through the exercise of the
power of eminent domain, this Lease shall terminate on the date when possession
of the Premises is required by the condemning authority. If only part of the
Premises is taken, then (i) if the condemnation award is insufficient to restore
the remaining portion of the Premises or if such award must be applied to repay
any mortgages encumbering the Building, (ii) if, in addition to a portion of the
Premises, a portion of the Building or Land is taken and Landlord deems it
commercially unreasonable to continue leasing all or a portion of the remaining
space in-the Building, or (iii) if a substantial portion of the Premises is so
taken and it is commercially unreasonable for Tenant to continue its business
within the Premises as determined by Tenant in the exercise of its reasonable
business judgment, then Landlord in the case of (i) and (ii) above or Tenant in
the case of (iii) above, shall have the right to terminate this Lease on the
date when the condemned portion of the Premises, Building or Land is required to
be delivered to the condemning authority, which right shall be exercisable by
the exercising party so notifying the other party no later than thirty (30) days
prior to such date.
b. If this Lease is not so terminated after a partial
condemnation, then after the date when the condemned portion of the Premises is
delivered to the condemnor, the Fixed Rent shall be reduced in the proportion
which the condemned area bears to the entire area of the Premises, and Tenant's
Proportionate Share shall be reduced by the same proportion.
c. Tenant shall have the right to claim against the condemnor
only for removal and moving expenses and business dislocation damages which may
be separately
15
<PAGE>
payable to tenants in general under Pennsylvania law, provided such payment does
not reduce the award otherwise payable to Landlord. Subject to the foregoing,
Tenant hereby waives all claims against Landlord with respect to a condemnation,
and hereby assigns to Landlord all claims against the condemnor including,
without limitation, all claims for leasehold damages and diminution in the value
of Tenant's leasehold estate.
13. Tenant's Fixtures. Tenant shall have the right to install trade
-----------------
fixtures, personal computers and local area networks, office machinery and
equipment (excluding alterations, improvements and additions which are governed
by Section 14) required by Tenant or used by it in its business, provided that
same do not impair the structural strength of the Building and further provided
that such trade fixtures, office machinery and equipment shall be limited to
items normally used in an office building. Without limiting the generality of
the foregoing, it is specifically understood and agreed that Tenant shall not
have the right to install or operate any electrical equipment or machinery in
the Premises (other than normal office machinery and equipment such as
typewriters, adding machines, and copier) without Landlord's prior written
consent. Tenant shall remove all such trade fixtures, office machinery and
equipment prior to the end of the Term, and Tenant shall repair and restore any
damage to the Premises and Building caused by such installation or removal.
Tenant's personal property, fixtures and equipment are not covered by any
insurance policies maintained by Landlord under this Lease or otherwise, and it
shall be Tenant's responsibility to secure extended coverage insurance against
fire, vandalism, malicious mischief, sprinkler and other water leakage and such
additional perils as now are or hereafter may be included in a standard extended
coverage endorsement insuring its trade fixtures, machinery and equipment.
14. Alterations. Tenant shall not, without on each occasion first
-----------
obtaining Landlord's prior written consent, make any alterations, improvements
or additions to the Premises, except that Tenant may, without the consent of
Landlord but with prior written notice to Landlord, make minor improvements to
the interior of the Premises provided that: (i) they do not impair the
structural strength, operation or value of the Building, and (ii) Tenant shall,
prior to the commencement of the work, deliver to Landlord waivers of liens, in
form acceptable to Landlord, from all contractors, subcontractors and
materialmen performing such work, and shall take all steps required or permitted
by law to avoid the imposition of any mechanic's liens upon the Premises,
Building and Land. All alterations, improvements and additions, except for minor
alterations and improvements as aforesaid, upon completion of construction
thereof, shall become part of the Premises and the property of Landlord without
payment therefor by Landlord and shall be surrendered to Landlord at the end of
the Term; provided, however, if so notified by Landlord in writing, Tenant
-------- -------
shall, prior to the end of the Term, remove all such alterations and
improvements, or the parts thereof specified by Landlord, from the Premises and
shall repair all damage caused by installation and/or removal. In connection
with the foregoing, Tenant may at any time within the last four (4) months of
the Term request the Landlord to identify what, if any, of the alterations or
improvements are to be removed and Landlord will respond to Tenant's request in
reasonable detail within fifteen (15) days thereafter. For purposes of this
Section 14, "minor improvements" shall be defined as those improvements costing
no more than Five Thousand ($5,000.00) Dollars.
15. Mechanics' Lien. Tenant shall not, in the making of any repairs
---------------
or alterations pursuant to the provisions of Section 14 hereof, suffer or permit
any mechanic's,
16
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laborer's or materialman's lien to be filed against the Premises, Building, Land
or any part thereof by reason of labor or materials supplied or claimed to have
been supplied to Tenant; and if any such limb shall be filed, Tenant, within
fifteen (15) days after notice of filing, shall cause it to be discharged of
record.
16. Use of Premises. Tenant may use and occupy the Premises only for
---------------
the express and limited purposes listed in Section 1 of this Lease, and the
Premises shall not be used or occupied, in whole or in part, for any other
purpose without the prior written consent of Landlord. Tenant shall not commit
or suffer any waste upon the Premises or Building, or any nuisance or any other
act which may disturb the quiet enjoyment of any other tenant in the Building or
the Business Park.
Tenant will not dump, flush, or in any way introduce any hazardous
substances or any other toxic substances into the public sanitary sewer system
serving the Premises; nor generate, store or dispose of hazardous substances on
the Premises or from the Premises to any other location without the prior
written consent of Landlord and then only in compliance with the Comprehensive
Environmental Response, Compensation and Liability Act, as amended 42 U.S.C.
9601 et seq. ("CERCLA"), and all other applicable laws, ordinances and
regulations. Tenant shall notify Landlord of any incident which would require
the filing of a notice under applicable federal, state or local environmental
protection law (collectively "environmental laws"). "Hazardous substances" as
used in this Section shall mean "hazardous substances" as defined in CERCLA and
any regulations adopted pursuant thereto. If any such materials and/or
substances are found on the Land or Building, the obligation and cost for the
clean up shall be upon Landlord unless Tenant contributed or was responsible for
the existence of such hazardous material or substance on the Land or Building,
in which event the Tenant shall be responsible therefor.
Tenant shall, protect, indemnify and save Landlord harmless from and
against any and all liability, loss, damage, cost or expense that Landlord may
suffer or incur as a result of any claims, demands, damages, losses,
liabilities, costs, charges, suits, orders, judgments or adjudications asserted,
assessed, filed or entered against Landlord by any third party, including any
governmental authority, arising from the alleged deposit, storage, disposal,
burial, dumping, injecting, spilling, leaking or other use, placement or release
in, on or affecting the Premises or any adjoining property owned by Landlord of
a hazardous substance or otherwise arising from any other alleged violation of
any environmental law, including, but not limited to, liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties, or liability for personal injury or property damage.
17. Rules and Regulations. Tenant covenants and agrees that Tenant,
---------------------
its employees, agents, invitees, licensees and other visitors, shall observe
faithfully, and comply strictly with, such reasonable Rules and Regulations as
Landlord or Landlord's agents may, after 30 days written notice to Tenant, from
time to time adopt with respect to the buildings and common areas in the
Business Park and which are uniformly enforced by Landlord against all other
Building tenants. Any rules and regulations currently adopted by Landlord are
attached hereto as Exhibit C.
17
<PAGE>
18. Governmental Regulations. Tenant shall, in the use and occupancy
------------------------
of the Premises, comply with all applicable laws, ordinances, notices and
regulations of all governmental and municipal authorities, and with the
regulations of the insurers of the Premises. Tenant shall keep in force at all
times all licenses, consents and permits necessary for the lawful conduct of
Tenant's business at the Premises.
19. Signs. Landlord, at its expense, shall construct one (1) standard
-----
Business Park identification sign for Tenant upon the exterior of the Premises
at a location to be selected by Landlord. Except for signs which are located
wholly within the interior of the Premises and which are not visible from the
exterior thereof, no signs shall be erected by Tenant anywhere upon the
Premises, Building or Land.
20. Landlord's Entry. Landlord and its agents, contractors and
----------------
invitees shall have the right to enter the Premises at all reasonable times to
inspect the same, to exhibit same to prospective purchasers, tenants and
mortgagees, and to make any necessary repairs thereto. Landlord shall not be
liable in any manner to Tenant by reason of such entry or the performance of
repair work in the Premises and the obligations of Tenant hereunder shall not
thereby be affected; however, Landlord agrees (except in the case of Tenant's
default hereunder) that all repair work (excepting only emergency work or work
which must, in Landlord's judgment, be performed on an urgent basis) by Landlord
shall be performed in a reasonable manner at reasonable times.
21. Indemnification. (A) Tenant shall indemnify Landlord from and
---------------
against any and all losses, costs (including reasonable counsel fees), claims,
suits, actions and causes of action, whether legal or equitable, sustained or
arising by reason of (a) Tenant's default in any of its obligations hereunder,
or (b) any act or omission of Tenant of any of its officers, agents, employees
or invitees brought by any person or persons whomsoever, arising out of Tenant's
occupancy or use of the Premises.
(B) Landlord shall indemnify Tenant from and against any and all
losses, costs (including reasonable counsel fees) claims, suits, actions and
causes of action, whether legal or equitable, sustained or arising by reason of
any act or omission of Landlord or any of its officers, agents, employees or
invitees brought by any person or persons whosoever, arising out of Landlord
ownership or control of the Building or Common Facilities.
22. Curing Tenant's Defaults. If Tenant shall default in performing
------------------------
any of its obligations hereunder, Landlord may (but shall not be so obliged), in
addition to Landlord's other rights and remedies and without waiver of such
default, cure such default on behalf of Tenant (and, if deemed necessary by
Landlord, enter and possess the Premises), provided that Landlord shall have
first given Tenant written notice of such default and Tenant shall have failed
within ten (10) days following said notice to cure or diligently to pursue the
cure of said default (which notice and opportunity to cure shall not be required
in case of emergency). Tenant, upon demand of Landlord, shall reimburse Landlord
of all costs (including reasonable counsel fees) incurred by Landlord with
respect to Landlord's efforts to cure the same, which costs shall be deemed
Additional Rent hereunder.
23. Default.
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<PAGE>
a. If (i) after five (5) days prior written notice from
Landlord, Tenant fails to pay any installment of Fixed Rent when due (provided
that written notice will not be required more than twice in a calendar year),
(ii) Tenant fails to pay any Additional Rent within ten (10) days after written
notice that same has become due, (iii) Tenant fails to observe or perform any of
Tenant's other obligations herein contained and such failure continues for more
than thirty (30) days after written notice from Landlord and, if such default is
of a type that cannot be cured within thirty (30) days, such additional time so
long as Tenant is diligently proceeding to cure, (iv) Tenant makes an assignment
for the benefit of creditors, (v) Tenant commits an act of bankruptcy or files a
petition or commences any proceeding under any bankruptcy or insolvency law,
(vi) a petition is filed or any proceeding is commenced against Tenant under any
bankruptcy or insolvency law and is not dismissed within sixty (60) days, (vii)
Tenant is adjudicated a bankrupt, (viii) a receiver or other official is
appointed for Tenant or for a substantial part of Tenant's assets or for
Tenant's interest in this Lease, or (ix) any attachment or execution is filed or
levied against a substantial part of Tenant's assets or Tenant's interests in
this Lease or any of Tenant's property in the Premises, then, in any such event,
an Event of Default shall be deemed to exist and Tenant shall be in default
hereunder, and, at the option of Landlord: (a) Landlord may accelerate the
balance of the Fixed Rent and all Additional Rent and all other sums to which
Landlord is entitled hereunder and declare the same to be immediately due and
payable; or (b) this Lease and the Term shall, without waiver of Landlord's
other rights and remedies, terminate without any right of Tenant to save the
forfeiture. Any acceleration of the rent by Landlord shall not constitute a
wavier of any right or remedy of Landlord, and if Tenant shall fail to pay the
accelerated rent upon Landlord's demand, then Landlord may thereafter terminate
this Lease, as aforesaid. Immediately upon such termination by Landlord,
Landlord shall have the right to recover possession of the Premises pursuant to
legal process, including the breaking of locks and replacing of locks as
authorized by the court, and removing Tenant's and any third party's property
therefrom, and making any disposition thereof as Landlord may deem commercially
reasonable. In the event that Landlord intends to use the remedy of Confession
of Judgement as set forth in subsection 23 (d) hereof, it shall first give
Tenant fifteen (15) days prior written notice of its intention to do so.
b. Following such termination, Landlord shall have the
unrestricted right to lease the Premises or any part thereof to any person and
pursuant to any terms as Landlord may elect, but Landlord shall have no
obligations to rent the Premises so long as Landlord (or any related entity) has
other comparable vacant space available for leasing in the general geographical
areas of the Premises.
c. No act or forbearance by Landlord shall be deemed a waiver
or election of any right or remedy by Landlord, with respect to Tenant's
obligations hereunder, unless and to the extent that Landlord shall execute and
deliver to Tenant a written instrument to such effect, and any such written
waiver by Landlord shall not constitute a waiver or relinquishment for the
future of any obligation of Tenant. Landlord's acceptance of any payment from
Tenant (regardless of any endorsement on any check or any writing accompanying
such payment) may be applied by Landlord to Tenant's obligations then due
hereunder, in any priority as Landlord may elect, and such acceptance by
Landlord shall not operate as an accord and satisfaction or constitute a waiver
of any right or remedy of Landlord with regard to Tenant's obligations
hereunder.
19
<PAGE>
d. FOR THE PURPOSE OF PROCURING POSSESSION OF THE PREMISES WHEN
THE TERM SHALL END BY EXPIRATION OR BY TERMINATION THEREOF ON ACCOUNT OF
TENANT'S DEFAULT, TENANT HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, AS ATTORNEY
FOR TENANT AND ALL PERSONS CLAIMING UNDER OR THROUGH TENANT, TO SIGN AN
AGREEMENT FOR ENTERING IN ANY COMPETENT COURT AN ACTION IN EJECTMENT FOR
POSSESSION OF THE PREMISES AND TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
TENANT, AND AGAINST ALL PERSONS CLAIMING UNDER OR THROUGH TENANT, FOR THE
RECOVERY BY LANDLORD OF POSSESSION OF THE SAME, WITHOUT ANY STAY OF EXECUTION,
FOR WHICH THIS LEASE, OR A COPY THEREOF VERIFIED BY AFFIDAVIT, SHALL BE A
SUFFICIENT WARRANT: AND THEREUPON A WRIT OF POSSESSION MAY RE ISSUED FORTHWITH,
WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER. TENANT HEREBY RELEASES LANDLORD
FROM ALL ERRORS AND DEFECTS WHATSOEVER IN ENTERING SUCH ACTION AND JUDGMENT AND
IN CAUSING SUCH WRIT OR WRITS TO BE ISSUED, AND HEREBY AGREES THAT NO WRIT OF
ERROR, APPEAL, PETITION TO OPEN OR STRIKE OFF JUDGMENT, OR OTHER OBJECTION SHALL
BE FILED OR MADE WITH RESPECT THERETO. IF FOR ANY REASON AFTER SUCH ACTION HAS
BEEN COMMENCED THE SAME SHALL BE DISCONTINUED OR POSSESSION OF THE PREMISES
SHALL REMAIN-IN OR BE RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT FOR THE
SAME DEFAULT OR ANY SUBSEQUENT DEFAULT TO BRING ONE OR MORE FURTHER ACTIONS AS
ABOVE PROVIDED TO RECOVER POSSESSION OF THE PREMISES.
e. TENANT, BEING FULLY AWARE OF THE RIGHT TO NOTICE AND A
HEARING CONCERNING THE VALIDITY OF ANY AND ALL CLAIMS THAT MAY BE ASSERTED
AGAINST TENANT BY LANDLORD BEFORE A JUDGMENT CAN BE ENTERED HEREUNDER OR BEFORE
POSSESSION MAY BE OBTAINED ON SUCH JUDGMENT, HEREBY WAIVES THESE RIGHTS AND
AGREES AND CONSENTS TO JUDGMENT BEING ENTERED BY CONFESSION IN ACCORDANCE WITH
THE TERMS HEREOF AND POSSESSION BEING OBTAINED ON SUCH JUDGMENT WITHOUT FIRST
BEING GIVEN NOTICE AND THE OPPORTUNITY TO BE HEARD ON THE VALIDITY OF THE CLAIM
OR CLAIMS UPON WHICH SUCH JUDGMENT FOR POSSESSION IS ENTERED.
24. Quiet Enjoyment. So long as Tenant is not in default under the
---------------
covenants and agreements of this Lease, Tenant's quiet and peaceful enjoyment of
the Premises shall not be disturbed or interfered with by Landlord or by any
person claiming by, through or under Landlord.
25. Assignment and Subletting. Tenant shall be permitted an absolute
-------------------------
right to assign or sublet all or any part of the Premises to any entity in
control of, controlled by or under common control with Tenant, provided that
Tenant shall remain obligated under the Lease to Landlord. As to other
assignments or sublettings, Tenant shall not assign, pledge, mortgage or
otherwise transfer or encumber this Lease, nor sublet all or any part of the
Premises or permit the
20
<PAGE>
same to be occupied or used by anyone other than Tenant or its employees without
Landlord's prior written approval. Notwithstanding the foregoing, Tenant may not
sublet less than 4,000 square feet of the Premises. It will not be unreasonable
for Landlord to withhold consent if the reputation financial responsibility or
business of a proposed assignee or subtenant is unsatisfactory to Landlord, or
if Landlord deems such business not to be consonant with that of other tenants
in the Building, or if the intended use by the proposed assignee or subtenant
conflicts with any commitment made by Landlord to any other tenant in the
Building.
Tenant's request for approval shall be in writing and contain the
name, address, and description of the business of the proposed assignee or
subtenant, its most recent financial statement and other evidence of financial
responsibility, its intended use of the Premises, and the terms and conditions
of the proposed assignment or subletting.
Within ten (10) days from receipt of such request Landlord shall
either: (a) grant or refuse consent; or (b) elect to require Tenant (i) to
execute an assignment of lease or sublease of Tenant's interest hereunder to
Landlord or its designee upon the same terms and conditions as are contained
herein, together with an assignment of Tenant's interest as sublessor in any
such proposed sublease, or (ii) if the request is for consent to a proposed
assignment of this Lease, to terminate this Lease and the term hereof effective
as of the last day of the third month following the month in which the request
was received.
Each assignee or sublessee of Tenant's interest hereunder shall assume
and be deemed to have assumed this Lease and shall be and remain liable jointly
and severally with Tenant for all payments and for the due performance of all
terms, covenants, conditions and provisions herein contained on Tenant's part to
be observed and performed. No assignment shall be binding upon Landlord unless
the assignee shall deliver to Landlord an instrument in recordable form
containing a covenant of assumption by the assignee, but the failure or refusal
of an assignee to execute the same shall not release assignee from its liability
as set forth herein.
Any assignment or subletting shall terminate any right in Tenant (as
may otherwise be provided for herein) to renew or extend the Term of this Lease
or any right of expansion to new or additional space or any right of first
refusal or first offer with respect to additional space, and shall likewise
terminate and render void and of no effect any prior exercise of any of the
rights enumerated above (except and only to the extent that a renewal term is
then in effect).
Any consent by Landlord hereunder shall not constitute a waiver of
strict future compliance by Tenant of the provisions of this Section 25 or a
release of Tenant from the full performance by Tenant of any of the terms,
covenants, provisions, or conditions in this Lease contained.
26. Subordination; Attornment.
-------------------------
a. This Lease is and shall be subject and subordinate at all
times to any lease under which Landlord is in control of the Premises, to the
rights of the owners of the Building and Land, to all mortgages and other
encumbrances now or hereafter placed upon the Premises or the Building and to
any and all amendments to or modifications of any such lease,
21
<PAGE>
ownership right or mortgage, without the necessity of any further instrument or
act on the part of Tenant to effectuate such subordination. Tenant shall from
time to time execute and deliver within ten (10) days following the request of
Landlord and Landlord's mortgagee, grantee or lessor, recordable instruments in
form satisfactory to the holder of such prior right evidencing such
subordination and Tenants' agreement to attorn to such holder. Notwithstanding
the foregoing, any mortgagee may at any time subordinate its mortgage to this
Lease, without Tenant's consent, by notice in writing to Tenant, whereupon this
Lease shall be deemed prior to such mortgage without regard to their respective
dates provided that, prior to any subsequent subordination by Tenant becoming
effective, the lender or mortgagee shall have delivered to Tenant an executed
non-disturbance agreement in form reasonably acceptable to mortgagee.
b. If any successor in interest, including but not limited to,
a lessor of a superior lease or the holder, now or hereafter, of a superior
mortgage, shall succeed to Landlord's estate in the Building or the rights of
Landlord under this Lease, whether through purchase, operation of law,
possession or foreclosure action or delivery of a new lease or deed or
otherwise, then-at the election of such party so succeeding to Landlord's rights
(herein sometimes called "Successor Landlord"), Tenant shall attorn to and
recognize such Successor Landlord as Tenant's landlord under this Lease and
shall within ten (10) days of such written request, execute, acknowledge and
deliver any instrument that such Successor Landlord may reasonably request to
evidence such attornment, provided only that such Successor Landlord agrees not
to disturb Tenant's possession under the Lease so long as Tenant is not in
default hereunder. Tenant hereby irrevocably appoints such Successor Landlord as
Tenant's attorney-in-fact to execute and deliver such instrument for and on
behalf of Tenant, such appointment being coupled with an interest. To the extent
permitted by law, Tenant hereby waives any right Tenant may have under any
present or future law to terminate this Lease or surrender the Premises by
reason of the institution of any proceeding to terminate a superior lease or
action to foreclose a superior mortgage, and this Lease shall not be affected by
any such proceeding or action unless and until the lessor of the superior lease
or holder, now and hereafter, of the superior mortgage, elects in such
proceeding or action to permit the termination of this Lease by the Tenant.
27. Tenant's Certificates. Tenant shall from time to time, within
---------------------
five (5) days after Landlord's request, execute and deliver to Landlord a
recordable written instrument (s) certifying that this Lease is unmodified and
in full effect (or if there have been modifications, that it is in effect as
modified), the dates to which rental charges have been prepaid by Tenant, if
any, whether or not Landlord is in default of any of its obligations hereunder,
and covering such other matters as Landlord may reasonably request. Tenant
agrees that such statement may be relied upon by any mortgagee, purchaser or
assignee of Landlord's interest in this Lease, the Building or Land. Upon
Landlord's written request from time to time, but not more than twice during any
Lease Year, Tenant shall promptly furnish Landlord financial statements
evidencing Tenant's (and/or its Guarantor, if any) then current financial
condition.
28. Acceptance; Surrender. By entry and possession of the Premises,
---------------------
Tenant thereby acknowledges that Tenant has examined the Premises and accepts
the same as being in the condition called for by this Lease. Tenant shall, at
the end of the Term, promptly surrender the Premises in good order and condition
and in conformity with the applicable provisions of this Lease, excepting only
reasonable wear and tear and damage by fire or other insured casualty.
22
<PAGE>
29. Holding Over. This Lease shall expire absolutely and without
------------
notice on the last day of the Term, provided that if Tenant, with the prior
written consent of Landlord, retains possession of the Premises or any part
thereof after the termination of this Lease by expiration of the Term or
otherwise, a month-to-month tenancy shall be deemed to exist, and Tenant shall
continue to pay the Fixed Rent and Additional Rent due hereunder. If such
holding over exists without Landlord's prior written consent, Tenant shall pay
Landlord, as partial compensation for such unlawful retention, an amount
calculated on a per diem basis for each day of such continued unlawful
retention, equal to 150% of the Base Rent for the time Tenant thus remains in
possession. Such payments for unlawful retention shall not limit any rights or
remedies of Landlord resulting by reason of the wrongful holding over by Tenant
or create any right in Tenant to continue in possession of the Premises.
30. Notices. All notices, requests and consents herein required or
-------
permitted from either party to the other shall be in writing and shall be sent
by personal delivery, nationally recognized courier guaranteeing overnight
delivery, facsimile (with receipt confirmed) or by mailing the same by
registered or certified mail, postage prepaid, return receipt requested,
addressed to Landlord at its address aforesaid, with a copy to any mortgagee
designated by Landlord, or, as the case may be, addressed to Tenant at its
address aforesaid, or to such other address as the party to receive same may
designate by notice to the other. All such notices, requests and other
communications shall be deemed to have been sufficiently given for all purposes
on the date of personal delivery, upon confirmation of receipt of facsimile, on
the day after the date of deposit with a courier guaranteeing overnight
delivery, or if deposited in the United States mail, the date when the notice is
either received or rejected by the addressee.
31. Broker. Tenant represents and warrants to Landlord that all of
------
Tenant's dealings in regard to the Premises have been solely with Brandywine
Realty Services Corporation and Coldwell Banker Commercial Real Estate Group,
Inc., that no other broker, agent or party has shown the Premises to Tenant or
negotiated with Tenant in regard thereto.
32. Definition of Parties. The word "Landlord" is used herein to
---------------------
include the Landlord named above and any subsequent person who succeeds to the
rights of Landlord herein each of whom shall have the same rights and remedies
as he would have had had he originally signed this Lease as Landlord, and in all
events, Tenant shall look solely to the landlord's interest in the Land and
Building and rents derived therefrom for enforcement of any obligation hereunder
or by law assumed or enforceable against Landlord or such other person,
provided, however, that neither Landlord nor any successor to Landlord shall
have any liability hereunder after he ceases to hold a fee or leasehold interest
in the Premises, except for obligations which may have theretofore accrued. The
word "Tenant" is used herein to include the party named above as Tenant as well
as it: or their respective heirs, personal representatives, successors and
assigns, each of whom shall be under the same obligations, liabilities and
disabilities and have only such rights, privileges and powers as he would have
possessed had he originally signed this Lease as Tenant.
33. Entire Agreement; Interpretation. This Lease constitutes the
--------------------------------
entire agreement between the parties hereto with respect to the Premises and
there are no other agreements or understandings. This Lease shall not be
modified except by written instrument executed by both parties and any
cancellation surrender or amendment hereas without the
23
<PAGE>
cousins of any first mortgage to which this Lease has been collaterally assigned
shall be voidable at the option of said mortgage. The captions used herein are
for convenience only, and are not part of the Lease. This Lease shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania.
34. Parking. Throughout the term of this Lease, and any extension or
-------
expansion thereof, Landlord shall provide free parking for Tenant's non-
exclusive use at the rate of approximately five (5) parking spaces per 1,000
square feet of leased premises, all of which spaces shall be located on the
Land.
35. Condition of Leased Space. Landlord represents that, to the best
-------------------------
of its knowledge, the Building and Premises are free of hazardous substances.
If, during the term of this Lease or any extension or expansion thereof,
hazardous substances are discovered in or about the Building or the Premises
which were not caused by Tenant, its employees, agents or contractors, then
Landlord shall be responsible for and will indemnify Tenant against all costs
necessary to eliminate such hazardous substances in or about the Building or
Premises:
IN WITNESS WHEREOF, the parties hereto have executed this Lease, under
seal, as of the day and year first above written.
(CORPORATE SEAL) LANDLORD:
BRANDYWINE OPERATING
PARTNERSHIP, L.P.
By: Brandywine Realty Trust,
its general partner
ATTEST: /s/ By: /s/
----------------------------- -----------------------------------
(CORPORATE SEAL) TENANT:
NAVIANT TECHNOLOGY SOLUTIONS, INC.
ATTEST: /s/ By: /s/
----------------------------- -----------------------------------
24
<PAGE>
EXHIBIT "C"
BUILDING RULES AND REGULATIONS
LAST REVISION: AUGUST 1, 1997
Landlord reserves the right to rescind any of these rules and make such other
and further rules and regulations as in the judgment of Landlord shall from time
to time be needed for the safety, protection, care and cleanliness of the
Project, the operations thereof, the preservation of good order therein and the
protection and comfort of its tenants, their agents, employees and invitees,
which rules when made and notice thereof given to Tenant shall be binding upon
him in a like manner as if originally prescribed. Landlord will notify Tenant in
writing of any changes to the Building Rules and Regulations.
1. Sidewalks, entrances, passages, elevators, vestibules, stairways,
corridors, halls, lobby and any other part of the Building shall not be
obstructed or encumbered by any Tenant or used for any purpose other than
ingress or egress to and from each tenant's premises. Landlord shall have
the right to control and operate the common portions of the Building and
exterior facilities furnished for common use of the tenants (such as the
eating, smoking, and parking areas) in such a manner as Landlord deems
best.
2. No awnings or other projections shall be attached to the outside walls of
the Building without the prior written consent of Landlord. All drapes, or
window blinds, must be of a quality, type and design, color and attached in
a manner approved by Landlord.
3. No showcases or other articles shall be put in front of or affixed to any
part of the exterior of the Building, or placed in hallways or vestibules
without prior written consent of Landlord.
4. Rest rooms and other plumbing fixtures shall not be used for any purposes
other than those for which they were constructed and no debris, rubbish,
rags or other substances shall be thrown therein. Only standard toilet
tissue may be flushed in commodes. All damage resulting from any misuse of
these fixtures shall be the responsibility of the Tenant who, or whose
employees, agents, visitors, clients, or licensees shall have caused same.
5. No tenant, without the prior consent of Landlord, shall mark, paint, drill
into, bore, cut or string wires or in any way deface any part of the
Premises or the Building of which they form apart except for the reasonable
hanging of decorative or instructional materials on the walls of the
Premises.
6. Tenants shall not construct or maintain, use or operate in any part of the
project any electrical device, wiring or other apparatus in connection with
a loud speaker system or other sound/communication system which may be
heard outside the Premises. Any such communication system to be installed
within the Premises shall require prior written approval of Landlord.
7. No bicycles, baby carriages or other vehicles and no animals, birds or
other pets of any kind shall be brought into or kept in or about the
Building.
25
<PAGE>
8. No tenant shall cause or permit any unusual or objectionable odors to be
produced upon or permeate from its premises.
9. No space in the Building shall be used for the manufacture of goods for
sale in the ordinary course of business, or for sale at auction of
merchandise, goods or property of any kind.
10. No tenant may change the use of the premises without the prior written
approval of Landlord.
11. No tenant, or employees of Tenant, shall make any unseemly or disturbing
noises or disturb or interfere with the occupants of this or neighboring
buildings or residences by voice, musical instrument, radio, talking
machines, whistling, singing, or in any way. All passage through the
Building's hallways, elevators, and main lobby shall be conducted in a
quiet, business-like manner.
12. No tenant shall throw anything out of the doors, windows, or down corridors
or stairs of the Building.
13. Tenant shall not place, install or operate on the Premises or in any part
of the Project, any engine, stove or machinery or conduct mechanical
operations or cook thereon or therein except for: coffee machine, microwave
oven, vending machines, or place or use in or about the Premises or Project
any explosives, gasoline, kerosene oil, acids, caustics or any other
flammable, explosive, or hazardous material without prior written consent
of Landlord.
14. No smoking is permitted in the rest rooms, hallways, elevators, stairs,
lobby., exit and entrances vestibules, sidewalks, parking lot area except
for the designated exterior smoking area. All cigarette ashes and butts are
to be deposited in the containers provided for same, and not disposed of on
sidewalks, parking lot areas, or toilets within the Building rest rooms.
15. Tenants are not to install any additional locks or bolts of any kind upon
any door or window of the Building without prior written consent of
Landlord. Each tenant must, upon the termination of tenancy, return to the
Landlord all keys for the Premises, either furnished to or otherwise
procured by such tenant, and all security access card to the Building.
16. All doors to hallways and corridors shall be kept closed during business
hours except as they may be used for ingress or egress.
17. Tenant shall not use the name of the Building, Landlord or Landlord's Agent
in any way in connection with his business except as the address thereof.
Landlord shall also have the right to prohibit any advertising by Tenant,
which, in its sole opinion, tends to impair the reputation of the Building
or its desirability as a building for offices, and upon written notice from
Landlord, Tenant shall refrain from or discontinue such advertising.
26
<PAGE>
18. Tenants must be responsible for all Security Access cards issued to them,
and to secure the return of same from any employee terminating employment
with them. No person/company other than Building Tenants and/or their
employees may have Security Access cards unless Landlord grants prior
written approval.
19. All deliveries by vendors, couriers, clients, employees or visitors to the
Building which involve the use of a hand cart, hand truck, or other heavy
equipment or device must be made via the Freight Elevator. Tenant shall be
responsible to Landlord for any loss or damage resulting from any
deliveries made by or for Tenant to the Building.
20. Landlord reserves the right to inspect all freight to be brought into the
Building, and to exclude from the Building all freight or other material
which violates any of these rules and regulations.
21. Tenant will refer all contractors, contractor's representatives and
installation technicians, rendering any service on or to the premises for
Tenant, to Landlord for Landlord's approval and supervision before
performance of any contractual service or access to Building. This
provision shall apply to all work performed in the Building including
installation 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 portion
of the Building. Landlord reserves right to require that all agents of
contractors/vendors sign in and out of the Building.
22. Landlord reserves the right to exclude from the Building at all times any
person who is not known or does not properly identify himself to Landlord's
management or security personnel.
23. Landlord may require, at its sole option, all persons entering the Building
after 6 PM or before 7 AM, Monday through Friday and at any time on
Holidays, Saturdays and Sundays, to register at the time they enter and at
the time they leave the Building.
24. No space within the Building, or in the common areas such as the parking
lot, may be used at any time for the purpose of lodging, sleeping, or for
any immoral or illegal purposes.
25. No employees or invitees of Tenant shall use the hallways, stairs, lobby,
or other common areas of the Building as lounging areas during "breaks" or
during lunch periods.
26. Each tenant, before closing and leaving their premises, should lower the
blinds within their spaces.
27. No canvassing, soliciting or peddling is permitted in the Building or its
common areas by tenants, their employees, or other persons. Each tenant
shall cooperate to prevent same and shall report any such incident to
Landlord's management.
28. No mats, trash, or other objects shall be placed in the public corridors,
hallways, stairs, or other common areas of the Building.
27
<PAGE>
29. Tenant must place all recyclable items of cans, bottles, plastic and office
recyclable paper in appropriate containers provided by Landlord in each
tenant's space. Removable of these recyclable items will be by Landlord's
janitorial personnel.
30. Landlord does not maintain suite finishes which are non-standard, such as
kitchens, bathrooms, wallpaper, special lights, etc. However, should the
need arise for repair of items not maintained by Landlord, Landlord at its
sole option, may arrange for the work to be done at Tenant's expense.
31. Drapes installed by Tenant, which are visible from the exterior of the
Building, must be cleaned by Tenant, at its own expense, at least once a
year.
32. No pictures, signage, advertising, decals, banners, etc. are permitted to
be placed in or on windows in such a manner as they are visible from the
exterior, without the prior written consent of Landlord.
33. Tenant or Tenant's employees are prohibited at any time from eating or
drinking in hallways, elevators, rest rooms, lobby or lobby vestibules.
34. Tenant shall be responsible to Landlord for any acts of vandalism performed
in the Building by its employees, agents, invitees or visitors.
35. No tenant shall permit the visit to its Premises of persons in such numbers
or under such conditions as to interfere with the use and enjoyment of the
entrances, hallways, elevators, lobby or other public portions or
facilities of the Building and exterior common areas by other tenants.
36. Landlord's employees shall not perform any work or do anything outside of
their regular duties unless under special instructions from Landlord.
Requests for such requirements must be submitted in writing to Landlord.
37. Tenant agrees that neither Tenant nor its agents, employees, licensees or
invitees will interfere in any manner with the installation and/or
maintenance of the heating, air conditioning and ventilation facilities and
equipment.
38. Landlord will not be responsible for lost or stolen personal property,
equipment, money or jewelry from Tenant's area or common areas of the
Project regardless of whether such loss occurs when area is locked against
entry or not.
39. Landlord will not permit entrance to Tenant's Premises by use of pass key
controlled by Landlord, to any person at any time without written
permission of Tenant, except employees, contractors or service personnel
supervised or employed by Landlord.
40. Tenant and its agents, employees and invitees shall observe and comply with
the driving and parking signs and markers on the Building grounds and
surrounding areas.
28
<PAGE>
* * * * * * * * * * * * * * * * * *
Lease
414 North Orleans
Chicago, Illinois
* * * * * * * * * * * * * * * * * *
Between
MRJ Inc.
(Tenant)
and
Teachers Insurance and Annuity Association of America
(Landlord)
<PAGE>
Lease
414 North Orleans
Chicago, Illinois
<TABLE>
<CAPTION>
Page
----
<S> <C>
DEFINITIONS........................................................................................... iv
SCHEDULE 1............................................................................................ 1
1. LEASING AGREEMENT........................................................................... 2
2. RENT........................................................................................ 2
A. Kinds.................................................................................. 2
(1) Base Rent......................................................................... 2
(2) Operating Cost Share Rent......................................................... 2
(3) Tax Share Rent.................................................................... 2
(4) Additional Rent................................................................... 3
B. Payment of Operating Cost Share Rent and Tax Share Rent................................ 3
(1) Payment of Estimated Operating Cost Share Rent and Tax Share Rent................. 3
(2) Correction of Operating Cost Share Rent........................................... 3
(3) Correction of Tax Share Rent...................................................... 4
C. Definitions............................................................................ 4
(1) Taxes............................................................................. 4
(2) Operating Costs................................................................... 5
(3) Fiscal Year....................................................................... 6
(4) Tenant's Proportionate Share...................................................... 6
D. Rules of Interpretation and Computation of Base Rent and Rent Adjustments.............. 6
3. PREPARATION AND CONDITION OF PREMISES, POSSESSION AND SURRENDER OF PREMISES................. 9
4. PROJECT SERVICES............................................................................ 10
A. Heat and Air Conditioning.............................................................. 10
B. Elevators.............................................................................. 11
C. Electricity............................................................................ 11
D. Water.................................................................................. 11
E. Janitorial Service..................................................................... 12
F. Window Washing......................................................................... 12
G. Interruption of Service................................................................ 12
5. ALTERATIONS AND REPAIRS..................................................................... 13
6. USES OF PREMISES............................................................................ 15
7. BUILDING RULES AND GOVERNMENTAL REGULATIONS................................................. 15
8. CLAIMS; INSURANCE; LIABILITY................................................................ 15
9. FIRE AND OTHER CASUALTY..................................................................... 17
10. RIGHTS RESERVED TO THE LANDLORD............................................................. 18
A. Name................................................................................... 18
B. Signs.................................................................................. 18
C. Windows................................................................................ 19
</TABLE>
i.
<PAGE>
<TABLE>
<S> <C>
D. Service Contracts...................................................................... 19
E. Keys................................................................................... 19
F. Access for Repairs, etc................................................................ 19
G. Occupancy.............................................................................. 19
H. Rights to Conduct Businesses........................................................... 19
I. Heavy Equipment........................................................................ 19
J. Show Premises.......................................................................... 19
K. Close Project.......................................................................... 20
L. Substitution of Space.................................................................. 20
M. Use of Lock Box by Landlord............................................................ 20
N. Repairs and Alterations................................................................ 21
O. Mail Chutes............................................................................ 21
P. Other Rights........................................................................... 21
11. DEFAULT AND LANDLORD'S REMEDIES............................................................. 21
A. Defaults............................................................................... 21
B. Landlord's Remedies.................................................................... 23
12. HOLDOVER.................................................................................... 26
13. SUBORDINATION TO MORTGAGES, TRUST DEEDS AND GROUND LEASES................................... 26
A. Subordination.......................................................................... 13
B. Termination of Ground Lease or Foreclosure of Mortgage................................. 27
C. Security Deposit....................................................................... 27
D. Notice and Right to Cure............................................................... 28
14. ASSIGNMENT AND SUBLETTING BY TENANT......................................................... 28
15. SALE BY LANDLORD............................................................................ 31
16. ESTOPPEL CERTIFICATE........................................................................ 31
17. SECURITY DEPOSIT............................................................................ 31
18. EXCUSE OF EITHER PARTY'S INABILITY TO PERFORM; EITHER PARTY'S DEFAULT....................... 32
19. PERSONAL PROPERTY AND TENANT FIXTURES....................................................... 32
20. NOTICES..................................................................................... 32
21. QUIET POSSESSION............................................................................ 33
22. REAL ESTATE BROKER.......................................................................... 33
23. CONDEMNATION................................................................................ 33
24. SPRINKLERS.................................................................................. 34
25. MISCELLANEOUS............................................................................... 34
A. Covenants Binding on Successors........................................................ 34
B. Date Payments Are Due.................................................................. 34
C. Meaning of "Re-entry" and "Landlord"................................................... 34
D. Time Is of the Essence................................................................. 34
E. No Option.............................................................................. 34
F. Severability........................................................................... 34
G. Governing Laws......................................................................... 35
H. Lease Modification..................................................................... 35
I. No Oral Modification................................................................... 35
J. Litigation and Arbitration Costs....................................................... 35
</TABLE>
ii.
<PAGE>
<TABLE>
<S> <C>
K. Captions............................................................................... 35
L. Remedies and Rights May Be Exercised by Landlord in Its Own Name:
Authority to Execute This Lease........................................................ 35
M. Payments to Affiliates................................................................. 35
N. Entire Agreement....................................................................... 35
O. Landlord's Title....................................................................... 36
P. Light and Air Rights................................................................... 36
Q. Consents............................................................................... 36
R. Landlord's Agents...................................................................... 36
S. Terms "Landlord" and "Tenant".......................................................... 36
T. Rent Not Based on Income............................................................... 36
U. Exclusivity............................................................................ 36
V. No Recording by Tenant................................................................. 37
26. UNRELATED BUSINESS INCOME................................................................... 37
27. HAZARDOUS MATERIALS......................................................................... 37
28. EXCULPATORY PROVISIONS...................................................................... 38
29. EXTENSION OPTION............................................................................ 38
EXTENSION OPTION...................................................................................... 38
</TABLE>
APPENDIX A - PLAN OF THE PREMISES
APPENDIX B - CLEANING SCHEDULE
APPENDIX C - RULES AND REGULATIONS
APPENDIX D - INTENTIONALLY OMITTED
APPENDIX E - MORTGAGES CURRENTLY AFFECTING THE PROJECT
iii.
<PAGE>
DEFINITIONS
Section in which
Term Term is Defined
- ---------------------------------- --------------------
1. Additional Rent 2A(4)
2. Base Operating Costs 2A(2)
3. Base Rent 2A(1)
4. Base Taxes 2A(3)
5. Base Year 2A(2)
6. Building Preamble
7. Business hours 4A
8. Commencement Date 1
9. Corporate Base Rate 2D(3)
10. Equitable Adjustment 2C(2)
11. Excess Operating Costs 2A(2)
12. Excess Taxes 2A(3)
13. First 2D(3)
14. Fiscal year 2C(3)
15. Force Majeure 18
16. Ground Lease(s) 2C(2)
17. Holidays 4A
18. Included Capital Items 2C(2)
19. Land Preamble
20. Landlord Preamble (see also 25C)
21. Lease Preamble
22. Mortgage 138(3)
23. Mortgagee 138(3)
24. new premises 10(L)
25. Operating Cost Report 28(2)
26. Operating Cost Share Rent 2A(2)
27. Operating Costs 2C(2)
28. Premises Preamble
29. Project Preamble
30. Reconstruction Delays 9C
31. Re-enter, re-entry 25C
32. Rent Tax 2C(1)
33. Representations 25N
34. Required Improvements 9B
35. Schedule Preamble
36. Tax Report 2B(3)
37. Tax Share Rent 2A(3)
38. Taxes 2C(1)
39. Tenant Preamble
40. Tenant's Proportionate Share 2C(4)
41. Term 1
42. Termination Date 1
43. trust deed 138(3)
44. trustee 138(3)
45. Work 5A
iv.
<PAGE>
LEASE
414 NORTH ORLEANS
CHICAGO, ILLINOIS
THIS INDENTURE (this "Lease") is made as of the day ______ of
_____________, 1995 , between Teachers Insurance and Annuity Association of
America, a New York corporation (the "Landlord") and the tenant named in Item 1
of the Schedule (the "Tenant"). The term "Project" when used herein refers to
the land (the "Land") and the building (the "Building") currently known as
"Orleans Plaza" (including, without limitation, any and all easements adjacent
thereto) situated at the southwest corner of Orleans and Hubbard Streets,
Chicago, Illinois, together with the vehicular drives, and all other structures
and improvements now or hereafter located on the Land. "Premises" when used
herein refers to that part of the Project leased to Tenant.
The following Schedule (the "Schedule") is an integral part of this Lease.
SCHEDULE
1. Name of Tenant: MRJ Inc.
2. Floor(s) or room(s) of Premises: Fourth floor, Suite 401
3. Net Rentable Square Feat: 2,601 square feet
4. Tenant's use of Premises: general office purposes
5. Initial Base Rent (per year): $38,364.75 ($14.75 per rentable square foot)
6. Monthly Installments of Base Rent: $3,197.06
7. Tenant's Proportionate Share: 1.3938 (based on a total of 186,612 rentable
square feet in the Building and a total of 2,601 rentable square feet in
the Premises initially demised hereunder)
8. Rent Abatement: N/A
9. Security Deposit: $3,197.06
10. Tenant's address for notices before and after the possession date: c/o Ms.
Elaine White, Director of Administration, MRJ Inc., 10560 Arrowhead Drive,
Fairfax, Virginia 22030-7305
11. Tenant's Real Estate Broker used for this Lease: Scott Gordon c/o Anne
Anovitz Associates
12. Tenant Improvements, if any: None
13. Date Tenant Plans are due from Tenant including special work, if any: N/A
14. Commencement Date: October 1, 1995
15. Term/Termination Date: Three (3) years/ending September 30, 1998, thirty-
six (36) calendar months after the Commencement Date.
16. Base Year: 1995
<PAGE>
1. LEASING AGREEMENT. Landlord leases to Tenant, and Tenant leases from
Landlord, for the term (the "Term") set forth on the Schedule, commencing on the
commencement date (the "Commencement Date") set forth on the Schedule and ending
on the termination date (the "Termination Date") set forth on the Schedule,
unless sooner terminated or extended as herein provided, the Premises described
on the Schedule and outlined on the plan attached hereto and made a part hereof
as Appendix A. The Premises constitute a portion of the Building located on the
Land. As provisions of said Lease, Landlord and Tenant covenant and agree as
follows:
2. RENT.
A. Kinds. Tenant agrees to pay rent to Landlord's building manager at the
-----
office of the Project located at 414 North Orleans Street, Chicago, Illinois
60610 or to such other person or at such other place as Landlord from time to
time designates in a written notice to Tenant, with Tenant's check, or in coin
or currency which at the time of payment is legal tender for the payment of
public and private debts in the United States of America, the aggregate of the
following, all of which are rent reserved under this Lease:
(1) Base Rent to be paid in monthly installments in advance on or
---------
before the first day of each month of the Term of this Lease in the initial
amount set forth on the Schedule for the first Lease Year, provided that
the first monthly installment of Base Rent will be paid by the Tenant
concurrently with the execution of this Lease, and thereafter, the Base
Rent applicable to the second and third Lease Years shall be in accordance
with the following schedule:
Monthly Installment
Period Annual Base Rent of Base Rent
------------------- --------------------------- -------------------
Second Lease Year $39,665.25 ($15.25 x $3,305.44
2,601 rentable square feet)
Third Lease Year $40,965.75 (15.75 x $3,413.81
2,601 rentable square feet)
(2) Operating Cost Share Rent in an amount equal to the Tenant's
-------------------------
Proportionate Share of the excess of Operating Costs for the applicable
fiscal year of the Lease (the "Excess Operating Costs") over Operating
Costs for the base year (the "Base Year") set forth in the schedule (the
"Base Operating Costs"). Operating Cost Share Rent shall be paid monthly in
advance in an estimated amount, as adjusted by Landlord from time to time.
Definitions of Operating Costs, Tenant's Proportionate Share and the method
for billing and payment of operating Cost Share Rent are set forth in
Sections 2B and 2D.
(3) Tax Share Rent in an amount equal to the Tenant's Proportionate
Share of the excess of Taxes for the applicable fiscal year of the Lease
(the "Excess Taxes") over the Taxes for the Base Year (the "Base Taxes").
Tax Share Rent shall be paid monthly in advance in an estimated amount, as
adjusted by Landlord from time to time. Definition
2.
<PAGE>
of Taxes and the method for billing and payment of Tax Share Rent are set
forth in Sections 2B and 2D.
(4) Additional Rent consisting of all of the sums, liabilities,
----------------
obligations and other amounts (excepting Base Rent, Operating Cost Share
Rent and Tax Share Rent) which Tenant is required to pay or discharge
pursuant to this Lease (including, without limitation, any amounts which
this Lease provides shall be Tenant's cost or expense), together with
interest for late payment thereon, all as hereafter provided.
B. Payment of Operating Cost Share Rent and Tax Share Rent.
-------------------------------------------------------
(1) Payment of Estimated Operating Cost Share Rent and Tax Share
------------------------------------------------------------
Rent. Landlord shall estimate the Operating Costs and Taxes of the Project
----
from time to time each year. Such estimates may be revised by Landlord
whenever it obtains information relevant to making such estimates more
accurate. Such estimates will generally (but need not) be issued after the
beginning of a fiscal year and revised upon the determination of the final
real estate tax assessment or final real estate tax rate for the Project.
Within ten (10) days after notice from Landlord setting forth (a) an
estimate of operating Costs for a particular fiscal year, (b) the Base
Operating Costs, and (c) the resulting estimate of Excess Operating Costs
for such fiscal year, Tenant shall pay Landlord an amount equal to one-
twelfth (1/12th) of Tenant's Proportionate Share of such estimated Excess
Operating Costs for such fiscal year, multiplied by the number of months
that have elapsed in such fiscal year to the date of such payment, minus
payments of estimated Operating Cost Share Rent previously paid for said
period. Thereafter on the first day of each month, Tenant shall pay monthly
until a new estimate of Operating Costs is applicable, one-twelfth (1/12th)
of Tenant's Proportionate Share of the estimated Excess Operating Costs.
Within ten (10) days after notice from Landlord setting forth (a) an
estimate of Taxes for a particular fiscal year, (b) the Base Taxes, and (c)
the resulting estimate of Excess Taxes, Tenant shall pay Landlord an amount
equal to one-twelfth (1/12th) of Tenant's Proportionate Share of such
estimated Excess Taxes, multiplied by the number of months that have
elapsed in such fiscal year to the date of such payment, minus payments of
estimated Tax Share Rent previously paid for said period. Thereafter on the
first day of each month, Tenant shall pay monthly until a new estimate of
Taxes is applicable, one-twelfth (1/12th) of Tenant's Proportionate Share
of the estimated Excess Taxes.
(2) Correction of Operating Cost Share Rent. As soon as reasonably
possible after the end of each fiscal year, Landlord shall deliver to
Tenant a report (the "Operating Cost Report") setting forth (a) the actual
Operating Costs for the preceding fiscal year, (b) the Base Operating
Costs, (c) the amount of Operating Cost Share Rent due to Landlord for such
preceding fiscal year, and (d) the amount of Operating Cost Share Rent paid
by the Tenant in and allocable to such fiscal year. On or before twenty
(20) days after receipt of such report, Tenant shall pay to Landlord the
amount of operating Cost Share Rent due for the preceding fiscal year (or a
portion thereof if this Lease was not in
3.
<PAGE>
effect for the entire fiscal year) minus any payments made by Tenant for
such fiscal year. If Tenant's estimated payments of Operating Cost Share
Rent exceed the amount due Landlord for the fiscal year in question,
Landlord shall apply any such amount as a credit against Tenant's other
obligations under this Lease, or if the Term has expired or this Lease has
been terminated and Tenant has no further obligations under this Lease
(including any obligations which survive the expiration or termination of
this Lease), then Landlord shall refund any such amount to Tenant.
(3) Correction of Tax Share Rent. At any time during any fiscal year
----------------------------
when such information becomes available, Landlord shall deliver to Tenant a
report (the "Tax Report") setting forth (a) the actual Taxes for the
preceding fiscal year, (b) the Base Taxes, (c) the amount of Tax Share Rent
due to Landlord for such preceding fiscal year, and (d) the amount of Tax
Share Rent paid by the Tenant in and allocable to such fiscal year. On or
before twenty (20) days after receipt of such report, Tenant shall pay to
Landlord the amount of Tax Share Rent due for the preceding fiscal year (or
a portion thereof if this Lease was not in effect for the entire fiscal
year) minus any payments made by Tenant for such fiscal year. If Tenant's
estimated payments of Tax Share Rent exceed the amount due Landlord for the
fiscal year in question, Landlord shall apply any such amount as a credit
against Tenant's other obligations under this Lease, or if the Term has
expired or this Lease has been terminated and Tenant has no further
obligations under this Lease (including any obligations which survive the
expiration or termination of this Lease), then Landlord shall refund any
such amount to Tenant.
C. Definitions:
-----------
(1) Taxes. "Taxes" shall mean any and all federal, state and local
governmental taxes, assessments and charges of any kind or nature, whether
general, special, ordinary or extraordinary, which Landlord shall pay or
become obligated to pay because of or in connection with the ownership,
leasing, renting, management, control or operation of the Project or of the
personal property, fixtures, machinery, equipment, systems and apparatus
located therein or used in connection therewith. Taxes shall include,
without limitation, real estate taxes, personal property taxes, sewer
rents, water rents, assessments (special or otherwise), transit taxes and
ad valorem taxes and the Illinois Replacement Tax. Taxes shall also include
all fees, costs and expenses (including, without limitation, legal fees and
court costs) paid by Landlord in connection with protesting or contesting,
or seeking a refund or reduction of, any of the aforesaid Taxes, regardless
of whether the Landlord is ultimately successful. If at any time during the
term hereof, a tax or excise on rents or income or other tax however
described (the "Rent Tax") is levied or assessed by the United States or
the State of Illinois, or any political subdivision thereof, on account of
the rents hereunder or the interest of Landlord under this Lease, such Rent
Tax shall constitute and be included in Taxes, provided, however, that in
no event shall Tenant be obligated (a) to pay for any year any greater
amount as a result of such Rent Tax than would have been payable by Tenant
had the rentals paid to Landlord under all Project leases (being the
rentals upon which such taxes are imposed) been the sole taxable income of
Landlord for the year in question or (b) to pay or to reimburse Landlord
for any tax of any kind assessed against Landlord on
4.
<PAGE>
account of any such Rent Tax having been reimbursed to Landlord by Tenant
or any third party.
For the purpose of determining Taxes for any given fiscal year, the
amount to be included for such fiscal year (a) from special taxes or
assessments payable in installments, shall be the amount of the
installments (and any interest) due and payable during such fiscal year,
(b) from all other Taxes, shall be the amount accrued, assessed or
otherwise imposed for such fiscal year without regard to when any such
Taxes are payable, and (c) from any adjustment (including, without
limitation, a refund) to any Taxes by the taxing authority, when such
adjustment has resulted in, a corresponding adjustment payment by or to
Landlord, shall constitute an adjustment to Taxes for the fiscal year
during which such adjustment is made or received by Landlord, as the case
may be.
Taxes shall not include any net income (except Rent Tax as hereinabove
provided), capital, stock, succession, transfer, franchise, gift, estate or
inheritance taxes, unless the same shall be imposed in lieu of all or any
portion of Taxes.
(2) Operating Costs. "Operating Costs" shall mean any expenses, costs
---------------
and disbursements (other than Taxes) of every kind and nature, paid or
incurred by Landlord in connection with the ownership, leasing, management,
maintenance, operation and repair of all or any part of the Project
(adjusted for vacancy as hereafter provided) and of the personal property,
fixtures, machinery, equipment, systems and apparatus located in the
Project or used in connection therewith. Operating Costs shall not include
(a) costs of alterations of tenant premises; (b) costs of capital
improvements, except for any capital improvements which are intended, to
reduce Operating Costs, and any capital improvements which Landlord is
required to make pursuant to, or which Landlord shall deem necessary to
keep the Project in compliance with, all applicable governmental rules and
regulations applicable from time to time to the Project (the foregoing
capital improvements that are included within Operating Costs are
collectively referred to herein as the "Included Capital items"); (c)
depreciation (except on any Included Capital items); (d) interest and
principal payments on mortgages or any rental payments on any ground or
other underlying leases subject to which Landlord holds its interest in the
Project (hereinafter, referred to individually as a "Ground Lease" and
collectively as "Ground Leases"), and other debt costs, if any; (e) real
estate brokers' leasing commissions or compensations; (f) any cost or
expenditure (or portion thereof) for which Landlord is reimbursed, whether
by insurance proceeds or otherwise (Operating Cost Share Rent and Tax Share
Rent provided for in any tenant leases are not reimbursements); and (g) the
cost of any kind of service furnished to any other office tenant of the
Project which Landlord does not make available to Tenant hereunder. If
during all or any portion of any fiscal year the Project is not fully
rented and occupied by tenants, Landlord may elect to make an appropriate
adjustment (an "Equitable Adjustment") of Operating Costs for such fiscal
year, employing sound accounting and management principles, to determine
the Operating Costs that would have been paid or incurred by Landlord had
the Project been fully rented and occupied for the entire fiscal year, and
the amount so determined shall be deemed to have been the operating Costs
for such fiscal year. The foregoing process is illustrated by the following
hypothetical which assumes (i) the Building has ten
5.
<PAGE>
floors; (ii) the Tenant occupies one floor and therefore, Tenant's
Proportionate Share is ten percent (10%); (iii) the other nine floors are
vacant; (iv) the cost of providing a particular service for Tenant's floor
is $1,000. If Tenant were to pay Tenant's Proportionate Share of the cost
of such service for the Building it would pay $100. Instead, Landlord shall
estimate the cost of such service for the Building if it were one hundred
percent (100% occupied. If there would be any savings in the variable costs
per floor of providing the service because such service would be provided
for all ten floors, instead of one floor, these should be taken into
account by Landlord in making its estimate. If some savings would exist,
the estimate of the Landlord would be an amount that is less than the
amount obtained by multiplying the number of floors in the Building by the
cost of providing such service to one floor (10 x $1000); for example,
$9,000. The amount of Landlord's estimate ($9,000) less the actual cost
incurred by the Landlord in providing the service ($1000) would equal the
Equitable Adjustment ($8000). The Equitable Adjustment would be added to
the accrual cost and Tenant would then pay Tenant's Proportionate Share of
this amount, that is, Tenant would pay $9,000 times 10t, which equals $900.
Landlord shall not be entitled to receive from all tenants of the Project
an amount in excess of 100 of actual Operating Costs for any fiscal year.
If Landlord is not furnishing any particular work or service (the cost
of which if performed by Landlord would constitute an Operating Cost) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord for all or any portion of a fiscal year,
Operating Costs for such fiscal year shall be deemed to be increased by an
amount equal to the additional Operating Costs which reasonably would have
been incurred during such fiscal year by Landlord if it had, at its own
expense, furnished such work or service to such tenant.
Notwithstanding anything contained herein to the contrary, the
provisions of this Section 2C(2) with respect to an Equitable Adjustment of
Operating Costs for vacancy, or as a result of the performance by tenants
of certain services, shall apply only to Operating Costs which are variable
and which increase as occupancy in the Project increases and shall not
apply to any Operating Costs which do not vary with the amount of occupancy
in the Project.
(3) Fiscal Year. The term "fiscal year" shall mean any 12-month
-----------
period (including, without limitation, the calendar year) which Landlord
may from time to time select as the fiscal year of the Project, provided
that the first fiscal year and the last fiscal year of the Term may contain
less than twelve (12) months.
(4) Tenant's Proportionate Share. "Tenant's Proportionate Share"
------------------------------
shall mean the percentage set forth as Item 7 on the Schedule.
D. Rules of Interpretation and Computation of Base Rent and Rent
-------------------------------------------------------------
Adjustments:
- -----------
(1) If this Lease commences on other than the first day of a month,
the Base Rent, Operating Cost Share Rent and Tax Share Rent for the month
in which this Lease so begins shall be prorated based upon the number of
days of the Term falling within such month. If the Term of this Lease
commences on any day other than the first day of
6.
<PAGE>
the designated fiscal year, or if the Term of this Lease ends on any day
other than the last day of the designated fiscal year, any Operating Cost
Share Rent and Tax Share Rent due to Landlord with respect to such fiscal
year shall be prorated based on the number of days in the Term falling
within such fiscal year.
(2) All rent shall be paid to Landlord without deduction or offset.
The Tenant's covenants to pay rent shall be independent of every other
covenant set forth in this Lease.
(3) Arty sum due from Tenant to Landlord not paid when due shall bear
interest from the date due until the date paid at the annual rate equal to
the lesser of: (i) the highest lawful rate, or (ii) a rate of interest
equal to the sum of three percent (3%) plus the "Corporate Base Rate" at
the time of such default. The phrase "Corporate Base Rate" means that rate
of interest most recently announced by the First National Bank of Chicago,
or its successor (collectively, the "First") as the corporate base rate,
changing automatically and simultaneously with each announced change by the
First in the Corporate Base Rate, such change to be effective as of and on
the date announced by the First as the effective date for the change in the
Corporate Base Rate. A certificate made by an officer of the First stating
the Corporate Base Rate in effect on a certain day, or Corporate Base Rates
in effect during a certain period, shall, for purposes of this Lease, be
conclusive evidence of the First's Corporate Base Rate or Rates on said day
or during such period. In the event that the First ceases to use the term
"Corporate Base Rate" in setting a base rate of interest for commercial
loans, then the Corporate Base Rate herein shall be determined by reference
to the rate used by the First as a base rate of interest for commercial
loans as the same shall be designated by the First to the Landlord. The
payment of such interest shall not excuse or cure any default of Tenant
under this Lease.
(4) If Tenant is in default of any of its obligations under this
Lease, Tenant shall not be entitled to any refund of any sum which may
otherwise be due it by application of any provision of this Lease until any
and all of Tenant's defaults under this Lease are cured by Tenant.
(5) If changes are made to this Lease or to the Project changing the
number of rentable square feet contained in the Premises or in the Project,
Tenant's Proportionate Share shall be appropriately adjusted and the
computations of rent shall be appropriately adjusted so as to take into
account the different Tenant's Proportionate Share figures applicable
during each portion of the applicable fiscal year.
(6) Landlord shall maintain books and records in accordance with
sound accounting and management practices, reflecting the operating Costs
and Taxes. In the event of any dispute as to any operating Cost Share Rent
or Tax Share Rent, Tenant shall have the right to inspect Landlord's
accounting records relative to Operating Costs and Taxes at Landlord's
accounting office upon reasonable prior notice during normal business hours
during the thirty (30) days following the furnishing by Landlord to Tenant
of either of the Operating Cost Report and the Tax Report. Unless Tenant
shall take written exception to any item in any such report within said
thirty (30) day period, such report shall be considered as final and
accepted by Tenant. Any payment due to the
7.
<PAGE>
Landlord as shown on the Operating Cost Report or the Tax Report, whether
or not written exception is taken thereto, shall be made by the Tenant
within twenty (20) days after the Landlord shall have submitted the
operating Cost Report or the Tax Report (as the case may be) without
prejudice to any such written exception. If Tenant makes such timely
written exception, a certification as to the proper amount of Operating
Cost Share Rent and Tax Share Rent shall be made by Landlord's independent
certified public accountant, which shall be final and conclusive. Tenant
agrees to pay the cost of such certification unless it is determined that
Landlord's original determination of the aggregate of Taxes and Operating
Costs was in error by more than five percent (5%) of said amounts.
(7) In the event of the termination of this Lease by expiration of
the stated Term or for any other cause or reason whatsoever prior to the
determination of Operating Cost Share Rent, Tax Share Rent or Additional
Rent, Tenant's agreement to pay any such sum shall survive termination of
the Lease and Tenant shall pay any such amount due to Landlord within
fifteen (15) days after being billed therefor. Tenant's obligation to pay
Base Rent shall also survive the expiration or termination of this Lease.
In the event of the termination of this Lease by expiration of the stated
Term or for any other cause or reason whatsoever, except the default by
Tenant under any of the terms or provisions of this Lease, prior to the
determination of Operating Cost Share Rent or Tax Share Rent as hereinabove
set forth, Landlord's agreement to refund any excess in the amount of the
estimated payments made by Tenant on account of Operating Cost Share Rent
or Tax Share Rent over the actual amount thereof accruing or payable up to
the time of the termination or expiration shall survive termination of the
Lease and Landlord shall pay the amount due to Tenant within fifteen (15)
days of Landlord's determination of such amount.
(8) No calculation, determination or payment of Operating Cost Share
Rent or Tax Share Rent, by virtue of the operation of the rent adjustment
provisions under this Section 2 shall result in the payment by Tenant in
any fiscal year during the Term of less than the Base Rent shown on the
Schedule.
(9) If any Operating Cost though paid in one fiscal year, relates to
more than one fiscal year, at the option of the Landlord, such Operating
Cost may be proportionately allocated among such related fiscal years. If
any Operating Cost relates to more than one parcel of property, at the
option of the Landlord, such Operating Cost may be proportionately
allocated among all parcels of property to which it relates.
(10) All payments made with respect to Operating Cost Share Rent or
Tax Share Rent (including any monthly payments made on the basis of
Landlord's estimates thereof) may be commingled and need not be segregated
by the Landlord and may be held and utilized by the Landlord without
payment to the Tenant of interest or any sums for the use of any of said
amounts.
8.
<PAGE>
3. PREPARATION AND CONDITION OF PREMISES, POSSESSION AND SURRENDER OF
PREMISES.
A. Landlord is leasing the Premises to Tenant "as is," without any
representations or warranties of any kind (including, without limitation, any
express or implied warranties of merchantability, fitness or habitability) and
without any obligation on the part of the Landlord to alter, remodel, improve,
repair, decorate or clean the Premises or any part thereof.
B. During the term of this Lease, Tenant shall maintain the Premises in
as good condition as when Tenant took possession, or as when completed after
possession in the event that Tenant takes possession prior to the Completion
Date (loss or damage caused by action of the elements, Acts of God and the
public enemy, ordinary wear and fire and other casualty insured against by
Landlord excepted), failing which Landlord may but need not restore the Premises
to such good condition and Tenant shall pay the cost thereof. At the termination
of this Lease or at the termination of Tenant's right to possession without
termination of this Lease, Tenant shall, subject to Sections 3C and 3D below,
return the Premises to Landlord broom clean and in good condition as described
in the immediately preceding sentence or Landlord may, but need not, restore the
Premises to such good condition and Tenant shall pay the cost thereof.
C. Unless otherwise provided by written agreement, signed by Landlord,
all Work (hereinafter defined), partitions, hardware, light fixtures and other
fixtures (except trade fixtures and movable furniture and equipment belonging to
Tenant) in or upon the Premises, whether placed there by Landlord or Tenant,
shall be surrendered with the Premises at the termination of this Lease, by
lapse of time or otherwise, or at the termination of Tenant's right to
possession without termination of this Lease, and shall become Landlord's
property without compensation to Tenant; provided, however, that if prior to any
such termination of the Lease, or of the right to possession, or within ten (10)
days thereafter, Landlord so directs by written notice, Tenant shall promptly
remove any Work, partitions, hardware, light fixtures or other fixtures placed
in or upon the Premises by Tenant and designated in such notice and repair any
damage to the Premises caused by such removal, failing which Landlord may remove
the same and repair the Premises and Tenant shall pay the cost thereof to
Landlord upon demand.
D. Tenant shall also remove its furniture, movable equipment, trade
fixtures and all other items of personal property from the Premises prior to the
end of the Term or any extension thereof, or within thirty (30) days after the
early termination of this Lease for any reason, or of the termination of
Tenant's right of possession; and if Tenant does not remove such property, at
Landlord's election: (i) Tenant shall be conclusively presumed to have conveyed
the same to Landlord under this Lease as a bill of sale without further payment
or credit by Landlord to Tenant, (ii) Tenant shall be conclusively presumed to
have forever abandoned such property, and without accepting title thereto,
Landlord may, at Tenant's expense, remove, store, destroy, discard or otherwise
dispose of all or any part thereof in any manner that Landlord shall choose
without incurring liability to Tenant or to any other person, and Tenant shall
pay to Landlord, upon demand, any and all reasonable expenses incurred in taking
any of such actions. In no event shall Landlord ever become or accept or be
charged with the duties of a bailee (either voluntary or involuntary) of any
personal property; and the failure of Tenant to remove all such property from
the Premises and the Project shall forever bar Tenant from bringing any action
or
9.
<PAGE>
asserting any liability against Landlord with respect to any such property which
Tenant fails to remove.
E. All obligations of the Tenant under this Lease shall survive the
expiration of the Term or sooner termination of this Lease.
F. Tenant's taking possession of the Premises or any portion thereof
shall be conclusive evidence that the Premises or such portion were then in good
order, repair and satisfactory condition. Landlord may authorize Tenant to take
possession of all or any part of the Premises prior to the Commencement Date. If
Tenant does take possession pursuant to such authorization, all of the covenants
and conditions of this Lease shall apply to and shall control such pre-term
occupancy. Rent for such pre-term occupancy shall be paid upon occupancy and on
the first day of each calendar month thereafter at the rate set forth in Section
2A hereof. If the Premises are occupied for a fractional month, such rent shall
be prorated on a per diem basis.
4. PROJECT SERVICES. So long as Tenant is not in default hereunder,
Landlord agrees to furnish services to the Tenant without charge except for
Operating Cost Share Rent, electricity and as otherwise specifically provided
herein, as follows:
A. Heat and Air Conditioning. Landlord shall furnish heat and air
--------------------------
conditioning to provide a temperature condition required, in Landlord's
judgment, for comfortable occupancy of the Premises under normal business
operations in the absence of machines or equipment which may affect the
temperature otherwise maintained in the Premises. Such heat and air
conditioning shall be provided daily during business hours (8:00 a.m. to
6:00 p.m. Monday through Friday and 8:00 a.m. to 1:00 p.m. Saturday),
Sundays and Holidays (hereinafter defined) excepted. Tenant agrees to keep
and cause to be kept closed all windows in the Premises and at all times to
cooperate fully with the Landlord in the operation of the heating and air
conditioning systems and to abide by all reasonable regulations and
requirements which Landlord may prescribe to permit the proper functioning
and protection of the heating and air conditioning systems. Landlord
reserves the right to shop the heating and air conditioning systems when
necessary by reason of accident or emergency or for repairs, alterations,
replacements or improvements, which in the judgment of the Landlord are
desirable or necessary, until said repairs, alterations, replacements or
improvements shall have been completed. For purposes of this Lease
"Holidays" shall mean any Legal Holiday as defined in Ill. Rev. Stat. 1985,
Ch. 17, pars. 2201, 2202, as amended from time to time. Landlord agrees to
make any repairs to the heating and air conditioning systems promptly and
with due diligence.
Whenever heavy concentration of personnel, motors, machines or
equipment, including telephone equipment, used in the Premises adversely
affects the temperature otherwise maintained by the air conditioning
system, Landlord reserves the right to install supplementary air
conditioning units in the Premises and the cost thereof, including all of
the costs relating to the installation and the cost of operation and
maintenance thereof, shall be Additional Rent hereunder and shall be paid
by Tenant to Landlord upon demand.
10.
<PAGE>
Landlord shall also furnish heat and air conditioning after business
hours, on the condition that Tenant gives Landlord not less than forty-
eight (48) hours' prior notice of Tenant's needs for such additional
heating or air conditioning, and provided that Tenant pays to Landlord its
then current charges for such additional heating or air conditioning. Such
charges will be prorated by Landlord between requesting user-tenants if
more than one tenant requests such additional heating or air conditioning
at the same time and the proration shall be based on the area of the
Project leased to such tenants and their respective periods of use.
B. Elevators. Landlord shall provide passenger elevator service in
---------
common with the Landlord and the other tenants, daily, during business
hours, Sundays and Holidays excepted, and freight elevator service in
common with the Landlord and other tenants, daily from 6:00 AM to 5:00 PM
on Monday through Friday (Saturday, Sundays and Holidays excepted). Tenant
may request additional freight elevator service provided that such service
shall be at Tenant's sole cost and expense. Freight elevator service shall
at all times be subject to scheduling by the Landlord. Landlord shall
provide limited passenger elevator service at all times (except in the case
of an emergency) during which normal passenger elevator service is not
furnished.
C. Electricity. All the electricity used in the Premises shall be
-----------
supplied by Commonwealth Edison Company or any other electricity company
serving the Project, and such electricity shall be supplied through a
separate meter and be paid for by Tenant, provided that Landlord shall pay
for the electricity required for the operation of the Building's shared
heating, ventilating and air conditioning systems at the times specified in
Section 4A above. The meter shall be installed at the expense of Tenant or
the electricity company. A separate electrical meter is presently in place
for the Premises. Landlord shall not in any way be liable to Tenant for any
loss or damage or expense Tenant may sustain or incur if either the amount
or quality of electric service is changed or is no longer available or
suitable for Tenant's requirements. If such service shall be discontinued,
such discontinuance shall not in any way affect this Lease. Tenant
covenants and agrees that at all times its use of electric current shall
never exceed the capacity of the existing feeders to the Building or the
risers or the wiring installed thereon when reviewed in conjunction with
the electrical usage of the other tenants in the Project. Tenant covenants
and agrees that it shall make no alterations or additions to the electric
equipment and/or appliances without the prior written consent of Landlord
in each instance. Landlord shall maintain the light fixtures in the
Premises and install any lamps, bulbs, ballasts or starters to be used by
Tenant in the Premises, all at Tenant's sole cost and expense.
Tenant shall pay for all electricity required during janitorial
service and alterations and repairs to the Premises and Tenant shall pay
for all electricity required for the operation of any special air
conditioning or ventilating system for its office machinery or equipment
requiring special or extra current.
D. Water. Landlord shall furnish cold water from City of Chicago
-----
mains from regular Building outlets for drinking, lavatory and toilet
purposes, drawn through fixtures installed by Landlord or by Tenant with
Landlord's prior written consent, and hot
11.
<PAGE>
water for public lavatory purposes from the regular supply of the Building.
Tenant shall pay Landlord at rates fixed by Landlord for water furnished
for any other purpose as Additional Rent hereunder. Tenant shall not waste
or permit the waste of water.
E. Janitorial Service. Landlord shall also furnish janitorial and
------------------
cleaning services as set forth in Appendix B, on Monday through Friday,
Holidays excepted. Tenant shall not provide janitorial services in the
Premises without the prior written consent of Landlord and then only at
Tenant's sole responsibility, cost and expense, by contractors or employees
at all times satisfactory to Landlord in its sole discretion.
F. Window Washing. Landlord shall furnish window washing of all
--------------
exterior windows, weather permitting, at intervals to be determined by
Landlord, but not less than three times during each calendar year.
G. Interruption of Service. Landlord does not warrant that any
-----------------------
service will be free from interruption caused by labor controversies,
accidents, inability to obtain fuel, steam, water or supplies, governmental
regulations, or other causes beyond the reasonable control of the Landlord,
or repairs, alterations, replacements or improvements to such systems. No
such interruption of service shall be deemed an eviction or disturbance of
Tenant's use and possession of the Premises or any part thereof, or render
Landlord liable to Tenant for damages, by abatement of rest or otherwise,
or relieve. Tenant from performance of Tenant's obligations under this
Lease.
Notwithstanding anything to the contrary contained in this Section 4G, if
(i) Landlord ceases to furnish any service in the Building as a result of a
condition which affects only the Building (and does not affect office
buildings in general in the River North area of Chicago), and Tenant
notifies Landlord in writing within one (1) business day after such
cessation, (ii) such cessation is within Landlord's reasonable control
(that is, is not caused by Force Majeure [hereinafter defined)), (iii) such
cessation does not arise as a result of an act or omission of Tenant, and
(iv) as a result of such cessation, the Premises or a material portion
thereof, is rendered untenantable (meaning that Tenant is unable to use
such space in the normal course of its business) and Tenant in fact so
ceases to use such space, or material portion thereof, in the manner used
prior to such cessation, then, Tenant's remedy for such cessation shall be
as follows: on the sixth day after the affected space becomes untenantable,
Tenant ceases to use such space, and Tenant so notifies Landlord in writing
thereof, the Rent payable hereunder shall be equitably abated based upon
the percentage of the space in the Premises so rendered untenantable and
not being so used by Tenant, and such abatement shall continue until the
date the Premises become tenantable again.
Tenant shall make arrangements directly with the telephone company
servicing the Building for such telephone service in the Premises as may be
desired by Tenant. Tenant shall pay the entire cost of all telephone charges,
electricity consumed within the Premises, maintenance of light fixtures and
replacement of lamps, bulbs, tubes, ballasts and starters.
12.
<PAGE>
5. ALTERATIONS AND REPAIRS.
A. Tenant shall not make any improvements or alterations in or additions,
changes or installations to the Premises (collectively, "Work") without
submitting plans and specifications therefor to Landlord, and obtaining
Landlord's prior written consent in each instance. Landlord may withhold such
consent in its reasonable discretion. All Work shall be performed (a) at the
sole cost and expense of Tenant by employees of or contractors employed by
Landlord, or with Landlord's written consent given prior to the letting of the
contract, by contractors employed by Tenant under a written contract previously
approved in writing by Landlord, and (b) on such terms and under such conditions
as Landlord, in its sole discretion, shall determine as will protect the
Premises, the Building and the Project from improper contractors' work and
against the imposition of any lien resulting from Work; without limiting the
foregoing, if Landlord consents to any Work, it shall be performed subject to
the following requirements:
(1) If the Work is to be done by Tenant's contractors, Tenant shall
furnish to Landlord prior to commencement thereof, building permits and
certificates of appropriate insurance and bonds satisfactory in all
respects to Landlord. Tenant shall also furnish to Landlord, if Landlord so
requests, security for the payment of all costs to be incurred in
connection with the work.
(2) Upon completion of any Work, Tenant shall furnish Landlord with
contractors' affidavits and full and final waivers of lien, each conforming
to the applicable Illinois statutory requirements, as-built plans of any
Work and receipted bills covering all labor and materials expended and
used. Insofar as applicable to the work or material for which payment is
requested or notice or lien claim is made, Landlord in its reasonable
discretion shall make available for partial or final payment or release
thereof such funds as may have been deposited with it by Tenant for the
estimated cost of such Work.
(3) Any Work permitted to be undertaken by Tenant's contractors shall
be performed in such a fashion and by such means as necessary to maintain
peace and harmony among the other contractors serving the Project and the
other tenants and so as not to cause interference with the continuance of
work to be performed or services to be rendered to the Project or the other
tenants.
(4) All Work shall comply with all insurance requirements and with
all applicable laws, ordinances and regulations. All Work shall be
constructed in a good and workmanlike manner, and only good grades of
material shall be used with a quality equal to or better than that used in
the Project.
(5) Tenant shall permit Landlord to supervise all Work within the
Premises. Landlord shall charge a supervisory fee not to exceed (a) ten
percent (10%) of the total cost of the work, including, without limitation,
all labor and material costs, if Landlord's employees or contractors
perform the Work, and (b) Landlord's actual out-of-pocket costs in
supervising such work, if Tenant's employees or contractors perform the
work.
13.
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B. If Tenant desires telegraphic, telephonic, burglar alarm, computer
installations or signal service (all of which shall be at Tenant's sole cost and
expense), Landlord shall, upon request, direct where and how all connections and
wiring for such service shall be introduced and run. In the absence of any such
directions, Tenant shall make no borings, cutting or install any wires or cable
in or about the Premises.
C. Tenant agrees to protect, defend and indemnify Landlord, its agents,
building manager and employees, the Premises, the Building and the Project from
and against any and all liabilities of every kind and description which may
arise out of or be connected in any way with any work, whether performed by or
under the direction of Landlord and at the cost of Tenant or performed by Tenant
and whether performed in compliance with this Section 5.
D. Any mechanic's lien filed against the Premises or the Project or any
notice which is received by either Landlord or Tenant or filed for work or
materials furnished or claimed to be furnished and deriving from Work or for
materials or work claimed to have been furnished to Tenant or the Premises shall
be released and discharged of record by Tenant, in either case, within twenty
(20) days after such filing or receipt, whichever is applicable, at Tenant's
expense. If Tenant chooses to contest such claim, notice or lien, Tenant may do
so in place of causing the release and discharge thereof, provided that within
said twenty (20) day period, (i) Tenant provides Landlord with a title indemnity
or bond or other adequate security covering any possible lien or claim that may
arise from the failure to release and discharge such claim, notice or lien; (ii)
Tenant contests such claim, notice or lien in good faith by appropriate
proceedings that operate to stay enforcement thereof; and (iii) Tenant promptly
pays and discharges any final adverse judgment entered in any such proceeding.
If Tenant has not caused the release or discharge or begun appropriate
proceedings to contest such claim, notice or lien, within said twenty (20) days,
Landlord may, but shall not be obligated to, pay the amount necessary to remove
the same without being responsible for making an investigation as to the
validity or accuracy thereof, and the amount so paid, together with all costs
and expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord in connection therewith, shall be deemed Additional Rent
hereunder, payable upon demand. Tenant has no power or authority to cause or
permit any lien or encumbrance of any kind whatsoever, whether created by act of
Tenant, operation of law or otherwise, to attach to or be placed upon Landlord's
title or interest in the Premises or the Project, and any and all liens and
encumbrances created by Tenant shall attach to Tenant's interest only.
E. for ordinary wear and as otherwise provided in this Lease, Tenant
shall, at all times during the Term hereof, at its sole expense, keep all
Tenant's movable and removable fixtures located in or appurtenant to the
Premises in good order, repair and condition, and Tenant shall promptly arrange
with the Landlord to have Landlord or Landlord's agent make repairs of all other
damages to the Premises and the replacement or repair of all damaged or broken
glass (including signs thereon), fixtures and appurtenances (including hardware
and heating, cooling, ventilating, electrical, plumbing and other mechanical
facilities in the Premises), with materials equal in quality and class to the
original materials damaged or broken, within any reasonable period of time
specified by Landlord. Landlord may, but shall not be required to do so, enter
the Premises at all reasonable times to make any repairs, alterations,
improvements or additions, as Landlord shall desire or deem necessary for the
safety, protection, preservation or improvement of the Project, or as Landlord
may be required to do by any governmental department or agency,
14.
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or by the order or decree of any court or by any other proper authority. The
cost of all repairs made by Landlord to the Project which are made necessary as
a result of misuse or neglect by Tenant or Tenant's employees, invitees,
servants, contractors or agents shall be immediately paid as Additional Rent by
Tenant to Landlord upon being billed for same. The cost of all other repairs and
replacements (except those caused by Tenant's misuse or negligence and those
relating to Tenant's movable and removable fixtures) shall be paid for by the
Landlord and deemed an item of Operating Costs.
6. USES OF PREMISES. The Premises shall be occupied and used by Tenant
only for general office purposes, and for no other purpose. Without limiting the
generality of the foregoing, no use shall be made of the Premises nor acts done
which will increase the existing rate of insurance upon the Project or cause a
cancellation of any insurance policy covering the Project or any part thereof or
require additional insurance coverage. Tenant shall not permit to be kept, used
or sold in or about the Premises any article which may be prohibited by
Landlord's insurance policies.
7. BUILDING RULES AND GOVERNMENTAL REGULATIONS. Tenant shall abide by all
applicable laws or governmental regulations concerning its use of the Premises.
Tenant shall also abide by all uniform reasonable rules and regulations adopted
or to be adopted from time to time by Landlord pertaining to the operation and
management of the Project. If any rules and regulations are contrary to the
terms of the Lease, the terms of this Lease shall prevail. The present rules are
contained in Appendix C. The violation of the Project rules or the laws .or
regulations governing Tenant's use of the Premises shall be a default under this
Lease allowing Landlord all remedies for default set forth under Section 11 of
this Lease. Landlord shall not be responsible to Tenant for violation of rules
or regulations or terms of this Lease or any other Lease in the Project by
another tenant, nor shall failure to obey the same by others or lack of
enforcement by Landlord relieve Tenant from its obligations to comply therewith.
8. CLAIMS; INSURANCE; LIABILITY.
A. To the extent permitted by law, Tenant waives all claims it may have
against Landlord, its officers, directors, servants, agents or employees for
damage to person or property sustained by Tenant or by any occupant of the
Premises or the Project, or any other person, occurring in or about the Premises
or the Project, resulting from the Premises or the Project or any part of said
Premises or Project becoming out of repair or resulting from any existing or
future condition, defect, matter or thing in the Premises, the Project or any
part of it, or from equipment or appurtenances therein, or from the action of
the elements, or any accident within or adjacent to the Premises or Project or
resulting directly or indirectly from any act or omission of Landlord or any
occupant of the Premises or Project or any other person while on the Premises or
the Project. If any such damage to the Premises or the Project or any equipment
or appurtenances therein, or to tenants thereof, or their agents, employees,
contractors or invitees, results from any act, omission or negligence of Tenant,
its agents, employees, servants, contractors or invitees, Landlord may, at
Landlord's option, repair such damage and Tenant shall upon demand by Landlord
reimburse Landlord for all costs of such repairs and damages. All property on
the Project or in the Premises belonging to the Tenant, its agents, employees,
servants, contractors or invitees or to any occupant of the Premises shall be
there at the risk of the Tenant or such other person only and Landlord shall not
be liable for damage thereto or theft,
15.
<PAGE>
misappropriation or loss thereof. Notwithstanding anything contained in this
Section 8 to the contrary, no agreement of Tenant in this Section 8 shall be
deemed to exempt Landlord from liability for injury to persons or damage to
property caused by or resulting from the negligence or willful misconduct of
Landlord, its agents or employees in the operation or maintenance of the
Premises or the Project.
B. Landlord and Tenant agree to have all property insurance policies
which may be carried by either of them endorsed with a clause providing that any
release from liability of or waiver of claim for recovery from the other party
entered into in writing by the insured thereunder prior to any loss or damage
shall not affect the validity of said policy or the right of the insured to
recover thereunder. Without limiting any release or waiver of liability or
recovery contained in any other section of this Lease but rather in confirmation
and furtherance thereof, Landlord and Tenant each hereby waive any and every
claim for recovery from the other for any and all loss of or damage to the
Project or the Premises or to the contents thereof, which loss or damage is
covered by valid and collectible fire and extended coverage insurance policies,
to the extent that such loss or damage is recoverable under said insurance
policies. Inasmuch as this mutual waiver will preclude the assignment of any
such claim by subrogation (or otherwise) to an insurance company (or any other
person), Landlord and Tenant each agree to give to each insurance company which
has issued, or in the future may issue, its policies of fire and extended
coverage insurance, written notice of the terms of this mutual waiver, and to
have said insurance policies properly endorsed, if necessary to prevent the
invalidation of said insurance coverage by reason of said waiver.
C. At all times during the Term of this Lease, Tenant shall at its sole
cost and expense maintain in full force and effect insurance protecting Tenant
and Landlord and their respective agents and employees, and any other parties
designated by Landlord from time to time, with terms, coverages and in companies
at all times satisfactory to Landlord and with such increases in limits as
Landlord may, from time to time, request. Initially, such coverage shall be in
the following amounts:
(1) Comprehensive or Commercial General Liability Insurance,
including Contractual Liability insuring the indemnification provisions
contained in this Lease, with limits of not less than one Million Dollars
($1,000,000.00) combined single limit per occurrence for Bodily Injury,
Death and Property Damage, and umbrella coverage of not less than Five
Million Dollars ($5,000,000.00). The Comprehensive or Commercial General
Liability policy shall include the Landlord and the building manager as
additional insureds, with a severability of interest endorsement.
(2) Insurance against (a) "All Risks" of physical loss covering the
tenant improvements (if any) described in Item 12 of the Schedule, the
Work, movable fixtures, office equipment, furniture, trade fixtures,
merchandise and all other items of Tenant's property on the Premises, and
(b) loss of use of the Premises.
D. Tenant hereby agrees to, prior to the commencement of the Term hereof
and prior to the expiration of any policy, furnish Landlord certificates
evidencing that all required insurance is in force and providing that such
insurance may not be cancelled or changed without at least thirty (30) days'
prior written notice to Landlord and Tenant (unless such cancellation is
16.
<PAGE>
due to nonpayment of premiums, in which event ten (10) days' prior written
notice shall be provided).
E. Tenant hereby agrees to indemnify, defend and hold harmless Landlord
and its officers, directors, servants, agents and employees against any claims
or liability for damage to person or property (or for loss or misappropriation
of property) occurring in the Premises or Project, arising from any breach or
default on the part of Tenant during the Term of this Lease or from any act or
omission of Tenant or of any employee, agent, servant, invitee or contractor of
Tenant, and from any costs relating thereto (including, without limitation,
attorneys' fees).
F. Landlord shall prudently carry insurance coverage on the Building and
the Project as it sees fit.
9. FIRE AND OTHER CASUALTY.
A. In the event that (i) the Premises are made substantially untenantable
by fire or other casualty, including damage or casualties of war, and Landlord
shall decide not to restore or repair the same, or (ii) the Building is so
damaged by fire or other casualty that Landlord shall decide to demolish or not
rebuild the same, then, in either of such events, either Landlord or Tenant
shall have the right to terminate this Lease by notice to the other within
ninety (90) days after the date of such fire or other casualty.
B. If the Premises or the Building are made untenantable by fire or other
casualty, and this Lease is not terminated pursuant to Section 9A above,
Landlord shall; to the extent permitted by any mortgages or Ground Leases with
respect to the Premises and the Project, immediately take such action as is
necessary to make applicable insurance proceeds available and to use `the same
to reconstruct, repair and restore the Building and the Premises, subject to
zoning laws and building codes then in effect, and including only Building
Standard Tenant Improvements (as provided in Exhibit A of Appendix D) or, if any
portion of the Premises has been leased on an "as is" basis, including only
improvements similar to those located in such portion of the Premises on the
Commencement Date or the date on which such portion was added to the Premises,
if later than the Commencement Date (herein, the improvements Landlord is
required to make are called the "Required Improvements"), and at Landlord's
option Tenant may be permitted or required to devote the proceeds of its
insurance described in Section BC(2)(a) to cause restoration of tenant
improvements over and above the Required improvements, and pay for the same to
Landlord or through Landlord as if newly done pursuant to Section 5 of this
Lease. In the event a fire or other casualty occurs and both Landlord and Tenant
are insured, it is agreed that the coverage of the Landlord shall be primary and
that Landlord's recovery in no event shall be reduced by any insurance recovery
to Tenant.
C. Notwithstanding anything in this Section 9 to the contrary (except
that Section 9A shall supersede this Section 9C), if all or any portion of the
Premises shall be made untenantable by a fire or other casualty, Landlord shall
with reasonable promptness, cause a registered architect selected by Landlord
and licensed to do business in Illinois to estimate the amount of time required
to substantially complete repair and restoration of the Premises and make the
Premises tenantable again, using standard working methods. If the estimate
indicates that the Premises cannot be made tenantable within twelve (12) months
from the date the repair and
17.
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restoration is started, either party shall have the right to terminate this
Lease by giving to the other notice of such election within ten (10) days after
its receipt of the architect's certificate. If the estimate of the registered
architect indicates that the Premises can be made tenantable within twelve (12)
months from the date the repair and restoration is started, or if neither party
terminates this Lease pursuant to this Section 9C, Landlord shall proceed with
reasonable promptness to repair and restore the Premises, provided that if the
estimate of the registered architect indicates that the Premises can be made
tenantable within twelve (12) months from the date repair and restoration is
started, and if Landlord does not repair and restore the Premises within said
twelve (12) month period, which twelve (12) month period shall be extended to
the extent of any Reconstruction Delays, then Tenant may terminate this Lease
upon fifteen (15) days' prior written notice to Landlord. For purposes of this
Lease, the term "Reconstruction Delays" shall mean: (i) any delays caused by the
insurance adjustment process, (ii) any delays caused by Tenant, and (iii) any
delays caused by events beyond Landlord's reasonable control.
D. In the event that this Lease is terminated pursuant to Section 9A or
Section 9C above, rent shall be apportioned on a per diem basis and be paid to
the date of the fire or other casualty. In the event that such fire or casualty
renders all or any portion of the Premises untenantable and this Lease is not
terminated pursuant to Section 9A or Section 9C, then subject to the last
sentence of this Section 9D, the rent provided for in this Lease shall abate on
a per diem basis during the period of repair and restoration until the Premises
are tenantable again, and the abatement shall be in an amount bearing the same
ratio to the total amount of rent due for such period as the untenantable
portion of the Premises from time to time bears to the entire Premises. Any
provision hereof notwithstanding, Tenant's rent shall not abate if its
negligence was the cause of the fire or other casualty; and whether or not the
Lease is terminated, Tenant's recovery shall be limited to the amount necessary
to cause restoration of the tenant improvements as described in this Section 9.
10. RIGHTS RESERVED TO THE LANDLORD. Landlord reserves the following
rights, exercisable without notice to Tenant except as otherwise expressly
provided herein, and without liability to Tenant for damage or injury to
property, person or business (all such claims being hereby released, except to
the extent they are caused by Landlord's negligence), and without effecting an
eviction or disturbance of Tenant's use or possession or giving rise to any
claim for offsets, or abatements of rent o; affecting any of Tenant's
obligations under this Lease. Specification of the rights reserved to Landlord
herein shall not exclude any right accruing to Landlord by operation of law or
reserved specifically or by inference from any provision contained in this
Lease:
A. Name: To change the Project's name or street address.
----
B. Signs: To install, off ix and maintain any and all signs on the
-----
exterior and interior of the Building. No signs visible from the exterior
of the Building or from within its lobbies or common corridors shall be
permitted to be installed in the Premises by Tenant without Landlord's
approval of the sign and the location thereof, which may be withheld in
Landlord's sole discretion. Landlord reserves the right to remove at
Tenant's expense any such sign not so approved by Landlord.
18.
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C. Windows: To designate and approve, prior to installation, all
-------
types of window shades, blinds, drapes, awnings, window ventilators and
other similar equipment and to control all the internal lighting that may
be visible from the exterior of the Building.
D. Service Contracts: To designate all sources furnishing sign
-----------------
painting and lettering, ice and drinking water, towels, toilet supplies,
beverages, food service, shoe shining or other services on the Premises,
provided that the rates for such services as are designated by Landlord are
reasonably competitive with rates charged therefor in the Chicago
metropolitan area. No vending or dispensing machines of any kind shall be
placed in or about the Premises without the prior written consent of
Landlord.
E. Keys: To retain at all times and to use passkeys to the Premises
----
and keys to all door locks within and into the Premises. No locks or bolts
shall be altered, changed or added without the prior written consent of
Landlord.
F. Access for Repairs, etc.: To have access to the Premises to
-----------------------
perform its duties and obligations under this Lease and to inspect the
Premises, make repairs, alterations, additions or improvements, whether
structural or otherwise, in and about the Premises, the Project or any part
thereof as set forth in various Sections of this Lease including, without
limitation, Section 5 and Section 10N.
G. Occupancy: To decorate, remodel, repair, alter or otherwise
---------
prepare the Premises for reoccupancy at any time after Tenant vacates or
abandons the Premises. Such acts of Landlord shall not relieve Tenant of
its obligation to pay rent to the Termination Date.
H. Rights to Conduct Businesses: To grant to anyone the exclusive
----------------------------
right to conduct any business or render any service in the Project provided
such exclusive right shall not operate to exclude Tenant from the use
permitted by this Lease.
I. Heavy Equipment: To approve the weight, size or location of safes
----------------
and other heavy equipment and articles in and about the Premises and the
Project and to require all such items and furniture to be moved into and
out of the Building or anywhere else in the Project and the Premises only
at such times and in such manner as Landlord shall direct in writing.
Movement of Tenant's property into or out of the Project and within the
Project is entirely at the risk and responsibility of Tenant. Any
furniture, equipment, curtains and similar articles desired to be removed
from the Premises or the Building shall be listed in a written notice from
Tenant to Landlord and a removal permit therefor shall be obtained from
Landlord prior to removal thereof.
J. Show Premises: To show the Premises to prospective tenants or
--------------
brokers during the last year of the Term of this Lease or the last year of
any extension thereof or to show the Premises to prospective purchasers at
all reasonable times, provided prior notice is given to Tenant in each case
and Tenant's use and occupancy of the Premises shall not materially be
inconvenienced by any such action of Landlord.
19.
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K. Close Project: To close or restrict access to the Project during
-------------
such hours as Landlord shall from time to time reasonably determine, and on
Holidays subject, however, to Tenant's right to admittance at all times
under such 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 Project identify themselves to a security guard by
registration or otherwise and that said persons establish their right to
enter or leave the Project.
L. Substitution of Space: At any time hereafter, Landlord may
----------------------
relocate all or part of the Premises to another area in the Project (the
"new premises") upon thirty (30) days' prior written notice, provided that:
(1) the new premises shall be loft space similar to the Premises in
area and suitable for the use which Tenant had made of the Premises;
(2) such change shall be made in order to put into the Premises a
major tenant in the Project;
(3) Landlord shall pay all of Tenant's moving costs; and
(4) Landlord shall bear the cost of replacing all of Tenant's
stationery in customary amounts maintained by Tenant, and Landlord shall
reimburse Tenant up to an aggregate of $1,000 for costs of notifying third
parties of the relocation upon presentation by Tenant of paid receipts.
Tenant shall cooperate with Landlord in all reasonable ways to
facilitate the move to the new premises including, by way of example but
not of limitation, designating locations to move furniture and equipment,
supervising moving of files or fragile equipment, designating location of
telephone outlets, and listing color of paint and of flooring desired in
the new premises.
M. Use of Lock Box by Landlord: Landlord may from time to time elect
to designate a lock box collection agent (independent agent, bank or other
financial institution) to act as Landlord's agent for the collection of
amounts due Landlord. In such event the date of payment of rent or other
sums paid Landlord through such agent shall be the date of agent's receipt
of such payment (or the date of collection of any such sum if payment is
made in the form of a negotiable instrument thereafter dishonored upon
presentment); however, for purposes of this Lease, `no such payment or
collection shall be deemed "accepted" by Landlord if Landlord issues a
check payable to the order of the Tenant in the amount sent to the lock box
and if Landlord mails the check to the Tenant addressed to the place
designated in this Lease for notice to Tenant within twenty-one (21) days
after the amount sent by the Tenant is received by the lock box collection
agent or if the Landlord returns a dishonored instrument within twenty-one
(21) days of its dishonor. Return of any such sum to Tenant by so sending
such a check of the Landlord or by so sending a dishonored instrument to
the Tenant within the appropriate twenty-one (21) day period shall be
deemed to be rejection of Tenant's tender of such payment for all purposes
as of the date of Landlord's lock box collection agent's receipt
20.
<PAGE>
of such payment (or collection). The return of Tenant's payment in the
manner described in this Section 10M shall be deemed not to be a waiver of
any breach by Tenant of any term, covenant or condition of this Lease nor a
waiver of any of Landlord's rights or remedies granted in this Lease. The
possession of Tenant's funds or negotiation of Tenant's negotiable
instrument by Landlord's agent or Landlord during the applicable twenty-one
(21) day period shall be deemed not to be a waiver of any defaults of
Tenant or any rights of Landlord theretofore accrued nor shall any such
possession or negotiation be considered an acceptance of Tenant's tender.
N. Repairs and Alterations: At any time Landlord may decorate, make
-------------------------
alterations, additions or improvements, structural or otherwise, in or to
the Project or any part thereof, including the Premises, and perform any
acts required or permitted hereunder, or related to the safety, protection,
preservation or improvement of the Project or the Premises, and during such
operations Landlord shall have the right to take into and through the
Premises or any part of the Project all material and equipment required and
to close and temporarily suspend operation of entrances, doors, corridors,
elevators and other facilities, and to have access to and open all
ceilings, without liability to Tenant by reason of interference,
inconvenience, annoyance or loss of business; provided, however, that
Landlord shall cause as little inconvenience or annoyance to Tenant as is
reasonably possible under the circumstances, and shall not do any act which
would permanently reduce the size of the Premises. Landlord shall do any
such work during ordinary business hours, and Tenant shall pay Landlord for
overtime and for any other expenses incurred if such work is done during
other hours at Tenant's request. Landlord may do or permit any work to be
done upon or along, and any use of, any adjacent or nearby building, land,
street, alley or way.
O. Mail Chutes: To have access for Landlord and other occupants of
-----------
the Building to any mail chutes according to the rules of the United States
Postal Service.
P. Other Rights: All other rights reserved by the Landlord pursuant
------------
to the provisions of this Lease.
11. DEFAULT AND LANDLORD'S REMEDIES.
A. Defaults. The occurrence of any of the following shall constitute a
--------
default hereunder:
(1) If Tenant defaults in the payment of rent (whether Base Rent,
Operating Cost Share Rent, Tax Share Rent or Additional Rent), or any other
sum required to be paid by this Lease; provided, however, that Landlord
shall not be entitled to exercise its remedies set forth herein or at law
or in equity with respect to such default, unless such default is not
remedied within five (5) days after written notice thereof by Landlord to
Tenant;
(2) If Tenant defaults in the prompt and full performance or
observance of any term, covenant, agreement or provision of this Lease
(except those specified in Subsections (1), (3), (4), (5), (6), (7) and (8)
of this Section 11A); provided, however, that
21.
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Landlord shall not be entitled to exercise its remedies set forth herein or
at law or in equity with respect to such default, (i) if such default is
remedied within seven (7) days after written notice thereof by the Landlord
(or if such default involves a hazardous condition and it is not cured by
Tenant immediately upon written notice to Tenant), or (ii) with respect to
a default which cannot reasonably be cured within seven (7) days, if Tenant
immediately commences to cure and diligently proceeds to complete the cure
of such default within a reasonable time period which shall in no event
extend beyond ninety (90) days after Tenant receives written notice of such
default;
(3) If Tenant abandons or vacates the Premises during the Term
hereof; provided, however Tenant's vacating of the Premises shall not
constitute a default if, prior to vacating the Premises, Tenant has made
arrangements reasonably acceptable to Landlord to (a) insure that Tenant's
insurance for the Premises will be voided or cancelled with respect to the
Premises as a result of such vacancy, (b) insure that the Premises are
secured and not subject to vandalism, and (c) insure that the Premises will
be properly maintained after such vacation. Tenant shall inspect the
Premises at least once each month and report monthly in writing to Landlord
on the condition of the Premises;
(4) If the leasehold interest of Tenant is levied upon under
execution or is attached under process of law, which levy or attachment
continues for a period of thirty (30) days;
(5) If Tenant becomes insolvent or bankrupt or shall generally not
pay its debts as they become due or shall admit in writing its inability to
pay its debts or shall make a general assignment for the benefit of
creditors;
(6) If Tenant shall commence any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment of
a receiver, trustee, custodian or other similar official for it or for all
or any substantial part of its property;
(7) If Tenant shall take any corporate or other action to authorize
any of the actions set forth above in Subsections (5) and (6) of this
Section 11A; or
(8) If any case, proceeding or other action against Tenant shall be
commenced seeking to have an order for relief entered against it as debtor,
or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its property, and such case,
proceeding or other action (i) results in the entry of an order for relief
against it which is not fully stayed within seven (7) business days after
the entry thereof or (ii) remains undismissed for a period of sixty (60)
days.
22.
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B. Landlord's Remedies.
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(1) Upon the occurrence of any one or more defaults by Tenant,
Landlord may elect, by written notice to Tenant, to terminate this Lease
and Tenant's right to the Premises as of the date set forth in the notice
or, without terminating this Lease, to terminate Tenant's right to
possession of the Premises as of the date set forth in the notice. Upon any
termination of this Lease, whether by lapse of time or otherwise, or upon
any termination of Tenant's right to possession without termination of the
Lease, Tenant shall surrender possession and vacate the Premises and
deliver possession thereof to Landlord, and Tenant hereby grants to
Landlord full and free license to enter into and upon the Premises with or
without process of law in the event of any such termination of this Lease
or of Tenant's right to possession, and to repossess Landlord of the
Premises as of Landlord's former estate and to expel or remove Tenant and
any others who may be occupying or be within the Premises and to remove any
and all property therefrom using such force as may be necessary without
being deemed in any manner guilty of trespass, eviction or forcible entry
or detainer, and without relinquishing Landlord's rights to rent or any
other right given to Landlord hereunder or by law or in equity. Except as
otherwise provided in this Section 11, Tenant expressly waives the service
of any notice of intention to terminate this Lease or to reenter the
Premises and waives the service of any demand for payment of rent or
possession and waives the service of any other notice or demand prescribed
by any statute or other law, and agrees that the simple breach of any of
the covenants or conditions of this Lease shall, without the service of any
demand or notice whatsoever, constitute a forcible detainer by Tenant of
the Premises within the meaning of the statutes of the State of Illinois.
(2) If Tenant voluntarily abandons the Premises or otherwise entitles
Landlord to elect to terminate Tenant's right to possession only without
terminating the Lease, and Landlord does so elect, Landlord may at
Landlord's option enter into the Premises, remove Tenant's signs and other
evidences of tenancy, and take and hold possession thereof as set forth in
subsection B(1) of this Section 11, without such entry and possession
terminating the Lease or releasing Tenant, in whole or in part, from
Tenant's obligation to pay the rent hereunder for the full Term, and, at
Landlord's option, the present value of the aggregate amount of the Base
Rent, Operating Cost Share Rent and Tax Share Rent (based upon the amount
thereof for the calendar month immediately preceding the month in which the
default has occurred) for the period from the date stated in the written
notice terminating possession to the stated end of the Term (such present
value to be computed on the basis of a per annum discount rate equal to
three (3) percentage points below the Corporate Base Rate at the time of
the default) shall be immediately due and payable by Tenant to Landlord,
together with any other monies due hereunder, and Landlord shall have right
to immediate recovery of all such amounts. In the alternative, Landlord
shall have the right from time to time, to recover from Tenant, and Tenant
shall remain liable for, all rent not theretofore accelerated and paid
pursuant to the foregoing sentence and any other sums thereafter accruing
as they become due under this Lease during the period from the date stated
in the notice terminating possession to the stated end of the Term. Upon
and after entry into possession without termination of the Lease, subject
to Landlord's right to first rent other vacant areas in the Building,
Landlord shall use commercially reasonable efforts to relet the Premises or
any
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part thereof to any person, firm or corporation other than Tenant for such
rent, for such time (which may be a period extending beyond the stated Term
of this Lease) and upon such terms as Landlord in Landlord's sole
discretion shall determine, and Landlord shall not be required to accept
any tenant offered by Tenant or to observe any instructions by Tenant
relating to such reletting. In any such case, Landlord may make repairs,
alterations and additions in or to the Premises and redecorate the same to
the extent deemed necessary by Landlord, and in connection therewith
Landlord may change the locks to the Premises, and Tenant shall upon
written demand pay the cost thereof, together with Landlord's expenses of
reletting. Any proceeds from the reletting of the Premises by Landlord
shall be collected by Landlord and shall first be applied against the cost
and expenses of reentry and of reletting the Premises including, but not
limited to, all brokerage, advertising, legal, alteration, redecoration,
repair, and other reasonably necessary costs and reasonable expenses
incurred to secure a new tenant for the Premises, and second to the payment
of rent herein provided to be paid by the Tenant. If the consideration
collected by Landlord upon any such reletting, after payment of the
expenses of reletting the Premises, is not sufficient to pay monthly the
full amount of the rent reserved in this Lease, Tenant shall pay to
Landlord the amount of each monthly deficiency as it becomes due (as the
case may be). If the consideration collected by Landlord upon any such
reletting for Tenant's account after payment of the expenses of reletting
the Premises is greater than the amount necessary to pay the full amount of
the rent reserved in this Lease, the full amount of such excess shall be
retained by Landlord and in no event shall be payable to Tenant. No such
reentry, repossession, repairs, alterations, additions or reletting shall
be construed as an eviction or ouster of Tenant or as an election on
Landlord's part to terminate this Lease, unless written notice of such
intention is given to Tenant, or shall operate to release Tenant in whole
or in part from any of Tenant's obligations hereunder.
(3) If Landlord shall decide to terminate this Lease, Landlord shall
be entitled to recover from Tenant all of the amounts of rent accrued and
unpaid for the period up to and including the date of the termination, as
well as all other additional sums for which Tenant is liable, or in respect
of which Tenant has agreed to indemnify Landlord under any of the
provisions of this Lease, which may then be owing and unpaid, and all costs
and expenses including, without limitation, court costs and attorneys' fees
incurred by Landlord in the enforcement of its rights and remedies
hereunder, and in addition, Landlord, at its sole option, shall be entitled
to recover from Tenant, in lieu of any amounts due under Section 11B(2)
hereof, and Tenant shall pay to Landlord, on demand, as final and
liquidated damages (and not as a penalty), a sum equal to the amount of
Landlord's reasonable estimate of the aggregate amount of Base Rent,
Operating Cost Share Rent, Tax Share Rent and Additional Rent that would be
payable for the period from the date of such termination through the
Termination Date, reduced by the then reasonable rental value of the
Premises for the same period, both discounted to present value at the rate
per annum equal to three (3) percentage points below the Corporate Base
Rate at the time of the default. If, before presentation of proof of such
liquidated damages to any court, commission or tribunal, the Premises, or
any part thereof, shall have been relet by Landlord for such period, or any
part thereof, the amount of rent payable upon such reletting shall be
deemed to be the reasonable rental value for the part or the whole of the
Premises relet during the term of the reletting.
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(4) Landlord may but shall not be obligated to cure any default by
Tenant hereunder, but, if Landlord so elects, all costs and expenses paid
by Landlord in curing such default and legal fees in connection therewith
shall be Additional Rent due on the next rent date.
(5) Notwithstanding anything in the Lease to the contrary, any and
all remedies set forth in this Lease (i) shall be in addition to any and
all other remedies Landlord may have at law or in equity and (ii) shall be
cumulative. The waiver by Landlord of any breach of any term, covenant or
condition herein contained shall only be effective if it is in writing and
shall not be deemed to be a waiver of a continuing or subsequent breach of
the same, or of any other term, covenant or condition herein contained. The
acceptance of rent or any other amounts due hereunder shall not be
construed to be a waiver of any breach by Tenant of any term, covenant or
condition of this Lease, and if the same shall be accepted after the
termination of this Lease, by lapse of time or otherwise, or of the Tenants
right of possession hereunder, or after the giving of any notice, such
acceptance shall not reinstate, continue or extend the Term of this Lease
or affect any notice given to Tenant prior to the receipt of such amount's,
it being agreed that after the service of notice or the commencement of a
suit or after final judgment for possession of the Premises, Landlord may
receive and collect any rent and other sums due, and the payment of the
same shall not waive or affect said notice, suit or judgment.
(6) Notwithstanding any provision in this Lease prohibiting Landlord
from exercising its rights hereunder or at law or in equity if Tenant cures
a default within a specified period of time, if Tenant shall default (i) in
the timely payment of rent (whether any or all of Base Rent, Operating Cost
Share Rent, Tax Share Rent or Additional Rent) three or more times in any
period of 12 consecutive months, or (ii) in the performance of any
particular term, condition or covenant of this Lease three or more times in
any period of six consecutive months, then, notwithstanding that such
defaults shall have each been cured within any applicable cure period after
notice, if any, as provided in this Lease, any further similar default
(including, without limitation, with respect to non-payment of rent, the
further non-payment of any kind of rent payable under this Lease) shall not
be curable by Tenant and Landlord shall have the right to exercise all of
the remedies provided in this Lease (including, without limitation, any and
all remedies at law and in equity) immediately after the occurrence of such
similar default.
(7) If the term of any lease, other than this Lease, made by the
Tenant for any demised premises in the Building or any other building owned
by Landlord or an affiliate of Landlord shall be terminated or terminable
after the making of this Lease because of any default by the Tenant under
such other lease, such fact shall empower the Landlord, at Landlord's sole
option, to terminate this Lease by written notice to the Tenant.
(8) In the event that Tenant shall file for protection under the
Bankruptcy Code now or hereinafter in effect, or a trustee in bankruptcy
shall be appointed for Tenant, Landlord and Tenant agree to the extent
permitted by law, to request that the debtor-in-possession or trustee-in-
bankruptcy, if one shall have been appointed, assume or reject this Lease
within sixty (60) days thereafter.
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12. HOLDOVER. If Tenant retains possession of the Premises or any part
thereof after thirty (30) days after the termination of the Term or any
extension thereof, by lapse of time or otherwise, Tenant shall become a tenant
from month-to-month only upon each and all of the terms herein provided as may
be applicable to such month-to-month tenancy and any such holding over shall not
constitute an extension of this Lease; provided, however, that during such
holding over, Tenant shall pay Base Rent, Operating Cost Share Rent and Tax
Share Rent at double the rate payable for the fiscal year, or portion thereof,
immediately preceding said holding over, computed on a monthly basis for the
time Tenant thus remains in possession .and, in addition, Tenant shall pay
Landlord all damages, consequential as well as direct, sustained by reason of
Tenant's holding over. Alternatively, at the election of Landlord expressed in a
written notice to Tenant and not otherwise, such retention of possession shall
constitute a renewal of this Lease for one (1) year; provided, however, that
Tenant shall pay Base Rent in an amount equal to the greater of 150% of the rate
payable for the immediately preceding fiscal year, or portion thereof or 150% of
the then current market rate as determined by Landlord, and Tenant shall
continue to make all other payments required under this Lease, including,
without limitation, operating Cost Share Rent and Tax Share Rent. Neither the
acceptance of rent by the Landlord after termination, nor the provisions of this
section: (i) shall be construed as, or operate as, a renewal or as a waiver of
Landlord's right of re-entry or right to regain possession by actions at law or
in equity or by any other right or remedy hereunder, or (ii) shall be construed
as, or operate as, a waiver of any other right or remedy of Landlord.
13. SUBORDINATION TO MORTGAGES, TRUST DEEDS AND GROUND LEASES.
A. Subordination. This Lease shall be subordinated to any and all Ground
Leases hereafter in force with respect to the Project at the election of the
ground lessor under any such Ground Lease. This Lease shall be subject to all of
the terms and conditions of such Ground Leases, which are hereby incorporated in
this Lease by this reference, and in the event of any conflict between the terms
hereof and the terms of any such Ground Leases, the terms of such Ground Leases
shall control. This Lease shall be subordinated to the lien of any and all
mortgages now or hereafter in force against (a) the Project and (b) any and all
Ground Leases with respect to the Project, at the election of the mortgagee
under any such mortgage. Landlord hereby represents that as of the date hereof
there are no Ground Leases with respect to the Project. The respective rights to
so subordinate this Lease at the election of any such ground lessor or mortgagee
shall continue during any amendment, renewal, modification, consolidation,
replacement or extension of each such Ground Lease or mortgage, and shall apply
to any and all advances made or hereafter made on the security of each such
mortgage.
Subordination shall be effective at election of any such ground lessor or
mortgagee. Election shall not be dependent on receipt of notice by Tenant of the
election to subordinate. Without limiting the foregoing, notice of the election
to subordinate may be given as provided for notices pursuant to this Lease.
Any subordination at the election of any such ground lessor or mortgagee
shall be self-operating. Nevertheless, Tenant or its successors in interest upon
request of Landlord shall promptly execute and deliver (within ten (10) days
after a request therefor) at any time, and from
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time to time upon the request of Landlord, such instruments as are reasonably
necessary or appropriate in Landlord's judgment to evidence such subordination.
At any time after the date hereof that any Ground Lease or mortgage is
put in effect on' the Project, Landlord shall request from such mortgagee or
ground lessor a non-disturbance agreement for the benefit of Tenant, in form and
substance reasonably acceptable to Tenant, which agreement shall provide that so
long as Tenant is not in default under this Lease (after the expiration of any
applicable notice and cure periods), Tenant shall have the right to remain in
possession under this Lease and to exercise all of its options and rights on the
terms and conditions set forth herein, even if there is a default under any such
Ground Lease or if any such mortgagee forecloses its mortgage or accepts a deed
in lieu of foreclosure.
B. Termination of Ground Lease or Foreclosure of Mortgage. Should any
------------------------------------------------------
mortgage on the Project or on any Ground Lease be foreclosed or if any Ground
Lease be terminated and this Lease be continued:
(1) The liability of the mortgagee, ground lessor or purchaser at
such foreclosure sale shall exist only during the time such mortgagee,
ground lessor or purchaser is the owner of the Project.
(2) Tenant shall attorn, as Tenant under this Lease, without any
deductions or setoffs whatsoever, to the purchaser at the foreclosure sale
(or the mortgagee if the mortgagee becomes owner of the fee estate or
lessor under any Ground Lease) or, if any Ground Lease be terminated for
any reason, Tenant shall be deemed to have attorned as Tenant under this
Lease to the ground lessor under the Ground Lease, and this Lease shall
continue in full force and effect as a direct lease between and binding
upon Tenant and such mortgagee or ground lessor, as the case may be.
Likewise, Tenant will attorn to a leasehold mortgagee in the event a
leasehold mortgagee should ever become the owner of the leasehold estate
covered by its mortgage or should become the owner of any new lease in
replacement or substitution of such leasehold estate. Tenant agrees to
promptly execute and deliver (within ten (10) days after a request
therefor) at any time and from time to time upon the request of Landlord,
or of any ground lessor under any such Ground Lease, or of any holder of
any such mortgage or leasehold mortgage, or of any such purchaser, any
instrument which, in the sole judgment of such requesting party, may be
necessary or appropriate in any such foreclosure or termination proceeding
or otherwise to evidence such attornment.
(3) As used in this Section 13, "mortgage" shall include "trust deed"
and "mortgagee" shall include "trustee" and successors and assigns of such
party (whether immediate or remote), the purchaser of any mortgage, whether
at foreclosure or otherwise and the successors, assigns and mortgagees of
such purchaser (whether immediate or remote).
C. Security Deposit. The mortgagee under a mortgage and the lessor under
-----------------
any Ground Lease shall have no responsibility for the return of the security
deposit, if any, except to the extent the security deposit is held by such
mortgagee or ground lessor.
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D. Notice and Right to Cure. Landlord hereby notifies Tenant that the
------------------------
Project is subject to the mortgages set forth on Appendix E attached hereto
(Mortgages Currently Affecting the Project), and Landlord agrees promptly to
notify Tenant of the placing of any additional Ground Leases, mortgages or trust
deeds against the real property or leasehold estate of which the Premises form a
part.
Tenant agrees to give the mortgagees shown on Appendix E and any other
mortgagee or holder of a deed of trust or lessor of any Ground Lease, by
registered mail, a copy of any notice of default served upon the Landlord,
provided that prior to such notice Tenant has been notified, in writing (by way
of notice of Assignment of Rents and Leases, or otherwise), of the address of
such mortgagee, holder of a deed of trust or lessor under any Ground Lease.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then such mortgagee, holder of a
deed of trust or lessor under any Ground Lease shall have an additional thirty
(30) days within which to cure such default, or if such default cannot be cured
within that time, such mortgagee, holder of a deed of trust or lessor under any
Ground Lease shall have such additional time as may be necessary to cure such
default, provided that within such thirty (30) days, any mortgagee, holder of a
deed of trust or lessor under any Ground Lease, as the case may be, has
commenced and is diligently pursuing the cure of such default (including but not
limited to commencement of foreclosure or lease forfeiture proceedings, if
necessary to effect such cure), and Tenant shall not pursue any of the remedies
it may have for such default and this Lease shall not be terminated, while such
cure is being diligently pursued, so long as the default is completely cured
within a reasonable time thereafter. During the period between the giving of
such notice and the remedying of Landlord's default, the rent herein recited
shall be abated and apportioned to the extent that any part of the Premises
shall be untenantable.
14. ASSIGNMENT AND SUBLETTING BY TENANT.
A. Tenant shall not, without the prior written consent of Landlord in
each instance, which consent will not be unreasonably withheld, (i) assign,
transfer, mortgage, pledge, hypothecate or encumber or subject to or permit to
exist upon or be subjected to any lien or charge, this Lease or any interest
under it, (ii) allow to exist or occur any transfer of or lien upon this Lease
or the Tenant's interest herein by operation of law, (iii) sublet the Premises
or any part thereof, or (iv) permit the use or occupancy of the Premises or any
part thereof for any purpose not provided for under Section 6 of this Lease or
by anyone other than the Tenant and Tenant's employees. Landlord shall be acting
reasonably when such consent is not granted, if any of the following is true:
(1) in the reasonable judgment of Landlord the subtenant or assignee
is of a character or engaged in a business which is not in keeping with the
standards of Landlord for the Building;
(2) in the reasonable judgment of Landlord the purpose for which the
subtenant or assignee intends to use the Premises (or a portion thereof) is
not in keeping with the standards of Landlord for the Building or are in
violation of the terms of any other leases in the Building (it being
understood that the purpose for which such
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subtenant or assignee intends to use all or a portion of the Premises may
not be in violation of this Lease);
(3) the subtenant or assignee is either a government (or subdivision
or agency thereof) or an occupant of the Building;
(4) an assignment is desired for less than the entire Premises and/or
for less than the remaining Term of the Lease; or
(5) Tenant is in default under any of the terms or conditions of this
Lease.
In no event shall this Lease or any interest herein be assigned or
assignable by voluntary or involuntary bankruptcy proceedings or by
operation of law 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, except as provided by law.
B. Consent by Landlord to any assignment, subletting, use, occupancy,
transfer or encumbrance shall not operate to relieve Tenant from any covenant,
liability or obligation hereunder (whether past, present or future), including,
without limitation, the obligation to pay rent, except to the extent, if any,
expressly provided for in such consent, nor shall such consent be deemed to be a
consent to any subsequent assignment, subletting, use, occupancy, transfer or
encumbrance. Tenant shall pay all of Landlord's costs, charges and expenses,
including without limitation, reasonable attorney's fees, incurred in connection
with any assignment, subletting, use, occupancy, transfer or encumbrance made or
requested by Tenant.
C. Tenant shall, by notice in writing, advise Landlord of its intention
from, on and after a stated date (which shall not be less than sixty (60) days
after the date of Tenant's notice) to assign this Lease or sublet any part or
all of the Premises for the balance or any part of the Term, and, in such event,
Landlord shall have the right, to be exercised by giving written notice to
Tenant within thirty (30) days after receipt of Tenant's notice, to terminate
this. Lease with respect to the space described in Tenant's notice as of the
date stated in Tenant's notice for the commencement of the proposed assignment
or sublease; provided, however, that if Landlord elects to terminate this Lease
with respect to the space described in Tenant's notice, Tenant shall have the
right, to be exercised by giving written notice to Landlord within fifteen (15)
days after receipt of Landlord's notice, to withdraw its notice of intent to
assign or sublease such space and Landlord's notice to terminate shall be of no
force and effect. Tenant's notice shall include the name and address of the
proposed assignee or subtenant, a true and complete copy of the proposed
assignment or sublease and sufficient information as Landlord deems necessary to
permit Landlord to determine the financial responsibility and character of the
proposed assignee or subtenant. If Tenant's notice covers all of the Premises
and if Landlord exercises its right to terminate this Lease as to such space,
then the Term of this Lease shall expire and end on the commencement date stated
in Tenant's notice as fully and completely as if that date had been the
Termination Date. If, however, Tenant's notice covers less than all of the
Premises, and if Landlord exercises its right to terminate this Lease with
respect to such space described in Tenant's notice, then as of the commencement
date stated in Tenant's notice, the rent reserved herein shall be adjusted on
the basis of the number of, rentable square feet retained by Tenant, and this
Lease as so amended, shall continue thereafter in full force and effect. If
Landlord, upon
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receiving Tenant's notice, does not exercise its right to terminate as
aforesaid, Landlord will not unreasonably withhold its consent to Tenant's
assignment of this Lease or subletting the space covered by its notice. Without
limitation, it shall be deemed reasonable for Landlord to withhold its consent
to Tenant's assignment of this Lease or subletting the space covered by its
notice if the proposed assignee or sublessee is a tenant or occupant of the
Building or an affiliate (a person controlling, controlled by or under common
control with) of a tenant or occupant of the Building.
D. If Tenant, having first obtained Landlord's consent to any assignment
or sublease, or if Tenant or a trustee in bankruptcy for Tenant pursuant to the
Bankruptcy Code, shall assign this Lease or sublet the Premises, or any part
thereof, at a rental or for other consideration in excess of the aggregate of
the Base' Rent, operating Cost Share Rent and Tax Share Rent due and payable by
Tenant under this Lease, then Tenant shall pay to Landlord as Additional Rent
one-half of such excess rent or other consideration within ten (10) days after
receipt thereof from time to time.
E. If Tenant shall assign this Lease as permitted herein, the assignee
shall expressly assume all of the obligations of Tenant hereunder and agree to
comply with and be bound by all of the terms, provisions and conditions of this
Lease, in a written instrument satisfactory to Landlord and furnished to
Landlord not later than fifteen (15) days prior to the effective date of the
assignment. If Tenant shall sublease the Premises as permitted herein, Tenant
shall obtain and furnish to Landlord, not later than fifteen (15) days prior to
the effective date of such sublease and in form satisfactory to Landlord, the
written agreement of such subtenant that it shall comply with and be bound by
all of the terms, provisions and conditions of this Lease and that it will
attorn to Landlord, at Landlord's option and written request, in the event this
Lease terminates before the expiration of the sublease.
F. If Tenant is a corporation whose stock is not publicly traded, any
transaction or series of transactions (including, without limitation, any
dissolution, merger, consolidation or other reorganization of Tenant, or any
issuance, sale, gift, transfer or redemption of any capital stock of Tenant,
whether voluntary, involuntary or by operation of law, or any combination of any
of the foregoing transactions) resulting in the transfer of control of Tenant,
other than by reason of death, shall be deemed to be a voluntary assignment of
this Lease by Tenant subject to the provisions of this Section 14. If Tenant is
a partnership, any transaction or series of transactions (including without
limitation any withdrawal or admittance of a partner or any change in any
partner's interest in Tenant, whether voluntary, involuntary or by operation of
law, or any combination of any of the foregoing transactions) resulting in the
transfer of control of Tenant, other than by reason of death, shall be deemed to
be a voluntary assignment of this Lease by Tenant subject to the provisions of
this Section 14. The term "control" as used in this Section 14F means the power
to directly or indirectly direct or cause the direction of the management or
policies of Tenant. If Tenant is a corporation, a change or series of changes in
ownership of stock which would result in direct or indirect change in ownership
by the stockholders or an affiliated group of stockholders of less than fifty
percent (50%) of the outstanding stock as of the date of the execution and
delivery of this Lease shall not be considered a change of control.
Notwithstanding anything contained herein to the contrary, Tenant may assign
this Lease or sublet the Premises, or any part thereof, to any entity
controlling
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Tenant, controlled by Tenant or under common control with Tenant, without the
prior written consent of Landlord.
G. Any assignment, subletting, use, occupancy, transfer or encumbrance of
this Lease or the Premises without Landlord's prior written consent shall be of
no effect and shall, at the option of Landlord, constitute a default under this
Lease.
15. SALE BY LANDLORD. In the event of sale, conveyance, assignment or
transfer by Landlord of its interest in the Project or in the Building or in
this Lease, the same shall operate to release Landlord (subject to the second
paragraph of Section 17 hereof) from any future obligations and any future
liability for or under any of the covenants or conditions, express or implied,
herein contained in favor of Tenant, and in such event, and with respect to such
obligations, covenants and conditions, Tenant agrees to look solely to the
successor in interest of Landlord in and to this Lease. This Lease shall not be
affected by any such sale, conveyance or transfer.
16. ESTOPPEL CERTIFICATE. Landlord shall, at the request of Tenant and
Tenant shall at the request of Landlord at any time and from time to time upon
not less than ten (10) days, prior written notice, execute, acknowledge in
recordable form, and deliver to the other, or for the Tenant to its auditor or a
prospective purchaser of its business or assets, or to its assignee or subtenant
if acceptable to Landlord, or for the Landlord to Landlord's mortgagee, the
lessor under any Ground Lease, auditors or a prospective purchaser of the
Project or any part thereof, a certificate stating that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect), and the dates to which the rent and other charges are paid, and
that Tenant is paying rent on a current basis with no offsets or claims, and
there are not, to Tenant's or Landlord's knowledge, as the case may be, any
uncured defaults on the part of Landlord or of Tenant (or specifying such
offsets, claims or defaults, if any are claimed). Such certificate may require
the party giving it to specify the date of commencement of rent, the
Commencement Date, the Termination Date, the Base Rent, current Operating Cost
Share Rent and Tax Share Rent estimates, the date to which rent has been paid,
whether or not Landlord has completed any improvements required to be made to
the Premises and such other matters as may be required. It is expressly
understood and agreed that any such statement may be relied upon by any
prospective purchaser or encumbrancer of all or any portion of the Project or by
any ground lessor, or by a purchaser or assignee or lender to Tenant or to
auditors of either party hereto or by any other person to whom it is delivered.
The failure to deliver such statement within the time required hereunder shall,
at the option of the requesting party, be a default under this Lease, or be
conclusive evidence, binding upon the nonperforming party that this Lease is in
full force and effect, without modification except as may be represented by the
requesting party, that there are no uncured defaults by the requesting party and
that not more than one (1) month's rent has been paid in advance, and the
nonperforming party shall be estopped from asserting any defaults known to it at
that time.
17. SECURITY DEPOSIT. Tenant has deposited with Landlord security for the
full and faithful performance of every provision of this Lease to be performed
by Tenant in the amount set forth as Item 9 in the Schedule. If Tenant defaults
with respect to any provision of this Lease, Landlord may use all or any part of
this security deposit for the payment of any rent
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and any other sum due or in default, or for the payment of any other amount
which Landlord may spend or become obligated to spend by reason of Tenant's
default, or to compensate Landlord for any loss or damage which Landlord may
suffer by reason of Tenant's default. If any portion of such deposit is to be
used, Tenant shall within five (5) days after written demand therefor deposit
cash with Landlord in an amount sufficient to restore the security deposit to
its original amount and Tenant's failure to do so shall be a material breach of
this Lease. Landlord shall not be required to keep this security deposit
separate from its general funds and Tenant shall not be entitled to interest on
such deposit. If Tenant shall fully and faithfully perform every provision of
this Lease to be performed by it, the security deposit or any balance thereof
shall be returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest hereunder) at the expiration of this Lease and upon vacation
of the Premises in accordance with the provisions hereof. Said security deposit
shall not be deemed an advance payment of rent or a measure of Landlord's
damages for any default hereunder by Tenant.
Tenant acknowledges that Landlord has the right to transfer all or any part
of its interest in the Project or this Lease, and Tenant agrees that in the
event of any such transfer, Landlord shall have the right to transfer such
security deposit to the transferee. Upon delivery by Landlord to Tenant of such
transferee's written acknowledgement of its receipt of such security deposit,
Landlord shall thereby be released by Tenant from all liability or obligation
for the return of such deposit and Tenant agrees to look solely to such
transferee for the return of the security deposit.
18. EXCUSE OF EITHER PARTY'S INABILITY TO PERFORM; EITHER PARTY'S DEFAULT.
Except as specifically provided to the contrary in this Lease and for all
obligations of Tenant under this Lease regarding the payment of money, this
Lease and the obligation of Tenant to pay rent hereunder and perform all of
Tenant's covenants and agreements hereunder shall not be impaired nor shall
either party be in default hereunder because it is unable to fulfill any of its
obligations under this Lease, if the affected party is prevented or delayed from
so doing by any of the following (which shall be referred to herein as a "Force
Majeure"): any accident, breakage, repairs, alterations, improvements, strike or
labor troubles, or any other cause whatsoever beyond the reasonable control of
the affected party, including, but not limited to, energy shortages or
governmental preemption in connection with a national emergency, or by reason of
government laws or any rule, order or regulation of any department or
subdivision thereof of any governmental agency, or by reason of the conditions
of supply and demand which have been or are affected by war or other emergency.
19. PERSONAL PROPERTY AND TENANT FIXTURES. Landlord hereby specifically
waives any right it may have under Illinois statutory or common law to a
security interest or any other lien rights in any of Tenant's personal property
or fixtures situated on the Premises.
20. NOTICES. All notices and approvals to be given by one party to the
other party under this Lease shall be given in writing, mailed or delivered as
follows
32.
<PAGE>
A. To Landlord as follows:
Teachers Insurance and Annuity Teachers Insurance and Annuity
Association of America Association of America
c/o Office of the Building Manager 730 Third Avenue
414 North Orleans Street New York, New York 10017
Chicago, Illinois 60610 Attn: Vice President
or to such other person at such other address designated by notice to Tenant.
B. To Tenant at the place set forth as Item 10 on the Schedule and at the
Premises or at such other address designated by notice to Landlord.
Mailed notices shall be sent by United States Certified or Registered Mail,
postage prepaid. Mailed notices shall be deemed to have been given 2 business
days after posting in the United States mails, and notices delivered personally
shall be deemed to have been given upon delivery or attempted delivery.
21. QUIET POSSESSION. So long as Tenant shall observe and perform the
covenants and agreements binding on it hereunder, Tenant shall at all times
during the Term herein granted and subject to the provisions of this Lease
peacefully and quietly have and enjoy the possession of the Premises without any
encumbrance or hindrance by, from or through Landlord, its successors or
assigns.
22. REAL ESTATE BROKER. Both parties represent to the other that they have
not dealt with any real estate broker except for Miglin-Beitler Management
Corporation and that broker listed in Item 11 in the Schedule, with respect to
this Lease and, to their knowledge no other broker initiated or participated in
the negotiation of this Lease, submitted or showed the Premises to Tenant or is
entitled to any commission in connection with this Lease. Both parties agree to
indemnify and hold the other harmless from all claims from any other real estate
broker claiming through such indemnifying party for commission or fees in
connection with this Lease.
23. CONDEMNATION. If all or any portion of the Project or Premises are
taken by eminent domain so that the Premises cannot be reasonably used by Tenant
for the purposes for which they are demised, then at the option of either party
this Lease may be terminated effective as of the date of the taking and all rent
reserved hereunder shall be paid to the date of such taking. The entire award
for any total or partial taking shall be paid to and retained by Landlord.
Nothing contained in this Section 23 shall prohibit Tenant from instituting
separate proceedings to pursue a separate award compensating it for relocation,
business loss and other costs incurred by Tenant in connection with a
condemnation or taking, as long as such award in no way reduces the award
otherwise payable to Landlord. If any condemnation proceeding shall be
instituted in which it is sought to take or damage any part of the Project, or
if the grade of any street or alley adjacent to the Project is changed by any
competent authority and such change of grade makes it necessary or desirable to
remodel the Project to conform to the changed grade, Landlord shall have the
right to terminate this Lease upon not less than ninety (90) days' notice prior
to the date of termination designated in the notice. No money or other
consideration shall be payable by Landlord to Tenant for said termination, and
the Tenant shall have no right to share in the
33.
<PAGE>
condemnation award or in any judgment for damages caused by said eminent domain
proceeding.
24. SPRINKLERS. If the sprinkler system installed at the Project or any of
its appliances shall be damaged or injured or not in proper working order by
reason of any act or omission of Tenant, Tenant's agents, servants, employees,
licensees or invitees, Tenant shall forthwith restore the same to good working
condition at its own expense. Tenant shall not do or permit anything to be done
upon the Premises, or bring or keep anything thereon which is in violation of
rules, regulations and requirements of the Illinois Inspection and Rating
Bureau, Fire Insurance Rating Organization or any similar authority having
jurisdiction over the Building, and if the Board of Fire Underwriters or Fire
Insurance Exchange or any bureau, department or official of the state or city
government, requires or recommends that any changes, modifications, alterations
or additional sprinkler heads or other equipment be made or supplied by reason
of Tenant's business or acts or the location of partitions, trade fixtures, or
other contents of the Premises, or if any such changes, modifications,
alterations, additional sprinkler heads or other equipment, become necessary to
prevent the imposition of a penalty or charge against the full allowance for a
sprinkler system in the fire insurance rate as fixed by said Exchange, or by any
fire insurance company, Tenant shall, at Tenant's expense, promptly make and
supply such changes, modifications, alterations, additional sprinkler heads or
other equipment.
25. MISCELLANEOUS.
A. Covenants Binding on Successors. Subject to the terms and provisions
--------------------------------
of Section 14 of this Lease, each provision of this Lease shall extend to and
shall, as the case may require, bind and inure to the benefit of Landlord and
Tenant and their respective heirs, legal representatives and successors and
assigns.
B. Date Payments Are Due. All amounts owed to Landlord hereunder, for
---------------------
which the date of payment is not expressly fixed herein, shall be paid, within
thirty (30) days from the date Landlord renders statements of account therefor
and shall bear interest at the rate provided in Section 2D(3) from the date due
until paid.
C. Meaning of "Re-entry" and "Landlord". The words "re-enter" and "re-
-----------------------------------
entry" as used in this Lease are not restricted to their technical legal
meaning. The term "Landlord," as used in this Lease, means only the landlord
from time to time, and upon conveying or transferring its interest, such
conveying or transferring landlord .shall be relieved from any further
obligation or liability pursuant to Sections 13B(1) , 13C, 15 and 17 of this
Lease.
D. Time Is of the Essence. Time is of the essence of this Lease and
----------------------
each and all of its provisions.
E. No Option. Submission of this instrument for examination or signature
---------
by Tenant or by Landlord does not constitute a reservation of or option for
lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
F. Severability. The invalidity or unenforceability of any provision
------------
hereof shall not affect or impair any other provisions.
34.
<PAGE>
G. Governing Laws. This Lease shall be governed by and construed pursuant
--------------
to the laws of the State of Illinois.
H. Lease Modification. Should any mortgage require a modification of this
-------------------
Lease, which modification will not bring about any increased cost or expense to
Tenant or in any other way substantially change the rights and obligations of
Tenant hereunder, Tenant agrees that this Lease may be so modified.
I. No Oral Modification. No subsequent alteration, amendment, change or
---------------------
addition to this Lease shall be binding upon Landlord or Tenant unless in
writing signed by both parties.
J. Litigation and Arbitration Costs. In the event of any litigation or
--------------------------------
arbitration between the parties hereto with respect to the enforcement or
interpretation of this Lease, the nonprevailing party shall pay the attorney's
fees, court costs and other costs of the prevailing party, provided that Tenant
shall notify Landlord of any alleged breach of Landlord's obligations under this
Lease and shall take no action with respect to such breach as long as Landlord
immediately commences to cure and diligently proceeds to complete the cure of
said breach within a reasonable time period. Each party hereto shall pay the
attorney's fees, court costs (if any) and other costs incurred by the other
party in any litigation, negotiation or transaction in which such party causes
the other party, without the other party's fault, to become involved or
concerned (including, without limitation, any request for Landlord's consent to
a sublet or assignment).
K. Captions. The marginal headings and titles to the paragraphs of this
--------
Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part hereof.
L. Remedies and Rights May Be Exercised by Landlord in Its Own Name:
----------------------------------------------------------------
Authority to Execute This Lease. All rights and remedies of Landlord under this
- -------------------------------
Lease, or that may be provided by law, may be exercised by Landlord in its own
name individually, or in its name by any agent thereof, and all legal
proceedings for the enforcement of any such rights or remedies, may be commenced
and prosecuted to final judgment and executed by Landlord in its own name
individually or in its name by any agent thereof. Landlord and Tenant each
represents to the other that each has full power and authority to execute this
Lease and to make and perform the agreements herein contained.
M. Payments to Affiliates. Nothing in this Lease shall be construed to
----------------------
prevent Landlord from paying for services rendered or materials delivered with
respect to the Project or to the Premises (including, without limitation,
management services and contracting out capital improvements .or other capital
repairs or construction items) by affiliates of Landlord provided that the fees
or costs of such services and materials are at market rates in the Chicago
metropolitan area. All such fees or costs paid by Landlord to such affiliates
shall be deemed to constitute Operating Costs on the same terms and conditions
as if such fees and costs were paid to non-affiliates of Landlord.
N. Entire Agreement. This Lease (including, without limitation, any Rider
----------------
attached hereto and signed by both parties and Appendices A through E, all of
which are incorporated
35.
<PAGE>
herein by this reference) constitutes the entire agreement between the Landlord
and the Tenant. Tenant acknowledges that it has not been induced to enter this
Lease by any promises, assurances, agreements, statements or representations
(collectively, "Representations") which are not set forth in this Lease
(including without limitation any Representations concerning Operating Costs or
Taxes). Tenant acknowledges that it has not relied on any such Representations,
agrees that no such Representations shall be used in the construction or
interpretation of this Lease and agrees that Landlord shall have no liability
for any consequences arising as a result of any such Representations.
O. Landlord's Title. Landlord's title is and always shall be paramount to
----------------
the interest of Tenant, and nothing herein contained shall empower Tenant to do
any act which can, shall or may encumber Landlord's title.
P. Light and Air Rights. This Lease does not grant any rights to light or
--------------------
air over or about the Project. Landlord specifically excepts and reserves to
itself the use of any roofs, the exterior portions of the Premises, all rights
to and the land and improvements below the improved floor level of the Premises,
the improvements and air rights above the Premises and the improvements and air
rights located outside the demising walls of the Premises, and such areas within
the Premises as are required for installation of utility lines and other
installations required to serve any occupants of the Building and the right to
maintain and repair the same, and no rights with respect thereto are conferred
upon Tenant unless otherwise specifically provided herein.
Q. Consents. Except as otherwise expressly set forth herein, wherever the
--------
consent or approval of either Landlord or Tenant is required by the provisions
of this Lease, such party shall not unreasonably withhold or delay such consent
or approval.
R. Landlord's Agents. Any rights reserved or granted to Landlord
-----------------
hereunder may be exercised by Landlord or any of its agents, employees,
contractors or designees.
S. Terms "Landlord" and "Tenant". The words "Landlord" and "Tenant"
----------------------------
whenever used in this Lease shall be construed to mean the plural where
necessary, and the necessary grammatical changes required to make the provisions
hereof apply either to entities or individuals, or men or women, shall in all
cases be assumed as though in each case fully expressed.
T. Rent Not Based on Income. It is agreed by Landlord and Tenant that no
------------------------
rental or other payment for the use, occupancy or utilization of the Premises
demised hereunder shall be, or is, based in whole or in part on the net income
or profits derived by any person from the Building or the Premises so leased,
used, occupied, or utilized, and Tenant further agrees that it will not enter
into any sublease, license, concession or other agreements for any use,
occupancy or utilization of the Premises which provides for a rental or other
payment for such use, occupancy or utilization based in whole or in part on the
net income or profits derived by any person from the Premises so leased, used,
occupied or utilized.
U. Exclusivity. Tenant is not granted by this Lease and shall not be
-----------
entitled to have any exclusive rights in the Building other than the rights of
its occupancy.
36.
<PAGE>
V. No Recording by Tenant. Tenant shall not record or file in any public
----------------------
records this Lease or any portion thereof.
26. UNRELATED BUSINESS INCOME.
A. Landlord shall have the right at any time and from time to time to
unilaterally amend the provisions of this Lease, if Landlord is advised by its
counsel that all or any portion of the monies paid by Tenant to Landlord
hereunder are, or may be deemed to be, unrelated business income within the
meaning of the United States Internal Revenue Code or regulations issued
thereunder, and Tenant agrees that it will execute all documents or instruments
necessary to effect such amendment or amendments, provided that no such
amendment shall result in Tenant having to pay in the aggregate more money on
account of its occupancy of the Premises under the terms of this Lease, as so
amended, and provided further that no such amendment shall result in Tenant
receiving fewer services or services of a lesser quality than it is presently
entitled to receive under this Lease.
B. Any services which Landlord is required to furnish pursuant to the
provisions of this Lease may, at Landlord's option, be furnished from time to
time, in whole or in part, by employees of Landlord or the building manager of
the Project or its employees or by one or more third persons hired by Landlord
or the building manager of the Project. Tenant agrees that upon Landlord's
written request it will enter into direct agreements with the building manager
of the Project or other parties designated by Landlord for the furnishing of any
such services required to be furnished by Landlord hereunder, in form and
content approved by Landlord, provided however that no such contract shall
result in Tenant having to pay in the aggregate more money on account of its
occupancy of the Premises under the terms of this Lease, and provided further
that no such contract shall result in Tenant receiving fewer services or
services of a lesser quality than it is presently entitled to receive under this
Lease.
27. HAZARDOUS MATERIALS. Tenant shall not (either with or without
negligence) cause or permit the escape, disposal or release of any biologically
or chemically active or other hazardous substances, or materials. Tenant shall
not allow the storage or use of such substances or materials in any manner not
sanctioned by law or by the highest standards prevailing in the industry for the
storage and use of such substances or materials, nor allow to be brought into
the Project any such materials or substances except to use in the ordinary
course of Tenant's business, and then only after written notice is given to
Landlord of the identity of such substances or materials, without limitation,
hazardous substances and materials shall include those described in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Section 6901 et seq., any applicable state or local
laws and the regulations adopted under these acts. If any present or future
lender or governmental agency shall ever require testing to ascertain whether or
not there has been any release of hazardous materials, then the reasonable costs
thereof shall be reimbursed by Tenant to Landlord upon demand as Additional Rent
hereunder if such requirement applies to the Premises. In addition, Tenant shall
execute affidavits, representations and the like from time to time at Landlord's
request concerning Tenant's best knowledge and belief regarding the presence of
hazardous substances or materials on the Premises. In all events, Tenant shall
indemnify Landlord in the manner elsewhere provided in this Lease from any
release of hazardous materials on the
37.
<PAGE>
Premises occurring while Tenant is in possession, or elsewhere if caused by
Tenant or persons acting under Tenant. The within covenants shall survive the
expiration or earlier termination of the Lease Term.
28. EXCULPATORY PROVISIONS. It is expressly understood and agreed by and
between the parties hereto, anything herein to the contrary notwithstanding,
that each and all of the representations, warranties, covenants, undertakings
and agreements herein made on the part of any Landlord while in form purporting
to be the representations, warranties, covenants, undertakings and agreements of
such Landlord are nevertheless each and every one of them made and intended, not
as personal representations, warranties, covenants, undertakings and agreements
by such Landlord, or for the purpose or with the intention of binding such
Landlord personally, but are made and intended for the purpose only of
subjecting such Landlord's interest in the Premises and the Project to the terms
of this Lease and for no other purpose whatsoever, and in case of default
hereunder by such Landlord (or default through, under or by any of the
beneficiaries of any Landlord which is a land trust, or any of the agents,
servants, employees or representatives of such Landlord or said beneficiaries),
Tenant shall look solely to the interests of such Landlord in the Premises and
the Project; that no Landlord nor any of the beneficiaries of any Landlord which
is a land trust shall have any personal liability to pay any indebtedness
accruing hereunder or to perform any covenant, either express or implied, herein
contained and no liability or duty shall rest upon any Landlord which is a land
trust to sequester the trust estate or the rents, issues and profits arising
therefrom, or the proceeds arising from any sale or other disposition thereof;
that no personal liability or personal responsibility of any sort is assumed by,
nor shall at any time be asserted or enforceable against, any Landlord, or
against any of the beneficiaries of any Landlord which is a land trust, on
account of this Lease or on account of any representation, warranty, covenant,
undertaking or agreement of Landlord in this Lease contained, either express or
implied, all such personal liability, if any, being expressly waived and
released by Tenant and by all persons claiming by, through or under Tenant; that
this Lease, if executed by any Landlord which is a land trust, is executed and
delivered solely in the exercise of the powers conferred upon it as such
Trustee; and that as to any partnership which is a Landlord or the beneficiary
of a Landlord which is a land trust, a deficit capital account of any partner of
such partnership shall not be deemed to be an asset or property of such
partnership.
29. EXTENSION OPTION. Subject to Sections 29B and 29C below, the Term of
this Lease may be extended, at the option of Tenant, for one additional period
of three (3) years (the "Renewal Term"). The Renewal Term shall be upon the same
terms, covenants and conditions contained in this Lease, except for the amount
of Base Rent payable during the Renewal Term, and any reference in the Lease to
the "Term" of the Lease shall be deemed to include the Renewal Term and apply
thereto, unless it is expressly provided otherwise. Tenant shall have no
extension option beyond the aforesaid three year extension option. Any
termination of this Lease during the initial Term of this Lease shall terminate
all rights under this Section 29.
A. The initial Base Rent during the Renewal Term for any space then
constituting a portion of the Premises shall be at a rate equal to the greater
of (i) the Base Rent (as escalated pursuant to Section 2A above) applicable to
the third Lease Year, and (ii) the then prevailing market rate for fully
creditworthy tenants for comparable space in the Building and other first class
office buildings in the vicinity of the Building as reasonably determined by
Landlord.
38.
<PAGE>
Tenant's obligation to pay Operating Cost Share Rent and Tax Share Rent pursuant
to Section 2A of the Lease shall continue during the Renewal Term.
B. Such option to extend shall be exercised by Tenant delivering written
notice to Landlord not less than nine (9) full calendar months prior to the
expiration of the initial Term of this Lease. Thereafter, Landlord shall
calculate the prevailing market rate for the Premises, which calculation shall
reflect the market rate that would be payable per annum for a term commencing on
the first day of the Renewal Term, provided that such calculation shall be final
and shall not be recalculated at the actual commencement of the Renewal Term (if
any).
C. Tenant's right to exercise its option to extend this Lease pursuant to
this Section 29, is subject to the following conditions: (i) that on the date
that Tenant delivers its final binding written notice of its election to
exercise its option to extend, Tenant is not in default under any of the terms,
covenants or conditions of this Lease, after the expiration of any applicable
notice and cure periods, and (ii) that Tenant shall not have assigned this Lease
or sublet the Premises at any time during the period commencing with the date
that Tenant delivers its final binding written notice to Landlord of its
exercise of such option to extend and ending on the commencement date of the
Renewal Term, or at any time prior to such period, if such assignment or
sublease extends into such period.
D. If Tenant fails to give its initial non-binding written notice of
intent or its final binding written notice of intent to exercise its option to
extend when due as provided in this Section 29, Tenant will be deemed to have
waived such option to extend.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the date
first above written.
LANDLORD:
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA, a New York
corporation
By: ____________________________________
Print Name _____________________________
Title __________________________________
TENANT:
MRJ INC., a __________________corporation
By: ___________________________________
Print Name ____________________________
Title _________________________________
39.
<PAGE>
APPENDIX A
[PLAN APPEARS HERE]
Page 1 of 1
<PAGE>
APPENDIX B
CLEANING SCHEDULE
Landlord shall furnish janitorial service for offices and common areas as
described below five nights per week unless otherwise specified and except
Holidays:
1. LOBBIES AND ENTRANCE AREAS
Directories shall be wiped clean nightly.
Public telephones shall be cleaned nightly.
Entrance door glass shall be cleaned nightly.
Cigarette urns shall be cleaned nightly.
Carpets, runners and mats shall be vacuumed nightly.
Terrazzo flooring shall be swept and mopped nightly.
Terrazzo flooring shall be buffed nightly.
Terrazzo flooring shall be recoated bi-weekly.
Terrazzo flooring shall be completely stripped and refinished bi-
monthly.
Terrazzo side panels shall be spot cleaned nightly.
Terrazzo side panels shall be completely washed, dried and polished
quarterly.
2. ELEVATORS--PUBLIC & FREIGHT
Elevator doors, tracks, metal work shall be dusted and wiped down
nightly.
Elevator control panels shall be washed and polished nightly.
Elevator ceiling vents and light fixtures shall be dusted weekly.
Elevator carpets shall be vacuumed and spot cleaned nightly.
Elevator carpets shall be shampooed monthly or as required.
3. WASHROOMS
Toilets and urinals shall be cleaned on all surfaces nightly.
Wash basins, shelves, dispensers and all other washroom fixtures shall
be cleaned nightly.
Mirrors shall be cleaned and polished nightly.
Chrome and other bright work including exposed plumbing, toilet seat
hinges, etc. shall be cleaned nightly.
Partitions and walls to be spot cleaned nightly.
Waste receptacles shall be emptied and cleaned nightly.
Washroom floors shall be swept and floor wet mopped nightly.
Washroom dispenser supplies shall be replenished nightly.
4. GENERAL DUSTING
Horizontal surfaces (cleared desk tops, furniture tops, file cabinets,
etc.) shall be dusted nightly.
Window sills and frames, partition tops, coat racks, etc. will be
dusted weekly.
APPENDIX B
Page 1 of 1
<PAGE>
High dusting shall be performed monthly and includes the following:
pictures and frames not reached in nightly cleaning; vertical
surfaces such as partitions and ceiling vents.
Venetian blinds shall be dusted semi-annually.
5. CARPET AREAS
All carpets shall be vacuumed nightly and vacuumed edge to edge once
per week.
Carpeting in traffic areas shall be thoroughly vacuumed nightly.
Carpeting to be spot cleaned as required.
Corridor carpeting to be bonnet cleaned monthly.
6. TRASH REMOVAL
Waste baskets and other waste receptacles shall be emptied nightly.
Waste material shall be removed to a designated area and placed in the
containers to be furnished by Landlord.
7. PARTITIONS GLASS AND INTERIOR ENTRANCE DOORS
Interior partition glass and doors shall be spot cleaned nightly.
Interior partition glass and door glass shall be washed monthly in all
public areas and quarterly in tenant areas.
Exterior window cleaning is not included.
8. OFFICE FURNITURE
Cleared desk tops, to be dusted nightly.
Telephones shall be dusted daily and sanitized weekly.
File cabinets, office furniture (tops, sides and legs) shall be
maintained in a dirt and dust free condition.
File cabinets and desk fronts shall be spot cleaned nightly.
9. RESILIENT AND HARD FLOORS
Only approved floor finishes which are non-staining and provide a high
degree of slip prevention shall be utilized.
Tenant non-carpeted areas shall be swept nightly and spot damp mopped.
Tenant resilient tile floors shall be damp mopped a minimum of once
per week and buffed or spray buffed as required.
Tenant high traffic areas shall be swept and mopped nightly and spray
buffed as required.
Tenant resilient tile floors and hard floors shall be thoroughly
stripped and refinished semi-annually.
Stairwells will be monitored daily, swept and damp mopped as required.
APPENDIX B
Page 2 of 2
<PAGE>
10. MISCELLANEOUS
Drinking fountains shall be cleaned, sanitized and polished nightly.
Doors and switch plates shall be spot cleaned daily to remove finger
marks and smudges.
Wall surfaces that can safely be spot cleaned without damage to paint
shall be cleaned as required.
Premises shall be left locked, with only designated lights left on.
APPENDIX B
Page 3 of 3
<PAGE>
APPENDIX C
RULES AND REGULATIONS
1. Tenant shall not place anything, or allow anything to be placed near
the glass of any window, door, partition or wall which may, in Landlord's
judgment, appear unsightly from outside of the Project.
2. The Project directory shall be available to Tenant solely to display
names and their location in the Project, which display shall be as directed by
Landlord.
3. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used by Tenant for any purposes
other than for ingress to and egress from the Premises. Tenant shall lend its
full cooperation to keep such areas free from all obstruction and in a clean and
sightly condition and shall move all supplies, furniture and equipment as soon
as received directly to the Premises and move all such items and waste, being
taken from the Premises (other than waste customarily removed by employees of
the Building) directly to the shipping platform at or about the time arranged
for removal therefrom. The halls, passages; exits, entrances, elevators,
stairways, balconies and roof 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, reasonably
exercised, shall be prejudicial to the safety, character, reputation and
interests of the Project. Neither Tenant nor any employee or invitee of Tenant
shall go upon the roof of the Project.
4. The toilet rooms, urinals, wash bowls and other apparatuses shall not
be used for any purposes other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein, and to the
extent caused by Tenant or its employees or invitees, the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant.
5. Tenant shall not cause any unnecessary janitorial labor or services by
reason of Tenant's carelessness or indifference in the preservation of good
order and cleanliness
6. Tenant shall not install or operate any refrigerating, heating or air
conditioning apparatus or carry on any mechanical business without the prior
written consent of Landlord; use the Premises for housing, lodging or sleeping
purposes; or permit preparation or warming of food in the Premises (warming of
coffee and individual meals with employees and guests excepted). Tenant shall
not occupy or use the Premises or permit the Premises to be occupied or used for
any purpose, act or thing which is in violation of any public law, ordinance or
governmental regulation or which may be dangerous to persons or property.
7. Tenant shall not bring upon, use or keep in the Premises or the
Project any kerosene, gasoline or inflammable or combustible fluid or material,
or any other articles deemed hazardous to persons or property, or use any method
of heating or air conditioning other than that supplied by Landlord.
APPENDIX C
Page 1 of 1
<PAGE>
8. Landlord shall have sole power to direct electricians to where and how
telephone and other wires are to be introduced. No boring or cutting for wires
is to be allowed without the consent of Landlord. The location of telephones,
call boxes and other office equipment affixed to the Premises shall be subject
to the approval of Landlord.
9. No additional locks shall be placed upon any doors, windows or
transoms in or to the Premises. Tenant shall not change existing locks or the
mechanism thereof. Upon termination of the lease, Tenant shall deliver to
Landlord all keys and passes for offices, rooms, parking lot and toilet rooms
which shall have been furnished Tenant. In the event of the loss of keys so
furnished, Tenant shall pay Landlord therefor. Tenant shall not make, or cause
to be made, any such keys and shall order all such keys solely from Landlord and
shall pay Landlord for any keys in addition to the two sets of keys originally
furnished by Landlord for each lock.
10. Tenant shall not install linoleum, tile, carpet or other floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord.
11. No furniture, packages, supplies, equipment or merchandise will be
received in the Project or carried up or down in the freight elevator, except
between such hours and in such freight elevator as shall be designated by
Landlord. Tenant shall not take or permit to be taken in or out of other
entrances of the Building or take or permit on other elevators, any item
normally taken in or out through the trucking concourse or service doors or in
or on freight elevators.
12. Tenant shall cause all doors to the Premises to be closed and securely
locked and shall turn off all utilities, lights and machines, before leaving the
Project at the end of the day.
13. Without the prior written consent of Landlord, Tenant shall not use
the name of the Project or any picture of the Project in connection with, or in
promoting or advertising the business of, Tenant, except Tenant may use the
address of the Project as the address of its business.
14. Tenant shall cooperate fully with Landlord to assure the most
effective operation of the Premises' or the Project's heating and air
conditioning, and shall refrain from attempting to adjust any controls, other
than room thermostats installed for Tenant's use. Tenant shall keep corridor
doors closed.
15. Tenant assumes full responsibility for protecting the Premises from
theft, robbery and pilferage, which may arise from a cause other than Landlord's
negligence, which includes keeping doors locked and other means of entry to the
Premises closed and secured.
16. Peddlers, solicitors and beggars shall be reported to the office of
the Projector as Landlord otherwise requests.
17. Tenant shall not advertise the business, profession or activities of
Tenant conducted in the Project in any manner which violates the letter or
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business, profession or activities.
APPENDIX C
Page 2 of 2
<PAGE>
18. No bicycle or other vehicle and no animals or pets shall be allowed in
the Premises, halls, freight docks, or any other parts of the Building except
that blind persons may be accompanied by "seeing eye" dogs. Tenant shall not
make or permit any noise, vibration or odor to emanate from the Premises, or do
anything therein tending to create, or maintain, a nuisance, or do any act
tending to injure the reputation of the Building.
19. Tenant acknowledges that Building security problems may occur which
may require the employment of extreme security measures in the day-to-day
operation of the Project.
Accordingly:
(a) Landlord may, at any time, or from time to time, or for regularly
scheduled time periods, as deemed advisable by Landlord and/or its agents, in
their sole discretion, require that persons entering or leaving the Project or
the Property identify themselves to watchmen or other employees designated by
Landlord, by registration, identification or otherwise. Uniformed guards will be
on duty at the Project 24 hours a day, 7 days a week.
(b) Tenant agrees that it and its employees will cooperate fully with
Project employees in the implementation of any and all security procedures.
(c) Such security measures shall be the sole responsibility of Landlord,
and Tenant shall have no liability for any action taken by Landlord in
connection therewith.
20. Tenant shall not do or permit the manufacture, sale, purchase, use or
gift of any fermented, intoxicating or alcoholic beverages without obtaining
written consent of Landlord.
21. Tenant shall not disturb the quiet enjoyment of any other tenant.
22. Tenant shall not provide any janitorial services or cleaning without
Landlord's written consent and then only subject to supervision of Landlord and
at Tenant's sole responsibility and by janitor or cleaning contractor or
employees at all times satisfactory to Landlord.
23. Landlord may retain a pass key to the Premises and be allowed
admittance thereto at all times to enable its representatives to examine the
Premises from time to time and to exhibit the same and Landlord may place and
keep on the windows and doors of the Premises at any time signs advertising the
Premises for rent.
24. No equipment, mechanical ventilators, awnings, special shades or other
forms of window covering shall be permitted either inside or outside the windows
of the Premises without the prior written consent of Landlord, and then only at
the expense and risk of Tenant, and they shall be of such shape, color,
material, quality, design and make as may be approved by Landlord.
25. Tenant shall not during the term of this Lease canvas or solicit other
tenants of the Building for any purpose.
APPENDIX C
Page 3 of 3
<PAGE>
26. Tenant shall not install or operate any phonograph, musical or sound
producing instrument or device, radio receiver or transmitter, TV receiver or
transmitter, or similar device in the Building, nor install or operate any
antenna, aerial, wires or other equipment inside or outside the Building, nor
operate any electrical device from which may emanate electrical waves which may
interfere with or impair radio or television broadcasting or reception from or
in the Building or elsewhere, without in each instance the prior written
approval of Landlord. The use thereof, if permitted, shall be subject to control
by Landlord to the end that others shall not be disturbed.
27. Tenant shall promptly remove all rubbish and waste from the Premises.
28. Tenant shall not exhibit, sell or offer for sale, rent or exchange in
the Premises or at the Project any article, thing or service except those
ordinarily embraced within the use of the Premises specified in Section 6 of
this Lease, without the prior written consent of Landlord.
29. Tenant shall list all furniture, equipment and similar articles Tenant
desires to remove from the Premises or the Building and deliver a copy of such
list to Landlord and procure a removal permit from the Office of the Building
authorizing Building employees to permit such articles to be removed.
30. Tenant shall not overload any floors in the Premises or any public
corridors or elevators in the Building.
31. Tenant shall not do any painting in the Premises, or mark, paint, cut
or drill into, drive nails or screws into, or in any way deface any part of the
Premises or the Building, outside or inside, without the prior written consent
of Landlord.
32. Whenever Landlord's consent, approval or satisfaction is required
under these Rules, then unless otherwise stated, any such consent, approval or
satisfaction must be obtained in advance, such consent or approval may be
granted or withheld in Landlord's sole discretion, and Landlord's satisfaction
shall be determined in its sole judgment.
33. Tenant and its employees shall cooperate in all fire drills conducted
by Landlord in the Building.
34. Tenant shall have access to the Premises 24 hours a day.
APPENDIX C
Page 4 of 4
<PAGE>
APPENDIX D
Intentionally Omitted.
APPENDIX D
Page 1 of 1
<PAGE>
APPENDIX E
MORTGAGES CURRENTLY AFFECTING THE PROJECT
Mortgage, Assignment of Leases and Rents, and Security Agreement and
Fixture Filing dated October 30, 1986 by and between 414 Orleans Plaza, Ltd. and
American National Bank and Trust Company of Chicago not individually but solely
as Trustee under a certain Trust Agreement dated March 28, 1984 and known as
Trust No. 60679 (collectively, the "Mortgagor") and Teachers Insurance and
Annuity Association of America (the "Mortgagee").
APPENDIX E
Page 1 of 1
<PAGE>
NAVIANT TECHNOLOGY SOLUTIONS, INC.
LEASE
650 TOWNSEND STREET
SAN FRANCISCO
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. SALIENT LEASE TERMS.................................................................. 1
2. DEFINITIONS.......................................................................... 3
3. PREMISES............................................................................. 9
4. TERM................................................................................. 10
5. PRE-TERM POSSESSION.................................................................. 10
6. DELAY IN DELIVERY OF POSSESSION...................................................... 11
7. MINIMUM RENT......................................................................... 11
8. ADDITIONAL RENT...................................................................... 11
9. ACCORD AND SATISFACTION.............................................................. 13
10. SECURITY DEPOSIT..................................................................... 13
11. USE.................................................................................. 14
12. COMPLIANCE WITH LAWS AND REGULATIONS................................................. 16
13. SERVICE AND EQUIPMENT................................................................ 22
14. WASTE................................................................................ 24
15. ALTERATIONS.......................................................................... 24
16. PROPERTY INSURANCE................................................................... 26
17. INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION.................................... 28
18. LIABILITY INSURANCE.................................................................. 29
19. INSURANCE POLICY REQUIREMENTS........................................................ 30
20. LESSEE INSURANCE DEFAULT............................................................. 30
21. FORFEITURE OF PROPERTY AND LESSOR'S LIEN............................................. 30
22. MAINTENANCE AND REPAIRS.............................................................. 31
23. DESTRUCTION.......................................................................... 32
24. CONDEMNATION......................................................................... 33
25. ASSIGNMENT AND SUBLETTING............................................................ 35
26. ABANDONMENT.......................................................................... 38
27. ENTRY BY LESSOR...................................................................... 39
28. SIGNS................................................................................ 39
29. DEFAULT.............................................................................. 39
30. REMEDIES UPON DEFAULT................................................................ 40
31. BANKRUPTCY........................................................................... 42
32. SURRENDER OF LEASE................................................................... 45
33. LESSOR'S EXCULPATION................................................................. 46
34. ATTORNEYS' FEES...................................................................... 46
35. NOTICES.............................................................................. 47
36. SUBORDINATION........................................................................ 47
37. ESTOPPEL CERTIFICATES................................................................ 48
38. WAIVER............................................................................... 48
</TABLE>
i.
<PAGE>
<TABLE>
<S> <C>
39. HOLDING OVER......................................................................... 49
40. SUCCESSORS AND ASSIGNS............................................................... 49
41. TIME................................................................................. 49
42. EFFECT OF LESSOR'S CONVEYANCE........................................................ 49
43. COMMON AREAS......................................................................... 49
44. TRANSFER OF SECURITY................................................................. 49
45. LATE CHARGES......................................................................... 50
46. CORPORATE AUTHORITY.................................................................. 50
47. MORTGAGEE PROTECTION................................................................. 50
48. MISCELLANEOUS PROVISIONS............................................................. 50
49. WAIVER OF CALIFORNIA CODE SECTIONS................................................... 53
50. SHUTTLE SERVICE...................................................................... 53
</TABLE>
ii.
<PAGE>
_________ dated for reference purposes only this ______day of________ 1999.
1. SALIENT LEASE TERMS
1.1 Payment: ZORO, LLC
650 Townsend Street
San Francisco, CA 94103
Attn.: Building Management Office
Fax No.: (415) 487-4056
1.2 Address and Notice Lessor: ZORO, LLC,
Address: a California limited liability company
650 Townsend Street
San Francisco, CA 94103
Attn.: Building Management Office
Fax No.: (415) 487-4056
Lessee: NAVIANT TECHNOLOGY
SOLUTIONS, INC.,
a _________________ corporation
(If more than one party, then the obligations
hereunder shall be joint and several.)
Until commencement of the Term:
Naviant Technology Solutions
14 Campus Boulevard, Suite 200
Newtown Square, PA 19073-3279
After commencement of the Term, Notices shall be
sent to Lessee at the Leased Premises.
(Section 35.1)
1.3 Premises: (A) Name and Location of Complex:
Townsend Center
650 Townsend Street
San Francisco, CA 94103
(B) Leased Premises: Third Floor, Quadrant A
Suite 300
Usable Area: 3,180 square feet
Adjusted Rentable Area: 4,134 square feet*
Rentable Area: 4,654 square feet
Load Factor: 1.3
1.
<PAGE>
(*Based On Usable Area multiplied
by a load factor of 1.3)
1.4 Term: (A) Estimated Delivery Date: __________________
(B) Initial Term: Four (4) years
(C) Renewal Term: None
(Section. 4.1)
1.5 Rent: (A) Minimum Rent:
Annual Rental Monthly Rental
Years 1-4 $136,422 $11,368.50
($33.00/ARSF) ($2.75/ARSF)
(Section 7.1)
(B) Advance Rent:
Eleven Thousand Three Hundred Sixty-Eight and
Fifty ($11,368.50)
(Section 7.2)
1.6 Security Deposit: One Hundred Fifty-Three Thousand Dollars
($153,000)
(Section 10.1)
1.7 Use: Multimedia, software development, marketing, sales,
customer service and administrative functions
(Section 11.1)
1.8 Initial Pro Rata .69% (4,654/672,788 rsf)
Percent:
(Section 2.1)
(Section 16.3)
1.9 Base Operating Cost (A) Base Expense Year: 2000
for the Complex: (B) Base Tax Year: 1999-2000
(Section 8.2)
(Section 16.3)
1.10 Real Estate Cushman & Wakefield of California, Inc. and
Brokers: Polatnick Properties (Lessor's Brokers)
CB Richard Ellis, Inc. (Lessee's Broker)
(Section 48.14)
1.11 Rentable Area of 672,788 square feet
Building at
Commencement:
2.
<PAGE>
1.12 Parking Three (3) stalls
1.13 Contents: This Lease consists of:
Pages 1 through 59
Sections 1 through 50 Addenda (if any)
Exhibits:
A - Legal Description of Complex
B - Plan of the Complex
C - Floor Plan of the Leased Premises
D - Work Letter Agreement
E - Acknowledgment of Commencement
F - Rules and Regulations
G - Building Standards
H - Janitorial Specifications
I - Subordination Agreement
J - Letter of Credit Terms
2. DEFINITIONS
2.1 The terms defined in this Article 2 shall, for all purposes of this
Lease and all agreements supplemental hereto, have the meanings herein specified
unless expressly stated otherwise.
"Adjusted Rentable Area" means the Usable Area multiplied by 1.2
----------------------
except on the 2nd and 3rd floors for which the multiplicand shall be 1.3.
"Alterations" means any alterations, additions, improvements or
-----------
installations performed by Lessee.
"Atrium" means the central Atrium on floors 2 through 6 of the
------
Building so identified on Exhibits B and C, if applicable.
"Base Building Work" is defined in the Work Letter Agreement,
------------------
attached hereto as Exhibit D.
"Base Operating Cost" means the sum set forth in Section 1.9
-------------------
hereof.
"BOMA" means the standards of measurement adopted by the Building
----
Owners and Managers Association, American National Standard, ANSI/BOMA 2.65.1 -
1996 ("BOMA") as modified by Lessor for uniform use in the Complex.
"Building" shall mean the structure which contains the Leased
--------
Premises.
"Building Standards" shall mean Lessor's standard specifications for
------------------
construction in the Building as set forth in Exhibit G, attached hereto, and as
may be established by Lessor from time to time.
3.
<PAGE>
"Commencement Date" shall mean the earlier of the following dates:
-----------------
(i) The day upon which Lessee takes possession of the Leased
Premises; or
(ii) The date upon which the Tenant Improvements, including the
Lessee's Work (as herein defined), have been substantially completed as
determined by Lessor's project architect; or
(iii) Sixty (60) days following the Delivery Date (as herein
defined).
"Common Areas" shall mean all areas and facilities outside the
------------
Leased Premises within the exterior boundaries of the Complex of which the
Leased Premises form a part, that are provided and designated by Lessor from
time to time for the general use and convenience of Lessee and of other tenants
of Lessor having the common use of such areas, and their respective authorized
representatives and invitees. Common Areas include, without limitation,
corridors, stairways, elevator shafts, janitor rooms, driveways, parking areas,
and landscaped areas all as generally described on Exhibit B, attached hereto.
Exhibit B is tentative and Lessor reserves the right to make alterations thereto
from time to time. Other areas may be designated by Lessor from time to time as
for the exclusive use of certain lessees, and shall cease being Common Areas.
"Complex" is the real property of which the Leased Premises
-------
forms a part, including, but not limited to, the Building, parking facility and
landscaping, which property is described with particularity in Exhibit A,
attached hereto and made a part hereof by reference.
"Delivery Date" shall mean the earlier of the following dates:
------------
(i) the date upon which Lessee takes possession of the Leased Premises (provided
possession shall not mean Lessee's possession of and entry to the Leased
Premises for the purpose set forth in Section 5.1), or (ii) the date upon which
Lessor's Work with respect to the Leased Premises has been substantially
completed in accordance with Exhibit D; provided, however, in the event
completion of Lessor's Work is delayed by Lessee's Work or other acts of Lessee
or its agents ("Lessee Delay") any such Lessee Delay shall thereupon effect a
postponement of the date at which Lessor is obliged to deliver the Leased
Premises to Lessee by the number of days of Lessee Delay. However, the Delivery
Date and the Commencement Date as would otherwise be established had Lessee
Delay not occurred shall not be postponed by the number of days of Lessee Delay.
"Force Majeure" shall mean event(s) beyond the reasonable control of
-------------
the obligated party such as, for example only, strikes, riots, governmental act
or failure to act, shortage of materials, weather and other such matters over
which the party does not have reasonable control (except matters resulting from
financial insufficiency).
"Lease Year" means any calendar year, or portion thereof, following
----------
the commencement hereof, the whole or any part of which period is included
within the Term.
"Leased Premises" shall mean the portion of space leased to Lessee
---------------
hereunder.
4.
<PAGE>
"Lessee's Work" shall mean the work of improvement to the Leased
-------------
Premises to be performed by Lessee in accordance with the Work Letter Agreement.
"Lessor's Work" shall mean the work to be performed by Lessor in
-------------
accordance with the Work Letter Agreement.
"Lines" shall mean domestic water, chilled water and waste pipes and
-----
lines, exhaust pipes and vents, communications, computer, audio and video,
security and electrical (other than electrical wiring within the Leased Premises
terminating at or connected to Building check meters), cables, wires, lines,
duct work, sensors, switching equipment, control boxes, risers and related
improvements at the Complex, Building or the Leased Premises.
"Major Vertical Penetrations" shall mean stairs, elevator shafts,
---------------------------
flues, pipe shafts, vertical ducts, and the like, and their enclosing walls,
which serve more than one floor of the Building, but shall not include stairs,
dumbwaiters, lifts, and the like, exclusively serving a lessee occupying space
on more than one floor.
"Occupied Floor Area" means that portion of the Rentable Area of the
-------------------
Complex which is leased and occupied.
"Operating Costs" means the total amounts paid or payable, whether by
---------------
Lessor or others on behalf of Lessor, in connection with the ownership,
maintenance, repair, replacement and operations of the Complex (including,
without limitation, all areas and facilities within the exterior boundaries of
the Complex) as determined in a manner consistent with generally accepted
accounting principles ("GAAP"). Operating Costs shall include, but not be
limited to, the aggregate of the amount paid for all electricity and fuel used
in heating and air conditioning of the Building; the amount paid or payable for
all electricity furnished by Lessor to the Complex; the cost of periodic
relamping and reballasting of Building Standard lighting fixtures; the amount
paid or payable for all hot and cold water (other than that chargeable to
lessees by reason of their extraordinary consumption of water); the amount paid
or payable for all labor and/or wages and other payments including cost to
Lessor of workers' compensation and disability insurance, payroll taxes, welfare
and fringe benefits made to janitors, caretakers, and other employees,
contractors and subcontractors of Lessor (including wages of the Building
manager) involved in the operation, maintenance and repair of the Complex;
painting for exterior walls of the buildings in the Complex; managerial and
administrative expenses; the total charges of any independent contractors
employed in the repair, care, operation, maintenance, and cleaning of the
Complex; the amount paid or payable for all supplies occasioned by everyday wear
and tear; the costs of VAC (as defined in Section 13.1) of the Complex, (except
to the extent paid by Lessee, or other lessees, for VAC provided to the Leased
Premises, or other leased premises, in respect of VAC provided outside the
Climate Control Hours defined in Section 13.1), window and exterior wall
cleaning, telephone and utility costs; the cost of accounting services necessary
to compute the rents and charges payable by lessees and keep the books of the
Complex; fees for management, legal, accounting, inspection and consulting
services; the cost of operating, repairing and maintaining and replacing the
Building escalators and elevators and the utility systems, including Lines, of
the Complex including the cost of inspection and service contracts; the cost of
porters, guards and other protection services; the cost of establishing and
maintaining the Building's directory board; payments for general
5.
<PAGE>
maintenance and repairs to the plant and equipment supplying climate control;
the cost of supplying all services pursuant to Article 13 hereof to the extent
such services are not paid by individual lessees; amortization of the costs,
including repair and replacement, of all maintenance and cleaning equipment and
master utility meters and of the costs incurred for repairing or replacing all
other fixtures, equipment and facilities serving or comprising the Complex which
by their nature require periodic or substantial repair or replacement, and which
are not charged fully in the year in which they are incurred, at rates on the
various items determined from time to time by Lessor in accordance with GAAP;
the cost of the Shuttle Service described in Article 50 hereof; the cost of
operating the parking facility in the Complex and the cost of parking fees and
rents paid to the owner of another parcel for use of certain parking spaces
therein (collectively "Parking Costs") net of parking fees and rents collected
by Lessor in connection herewith provided, however, Lessor shall not be
obligated to credit any sums received in excess of the actual Parking Costs; the
cost and expenses for insurance for which Lessor is responsible hereunder or
which Lessor reasonably deems necessary in connection with the operation of the
Complex (including, without limitation, self-insurance and the payment of
deductible amounts under insurance policies); community association dues or
assessments and property owners' association dues and assessments which may be
imposed upon Lessor by virtue of any recorded instrument affecting title to the
complex; and costs of complying with all governmental regulations, rules, laws,
ordinances and codes, including Environmental Laws as such term is defined in
Article 12. In addition, Operating Costs shall include any Real Estate Taxes as
defined in Paragraph 2.1 hereof. Operating Costs shall also include, without
limitation, the repair and replacement, resurfacing and repaving of any paved
areas, curbs, gutters or other surfaces or areas within the Complex, the repair
and replacement of any equipment or facilities located within or serving the
Complex, and the cost of any capital repairs, replacements or improvements made
by Lessor to the Complex ("Capital Costs"). However, certain Capital Costs (the
"Restricted Capital Costs") shall be includable in Operating Costs each year
only to the extent of that fraction allocable to the year in question calculated
by amortizing such Restricted Capital Costs over the reasonably useful life of
the improvement resulting therefrom, as determined by Lessor, with interest on
the unamortized balance at the higher of (i) ten percent (10%) per annum; or
(ii) the interest rate as may have been paid by Lessor for the funds borrowed
for the purpose of performing the work for which the Restricted Capital Costs
have been expended, but in no event to exceed the highest rate permissible by
law. The Restricted Capital Costs subject to such amortization procedure are the
following: (x) those costs for capital improvements to the Complex of a type
which do not normally recur more frequently than every five (5) years in the
normal course of operation and maintenance of facilities such as the Complex
(specifically excluding painting of all or a portion of the Complex); (y) costs
incurred for the purpose of reducing other operating expenses or utility costs,
from which Lessee can expect a reduction in the amounts it would otherwise
expend, or reimburse Lessor, and (z) expenditures by Lessor that are required by
governmental law, ordinance, regulation or mandate, including, without
limitation, any Environmental Laws (as such term is defined in Article 12),
which were not applicable to the Complex at the time of the original
construction. Operating Costs shall not include legal or accounting expenses
incurred expressly for negotiating a lease with a particular lessee, or as a
result of a default of a specific lessee, which negotiation or default does not
affect the operation of the Complex.
"Proportionate Share" or "Pro Rata Percent" shall be that fraction
-------------------
(converted to a percentage) the numerator of which is the Rentable Area of the
Leased Premises and the
6.
<PAGE>
denominator of which is the number of square feet of Rentable Area of all floors
(or leased premises if the Complex is on a single floor) rentable to lessees in
the Complex. Lessee's Proportionate Share as of the commencement of the Term
hereof is specified in Section 1.8. Said Proportionate Share shall be
recalculated as may be required effective as at the commencement of any period
to which the calculation is applicable in this Lease. Notwithstanding the
preceding provisions of this Section, Lessee's Proportionate Share as to certain
expenses may be calculated differently to yield a higher percentage share for
Lessee as to certain expenses in the event Lessor permits other lessees in the
Complex to directly incur such expenses rather than have Lessor incur the
expense in common for the Complex (such as, by way of illustration, wherein a
lessee performs its own janitorial services). In such case Lessee's
Proportionate Share of the applicable expense shall be calculated as having as
its denominator the Rentable Area of all floors (or leased premises if the
Complex is on a single floor) rentable to lessees in the Complex less the
Rentable Area of lessees who have incurred such expense directly. Furthermore,
in the event Lessee consumes extraordinary amounts of any provided utility or
other service as determined in Lessor's good faith judgment, Lessee's
Proportionate Share for such utility or service may, at Lessor's election, be
based on usage as opposed to Rentable Area, that is, Lessee's Proportionate
Share of such a utility or service would be calculated as having as its
denominator the total usage of such utility or service in the Complex (or
Building as the case may be), and having as its numerator Lessee's usage of such
utility or service, as determined by Lessor in its sole good faith judgment. In
any case in which Lessee, with Lessor's consent, -incurs such expenses directly,
Lessee's Proportionate Share will be calculated specially so that expenses of
the same character which are incurred by Lessor for the benefit of other lessees
in the Complex shall not be prorated to Lessee. If repairs are required for
systems exclusively serving the Leased Premises (whether within or outside of
said Leased Premises), Lessee shall pay one hundred percent (100%) of such
repair costs. Nothing herein shall imply that Lessor will permit Lessee or any
other lessee of the Complex to incur any Common Area Costs or Operating Costs.
Any such permission shall be in the sole discretion of the Lessor, which Lessor
may grant or withhold in its arbitrary judgment.
"Quadrant." Floors 2-6 of the Building are centered around the central
--------
Atrium with Rentable Area being approximately divided into four unequal parts
known as "Quadrant(s)" and commonly carrying identifying letters as follows:
Quadrant A: Southeast of Atrium
Quadrant B: Northeast of Atrium
Quadrant C: Northwest of Atrium
Quadrant D: Southwest of Atrium
"R/U Ratio" (an abbreviation for Rentable/Usable Ratio) shall mean
--------
that fraction the numerator of which is Rentable Area and the denominator of
which is Usable Area.
"Real Estate Taxes" or "Taxes" shall mean and include all general and
----------------- -----
special taxes, assessments, fees of every kind and nature, duties and levies,
charged and levied upon or assessed by any governmental authority against the
Complex including the land, the Building, any other improvements situated on the
land other than the Building, the various estates in the land and the Building,
any Tenant Improvements, fixtures, installations, additions and equipment,
whether owned by Lessor or Lessee; except that it shall exclude any taxes of the
kind
7.
<PAGE>
covered by Section 8.1 hereof to the extent Lessor is reimbursed therefor by any
lessee in the Building. Real Estate Taxes shall also include the reasonable cost
to Lessor of contesting the amount, validity, or the applicability of any Taxes
mentioned in this Section. Further included in the definition of Taxes herein
shall be general and special assessments, license fees, commercial rental tax,
levy, penalty or tax (other than inheritance or estate taxes) imposed by any
authority having the direct or indirect power to tax, as against any legal or
equitable interest of Lessor in the Leased Premises or in the Complex or on the
act of entering into this Lease or, as against Lessor's right to rent or other
income therefrom, or as against Lessor's business of leasing the Leased Premises
or the Complex, any tax, fee, or charge with respect to the possession, leasing,
transfer of interest, operation, management, maintenance, alteration, repair,
use, or occupancy by Lessee, of the Leased Premises or any portion thereof or
the Complex, or any tax imposed in substitution, partially or totally, for any
tax previously included within the definition of Taxes herein, or any additional
tax, the nature of which may or may not have been previously included within the
definition of Taxes. Further, if at any time during the Term of this Lease the
method of taxation or assessment of real estate or the income therefrom
prevailing at the time of execution hereof shall be, or has been altered so as
to cause the whole or any part of the Taxes now or hereafter levied, assessed or
imposed on real estate to be levied, assessed or imposed upon Lessor, wholly or
partially, as a capital levy, business tax, fee, permit or other charge, or on
or-measured by the Rents received therefrom, then such new or altered taxes,
regardless of their nature, which are attributable to the land, the Building or
to other improvements on the land shall be deemed to be included within the term
Real Estate Taxes for purposes of this Section, whether in substitution for, or
in addition to any other Real Estate Taxes, save and except that such shall not
be deemed to include any enhancement of said tax attributable to other income of
Lessor. With respect to any general or special assessments which may be levied
upon or against the Leased Premises, the Complex, or the underlying realty, or
which may be evidenced by improvement or other bonds, and may be paid in annual
or semi-annual installments, only the amount of such installment, prorated for
any partial year, and statutory interest shall be included within the
computation of Taxes for which Lessee is responsible hereunder.
"Rent," "rent" or "rental" means Minimum Rent (as defined in Section
---- ---- ------
7.1 herein) and all other sums required to be paid by Lessee pursuant to the
terms of this Lease.
"Rentable Area." The Rentable Area means the Rentable Area determined
-------------
by BOMA, subject to such adjustments as Lessor may incorporate from time to
time. The Rentable Area of a floor shall mean all areas available or held for
the exclusive use and occupancy of occupants or future occupants of the Complex,
calculated in accordance with BOMA. No deductions shall be made for columns and
projections necessary to the Building. The Rentable Area of that portion of a
lessee's premises located on a floor shall be computed by multiplying the Usable
Area of such premises by the R/U Ratio. The Rentable Area of the Building is the
aggregate of the Rentable Area on all floors.
"Structural" as herein used shall mean any portion of the Leased
----------
Premises or Complex which provides bearing support to any other integral member
of the Complex such as, by limitation, the roof structure (trusses, joists,
beams), posts, load bearing walls, foundations, girders, floor joists, footings,
and other load bearing members constructed by Lessor.
8.
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"Tenant Improvements" shall mean the Lessee's Work in accordance with
-------------------
the Work Letter Agreement and all subsequent Alterations (as defined in Section
15.2 herein) to the Leased Premises made by Lessee.
"Term" shall mean the term of the lease as specified in Article 4
----
hereof, including any partial month at the commencement of the Term.
"Usable Area." The Usable Area of any individual leased premises shall
-----------
be the number of square feet calculated in accordance with BOMA, subject to such
adjustments as Lessor may incorporate from time to time; provided, however, that
the term Usable Area shall include toilet rooms in each Quadrant if such toilet
rooms are for the exclusive use of a lessee occupying such Quadrant. The Usable
Area of a floor shall be equal to the sum of all Usable Areas on that floor.
"Work Letter Agreement." That certain Agreement for performance of
---------------------
improvements to the Premises, Building or Complex set forth in Exhibit D,
attached hereto and made a part herein by reference.
3. PREMISES
3.1 Demising Clause. Both Lessee and Lessor acknowledge that the
effectiveness of this Lease and of the obligations of Lessor to lease the Leased
Premises to Lessee are contingent upon the release of the Leased Premises from a
lease currently held by another tenant. Accordingly, contingent upon the
delivery to Lessor by the current tenant of a written release from its lease of
the Leased Premises, Lessor hereby leases to Lessee, and Lessee hires from
Lessor a portion of the complex as hereinafter defined.
3.2 Description. The Complex, as defined in Section 2.1, is described
generally in Section 1.3(A) hereof. The premises leased herein are described in
Section 1.3(B) and delineated on Exhibit C, which is attached hereto and made a
part hereof by reference, consisting of the approximate amount of square footage
as specified in Section 1.3(B) hereof. The term "Building" shall refer to the
Building in which the Leased Premises are located. The portion leased herein to
Lessee is hereinafter referred to as the "Leased Premises." Lessee acknowledges
that Lessor may change the shape, size, location, number and extent of the
improvements to any portion of the Complex without consent of Lessee and without
affecting Lessee's obligations hereunder. Lessor reserves the area beneath and
above the Leased Premises, as well as the exterior thereof, together with the
right to install, maintain, use, repair and replace Lines, pipes, ducts,
conduits, wires, and structural elements leading through the Leased Premises
serving other parts of the Complex, including, but not limited to, vertical
risers, so long as such items are concealed by walls, flooring or ceilings. Such
reservation in no way affects the maintenance obligations imposed herein, nor
shall such reservation alter the parties' responsibilities and obligations set
forth in this Lease regarding Hazardous Materials (as defined in Section 12.3
(a) below).
3.3 Substituted Premises. In the event the Leased Premises consist of less
than six thousand (6,000) square feet, Lessor shall have the right, at any time
during the Term hereof, upon not less than ninety (90) days' prior written
notice to Lessee, to substitute for the Leased
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Premises such other space in the Complex as shall be substantially the same size
as the Leased Premises (the "Substituted Premises"), provided that Lessor shall
pay all expenses of Lessee incidental to Lessee's relocation to the Substituted
Premises and that Lessor, shall improve the Substituted Premises for Lessee's
use and occupancy at least to the same extent as the Leased Premises occupied by
Lessee prior to such relocation.
3.4 Covenants, Conditions and Restrictions. The parties agree that this
Lease is subject to the effect of: (a) any covenants, conditions, restrictions,
easements, mortgages or deeds of trust, ground leases, rights of way of record,
and any other matters or documents of record; (b) any zoning laws of the city,
county and state where the Complex is situated; and (c) general and special
taxes not delinquent. Lessee agrees that as to its leasehold estate, Lessee and
all persons in possession or holding under Lessee will conform to and will not
violate the terms of any covenants, conditions or restrictions of record which
may now or hereafter encumber the property (hereinafter the "Restrictions").
This Lease is subordinate to the Restrictions and any amendments or
modifications thereto.
4. TERM
4.1 Commencement Date. The Term of this Lease shall commence on the
Commencement Date defined in Section 2.1 and shall be for the Term specified in
Section 1.4(B) hereof, plus any partial month at the commencement of the Term
(but in no event shall this Lease expire on a date later than December 31,
2004.).
4.2 Acknowledgment of Commencement. After delivery of the Leased Premises
to Lessee, Lessee shall execute a written acknowledgment of the date of
commencement in the form attached hereto as Exhibit E, and by this reference it
shall be incorporated herein.
5. PRE-TERM POSSESSION
5.1 Pre-Term Possession.
(a) Conditions of Entry. In the event the Leased Premises are to be
constructed or remodeled by Lessor, Lessor may notify Lessee when the Leased
Premises are ready for Lessee's fixturing or Lessee's Work, which may be prior
to substantial completion of the Leased Premises by Lessor. Lessee may thereupon
enter the Leased Premises for such purposes at its own risk, to make such
improvements as Lessee shall have the right to make, to install fixtures,
supplies, inventory and other property. Lessee agrees that it shall not in any
way interfere with the progress of Lessor's Work by such entry. Should such
entry prove an impediment to the progress of Lessor's Work, in Lessor's
judgment, Lessor may demand that Lessee forthwith vacate the Leased Premises
until such time as Lessor's work is complete, and Lessee shall immediately
comply with this demand.
(b) Lease Terms Apply. During the course of any pre-term possession,
whether such pre-term period arises because of an obligation of construction on
the part of Lessor, or otherwise, all terms and conditions of this Lease, except
for rent and Commencement Date, shall apply, particularly with reference to
indemnity by Lessee of Lessor under Article 17 herein for all occurrences within
or about the Leased Premises.
10.
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6. DELAY IN DELIVERY OF POSSESSION
6.1 Delay. If Lessor, for any reason whatsoever, cannot deliver
possession of the Leased Premises to Lessee at the Estimated Delivery Date, this
Lease shall not be void or voidable, nor shall Lessor be liable for any loss or
damage resulting therefrom, but in that event, there shall be no accrual of Rent
for the period between the Estimated Delivery Date and the Commencement Date. In
the event Lessor cannot deliver the Leased Premises to Lessee within six (6)
months beyond the Estimated Delivery Date, then Lessor may elect to terminate
this Lease. In the event the Leased Premises are not delivered within three (3)
years from the date of execution, this Lease shall automatically terminate.
7. MINIMUM RENT
7.1 Payment. Lessee shall pay to Lessor at the address specified in
Section 1.1, or at such other place as Lessor may otherwise designate, as
"Minimum Rent" for the Leased Premises the amount specified in Section 1.5(A)
hereof, payable in advance on the first day of each month during the Term. If
the Term commences on other than the first day of a calendar month, the rent for
the first partial month shall be prorated accordingly.
All payments of Minimum Rent (including sums defined as rent in Section
2.1) shall be in lawful money of the United States, and payable without
deduction, setoff, offset, counterclaim, recoupment, notice or demand.
7.2 Advance Rent. The amount specified in Section 1.5($) hereof is paid
herewith to Lessor upon execution of this Lease as advance rent, receipt of
which is hereby acknowledged, provided, however, that such amount shall be held
by Lessor as a "Security Deposit" pursuant to Section 10.1 hereof until it is
applied by Lessor to the first Minimum Rent due hereunder.
7.3 Late Payment. If during any twelve (12) month period Lessee fails on
more than one occasion to make any payment of Minimum Rent to Lessor on the date
when it is due, then Lessor may, by giving written notice to Lessee, require
that Lessee pay the Minimum Rent to Lessor quarterly in advance.
8. ADDITIONAL RENT
8.1 Personal Property, Gross Receipts, Leasing Taxes. This Section 8.1 is
intended to deal with impositions or taxes directly attributed to Lessee or this
transaction, as distinct from taxes attributable to the Complex which are to be
allocated among various lessees and others and which are included in Operating
Costs. In addition to the Minimum Rent and additional charges to be paid by
Lessee hereunder, Lessee shall reimburse Lessor upon demand for any and all
taxes required to be paid by Lessor (excluding state, local or federal personal
and corporate income taxes measured by the income of Lessor from all sources,
and estate and inheritance taxes) whether or not now customary or within the
contemplation of the parties hereto:
(a) Upon, measured by, or reasonably attributable to the cost or value
of Lessee's equipment, furniture, fixtures and other personal property located
in the Leased
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Premises or by the cost or value of any Tenant Improvements made in or to the
Leased Premises by or for Lessee, regardless of whether title to such
improvements shall be in Lessee or Lessor;
(b) Upon or with respect to the possession, leasing, operation,
management, maintenance, Alteration, repair, use or occupancy by Lessee of the
Leased Premises or any portion thereof to the extent such taxes are not included
as Real Estate Taxes as defined in Section 2.1;
(c) Upon this transaction or any document to which Lessee is a party
creating or transferring an interest or an estate in the Leased Premises; and
(d) In connection with any testing, investigation, abatement,
remediation, removal, transportation and/or disposal of any Hazardous Materials
by Lessee (or by Lessor, pursuant to any provision of this Lease granting to
Lessor the right to do any of the foregoing and to bill Lessee therefor).
For purposes of this Section 8.1, the term "taxes" shall include, but not
be limited to, any fees, charges, fines, penalties and costs (including, without
limitation, permit, approval or licensing fees, charges or costs).
In the event that it shall not be lawful for Lessee so to reimburse Lessor,
the Minimum Rent payable to Lessor under this Lease shall be increased to net
Lessor (i.e., after payment of the Taxes for which Lessor may not receive
reimbursement from Lessee) the amount of Minimum Rent plus reimbursement for
Taxes which would have been receivable by Lessor if such tax had not been
imposed. All Taxes payable by Lessee under this Section shall be deemed to be,
and shall be paid as, additional Rent.
8.2 Operating Costs.
(a) During each calendar year or part thereof subsequent to the Base
Expense Year, Lessee shall pay to Lessor as additional Rent, in accordance with
Section 8.3 hereof, Lessee's Proportionate Share (computed in accordance with
Section 2.1 above) of the total dollar increase, if any, in all Operating Costs
for such calendar year over the Operating Costs for the Base Expense Year.
During each tax year (July 1 through June 30) or part thereof subsequent to the
Base Tax Year ending June 30, Lessee shall pay to Lessor as additional Rent, in
accordance with Section 8.3 hereof, Lessee's Proportionate Share of the total-
dollar increases, if any, in all Real Estate Taxes for such tax year over the
Real Estate Taxes for the Base Tax Year. Lessee's Proportionate Share shall be
calculated on the basis of the greater of (i) actual Operating Costs; or (ii) as
if the Complex were at least ninety-five percent (95%) occupied and operational
for the whole of such Lease Year.
(b) If any Lease Year of less than twelve (12) months is included
within the Term, the amount payable by Lessee for such period shall be prorated
on a per diem basis (utilizing a three hundred sixty (360) day year).
(c) Lessor shall exercise good faith efforts to equitably allocate
those Operating Costs that are incurred for the direct benefit of specific types
of lessees or users in the Complex to and among those specific lessees and/or
users ("Cost Pools"). Such Cost Pools may
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include, but shall not be limited to, the office and showroom space, the second
floor Atrium, the lower level exhibition hall, and any retail space lessees of
the Complex. Lessor's determination of such allocations shall be made in a
manner consistent with the terms and conditions of this Section 8.2(c) and shall
be subject to reconciliation per Section 8.3(c). Lessee acknowledges that the
allocation of Operating Costs among Cost Pools does not affect all Operating
Costs and is limited to specific items which Lessor determines, in good faith,
should be shared among the lessees and/or users of a certain Cost Pool.
8.3 Method of Payment. Any additional Rent payable by Lessee under
Sections 8.1 and 8.2 hereof shall be paid as follows, unless otherwise provided:
(a) During the Term, Lessee shall pay to Lessor monthly in advance
with its payment of Minimum Rent, one-twelfth (1/12) of the amount of such
additional Rent as estimated by Lessor in advance, in good faith, to be due from
Lessee.
(b) Annually, as soon as is reasonably possible after the expiration
of each Lease Year, Lessor shall prepare in good faith and deliver to Lessee a
comparative statement, which statement shall be conclusive between the parties
hereto, setting forth: (i) the Operating Costs for such Lease Year; and (ii) the
amount of additional Rent as determined in accordance with the provisions of
this Article 8.
(c) If the aggregate amount of such estimated additional Rent
payments made by Lessee in any Lease Year should be less than the additional
Rent due for such year, then Lessee shall pay to Lessor as additional Rent upon
demand the amount of such deficiency. If the aggregate amount of such additional
Rent payments made by Lessee in any Lease Year of the Term should be greater
than the additional Rent due for such year, then should Lessee not be otherwise
in default hereunder, the amount of such excess will be applied by Lessor to the
next succeeding installments of such additional Rent due hereunder; and if there
is any such excess for the last year of the Term, the amount thereof will be
refunded by Lessor to Lessee, provided Lessee is not otherwise in default under
the terms of this Lease.
9. ACCORD AND SATISFACTION
9.1 Acceptance of Payment. No payment by Lessee or receipt by Lessor of a
lesser amount of Minimum Rent or any other sum due hereunder, shall be deemed to
be other than on account of the earliest due rent or payment, nor shall any
endorsement or statement on any check or any letter accompanying any such check
or payment be deemed an accord and satisfaction, and Lessor may accept such
check or payment without prejudice to Lessor's right to recover the balance of
such rent or payment or pursue any other remedy available in this Lease, at law
or in equity. Lessor may accept any partial payment from Lessee without
invalidation of any contractual notice required to be given herein (to the
extent such contractual notice is required) and without invalidation of any
notice required to be given pursuant to California Code of Civil Procedure
Section 1161, et seq., or of any successor statute thereto.
10. SECURITY DEPOSIT
10.1 Payment on Lease Execution. Lessee shall pay Lessor upon execution
hereof the sum specified in Section 1.6 which may, at Lessor's sole option, be
entirely or partially in the
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form of a Letter of Credit. This sum, in whatever form or combination of forms,
is designated as a Security Deposit and shall remain the sole and separate
property of Lessor until actually repaid to Lessee (or at Lessor's option the
last assignee, if any, of Lessee's interest hereunder), said sum not being
earned by Lessee until all conditions precedent for its payment to Lessee have
been fulfilled. As this sum both in equity and at law is Lessor's separate
property for Lessor's benefit in the event of default, Lessor shall not be
required to: (i) keep said deposit separate from its general accounts; or (ii)
pay interest or other increment for its use. If Lessee fails to pay rent or
other charges when due hereunder, or otherwise defaults with respect to any
provision of this Lease, including and not limited to Lessee's obligation to
restore or clean the Leased Premises following vacation thereof, Lessee, at
Lessor's election, shall be deemed not to have earned the right to repayment of
the Security Deposit, or those portions thereof used or applied by Lessor for
the payment of any rent or other charges in default, or for the payment of any
other sum to which Lessor may become obligated by reason of Lessee's default, or
to compensate Lessor for any loss or damage which Lessor may suffer thereby.
Lessor may retain such portion of the Security Deposit as it reasonably deems
necessary to restore or clean the Leased Premises following vacation by Lessee.
The Security Deposit is not to be characterized as rent until and unless so
applied in respect of a default by Lessee. In the event a portion or all of the
Security Deposit is paid pursuant to a Letter of Credit, the terms specified in
Exhibit J, attached hereto, shall apply.
10.2 Restoration of Deposit. If Lessor elects to use or apply all or any
portion of the Security Deposit as provided in Section 10.1, Lessee shall within
ten (10) days after written demand therefor pay to Lessor in cash, an amount
equal to that portion of the Security Deposit used or applied by Lessor, and
Lessee's failure to so do shall be a material breach of this Lease. The ten (10)
day notice specified in the preceding sentence shall insofar as not prohibited
by law, constitute full satisfaction of notice of default provisions required by
law or ordinance.
10.3 Use and Transferability of Security Deposit. Lessee acknowledges and
agrees that, notwithstanding any provision of law purporting to limit a lessor's
rights with respect to tenant security deposits, the Security Deposit may be
used by Lessor to compensate Lessor for any foreseeable or unforeseeable loss or
damage caused by the act or omission of Lessee or Lessee's officers, agents,
employees, independent contractors or invitees and that the amounts Lessor may
claim from the Security Deposit are not limited to sums reasonably necessary to
remedy defaults in payment of rent, other charges in default or repair of
damages caused by Tenant, or to clean the Premises. Should Lessor dispose of its
interest in the Building, Lessor may deliver or credit the Security Deposit to
lessor's successor-in-interest in the Building and thereupon be relieved of
further responsibility with respect to the Security Deposit. Lessee may not
transfer, encumber or assign the Security Deposit. Lessor shall have the
absolute right to treat the Security Deposit as it sees fit, including but not
limited to the right to transfer, assign, encumber, pledge, or hypothecate all
or any portion of the Security Deposit.
11. USE
11.1 Permitted Use.
(a) The Leased Premises may be used and occupied only for the
purposes specified in Section 1.7 hereof, and for no other purpose or purposes.
Lessee shall promptly
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comply with all laws, ordinances, orders and regulations affecting the Leased
Premises, their cleanliness, safety, occupation and use.
(b) Lessee acknowledges that, under the current M-2 zoning of the
Building, office uses are restricted and that any and all office uses require
approval by the City and County of San Francisco. Lessee agrees that the
percentage of the Leased Premises designated as "Office", as defined in Section
313.1(24) or 314.1(p) of the San Francisco City Planning Code, or equivalent
ordinance, (the "Office Use"), shall not exceed either twenty percent (20%) of
Lessee's Adjusted Rentable Area (the "Permitted Office Use"), or (ii) an amount
which would increase the aggregate office use of the Complex above Two Hundred
Sixty-Nine Thousand Six Hundred Eighty (269,680) square feet. In the event
Lessee violates the covenant contained in this Section 11.1 and does not cure
same within five (5) days of notice by Lessor, Lessee shall be in default.
(c) Nothing herein shall permit the Lessee to build space for Office
Use in the Leased Premises in excess of that which is legally permissible under
the laws of the City arid County of San Francisco and approved by Lessor. If, as
a result of Lessee's addition of Office Use, as specified in this subparagraph
(b), a Planning Commission or other City hearing is required, the Office Uses
shall not be implemented until the successful completion of any such procedure
and Lessee has agreed to pay Lessor for costs which Lessor incurs as a result
thereof.
11.2 Safes, Heavy Equipment. Lessee shall not place a load upon any floor
of the Leased Premises which exceeds fifty (50) pounds per square foot live
load. Lessor reserves the right to prescribe the weight and position of all
safes and heavy installations which Lessee wishes to place in the Leased
Premises so as properly to distribute the weight thereof, or to require plans
prepared by a qualified structural engineer at Lessee's sole cost and expense
for such heavy objects. Notwithstanding the foregoing, Lessor shall have no
liability for any damage caused by the installation of such heavy equipment or
safes.
11.3 Machinery. Business machines and mechanical equipment belonging to
Lessee which cause noise and/or vibration that may be transmitted to the
structure of the Building or to any other leased space to such a degree as to be
objectionable to Lessor or to any lessees in the Complex shall be placed and
maintained by the party possessing the machines or equipment, at such party's
expense, in settings of cork, rubber or spring type noise and/or vibration
eliminators, and Lessee shall take such other measures as needed to eliminate
vibration and/or noise. If the noise or vibrations cannot be eliminated, Lessee
must remove such equipment within ten (10) days following written notice from
Lessor.
11.4 Hazardous Activities. Lessee shall not engage in any activities or
permit to be kept, used, or sold in or about the Leased Premises, any article
which may be prohibited by the standard form of fire insurance policies. Lessee
shall, at its sole cost and expense, comply with any and all requirements,
pertaining to the Leased Premises, of any insurance organization or company,
necessary for the maintenance of reasonable fire and public liability insurance
covering the Building and appurtenances.
15.
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12. COMPLIANCE WITH LAWS AND REGULATIONS
12.1 Lessee's Obligations. Lessee, shall, at its sole cost and expense,
comply with all of the requirements of all municipal, state and federal
authorities now in force, or which may hereafter be in force, pertaining to the
Leased Premises, and shall faithfully observe in the use of the Leased Premises
all municipal ordinances and state and federal statutes and regulations now in
force or which may hereafter be in force, including, without limitation,
Environmental Laws (as hereinafter defined), and the Americans with Disabilities
Act, 42 U.S.C. (s)(s) 12101-12213 (and any rules, regulations, restrictions,
guidelines, requirements or publications promulgated or published pursuant
thereto, collectively herein referred to as the "ADA"), whether or not any of
the foregoing were foreseeable or unforeseeable at the time of the execution of
this Lease. The judgment of any court of competent jurisdiction, or the
admission of Lessee in any action or proceeding against Lessee, whether Lessor
be a party thereto or not, that any such requirement, ordinance, statute or
regulation pertaining to the Leased Premises has been violated, shall be
conclusive of that fact as between Lessor and Lessee. Within five (5) days after
receipt of notice or knowledge of any violation or alleged violation of any
Environmental Law(s), and/or the ADA pertaining to the Complex, any governmental
or regulatory proceedings, investigations, sanctions and/or actions threatened
or commenced with respect to any such violation or alleged violation, and any
claim made or commenced with respect to such violation or alleged violation,
Lessee shall notify Lessor thereof and provide Lessor with copies of any written
notices or information in Lessee's possession. Lessee shall make, at Lessee's
sole cost and expense, any and all Alterations, improvements or non-structural
changes that are required by laws, statutes, ordinances and governmental
regulations or requirements as a result of Lessee's specific use of the Leased
Premises or any Alterations, additions or improvements made by Lessee. If any
alterations, improvements or structural changes are required to be made to the
Building in general or are applicable to substantially all lessees in the
Building without regard to Lessee's specific use of the Leased Premises or any
Alterations, additions or improvements made by Lessee, then Lessor shall make
such alterations, additions or improvements and the costs thereof shall be
included within Operating Costs pursuant to Section 2.1.
12.2 Condition of Leased Premises. Subject to Lessor's Work, if any, as
referred to in Exhibit D to this Lease, Lessee hereby accepts the Leased
Premises in the condition existing as of the date of occupancy, subject to all
applicable zoning, municipal, county and state laws, ordinances, rules,
regulations, orders, restrictions of record, and requirements in effect during
the Term or any part of the Term hereof regulating the Leased Premises, and
without representation, warranty or covenant by Lessor, express or implied, as
to the condition, habitability or safety of the Leased Premises, the suitability
or fitness thereof for their intended purposes, or any other matter. Lessor
covenants that the Lessor's Work pursuant to Exhibit D shall be in material
compliance with applicable local and state building codes and ordinances in such
manner that any violations or conditions of non-compliance will not result in
the inability of Lessee to be issued a building permit for Lessee's Work
pursuant to Exhibit D ("Code Compliance").
12.3 Hazardous Materials.
(a) Hazardous Materials Defined. As used herein, the term "Hazardous
---------------------------
Materials" shall mean any wastes, materials or substances (whether in the form
of liquids, solids or gases, and whether or not air-borne), which are or are
deemed to be pollutants or
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contaminants, or which are or are deemed to be hazardous, toxic, ignitable,
reactive, corrosive, dangerous, harmful or injurious, or which present a risk,
to public health or to the environment, or which are or may become regulated by
or under the authority of any applicable local, state or federal laws,
judgments, ordinances, orders, rules, regulations, codes or other governmental
restrictions, guidelines or requirements, any amendments or successors) thereto,
replacements thereof or publications promulgated pursuant thereto (collectively
"Environmental Laws"), including, without limitation, any waste, material or
substance which is:
(i) defined as "hazardous waste," "extremely hazardous waste,"
or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or
listed pursuant to Section 25140, of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law);
(ii) defined as a "hazardous substance" under Section 25316 of
the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-
Presley-Tanner Hazardous Substance Account Act);
(iii) defined as a "hazardous material," "hazardous substance,"
or "hazardous waste" under Section 25501 of the California Health and Safety
Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory);
(iv) defined as a "hazardous substance" under Section 25281 of
the California Health and Safety Code, Division 20, Chapter 6.7 (Underground
Storage of Hazardous Substances);
(v) defined as a "waste" or "hazardous substance" under
Section 13050 of the California Water Code, Division 7, Chapter 2 (Porter-
Cologne Water Quality Control Act);
(vi) listed as a chemical known to the State of California to
cause cancer or reproductive toxicity pursuant to Section 25249.8 of the
California Health and Safety Code, Division 20, Chapter 6.6 (Safe Drinking Water
and Toxic Enforcement Act of 1986);
(vii) defined as a "hazardous substance" or "pollutant or
contaminant" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (s) 9601
et seq.;
(viii) listed as an "extremely hazardous substance," "hazardous
chemical;" or "toxic chemical" pursuant to the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 et seq.;
(ix) listed as a "hazardous substance" in the United States
Department of Transportation Table, 49 C.F.R. 172.101 and amendments thereto, or
by the Environmental Protection Agency (or any successor agency) in 40 C.F.R.
Part 302 and amendments thereto;
(x) defined, listed or designated by regulations promulgated
pursuant to any Environmental Law; or
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(xi) any of the following: pesticide; flammable explosive;
petroleum, including crude oil or any fraction thereof; asbestos or asbestos-
containing material; polychlorinated biphenyl; radioactive material; or urea
formaldehyde.
In addition to the foregoing, the term Environmental Laws shall be deemed
to include, without limitation, local, state and federal laws, judgments,
ordinances, orders, rules, regulations, codes and other governmental
restrictions, guidelines and requirements, any amendments and successors
thereto, replacements thereof and publications promulgated pursuant thereto,
which deal with, or otherwise in any manner relate to, air or water quality, air
emissions, soil or ground conditions or other environmental matters of any kind.
(b) Use, etc. of Hazardous Materials. Lessee agrees that during the
Term, there shall be no use, presence, disposal, storage, generation, leakage,
treatment, manufacture, import, handling, processing, release or threatened
release of Hazardous Materials on, from or under the Leased Premises except to
the extent that, and in accordance with such conditions as, Lessor may have
previously approved in writing. The use, presence, disposal, storage,
generation, leakage, treatment, manufacture, import, handling, processing,
release or threatened release of Hazardous Materials are sometimes hereinafter
individually or collectively referred to as "Hazardous Use." It is further
agreed that Lessee shall be entitled to use and store only those Hazardous
Materials which are necessary for Lessee's business, provided that such usage
and storage is in full compliance with Environmental Laws, and all judicial and
administrative decisions pertaining thereto. Lessee shall not be entitled to
install any tanks under, on or about the Leased Premises for the storage of
Hazardous Materials without the express written consent of Lessor, which may be
given or withheld in Lessor's sole arbitrary judgment. For the purposes of this
Section 12.3, the term Hazardous Use shall include Hazardous Use(s) on, from or
under the Leased Premises by any and all lessees, occupants, and/or users of the
Leased Premises (except Lessor), whether known or unknown to Lessee, and whether
occurring and/or existing during or prior to the commencement of the Term.
(c) Hazardous Materials Report; When Required. Lessee shall submit to
------------------------------------------
Lessor a written report with respect to Hazardous Materials ("Report") in the
form prescribed in subparagraph (d) below on the following dates:
(i) Within ten (10) days after the Commencement Date,
(ii) Within ten (10) days after each anniversary of the
Commencement Date during the Term,
(iii) any time within ten (10) days after written request by
Lessor, and
(iv) At any time when there has been or is planned any
condition which constitutes or would constitute a change in the information
submitted in the most recent Report, including any notice of violation as
referred to in subparagraph (d)(vii) below.
(d) Hazardous Materials Report; Contents. The Report shall contain,
-------------------------------------
without limitation, the following. information:
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(i) Whether on the date of the Report and (if applicable)
during the period since the last Report there has been any Hazardous Use on,
from or under the Leased Premises.
(ii) If there was such Hazardous Use, the exact identity of
the Hazardous Materials, the dates upon which such materials were brought upon
the Leased Premises, the dates upon which the Hazardous Materials were removed
therefrom, and the quantity, location, use and purpose thereof.
(iii) If there was such Hazardous Use, any governmental permits
maintained by Lessee with respect to such Hazardous Materials, the issuing
agency, original date of issue, renewal dates (if any) and expiration date.
Copies of any such permits and applications therefor shall be attached.
(iv) If there was such Hazardous Use, any governmental
reporting or inspection requirements with respect to such Hazardous Materials,
the governmental agency to which reports are made and/or which conducts
inspections, and the dates of all such reports and/or inspections (if
applicable) since the last Report. Copies of any such reports shall be attached.
(v) If there was such Hazardous Use, identification of any
operation or business plan prepared for any government agency with respect to
Hazardous Use.
(vi) Any liability insurance carried by Lessee with respect to
Hazardous Materials, the insurer, policy number, date of issue, coverage
amounts, and date of expiration. Copies of any such policies or certificates of
coverage shall be attached.
(vii) Any notices of violation of Environmental Laws, written
or oral, received by Lessee from any governmental agency since the last Report,
the date, name of agency, and description of violation. Copies of any such
written notices shall be attached.
(viii) Any knowledge, information or communication which Lessee
has acquired or received relating to: (x) any enforcement, cleanup, removal or
other governmental or regulatory action threatened or commenced against Lessee
or with respect to the Leased Premises pursuant to any Environmental Laws; (y)
any claim made or threatened by any person or entity against Lessee or the
Leased Premises on account of any alleged loss or injury claimed to result from
any alleged Hazardous Use on or about the Leased Premises; or (z) any report,
notice or complaint made to or filed with any governmental agency concerning any
Hazardous Use on or about the Leased Premises. The Report shall be accompanied
by copies of any such claim, report, complaint, notice, warning or other
communication that is in the possession of or is available to Lessee.
(ix) Such other pertinent information or documents as are
requested by Lessor in writing.
(e) Release of Hazardous Materials: Notification and Cleanup. If at
any time during the Term Lessee knows or believes that any release of any
Hazardous Materials has come or will come to be located upon, about or beneath
the Leased Premises, then Lessee shall
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immediately, either prior to the release or following the discovery thereof by
Lessee, give verbal and-follow-up written notice of that condition to Lessor.
Lessee covenants to investigate, clean up and otherwise remediate any release of
Hazardous Materials at Lessee's cost and expense; such investigation, clean-up
and remediation shall be performed only after Lessee has obtained Lessor's
written consent, which shall not be unreasonably withheld; provided, however,
that Lessee shall be entitled to respond immediately to an emergency without
first obtaining Lessor's written consent. All clean-up and remediation shall be
done in compliance with Environmental Laws and to the reasonable satisfaction of
Lessor. Notwithstanding the foregoing, whether or not such work is prompted by
the foregoing notice from Lessee or is undertaken by Lessor for any other reason
whatsoever, Lessor shall have the right, but not the obligation, in Lessor's
sole and absolute discretion, exercisable by written notice to Lessee at any
time, to undertake within or outside the Leased Premises all or any portion of
any investigation, clean-up or remediation with respect to Hazardous Materials
(or, once having undertaken any of such work, to cease same, in which case
Lessee shall perform the work), all at Lessee's cost and expense, which shall be
paid by Lessee as additional rent within ten (10) days after receipt of written
request therefor by Lessor (and which Lessor may require to be paid prior to
commencement of any work by Lessor). No such work by Lessor shall create any
liability on the part of Lessor to Lessee or any other party in connection with
such Hazardous Materials or constitute an admission by Lessor of any
responsibility with respect to such Hazardous Materials. It is the express
intention of the parties hereto that Lessee shall be liable under this Section
12.3(e) for any and all conditions covered hereby which were caused or created
by any person or entity whatsoever (except Lessor) whether such condition
occurred, was created or caused or existed prior to or after the execution of
this Lease and/or prior to or after Lessee's possession of the Leased Premises.
Lessee shall not enter into any settlement agreement, consent decree or other
compromise with respect to any claims relating to any Hazardous Materials in any
way connected to the Leased Premises without first: (i) notifying Lessor of
Lessee's intention to do so and affording Lessor the opportunity to participate
in any such proceedings; and (ii) obtaining Lessor's written consent.
(f) Inspection and Testing by Lessor. Lessor shall have the right at
all times during the Term to: (i) inspect the Leased Premises, as well as
Lessee's books and records; and (ii) conduct tests and investigations to
determine whether Lessee is in compliance with the provisions of this Section.
Except in case of emergency, Lessor shall give reasonable notice to Lessee
before conducting any inspections, tests, or investigations. The cost of all
such inspections, tests and investigations shall be borne by Lessee, if Lessor
reasonably believes them to be necessary. Neither any action nor inaction on the
part of Lessor pursuant to this Section 12.3(f) shall be deemed in any way to.
release Lessee from, or in any way modify or alter, Lessee's responsibilities,
obligations, and/or liabilities incurred pursuant to Section 12.3 hereof.
12.4 Indemnity. Lessee shall indemnify, hold harmless, and, at Lessor's
option (with such attorneys as Lessor may approve in advance and in writing),
defend Lessor and Lessor's officers, directors, shareholders, trustees,
partners, employees, contractors, agents and mortgagees or other lien holders,
from and against any and all claims, demands, expenses, actions, judgments,
damages (whether consequential, direct or indirect, known or unknown, foreseen
or unforeseen), penalties, fines, liabilities, losses of every kind and nature
(including, without limitation, property damage, diminution in value of Lessor's
interest in the Leased Premises or the Complex, damages for the loss or
restriction on use of any space or amenity
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within the Leased Premises or the Complex, damages arising from any adverse
impact on marketing space in the Complex, sums paid in settlement of claims and
any costs and expenses associated with injury, illness or death to or of any
person), suits, administrative proceedings, costs and fees, including, but not
limited to, attorneys' and consultants' fees and expenses, and the costs of
cleanup, remediation, removal and restoration (all of the foregoing being
hereinafter sometimes collectively referred to as "Losses"), arising from or
related to any violation or alleged violation of any of the requirements,
ordinances, statutes, regulations or other laws referred to in this Article,
including, without limitation, Environmental Laws, any breach of the provisions
of this Article, or any Hazardous Use on, about or from the Leased Premises
caused by the acts or omissions of any persons or entities whatsoever, whether
related or unrelated to Lessee, including without limitation any Hazardous Use
or release of Hazardous Materials arising, occurring or existing prior to the
execution of this Lease and/or Lessee's possession of the Leased Premises.
Lessee warrants that it is leasing the Leased Premises "as-is, where-is," that
it has thoroughly inspected the Leased Premises prior to execution of this
Lease, and that it intends to act as an insurer with respect to any Hazardous
Use on, under or about the Leased Premises.
12.5 Release and Assumption of Risk.
(a) Lessee, for itself, and its officers, directors, shareholders,
partners, agents, contractors, attorneys, brokers, servants, employees,
sublessees, lessees, invitees, concessionaires, licensees and representatives
(hereinafter referred to as "Releasors"), hereby waives, releases, acquits and
forever discharges Lessor and its officers, directors, trustees, shareholders,
partners, agents, contractors, attorneys, brokers, servants, employees, lessees,
invitees, licensees and representatives (hereinafter referred to as "Releasees")
of and from any and all Losses, which are in any way connected with, based upon,
related to or arising out of (i) any Hazardous Use or Hazardous Materials on or
about the Leased Premises or the Complex, (ii) any violation by or relating to
the Leased Premises or the Complex (or the ownership, use, condition, occupancy
or operation thereof), or by the Releasors or any other persons or entities, of
any Environmental or Wetlands Laws affecting the Leased Premises or the Complex,
or (iii) any investigation, inquiry, order, hearing, action or other proceeding
by or before any governmental agency or any court in connection with any of the
matters referred to in clauses (i) or (ii) above (collectively, the "Released
Matters"), except to the extent caused by the gross negligence or willful
misconduct of the Releasees. Releasors hereby expressly assume any and all risk
of Losses based on or arising out of or pertaining to the Released Matters.
(b) Lessee agrees, represents and warrants that the Released Matters
are not limited to matters which are known, disclosed or foreseeable, and Lessee
waives any and all rights and benefits which are conferred upon Lessee by virtue
of the provisions of Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR.
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(c) Lessee agrees, represents and warrants that it is familiar with,
has read, understands, and has consulted legal counsel of its choosing with
respect to California Civil Code Section 1542 and Lessee realizes and
acknowledges that factual matters now unknown to it may have given, or may
hereinafter give, rise to Losses which are presently unknown, unanticipated and
unsuspected. Lessee further agrees, represents and warrants that the provisions
of this Section 12.5 have been negotiated and agreed upon in light of that
realization and that Lessee nevertheless hereby intends to release, discharge
and acquit the Releasees from any such unknown Losses which are in any way
related to this Lease or the Complex.
12.6 Indoor Air Quality. To prevent the generation, growth or deposit of
any mold, mildew, bacillus, virus, pollen or other microorganism (collectively,
"Biologicals") and the deposit, release or circulation of any indoor
contaminants, including, but not limited to, emissions from paint, carpet and
drapery treatments, cleaning, maintenance and construction materials and
supplies, pesticides, pressed wood products, insulation, tobacco and other
materials and products (collectively with Biologicals, "Contaminants"), that
could adversely affect the health, safety or welfare of any tenant, employee, or
other occupant of the Complex or their invitees (each, an "Occupant"), Lessee
shall, at Lessee's sole cost and expense, at all times during the Term: (i)
maintain, operate and repair the HVAC system servicing the Leased Premises (to
the extent that Lessee is otherwise obligated to perform such maintenance,
operation and repair pursuant to this Lease) in a manner consistent with
preventing or minimizing the generation, growth, circulation, release or deposit
of any Contaminants; (ii) maintain the humidity level and the air exchange rate
within the Leased Premises (to the extent that Lessee has control thereof) at a
level recommended to prevent or minimize the growth of any Biologicals and -the
circulation of any other Contaminants; (iii) maintain, operate and repair the
Leased Premises in such a manner to prevent or minimize the accumulation of
stagnant water and moisture in planters, kitchen appliances and vessels,
carpeting, insulation, water coolers and any other locations where stagnant
water and moisture could accumulate; and (iv) otherwise maintain, operate and
repair the Leased Premises to prevent the generation, growth, deposit, release
or circulation of any Contaminants. If any governmental entity or any Occupant
alleges that health, safety or welfare has been or could be adversely affected
by any such Contaminants, Lessee shall notify Lessor in writing within twenty-
four (24) hours of the time the allegation is made. Lessor may then elect to
engage the services of an industrial hygiene testing laboratory (or
alternatively or concurrently require Lessee to do the same) to determine
whether the cause of any alleged adverse health effect is or could be
attributable to any Contaminants present within the Leased Premises. Lessee
shall be responsible for all such testing costs and for any consequential
damages and costs (including, without limitation, any third-party claims, loss
of rental, remediation, removal and/or abatement costs, and increases in
insurance premiums) resulting from Lessee's failure to comply in whole or in
part with the terms of this Section 12.7. The indemnity set forth in Section
12.5 above shall apply to Lessee's failure to comply with any of the terms of
this Section.
13. SERVICE AND EQUIPMENT
13.1 Climate Control. Lessor shall provide as part of Operating Costs
ventilating and air conditioning ("VAC") to the Leased Premises from 8:00 a.m.
to 6:00 p.m., Monday through Friday and 8:00 a.m. to 1:00 p.m. Saturday (the
"Climate Control Hours") provided that Lessor shall have no responsibility or
liability for failure to supply VAC service when making repairs,
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alterations or improvements or when prevented from so doing by strikes or any
cause beyond Lessor's reasonable control. Any VAC provided to the Leased
Premises at Lessee's request after the Climate Control Hours shall be at
Lessee's sole cost and expense in accordance with rate schedules promulgated by
Lessor from time to time. Lessee acknowledges that Lessor has installed in .the
Building a system for the purpose of climate control. Initially, the use of fans
to circulate outside air or in conjunction with the climate control equipment
outside of the Climate Control Hours shall be charged at Twenty-Four Dollars
($24) per hour for each additional fan, and the use of chillers outside of the
Climate Control Hours shall be charged at One Hundred Fifty Dollars ($150) per
hour, with an additional overtime charge for Sundays and holidays, each prorated
among those lessees requiring such additional hours of climate control. Any use
of the Leased Premises which exceeds the Building design load standards may
require changes or alterations in the system or ducts through which the climate
control system operates. Any changes or alterations so occasioned, if such
changes can be accommodated by Lessor's equipment, shall be made by Lessee at
its cost and expense but only with the written consent of Lessor first had and
obtained, and in accordance with drawings and specifications and by a contractor
first approved in writing by Lessor. If Lessee's use of the Leased Premises
exceeds the Building design load standards, such excess use may necessitate the
re-balancing of the climate control equipment in the Leased Premises. In such
event, the same will be performed by Lessor at Lessee's expense. Any charges to
be paid by Lessee hereunder shall be due within ten (10) days of receipt of an
invoice from Lessor, which invoice may precede Lessor's expenditure for the
benefit of Lessee.
13.2 Elevator Service. Subject to Section 13.6, Lessor shall provide
reasonable elevator service (which may be with or without operator at Lessor's
option) on a twenty-four (24) hour basis, three hundred sixty-five (365) days
per year.
13.3 Cleaning Public Areas. Lessor shall maintain and keep clean the street
level lobbies, sidewalks, truck dock, public corridors and other public portions
of the Building.
13.4 Refuse Disposal. Lessee shall pay Lessor, within ten (10) days of
being billed therefor, for the removal from the Leased Premises and the Building
of such refuse and rubbish of Lessee as shall exceed that ordinarily accumulated
daily in the routine of business office occupancy.
13.5 Janitorial Service. Lessor shall provide cleaning and janitorial
service in and about the Complex and Leased Premises in accordance with Exhibit
H, attached hereto.
To the extent that Lessee shall require cleaning and/or janitorial service
in excess of that set forth in Exhibit H (hereinafter referred to as "Special
Cleaning Service") Lessor may, upon reasonable advance notice from Lessee, elect
to furnish such Special Cleaning Service and Lessee agrees to pay Lessor, within
ten (10) days of being billed therefor, Lessor's reasonable charge for providing
such additional service. If Lessor does not elect to provide said Special
Cleaning Service, Lessee may perform or provide for said Special Cleaning
Service, at Lessee's sole cost and expense.
13.6 Interruptions. Lessor does not warrant that any of the services
referred to above or any other services and/or utilities which Lessor may supply
or are supplied will be free from
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interruption and/or the need for maintenance and repairs or replacement. Lessee
acknowledges that any one or more such services may be suspended or reduced by
reason of repairs, alterations or improvements necessary to be made, by strikes
or accidents, by any cause beyond the reasonable control of Lessor, or by orders
or regulations of any federal, state, county or municipal authority. In
addition, Lessor shall have no liability for damages arising from, and Lessor
does not warrant that Lessee's use of any Lines will be free from: (i) any
eavesdropping or wire-tapping by unauthorized parties; (ii) any failure of any
Lines to satisfy Lessee's requirements; or (iii) any shortages, failures,
variations, interruptions, disconnections, loss or damage caused by
installation, maintenance, replacement, use or removal of Lines by or for other
occupants of the Complex, by any failure of the environmental conditions or the
power supply for the Building to conform to any requirements for the Lines or
any associated equipment or any other problems associated with any Lines by any
other cause.
Any such interruption or suspension of services shall not be deemed an
eviction or disturbance of Lessee's use and possession of the Leased Premises or
any part thereof, nor render Lessor liable to Lessee for damages by abatement of
Rent or otherwise, nor relieve Lessee of performance of Lessee's obligations
under this Lease.
13.7 Building Upgrade Work. Lessor has advised Lessee that Lessor may make
certain upgrades and improvements to the Common Areas and central systems of the
Complex ("Building Upgrade Work"). Lessee acknowledges that the performance of
the Building Upgrade Work may result in noise, dust and other temporary
inconveniences or interruptions to the conduct of normal business activity in
the Building. Lessor will utilize reasonable measures to reduce noise levels
associated with the performance of the Building Upgrade Work; provided, however,
the Building Upgrade Work shall in no event constitute a constructive eviction
or serve as a basis for any abatement or reduction in rent.
14. WASTE
14.1 Waste or Nuisance. Lessee shall not commit, or suffer to be committed,
any waste upon the Leased Premises, or any nuisance, or other act or thing which
may disturb the quiet enjoyment of any other lessee or occupant of the Complex
in which the Leased Premises are located.
15. ALTERATIONS
15.1 Consent of Lessor; Ownership. Lessee shall not make, or suffer to be
made, any Alterations to the Leased Premises, the Building, or the Complex,
and/or Lines, systems and facilities therein, or any part thereof, without the
written consent of Lessor first had and obtained. Any additions to or
Alterations of the Leased Premises (except trade fixtures) shall, immediately
upon being made, constitute a part of the realty and Lessor's property, and
shall, at the expiration or earlier termination of this Lease, remain upon the
Leased Premises without compensation to Lessee. Except as otherwise provided in
this Lease, Lessee shall have the right to remove its trade fixtures placed upon
the Leased Premises provided that Lessee restores the Leased Premises as
indicated below. Any anal all costs incurred by Lessor, whether in complying
with laws, governmental requirements or otherwise, as a result of any
Alterations, or as a result of request by Lessee for increased Lines or other
utility capacity above that presently existing (or,
24.
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in the event the Building is to be constructed or substantially altered by
Lessor prior to the Delivery Date, above that which is planned by Lessor for the
Building) shall be paid by Lessee within ten (10) days after demand therefor by
Lessor.
15.2 Lessee Alterations. Any alterations, additions, improvements or
installations performed by Lessee (collectively "Alteration" or "Alterations")
shall be subject to strict conformity with the following requirements:
(a) All Alterations shall be at the sole cost and expense of Lessee;
(b) Prior to commencement of any work of Alteration, Lessee shall
submit detailed plans and specifications, including working drawings
(hereinafter referred to as "Plans"), of the proposed Alterations, which shall
be subject to the consent of Lessor in accordance with the terms of Section 15.1
above;
(c) Following approval of the Plans by Lessor, Lessee shall give
Lessor at least ten (10) days' prior written notice of commencement of work in
the Leased Premises so that Lessor may post notices of non-responsibility in or
upon the Leased Premises as provided by law;
(d) No Alterations shall be commenced without Lessee having
previously obtained all appropriate permits and approvals required by and of
governmental agencies;
(e) All Alterations shall be performed in a skillful and workmanlike
manner, consistent with the Building Standards set forth as Exhibit G, and
pursued with diligence in accordance with the Plans previously approved by
Lessor and in full accord with all applicable laws and ordinances. All material,
equipment, and articles incorporated in the Alterations are to be new and of
recent manufacture and of the most suitable grade for the purpose intended.
Lessee's contractor shall maintain all of the insurance reasonably required by
Lessor, including, without limitation, commercial general liability, workers'
compensation, builder's risk and course of construction insurance. The limits of
such insurance shall be the same as those specified in Article 18;
(f) Lessee must obtain the prior written approval from Lessor for
Lessee's contractor before the commencement of the work. Lessor may require that
Lessee use subcontractors designated by Lessor as to specified portions of the
work. Lessee's contractor shall maintain all insurance reasonably required by
Lessor;
(g) As a condition of approval of .the Alterations, Lessor may
require performance and labor and materialmen's payment bonds issued by a surety
approved by Lessor, in a sum equal to the cost of the Alterations guarantying
the completion of the Alterations free and clear of all liens and other charges
in accordance with the Plans. Such bonds shall name Lessor as beneficiary;
(h) The Alterations must be performed in -a manner such that they
will not interfere with the quiet enjoyment of the other lessees in the Complex;
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(i) Lessor shall have the right to condition any approval of the
Alterations upon (i) submission by Lessee of a Report with respect to Hazardous
Materials, and/or (ii) the performance by Lessee at Lessee's cost and expense of
such investigation, clean-up and remediation with respect to Hazardous Materials
as Lessor may request, in Lessor's sole and absolute discretion; provided,
however, that Lessor shall have the right, but not the obligation, to undertake
all or any portion of such investigation, clean-up or remediation at Lessee's
cost and expense in accordance with the provisions of Section 12.3(e) above.
Lessee acknowledges and agrees that Lessor shall have the right, in its sole and
absolute discretion, to disapprove the making of any such Alterations based upon
the results of any investigation with respect to Hazardous Materials.
15.3 Liens. Lessee shall keep the Leased Premises and the Complex in which
the Leased Premises are situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Lessee. In the event a
mechanic's or other lien is filed against the Leased Premises or the Complex of
which the Leased Premises form a part as a result of a claim arising through
Lessee, Lessor may demand that Lessee furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to at least one hundred fifty percent
(150%) of the amount of the contested lien claim or demand, indemnifying Lessor
against liability for the same and holding the Leased Premises free from the
effect of such lien or claim. Such bond must be posted within ten (10) days
following notice from Lessor. In addition, Lessor may require Lessee to pay
Lessor's attorneys' fees and costs in participating in any action to foreclose
such lien if Lessor shall decide it is to its best interest to do so. Lessor may
pay the claim prior to the enforcement thereof, in which event Lessee shall
reimburse Lessor in full, including attorneys' fees, for any such expense, as
additional rent, with the next due rental.
15.4 Restoration. Lessee shall, at Lessee's sole cost and expense, return
the Leased Premises to Lessor at the expiration or earlier termination of this
Lease in good and sanitary order, condition and repair, free of rubble and
debris, broom clean, reasonable wear and tear excepted. In addition, Lessee
shall ascertain from Lessor at the time of approval of any Alterations, whether
Lessor considers any such Alterations to be specialized and non-reusable areas,
such as classrooms, manufacturing areas and storage racks, and whether Lessor
desires such specialized and non-reusable areas of the Leased Premises restored
to its condition prior to the making of such permitted Alterations. In such
event, Lessor shall, at least three (3) months prior to Lease expiration,
provide Lessee with an estimate of the costs to so restore the Leased Premises
("Restoration Costs") and Lessee shall pay to Lessor, as additional Rent, the
entire amount of the Restoration Costs no later than ten (10) days prior to
Lease expiration. The foregoing restoration of the Leased Premises shall be
performed after the Lease expiration. All damage to the Leased Premises caused
by the removal of such trade fixtures and other personal property that Lessee is
permitted to remove under the terms of this Lease and/or such restoration shall
be repaired by Lessee at its sole cost and expense prior to , termination.
Lessee's obligations under this Section 15.4 shall apply to the parking garage,
roof and other areas of the Complex impacted by Lessee's use and/or occupancy of
the Complex or any part thereof.
16. PROPERTY INSURANCE
16.1 Lessor's Insurance. Lessor shall, to the extent available, procure and
maintain at all times during the Term an "All Risk" or "Special Form" policy or
policies of insurance
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covering loss or damage to the Building and the Complex in an amount sufficient
to exceed minimum coinsurance requirements of such policy (exclusive of Lessee's
trade fixtures, inventory, personal property, Tenant Improvements and
equipment), providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage, and special extended coverage on
Building. Additionally, Lessor may (but shall not be required to) carry: (i)
bodily injury and property damage liability insurance and/or excess liability
coverage insurance; (ii) earthquake and/or flood damage insurance; or (iii)
rental income insurance at its election or if required by its lender from time
to time during the Term; or (iv) any other insurance as Lessor or its lender
reasonably deem appropriate, in such amounts and with such limits as Lessor or
its lender may deem appropriate. The costs of all such insurance shall be
included in Operating Costs.
16.2 Use of Premises. No use shall be made or permitted to be made on the
Leased Premises, nor acts done, which will increase the existing rate of
insurance upon the Building in which the Leased Premises are located or upon any
other Building in the Complex or cause the cancellation of any insurance policy
covering the Building, or any part thereof, nor shall Lessee sell, or permit to
be kept, used or sold, in or about the Leased Premises, any article which may be
prohibited by the standard form of "All Risk" fire insurance policies. Lessee
shall, at its sole cost and expense, comply with any and all requirements
pertaining to the Leased Premises, of any insurance organization or company,
necessary for the maintenance of reasonable property damage and commercial
general liability insurance, covering the Leased Premises, the Building, or the
Complex.
16.3 Increase in Premiums. Lessee agrees to pay to Lessor, as additional
Rent, any increase in premiums on policies which may be carried by Lessor on the
Leased Premises, the Building or the Complex, or any blanket policies which
include the Building or Complex, covering damage thereto and loss of Rent caused
by fire and other perils above the rates for the least hazardous type of
occupancy for office use. Lessee further agrees to pay Lessor, as additional
Rent, any increases in such premiums resulting from the nature of Lessee's
occupancy or any act or omission of Lessee. All payments of additional Rent by
Lessee to Lessor pursuant to this Section 16.3 shall be made within ten (10)
days after receipt by Lessee of Lessor's billing therefor.
16.4 Personal Property Insurance. Lessee shall maintain in full force and
effect on all of its fixtures, furniture, equipment and other business personal
property in the Leased Premises a policy or policies providing protection
against any peril included within the classification "All Risk" to the extent of
at least ninety percent (90%) of their replacement cost, or that percentage of
the replacement cost required to negate the effect of a coinsurance provision,
whichever is greater. No such policy shall have a deductible in a greater amount
than One Thousand Dollars ($1,000). Lessee shall also insure in the same manner
the physical value of all its Tenant Improvements and Alterations in the Leased
Premises including the Lessee's Work. During the Term, the proceeds from any
such policy or policies of insurance shall be used for the repair or replacement
of the fixtures, equipment, and Tenant Improvements so insured. Lessor shall
have no interest in said insurance, and will sign all documents necessary or
proper in connection with the settlement of any claim or loss by Lessee. Lessee
shall also maintain insurance for all plate glass upon the Leased Premises. All
insurance specified in this Section 16.4 to be maintained by Lessee shall be
maintained by Lessee at its sole cost.
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17. INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION
17.1 Waiver of Subrogation. Lessor and Lessee release each other, and their
respective authorized representatives, from any claims for damage to the Leased
Premises and the Building and other improvements in which the Leased Premises
are located, and to the furniture, fixtures, and other business personal
property, Lessee's improvements and Alterations of either Lessor or Lessee, in
or on the Leased Premises and the Building and other improvements in which the
Leased Premises are located, including loss of income, that are caused by or
result from risks insured or required under the terms of this Lease to be
insured against under any property insurance policies carried or to be carried
by either of the parties.
17.2 Form of Policy. Each party shall cause each such insurance policy
obtained by it to provide that the insurance company waives all rights of
recovery by way of subrogation against either party in connection with any
damage covered by such policy. Neither party shall be liable to the other far
any damage caused by any peril included within the classification "All Risk"
which is insured against under any property insurance policy carried under the
terms of this Lease.
17.3 Indemnity. Lessee, as a material part of the consideration to be
rendered to Lessor, shall indemnify, defend, protect and hold harmless Lessor
against all actions, claims, demands, damages, liabilities, losses, penalties,
or expenses of any kind which may be brought or imposed upon Lessor or-which
Lessor may pay or incur by reason of injury to person or property or business,
from whatever cause, all or in any way connected with the acts and omissions of
Lessee, and the condition or use of the Leased Premises, or the improvements or
personal property therein or thereon, including without limitation any liability
or injury to the person or property or business of Lessee, its agents, officers,
employees or invitees. Lessee agrees to indemnify, defend and protect Lessor and
hold it harmless from any and all liability, loss, cost or obligation on account
of, or arising out of, any such injury or loss however occurring, including
breach of the provisions of this Lease and the negligence of the parties hereto.
Nothing contained herein shall obligate Lessee to indemnify Lessor against its
own sole or gross negligence or willful acts, for which Lessor shall indemnify
Lessee.
17.4 Defense of Claims. In the event any action, suit or proceeding is
brought against Lessor by reason of any such occurrence, Lessee, upon Lessor's
request, will at Lessee's expense resist and defend such action, suit or
proceeding, or cause the same to be resisted and defended by counsel designated
either by Lessee or by the insurer whose policy covers the occurrence and in
either case approved by Lessor. The obligations of Lessee under this Section
arising by reason of any occurrence taking place during the Term shall survive
any termination of this Lease.
17.5 Waiver of Claims. Lessee, as a material part of the consideration to
be rendered to Lessor, hereby waives all claims against Lessor for damages or
injury, as described below, from any cause arising at any time, including breach
of the provisions of this Lease and the negligence of the parties hereto:
(a) damages to goods, wares, merchandise and loss of business in,
upon or about the Leased Premises; and
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(b) (notwithstanding anything to the contrary contained in this
Lease, including, without limitation, the definition of Operating Costs in
Section 2.1, which includes "policing") damages to goods, wares, merchandise and
loss of business, in, upon or about the Leased Premises or the Complex, and
injury to Lessee, its agents, employees, invitees or third persons in, upon or
about the Leased Premises or the Complex, where such damage or injury results
from Lessor's failure to police or provide security for the Complex or Lessor's
negligence in connection therewith.
Lessee expressly acknowledges and agrees that the provisions of Section
12.5(6) above apply fully with respect to the matters waived pursuant to this
Section 17.5, and, for such purpose, the term Released Matters, as used in
Section 12.5(6), shall be deemed to include the matters waived pursuant to this
Section 17.5.
17.6 References. Wherever in this Article the term Lessor or Lessee is used
and such party is to receive the benefit of a provision contained in this
Article, such term shall refer not only to that party but also to its officers,
directors, shareholders, employees, contractors, partners, agents and mortgagees
or other lien holders.
18. LIABILITY INSURANCE
18.1 Lessee's Insurance. Lessee shall, at Lessee's expense, obtain and keep
in force during the Term, a commercial general liability insurance policy
insuring Lessee against the risks of, bodily injury and property damage,
personal injury, contractual liability, completed operations, products
liability, host liquor liability, owned and non-owned automobile liability
arising out of the ownership, use, occupancy or maintenance of the Leased
Premises and all areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than One Million Dollars ($1,000,000)
per occurrence with a Two Million Dollar ($2,000,000) annual aggregate; and an
umbrella policy of Three Million Dollars ($3,000,000) for any one occurrence.
Lessor and any lender or other party in interest designated by Lessor shall be
named as additional insured(s). The policy shall contain cross liability
endorsements and shall insure performance by Lessee of the indemnity provisions
of this Lease; shall be primary, not contributing with, and not in excess of
coverage which Lessor may carry; shall state that Lessor is entitled to recovery
for the negligence of Lessee even though Lessor is named as an additional
insured; shall provide for severability of interest; shall provide that an act
or omission of one of the insured or additional insureds which would void or
otherwise reduce coverage shall not void or reduce coverages as to the other
insured or additional insured; and shall afford coverage after the Term (by
separate policy or extension if necessary) for all claims based on acts,
omissions, injury or damage which occurred or arose (or the onset of which
occurred or arose) in whole or in part during the Term. The limits of said
insurance shall not limit any liability of Lessee hereunder. Not more frequently
than every three (3) years, if, in the reasonable opinion of Lessor, the amount
of liability insurance required hereunder is not adequate, Lessee shall promptly
increase said insurance coverage as required by Lessor.
18.2 Workers' Compensation Insurance. Lessee shall carry Workers'
Compensation insurance as required by law, including an employers' liability
endorsement.
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18.3 Rent Loss/Business Interruption Insurance. Lessee shall carry Rental
Loss/Business Interruption insurance covering rental loss or business
interruptions resulting from those risks referred to in Section 18.1 in an
amount equal to all Rent payable under this Lease for a period of twelve (12)
months at the then current rate of charges.
19. INSURANCE POLICY REQUIREMENTS
19.1 General Requirements. All insurance policies required to be carried by
Lessee (except Lessee's business personal property insurance) hereunder shall
conform to the following requirements:
(a) The insurer in each case shall carry a designation in "Best's
Insurance Reports" as issued from time to time throughout the Term as follows:
policyholders' rating of A; financial rating of not less than VII;
(b) The insurer shall be qualified to do business in the state in
which the Leased Premises are located;
(c) The policy shall be in a form and include such endorsements as
are acceptable to Lessor;
(d) Certificates of insurance shall be delivered to Lessor at
commencement of the Term and certificates of renewal at least thirty (30) days
prior to the expiration of each policy;
(e) Each policy shall require that Lessor be notified in writing by
the insurer, at least thirty (30) days prior to any cancellation or expiration
of such policy, or any reduction in the amounts of insurance carried.
20. LESSEE INSURANCE DEFAULT
20.1 Rights of Lessor. In the event that Lessee fails to obtain any
insurance required of it under the terms of this Lease, Lessor may, at its
option, but is not obligated to, obtain such insurance on behalf of Lessee and
bill Lessee, as additional rent, for the cost thereof. Payment shall be due
within ten (10) days of receipt of the billing therefor by Lessee.
21. FORFEITURE OF PROPERTY AND LESSOR'S LIEN
21.1 Removal of Personal Property. Lessee agrees that as of the date of
termination of this Lease or repossession of the Leased Premises by Lessor, by
way of default or otherwise, it shall remove all personal property to which it
has the right to ownership pursuant to the terms of this Lease. Any and all such
property of Lessee not removed by such date shall, at the option of Lessor,
irrevocably become the sole property of Lessor. Lessee waives all rights to
notice and all common law and statutory claims and causes of action which it may
have against Lessor subsequent to such date as regards the storage, destruction,
damage, loss of use and ownership of the personal property affected by the terms
of this Article. Lessee acknowledges Lessor's need to relet the Leased Premises
upon termination of this Lease or repossession of the Leased Premises and
understands that the forfeitures and waivers provided herein are necessary to
aid
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said reletting, and to prevent Lessor incurring a loss for inability to deliver
the Leased Premises to a prospective lessee.
21.2 Lessor's Lien. Lessee hereby grants to Lessor a lien upon and security
interest in all fixtures, chattels and personal property of every kind now or
hereafter to be placed or installed in or on the Leased Premises and agrees that
in the event of any default, as defined in Article 29 herein, on the part of
Lessee, Lessor shall have all the rights and remedies afforded the secured party
by the chapter on "Default" of Division 9 of the Uniform Commercial Code of the
state in which the Leased Premises are located and may, in connection therewith,
also (a) enter on the Leased Premises to assemble and take possession of the
collateral, (6) require Lessee to assemble the collateral and make its
possession available to Lessor at the Leased Premises, and (c) enter the Leased
Premises, render the collateral, if equipment, unusable and dispose of it in a
manner provided by the Uniform Commercial Code of the state in which the Leased
Premises are located. Lessee hereby designates Lessor as his attorney-in-fact
for purposes of executing such documents as may be necessary to perfect the lien
and security interest granted hereunder.
22. MAINTENANCE AND REPAIRS
22.1 Lessor's Obligations. Subject to the other provisions of this Lease
imposing obligations in this respect upon Lessee, Lessor shall repair, replace
and maintain the external and Structural parts of the Complex which do not
comprise a part of the Leased Premises and are not leased to others, janitor and
equipment closets and shafts within the Leased Premises designated by Lessor for
use by it in connection with the operation and maintenance of the Complex, and
all Common Areas. Lessor shall maintain and repair equipment, Lines, facilities
or systems of the Building or Complex which are outside of the Leased Premises
or which do not exclusively serve the Leased Premises. Lessor shall perform such
repairs, replacements and maintenance with reasonable dispatch, in a good and
workmanlike manner; but Lessor shall not be liable for any damages, direct,
indirect or consequential, or for damages for personal discomfort, illness or
inconvenience of Lessee by reason of failure of equipment, Lines, facilities or
systems or reasonable delays in the performance of such repairs, replacements
and maintenance, unless caused by the deliberate act or omission of Lessor, its
servants, agents, or employees. The cost for such repairs, maintenance and
replacement shall be included in Operating Costs in accordance with Section 2.1
hereof.
22.2 Negligence of Lessee. If the Building, the elevators, escalators,
boilers, engines, pipes or apparatus used for the purpose of climate control of
the Building or operating the elevators, or escalators, or if the water pipes,
drainage pipes, electric lighting or other equipment, Lines, systems and/or
facilities of the Building or the Complex, or the roof or the outside walls of
the Building, fall into a state of disrepair or become damaged or destroyed
through the negligence, carelessness or misuse of Lessee, its agents, employees
or anyone permitted by it to be in the Complex, or through it in any way, the
cost of the necessary repairs, replacements or Alterations shall be borne by
Lessee who shall pay the same to Lessor as additional charges forthwith on
demand.
22.3 Lessee's Obligations. Lessee shall repair the Leased Premises,
including without limiting the generality of the foregoing, all interior
partitions and walls, fixtures, Leasehold Improvements and Alterations in the
Leased Premises and all electrical and telephone outlets and
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conduits, fixtures and shelving, and special mechanical and electrical equipment
which equipment is not a normal part of the Leased Premises installed by or for
Lessee, reasonable wear and tear, damage with respect to which Lessor has an
obligation to repair as provided in Section 22.1 and Section 23.2 hereof only
excepted. Prior to commencement of any repairs, Lessee shall give Lessor at
least ten (10) days' prior written notice thereof so that Lessor may post
notices of non-responsibility in or upon the Leased Premises as provided by law.
Lessee must obtain the prior written approval from Lessor for Lessee's
contractor before the commencement of the repair. Lessor may require that Lessee
use a specific contractor for certain types of repairs. Lessor may enter and
view the state of repair and Lessee will repair in a good and workmanlike manner
according to notice in writing. Notwithstanding the foregoing, Lessee shall not
make any repairs to the equipment, Lines, facilities or systems of the Building
or Complex which are outside of the Leased Premises or which do not exclusively
serve the Leased Premises.
22.4 Cleaning. Lessee agrees at the end of each business day to leave the
Leased Premises in a reasonably clean condition for the purpose of the
performance of Lessor's cleaning services referred to herein. Lessee shall
maintain the appearance of the Leased Premises in a manner consistent with the
character, use and appearance of the Complex.
22.5 Waiver. Lessee waives all rights it may have under law to make repairs
at Lessor's expense.
22.6 Acceptance. Except as to the construction obligations of Lessor for
the Lessor's Work, if any, stated in Exhibit D to this Lease, Lessee shall
accept the Leased Premises in "as is" condition as of the date of execution of
this Lease by Lessee, and Lessee acknowledges that the Leased Premises in such
condition are in good and sanitary order, condition and repair. Lessee
acknowledges that there shall be no floor/ceiling coring or penetrations due to
the post tension floor slab structural system of the Building.
23. DESTRUCTION
23.1 Rights of Termination. In the event the Leased Premises suffers (a) an
Uninsured Property Loss (as hereinafter defined) or (b) a property loss which
cannot be repaired within one hundred twenty (120) days from the date of
destruction under the laws and regulations of state, federal, county or
municipal authorities, or other authorities with jurisdiction, Lessor may
terminate this Lease as at the date of the damage upon written notice to Lessee
following the property loss. For purposes of this Lease, the term "Uninsured
Property Loss" shall mean any loss arising from a peril not covered by the
standard form of an "All Risk" or "Special Form" property insurance policy.
23.2 Repairs. In the event of a property loss which may be repaired within
one hundred twenty (120) days from the date of the damage, or, in the
alternative, in the event Lessor does not elect to terminate this Lease under
the terms of Section 23.1 above, then this Lease shall continue in full force
and effect and Lessor shall forthwith undertake to make such repairs to
reconstitute the Leased Premises to as near the condition as existed prior to
the property loss as practicable but not including any construction originally
performed by Lessee (including Lessee's Work) or subsequently undertaken by
Lessee, but shall include solely property
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constructed by Lessor (including Lessor's Work) prior to the commencement of the
Term. Such partial destruction shall in no way annul or void this Lease except
that Lessee shall be entitled to a proportionate reduction of Minimum Rent
following the property loss and until the time the Leased Premises are restored.
Such reduction shall be pro rata based upon the number of usable square feet of
the Leased Premises damaged and not occupied. Lessor's obligations to restore
shall in no way include any construction originally performed by Lessee or
subsequently undertaken by Lessee, but shall include solely that property
constructed by Lessor prior to commencement of the Term.
23.3 Repair Costs. The cost of any repairs to be made by Lessor, pursuant
to Section 23.2 of this Lease, shall be paid by Lessor utilizing available
insurance proceeds. Lessee shall reimburse Lessor upon completion of the repairs
for any deductible for which no insurance proceeds will be obtained under
Lessor's insurance policy to the extent such deductible is not reimbursed as an
Operating Cost, or if other premises are also repaired, a pro rata share based
on total costs of repair equitably apportioned to the Leased Premises. Lessee
shall, however, not be responsible to pay any deductible or its share of any
deductible to the extent that Lessee's payment would be in excess of Ten
Thousand Dollars ($10,000) if Lessee's' consent has not been received by Lessor,
unless such denial of consent by Lessee is unreasonable in the reasonable
judgment of Lessor's insurance consultant.
23.4 Waiver. Lessee hereby waives all statutory or common law rights of
termination in respect to any partial destruction or property loss which Lessor
is obligated to repair or may elect to repair under the terms of this Article.
Further, in event of a property loss occurring during the last two (2) years of
the original Term hereof or of any extension, Lessor need not undertake any
repairs and may cancel this Lease unless Lessee has the right under the terms of
this Lease to extend the Term for an additional period of at least five (5)
years and does so within thirty (30) days of the date of the property loss.
23.5 Lessor's Election. In the event that the Complex or Building in which
the Leased Premises are situated be destroyed to the extent of not less than (i)
thirty-three and one-third percent (33-1/3%) of the replacement cost thereof in
the event of an insured property loss, or (ii) more than Five Hundred Thousand
Dollars ($500,000) in replacement construction costs in the case of an Uninsured
Property Loss, Lessor may elect to terminate this Lease, whether the Leased
Premises be injured or not, in the same manner as in Section 23.1 above. At all
events, a total destruction of the Complex of which the Leased Premises form a
part, or the Leased Premises itself, shall terminate this Lease.
24. CONDEMNATION
24.1 Definitions.
(a) "Condemnation" means (i) the exercise of any governmental power,
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whether by legal proceedings or otherwise, by a Condemnor (as defined below)
and/or (ii) a voluntary sale or transfer by Lessor to any Condemnor, either
under threat of condemnation or while legal proceedings for condemnation are
pending.
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(b) "Date of Taking" means the date the Condemnor has the right to
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possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of value
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awarded, paid or received on a total or partial Condemnation.
(d) "Condemnor" means any public or quasi-public authority, or
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private corporation or individual, having the power of Condemnation.
24.2 Total Taking. If the Leased Premises are totally taken by
Condemnation, this Lease shall terminate on the Date of Taking.
24.3 Partial Taking; Common Areas.
(a) If any portion of the Leased Premises is taken by Condemnation,
this Lease shall remain in effect, except that Lessee can elect to terminate
this Lease if thirty-three and one-third percent (33-1/3%) or more of the total
number of square feet in the Leased Premises is taken.
(b) If any part of the Common Areas of the Complex is taken by
Condemnation and as a consequence thereof, the Complex is not in compliance with
applicable governmental codes and requirements, then Lessor shall have the
election to terminate this Lease pursuant to this Section.
(c) If fifty percent (50%) or more of the Building in which the
Leased Premises are located is taken, Lessor shall have the election to
terminate this Lease in the manner prescribed herein.
24.4 Termination or Abatement. If either party elects to terminate this
Lease under the provisions of Section 24.3 (such party is hereinafter referred
to as the "Terminating Party"), it must terminate by giving notice to the other
party (the "Nonterminating Party") within thirty (30) days after the nature and
extent of the taking have been finally determined (the "Decision Period"). The
Terminating Party shall notify the Nonterminating Party of the date of
termination, which date shall not be earlier than sixty (60) days after the
Terminating Party has notified the Nonterminating Party of its election to
terminate nor later than the Date of Taking. If Notice of Termination is not
given within the Decision Period, the Lease shall continue in full force and
effect except that Minimum Rent shall be reduced by subtracting therefrom an
amount calculated by multiplying the Minimum Rent in effect prior to the taking
by a fraction the numerator of which is the number of square feet taken from the
Leased Premises and the denominator of which is the number of square feet in the
Leased Premises prior to the taking.
24.5 Restoration. If there is a partial taking of the Leased Premises and
this Lease remains in full force and effect pursuant to this Article, Lessor, at
its cost, shall accomplish all necessary restoration so that the Leased Premises
is returned as near as practical -to its condition immediately prior to the date
of the taking, but in no event shall Lessor be obligated to expend more for such
restoration than the extent of funds actually paid to Lessor by the Condemnor.
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24.6 Award. Any award arising from the Condemnation or the settlement
thereof shall belong to and be paid to Lessor except that Lessee shall receive
from the award compensation for the following if specified in the award by the
Condemnor, so long as it does not reduce Lessor's award in respect of the real
property: Lessee's trade fixtures, tangible personal property, loss of business
and relocation expenses. At all events, Lessor shall be solely entitled to all
award in respect of the real property, including the bonus value of the
leasehold. Lessee shall not be entitled to any award until Lessor has received
the above sum in full.
25. ASSIGNMENT AND SUBLETTING
25.1 Lease is Personal. The purpose of this Lease is to transfer possession
of the Leased Premises to Lessee for Lessee's personal use in return for certain
benefits, including rent, to be transferred to the Lessor. Lessee's right to
assign or sublet as stated in this Article is subsidiary and incidental to the
underlying purpose of this Lease. Lessee acknowledges and agrees that it has
entered into this Lease in order to acquire the Leased Premises for its own
personal use and not for the purpose of obtaining the right to convey the
leasehold to others.
25.2 "Transfer of the Leased Premises" Defined. The terms "Transfer of the
Leased Premises" or "Transfer" as used herein shall include any assignment of
all or any part of this Lease (including assignment by operation of law),
subletting of all or any part of the Leased Premises or transfer of possession,
or granting of the right of possession or contingent right of possession of all
or any portion of the Leased Premises including, without limitation, license,
concession, mortgage, devise, hypothecation, agency, franchise or management
agreement, or suffering any other person (the agents and servants of Lessee
excepted) to occupy or use the Leased Premises or any portion thereof; and the
party to whom the Transfer is to be effected is hereinafter referred to as the
"Transferee." If Lessee is a corporation which is not deemed a public
corporation, or is an unincorporated association or partnership, or Lessee
consists of more than one party, the transfer, assignment or hypothecation of
any stock or interest in such corporation, association, partnership or ownership
interest, in the aggregate in excess of twenty-five percent (25%), shall be
deemed a Transfer of the Leased Premises.
25.3 No Transfer Without Consent. Lessee shall not suffer a Transfer of the
Leased Premises or any interest therein, or any part thereof, or any right or
privilege appurtenant thereto without the prior written consent of Lessor, and a
consent to one Transfer of the Leased Premises shall not be deemed to be a
consent to any subsequent Transfer of the Leased Premises. Any Transfer of the
Leased Premises without such consent shall (i) be voidable, and (ii) terminate
this Lease, in either case, at the option of Lessor.
25.4 When Consent Granted.
(a) The consent .of Lessor to a Transfer may not be unreasonably
withheld, provided that it is agreed to be reasonable for Lessor to consider
any-of the following reasons, which list is not exclusive, in electing to
consent or to deny consent:
(i) Financial strength of the proposed Transferee is not at
least equal to that of Lessee at the time of execution of this Lease;
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(ii) A proposed Transferee whose occupation of the Leased
Premises would cause a diminution in the reputation of the Complex or the other
businesses located therein;
(iii) A proposed Transferee whose impact on the common facilities
or the other occupants of the Complex would be disadvantageous to the operation
and management of the Complex including increasing the cost of operation and
management;
(iv) A proposed Transferee whose use presents a risk of
violation of Article 12;
(v) A proposed Transferee whose occupancy will require a
variation in the terms of this Lease (for example; a variation in the use
clause) or which otherwise adversely affects any interest of Lessor;
(vi) That there be no uncured notices of default under the terms
of this Lease; or
(vii) A proposed Transferee who is or is likely to be, or whose
business is or is likely to be, subject to compliance with additional laws or
other governmental requirements beyond those to which Lessee or Lessee's
business is subject.
(b) Notwithstanding the foregoing, Lessee shall have the right,
without the consent of Lessor, but upon prior written notice to Lessor, to
assign this Lease to a company incorporated or to be incorporated by Lessee,
provided that Lessee owns or beneficially controls all the issued and
outstanding shares of capital stock of the company; further provided, however,
that in the event that at any time following such assignment, Lessee wishes to
sell, mortgage, devise, hypothecate or in any other manner whatsoever transfer
any portion of the ownership or beneficial control of the issued and outstanding
shares in the capital stock of such company, such transaction shall be deemed to
constitute a Transfer and shall be subject to all of the provisions of this
Article 25 with respect to a Transfer of the Leased Premises including, by
specific reference, the provisions of Section 25.8.
25.5 Procedure for Obtaining Consent.
(a) Lessor need not commence its review of any proposed Transfer, or
respond to any request by Lessee with respect to such, unless and until it has
received from Lessee adequate descriptive information concerning the Transferee,
the business to be conducted by the Transferee, the Transferee's financial
capacity, and such other information as may reasonably be required in order to
form a prudent judgment as to the acceptability of the proposed Transfer,
including, without limitation, the following:
(i) Reasonable financial information concerning the proposed
Transferee including the past two years' audited annual Balance Sheets and
Profit and Loss statements, certified correct by a Certified Public Accountant;
(ii) Banking references of the proposed Transferee;
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(iii) A resume of the business background and experience of the
proposed Transferee;
(iv) At least five (5) business references for the proposed
Transferee;
(v) An executed copy of the instrument by which Lessee proposes
to effectuate the Transfer;
(vi) A certified statement, including the calculation, of the
amount of unamortized cost of Lessee's Tenant Improvements to the Leased
Premises.
(b) Lessee shall reimburse Lessor as additional rent for Lessor's
reasonable costs and attorneys' fees incurred in conjunction with the processing
and documentation of any proposed Transfer of the Leased Premises, whether or
not consent is granted.
25.6 Recapture.
(a) By written notice to Lessee (the "Termination Notice") within
twenty (20) business days following submission to Lessor by Lessee of the
information specified in Section 25.5, Lessor: (i) may terminate this Lease in
the event of an assignment of this Lease or sublet of the entire Leased
Premises; or (ii) if such proposed subletting will result in more than fifty
percent (50%) of the entire Leased Premises being sublet (in the aggregate with
any previous subleases), terminate this Lease as to all or any portion of the
Leased Premises. Any termination pursuant to clause (ii) above shall be subject
to the rights of any sublessees under any existing subleases provided Lessor has
previously consented to the sublease in accordance with the terms of this Lease.
In the event Lessor elects to terminate this Lease as to that portion of the
Leased Premises to be sublet, an amendment to this Lease shall be executed
whereby the description of the Leased Premises is restated and Lessee's
obligations for rent and other charges are reduced in proportion to the
reduction in Rentable Area of the Leased Premises caused thereby.
(b) In the event that Lessor terminates this Lease or terminates this
Lease as to a portion thereof, Lessor may, if it elects, enter into a new lease
covering the Leased Premises or a portion thereof with the intended Transferee
on such terms as Lessor and such Transferee may agree or enter into a new lease
covering the Leased Premises with any other party; in such event, Lessee shall
not be entitled to any portion of the profit if any which Lessor may realize on
account of such termination and reletting. From and after the date of such
termination of this Lease, the parties shall have no further obligations to each
other under this Lease except for matters occurring or obligations arising prior
to the date of such termination.
25.7 Reasonable Restriction. The restrictions on Transfer described in this
Article 25 are acknowledged by Lessee to be reasonable for all purposes,
including, without limitation, the provisions of California Civil Code (the
"Code") Section 1951.4(6)(2). Lessee expressly waives any rights which it might
otherwise be deemed to possess pursuant to applicable law, including, without
limitation, Section 1997.040 of the Code, to limit any remedy of Lessor pursuant
to Section 1951.2 or 1951.4 of the Code by means of proof that enforcement of a
restriction on use of the Leased Premises would be unreasonable.
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25.8 Effect of Transfer. If Lessor consents to a Transfer (or if a Transfer
occurs without Lessor's consent in accordance with Section 25.4(6)), the
following conditions shall apply:
(a) Each and every covenant, condition or obligation imposed upon
Lessee by this Lease and each and every right, remedy or benefit afforded Lessor
by this Lease shall not be impaired or diminished as a result of such Transfer.
(b) Lessee shall pay to Lessor, on a monthly basis, seventy percent
(70%) of the excess of any sums of money, or other economic consideration
received by Lessee from the Transferee in such month (whether or not for a
period longer than one month), including higher rent, bonuses, key money, or the
like over the aggregate, of: (i) the Amortized Portion, as defined below, of the
reasonable expenses actually paid by Lessee to unrelated third parties for
brokerage commissions, tenant improvements to the Leased Premises, or design
fees incurred as a direct consequence of the Transfer; and (ii) the total sums
which Lessee pays Lessor under this Lease in such month, or the prorated portion
thereof if the Leased Premises transferred is less than the entire Leased
Premises. The amount so derived shall be paid with Lessee's payment of Minimum
Rent. The term "Amortized Portion" is that portion of the applicable expenses
derived by dividing such expenses by the number of months in the original term
of the Transfer transaction.
(c) No Transfer, whether or not consent of Lessor is required
hereunder, shall relieve Lessee of its primary obligation to pay the rent and to
perform all other obligations to be performed by Lessee hereunder. The
acceptance of rent by Lessor from any proposed Transferee shall not be deemed to
be a waiver by Lessor of any provision of this Lease or to be a consent to any
Transfer of the Leased Premises.
(d) If Lessor consents to a sublease, such sublease shall not extend
beyond the expiration of the Term.
(e) No Transfer shall be valid and no Transferee shall take
possession of the Leased Premises or any part thereof unless, within ten (10)
days after the execution of the documentary evidence thereof, Lessee shall
deliver to Lessor a duly executed duplicate original of the Transfer instrument
in form satisfactory to Lessor which provides that: (i) the Transferee assumes
Lessee's obligations for the payment of rent and for the full and faithful
observance and performance of the covenants, terms and conditions contained
herein; (ii) such Transferee will, at Lessor's election, attorn directly to
Lessor in the event Lessee's Lease is terminated for any reason on the terms set
forth in the instrument of transfer; and (iii) such instrument of transfer
contains such other assurances as Lessor reasonably deems necessary.
26. ABANDONMENT
26.1 Lessee to Occupy. Lessee shall not abandon the Leased Premises at any
time during the Term, and if Lessee shall abandon, vacate or surrender the
Leased Premises, or be dispossessed by process of law, or otherwise, any
personal property belonging to Lessee and remaining on the Leased Premises
thereafter shall, at the option of Lessor, be deemed abandoned.
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27. ENTRY BY LESSOR
27.1 Rights of Lessor. Lessee shall permit Lessor and Lessor's agents to
enter the Leased Premises at all reasonable times for the purpose of inspecting
the same or for the purpose of maintaining the Building and the Lines, systems
and facilities therein, or for the purpose of making repairs, replacements,
alterations or additions to any portion of the Building and the Lines, systems
and facilities therein, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required, or for the purpose
of posting notices of non-responsibility for alterations, additions or repairs,
or for the purpose of placing upon the Building any usual or ordinary "for sale"
signs, without any rebate of Rent and without any liability to Lessee for any
loss of occupation or quiet enjoyment of the Leased Premises thereby occasioned,
and shall permit Lessor, at any time within ninety (90) days prior to the
expiration of this Lease, to place upon the Leased Premises any usual or
ordinary "to let" or "to lease" signs. This Section in no way affects the
maintenance obligations of the parties hereto.
28. SIGNS
28.1 Lessee shall not place on the Leased Premises or on the Complex, any
exterior signs or advertisements nor any interior signs or advertisements that
are visible from the exterior of the Leased Premises including the Atrium,
without Lessor's prior written consent, which Lessor reserves the right to
withhold for any aesthetic reason in its sole judgment. Lessee's name shall be
included on the Building directory in the main lobby of the Building and in
applicable Common Areas, in accordance with Lessor's Sign Program. The cost of
installation and regular maintenance of any such signs approved by Lessor shall
be at the sole expense of Lessee. At the termination of this Lease, or any
extension thereof, Lessee shall remove all its signs, and all damage caused by
such removal shall be repaired at Lessee's expense.
29. DEFAULT
29.1 Definition. The occurrence of any of the following shall constitute a
material default and breach of this Lease by Lessee:
(a) Any failure by Lessee to pay the rent or to make any other
payment required to be made by Lessee hereunder when due;
(b) The abandonment of the Leased Premises by Lessee in violation of
Section 26.1 hereof;
(c) Any failure by Lessee to provide executed documents as and when
required under the provisions of Section 36.2 and/or Article 37;
(d) A failure by Lessee to observe and perform any other provision of
this Lease to be observed or performed by Lessee, where such failure continues
for ten (10) days after written notice thereof by Lessor to Lessee; provided,
however, that if the nature of the default is such that the same cannot
reasonably be cured within the ten (10) day period allowed, Lessee shall not be
deemed to be in default if Lessee shall, within such ten (10) day period,
commence to cure and thereafter diligently prosecute the same to completion;
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(e) Either: (i) the appointment of a receiver (except a receiver
appointed at the instance or request of Lessor) to take possession of all or
substantially all of the assets of Lessee; (ii) a general assignment by Lessee
for the benefit of creditors; or (iii) any action taken or suffered by Lessee
under any insolvency or bankruptcy act shall constitute a breach of this Lease
by Lessee. In such event, Lessor may, at its option, declare this Lease
terminated and forfeited by Lessee, and Lessor shall be entitled to immediate
possession of the Leased Premises. Upon such notice of termination, this Lease
shall terminate immediately and automatically by its own limitation;
(f) Any two (2) failures by Lessee to observe and perform any
material provision of this Lease during any twelve (12) month period of the
Term, as such may be extended, shall constitute, at the option of Lessor, a
separate and noncurable default.
30. REMEDIES UPON DEFAULT
30.1 Termination and Damages. In the event of any default by Lessee, then
in addition to any other remedies available to Lessor herein or at law or in
equity, Lessor shall have the immediate option to terminate this Lease and all
rights of Lessee hereunder by giving written notice of such intention to
terminate. In the event that Lessor shall elect to so terminate this Lease, then
Lessor may recover from Lessee:
(a) The Worth at the Time of Award , as defined below, of any unpaid
rent which had been earned at the time of such termination; plus
(b) The Worth at the Time of Award of the amount by which the unpaid
rent which would have been earned after termination until the time of award
exceeds the amount of such rental loss Lessee proves could have been reasonably
avoided; plus
(c) The Worth at the Time of Award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the amount of
such rental loss that Lessee proves could be reasonably avoided; plus
(d) Any other amount necessary to compensate Lessor for all the
detriment proximately caused by Lessee's failure to perform its obligations
under this Lease or which in the ordinary course of events would be likely to
result therefrom; and
(e) At Lessor's election, such other amounts in addition to or in
lieu of the foregoing as maybe permitted from time to time by the applicable law
in the state in which the Leased Premises are located.
30.2 Definition. As used in subsections 30.1(a) and (b) above, the "Worth
at the Time of Award" is computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subsection 30.1(c) above, the "Worth at the
Time of Award" is computed by discounting such amount at the discount rate of
the Federal Reserve Bank for the region in which the Complex is located at the
time of award plus one percent (1%).
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30.3 Personal Property.
(a) In the event of any default by Lessee, Lessor shall also have the
right, with or without terminating this Lease, to reenter the Leased Premises
and remove all persons and property from the Leased Premises; such property may
be removed and stored in a public warehouse or elsewhere at the cost of and for
the account of Lessee.
(b) In the event of default, all of Lessee's fixtures, furniture,
equipment, improvements, additions, Alterations and other personal property
shall, at the option of Lessor, remain upon the Leased Premises and in that
event, and continuing during the length of such default, Lessor shall have the
sole right to take exclusive possession of such property and to use it, rent or
charge free, until all defaults are cured or, at Lessor's option, at any time
during the Term, to require Lessee to forthwith remove such property. The rights
stated herein are in addition to Lessor's rights described in Section 21.1.
30.4 Recovery of Rent; Reletting.
(a) In the event of the vacation or abandonment of the Leased
Premises by Lessee or in the event that Lessor shall elect to reenter as
provided in Section 30.3 above, or shall take possession of the Leased Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then if
Lessor does not elect to terminate this Lease as provided in Section 30.1 above,
this Lease shall continue in effect for so long as Lessor does not terminate
Lessee's right to possession, and Lessor may enforce all its rights and remedies
under this Lease, including, without limitation, Lessor's right from, time to
time, without terminating this Lease, to either recover all rental as it becomes
due or relet the Leased Premises or any part thereof for such term or terms and
at such rental or rentals and upon such other terms and conditions as Lessor, in
its sole discretion, may deem advisable, with the right to make Alterations and
repairs to the Leased Premises. Acts of maintenance or preservation or efforts
to relet the Leased Premises or the appointment of a receiver upon initiation of
Lessor or other legal proceeding granting Lessor or its agent possession to
protect Lessor's interest under this Lease shall not constitute a termination of
Lessee's right to possession.
(b) In the event that Lessor shall elect to so relet, then rentals
received by Lessor from such reletting shall be applied: first, to the payment
of any indebtedness other than rent due hereunder from Lessee to Lessor; second,
to the payment of any cost of such reletting; third,' to the payment of the cost
of any alterations and repairs to the Leased Premises; fourth, to the payment of
rent due and unpaid hereunder; and the residue, if any, shall be held by Lessor
and applied in payment of future rent as the same may become due and payable
hereunder. Should that portion of such rentals received from such reletting
during any month, which is applied by the payment of rent hereunder, be less
than the rent payable during that month by Lessee hereunder, then Lessee shall
pay such deficiency to Lessor immediately upon demand therefor by Lessor. Such
deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
(c) No reentry or taking possession of the Leased Premises or any
other action under this Section shall be construed as an election to terminate
this Lease unless a written notice
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of such intention be given to Lessee or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any reletting
without termination by Lessor because of any default by Lessee, Lessor may at
any time after such reletting elect to terminate this Lease for any such
default.
(d) Lessor has the remedy described in California Civil Code Section
1951.4 (Lessor may continue Lease in effect after Lessee's breach and
abandonment and recover rent as it becomes due, if Lessee has right to sublet or
assign, subject only to reasonable limitations).
30.5 No Waiver. Efforts by Lessor to mitigate the damages caused by
Lessee's default in this Lease shall not constitute a waiver of Lessor's right
to recover damages hereunder, nor shall Lessor have any obligation to mitigate
damages hereunder.
30.6 Curing Defaults. Should Lessee fail to repair, maintain, keep clean,
and/or service the Leased Premises, or any part or contents thereof at any time
or times, or perform any other obligations imposed by this Lease or otherwise,
then after having given Lessee reasonable notice of the failure or failures and
a reasonable opportunity which in no case shall exceed ten (10) days, to remedy
the failure, Lessor may enter upon the Leased Premises and perform or contract
for the performance of the repair, maintenance, or other Lessee obligation, and
Lessee shall pay Lessor for all direct and indirect costs incurred in connection
therewith within ten (10) days of receiving a bill therefor from Lessor.
30.7 No Right to Cure. Notwithstanding anything to the contrary set forth
in Section 29.1 above, Lessee shall be deemed to have committed a material
default and breach of this Lease, without any right on Lessee's part to cure
such default and breach, upon the failure by Lessee to observe and perform the
provisions of any one or more of the following Sections (or indicated portions
thereof) of this Lease: 3.3, 12.1, 15.1 (first sentence), 25.3, 27.1, 36.2,
37.1, and 37.2.
30.8 Cumulative Remedies. The various rights, options, election powers, and
remedies of Lessor contained in this Article and elsewhere in this Lease shall
be construed as cumulative and no one of them exclusive of any others or of any
legal or equitable remedy which Lessor might otherwise have in the: event of
breach or default, and the exercise of ore right or remedy by Lessor shall not
in any way impair its right to any other right or remedy.
31. BANKRUPTCY
31.1 Bankruptcy Events. If at any time during the Term there shall be filed
by or against Lessee in any court pursuant to any statute either of the United
States or of any state, commonwealth, district or territory thereof a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of all or a portion of Lessee's property or estate, or if a
receiver or trustee takes possession of any of the assets of Lessee, or if the
leasehold interest herein passes to a receiver, or if Lessee makes an assignment
for the benefit of creditors or petitions for or enters into an arrangement (any
of which are referred to herein as a "Bankruptcy Event"), then the following
provisions shall apply:
(a) Upon the occurrence of a Bankruptcy Event, or if Lessee takes
advantage of any insolvency laws of any state, district, commonwealth or
territory of the United States, then
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in any such event Lessor at its option and sole discretion may terminate this
Lease at any time by written notice to Lessee (subject, however, to applicable
provisions of the applicable bankruptcy federal or state statutes or any
insolvency laws during the pendency of any action thereunder involving Lessee as
the subject debtor). If this Lease is terminated under this Article: (i) Lessee
agrees to immediately surrender and vacate the Leased Premises, waives all
statutory or other notice to quit, and agrees that Lessor's obligations under
this Lease shall cease from such termination date; and (ii) Lessor may recover
possession by process of law or in any other lawful manner. Furthermore, if this
Lease terminates under this Section (a), Lessor shall, subject to the Bankruptcy
Code, have all rights and remedies against Lessee as provided in this Lease and
at law for a default of Lessee in the payment of Minimum Rent, Percentage Rent,
if any, and/or additional Rent. Lessee hereby acknowledges that it shall have
abandoned all of its personal property remaining in the Leased Premises after
Lessee surrenders possession of the Leased Premises, and Lessee hereby
authorizes Lessor to dispose of such personal property in any manner Lessor
deems appropriate without accounting to Lessee or its legal representative for
the proceeds thereof. Notwithstanding the foregoing, Lessor retains the right to
assert an administrative claim and a general unsecured claim that result from a
breach of this Lease including, without limitation, the cost to remove Lessee's
personal property from the Leased Premises and to restore the Leased Premises
after Lessee surrenders possession thereof.
(b) In all events any receiver or trustee in bankruptcy or Lessee as
debtor in possession shall, by written notice, either expressly assume or reject
this Lease within sixty (60) days following the entry of an "Order for Relief."
Failure of the trustee to give notice of such assumption hereof within said
period shall conclusively and irrevocably constitute a rejection of this Lease
and waiver of any rights to assume or assign this Lease.
(c) Lessee or the receiver or trustee shall not have the right to
assume this Lease unless: (1) Lessee or the receiver or trustee cures any
default. or provides adequate assurances that defaults will be promptly cured;
(2) Lessee or the receiver or trustee compensates Lessor and any other party
other then Lessor for all monetary damages and/or any actual pecuniary loss
incurred as a result of such default or provides adequate assurances that
compensation will be made for such monetary damages and/or actual pecuniary
loss; (3) the Bankruptcy Court (or other court of competent jurisdiction) enters
an order authorizing the assumption or assignment; (4) the assumption or
assignment is not prohibited under applicable law, including, but not limited
to, Section 365 of the Bankruptcy Code; and (5) Lessee or the receiver or
trustee provides to Lessor Adequate Assurance of Future Performance (as defined
herein below) of the Lease. For the purposes of this Section (c), "Adequate
Assurance of Future Performance" of all obligations under this Lease shall
include, but is not limited to:
(i) providing financial records which reveal that Lessee's
gross receipts in the ordinary course of its business during the thirty (30)
days immediately preceding the initiation of the case under the Bankruptcy Code
must be at least ten (10) times greater than the next installment of Minimum
Rent and other charges due under this Lease;
(ii) providing financial records which reveal that both the
average and median of Lessee's monthly gross receipts in the ordinary course of
business during the six (6) months immediately preceding initiation of the case
under the Bankruptcy Code must be at least
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five (5) times greater than the next installment of Minimum Rent and other
charges due under this Lease;
(iii) covenanting in writing to Lessor (and obtaining approval
from the Bankruptcy Court therefor) that Lessee shall pay in advance to Lessor
all Minimum Rent and other sums payable by Lessee hereunder including, but not
limited to, its share (as estimated by Lessor) of the cost of all services
provided by Lessor (whether directly or through agents or contractors, and
whether or not the cost of such services is to be passed through to Lessee) in
advance of the performance or provision of such services;
(iv) covenanting in writing to Lessor (and obtaining approval
from the Bankruptcy Court therefor) that Lessee shall pay Minimum Rent and any
other consideration due under the Lease shall first be paid before any other of
Lessee's costs of operation of its business in the Leased Premises are paid;
(v) covenanting in writing to Lessor (and obtaining approval
from the Bankruptcy Court therefor) that Lessee's business shall be conducted in
a first class manner, and that no liquidating sales, auctions, or other non-
first class business operations shall be conducted on the Leased Premises, and
that the use of the Leased Premises as stated in this Lease will remain
unchanged, and that the assumption or assignment of this Lease will not violate
or adversely affect the rights of other lessees located in the Complex, and that
if any of these breaches occur, Lessee or the receiver or trustee will indemnify
Lessor against such loss (including costs of suit and attorneys' fees),
occasioned by such breach; and
(vi) in the event this Lease is for space within a shopping
center, Lessee reasonably satisfying any additional .requirements imposed under
Section 365(b)(3) of the Bankruptcy Code.
(d) Where a default exists under the Lease, the party assuming the
Lease may not require Lessor to provide services or supplies incidental to the
Lease before its assumption, unless Lessor is compensated under the terms of the
Lease for such services and supplies before the assumption of such Lease.
(e) In the event Lessee is unable to: (i) cure its defaults; (ii)
reimburse Lessor or any other party to this Lease for its monetary damages or
actual pecuniary loss to such party resulting from the defaults; (iii) pay the
rents due under this Lease or any other payments required of Lessee under this
Lease when due; or (iv) meet the criteria and obligations imposed by (i) through
(vi) in the previous Section (c), then Lessee hereby agrees in advance that it
has not met its burden to provide Adequate Assurance of Future Performance and
therefore cannot assume this Lease, and this Lease may be immediately terminated
by Lessor in accordance with Section (a) above.
(f) Lessee or the receiver or trustee may only assign this Lease in
accordance with the terms of Article 25 and if Adequate Assurance of Future
Performance by the assignee is provided, whether or not there has been a default
under the Lease. Any consideration paid by any assignee in excess of the rental
reserved in the Lease shall be the sole property of, and paid to, Lessor. Upon
assignment by Lessee or the receiver or trustee, the obligations of Lessee under
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this Lease shall be deemed to have been assumed by the assignee, and the
assignee shall execute an assumption agreement on request of Lessor.
(g) Subsequent to the commencement of a Bankruptcy Event, Lessor
shall be entitled to receive as rental for the Leased Premises and the services
provided by Lessor no less than the rental and charges reserved in the Lease.
(h) It is further stipulated and agreed that, notwithstanding any
provision herein to the contrary, in the event of the termination of this Lease
pursuant this Article, Lessor shall forthwith, upon such termination, to the
extent that Lessor is prevented by the Bankruptcy Code from pursuing remedies
under this Lease, and/or as provided by state law, become entitled to recover as
liquidated damages for the breach of the provisions of this Lease an amount
equal to the amount by which the then cash value of the Minimum Rent reserved
hereunder for the unexpired portion of the Lease Term exceeds the then cash
rental value of the Leased Premises for such unexpired portion of the Lease
Term, unless the statute which governs or shall govern the proceedings in which
such damages are to be proved limits or shall limit the amount of such claim
capable of so being proved, in which case Lessor shall be entitled to prove as
and for liquidated damages an amount equal to that allowed by or under any such
statute. When calculating damages hereunder, Lessor shall be entitled to recover
the amount of any "free rent" or other concessions extended by Lessor and
received by Lessee prior to the premature expiration of this Lease, it being
agreed by Lessee that such "free rent" and concessions were contingent upon
Lessee fulfilling its obligations for the entire term of this Lease. The
provisions of this paragraph shall be without prejudice to (i) Lessor's right to
prove in full damages for Minimum Rent, Percentage Rent, if any, and additional
Rent accrued prior to the termination of this Lease, but not paid, and (ii) any
rights given to Lessor by any pertinent statute to prove any amounts allowed
thereby. In making any such computation, the then cash rental value of the
Leased Premises shall be deemed prima facie to be the rental realized upon any
reletting, if such reletting can be accomplished by Lessor within a reasonable
time after such termination of this Lease, and the then present cash value of
the future rents hereunder reserved to Lessor for the unexpired portion of the
Lease Term hereby demised shall be deemed to be such sum, if invested at the
then current passbook account rate offered by Wells Fargo Bank, N.A. at its main
office in San Francisco, as will produce the future rent over the period of time
in question. Lessor and Lessee further agree that in making any computation of
damages for Lessee holding over after the termination of this Lease, Lessor may
claim damages based on the Minimum Rent, Percentage Rent; if any, and additional
Rent provided herein for the period of such hold over, it being agreed that the
Minimum Rent, Percentage Rent, if any, and additional Rent constitutes the fair
rental value of the Leased Premises during the hold over period.
(i) Notwithstanding subsection (h) of this Article 31, Lessor
specifically reserves any and all remedies available to Lessor in Article 30
hereof or at law or in equity in respect of a Bankruptcy Event to the extent
such remedies are permitted by law.
32. SURRENDER OF LEASE
32.1 No Merger. The voluntary or other surrender of this Lease by Lessee,
or a mutual cancellation thereof, shall not work as a merger, and shall, at the
option of Lessor,
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terminate all or any existing subleases or subtenancies, or may, at the option
of Lessor, operate as an assignment to it of any or all such subleases or
subtenancies.
33. LESSOR'S EXCULPATION
33.1 Limited Liability. In the event of default, breach, or violation by
Lessor (which term includes Lessor's partners, co-venturers, co-tenants,
officers, directors, trustees, employees, agents, representatives, successors or
assigns) of any of Lessor's obligations under this Lease, Lessor's liability to
Lessee shall be limited to its ownership interest in the Leased Premises (or its
interest in the Complex, if applicable) or the proceeds of a public sale of such
interest pursuant to foreclosure of a judgment against Lessor. Lessor may, at
its option, and among its other alternatives, relieve itself of all liability
under this Lease by conveying the Leased Premises to Lessee. Notwithstanding any
such conveyance, Lessee's leasehold and ownership interest shall not merge.
33.2 No Recourse. Lessor .(as defined in Section 33.1) shall not be
personally liable for any deficiency beyond its interest in the Leased Premises.
All personal liability of all trustees, their employees, agents or
representatives; is expressly waived by Lessee.
34. ATTORNEYS' FEES
34.1 Actions, Proceedings, etc. Lessee hereby agrees to pay, as additional
rent, all attorneys' fees and disbursements, and all other court costs or
expenses of legal proceedings or other legal services which Lessor may incur or
pay out by reason of, or in connection with:
(a) Any appearance by Lessor (or any officer, partner, or employee of
Lessor) as a witness or otherwise in any action or proceeding whatsoever
involving or affecting Lessee or this Lease except as otherwise covered by
Section 34.3;
(b) Any assignment, sublease, or leasehold mortgage proposed or
granted by Lessee (whether or not permitted under this Lease), and all
negotiations with respect thereto; and
(c) Any Alteration of the Leased Premises by Lessee, and all
negotiations with respect thereto.
34.2 Survival. Lessee's obligations under this Section shall survive the
expiration or any other termination of this Lease. This Section is intended to
supplement (and not to limit) other provisions of this Lease pertaining to
indemnities and/or attorneys' fees.
34.3 Attorneys' Fees. If there is any legal action or proceeding (including
arbitration other than the Arbitration of Fair Market Rental described in
Section 4.3) between Lessor and Lessee arising out of any default by Lessee or
Lessor in the observance or performance of any obligation under this Lease or to
enforce this Lease or to protect or establish any right or remedy under this
Lease, the unsuccessful party to such action or proceeding shall pay to the
prevailing party all costs and expenses, including reasonable attorneys' fees
and disbursements, incurred by such prevailing party in such action or
proceeding and in any appeal in connection therewith. If such prevailing party
recovers a judgment in any such action or proceeding (including
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arbitration) or appeal thereon, such costs, expenses and attorneys' fees and
disbursements shall be included in and as a part of such judgment.
35. NOTICES
35.1 Writing. All Notices (as defined below), demands and requests required
or permitted to be given or made under any provision of this Lease shall be in
writing and shall be given or made by (i) personal service, or (ii) by telephone
facsimile upon which date and time are imprinted in the course of transmission
to the number indicated in Section 1.2, or (iii) by mailing same by registered
or certified mail, return receipt requested, postage prepaid, or (iv) by
reputable courier which provides written evidence of delivery, addressed to the
respective party at the address set forth in Section 1.2 of this Lease or at
such other address as the party may from time to time designate, by a written
Notice, as defined below, sent to the other in the manner aforesaid.
35.2 Effective Date. Any such Notice, demand or request ("Notice") shall be
deemed given or made on the third day after the date so mailed. Notwithstanding
the foregoing, Notice given by personal delivery to the party at its address as
aforesaid shall be deemed given on the day on which delivery is made. Notice
given by a reputable courier service which provides written evidence of delivery
shall be deemed given on the business day immediately following deposit with the
courier service.
35.3 Authorization to Receive. Each person and/or entity whose signature is
affixed to this Lease as Lessee or as guarantor of Lessee's obligations
("Obligor") designates such other Obligor its agent for the purpose of receiving
any Notice pertaining to this Lease or service of process in the event of any
litigation or dispute arising from any obligation imposed by this Lease.
36. SUBORDINATION
36.1 Priority of Encumbrances. This Lease shall be subject and subordinate
at all times to any and all ground leases and the lien of any and all mortgages
and deeds of trust securing any amount or amounts whatsoever which may now exist
or hereafter be placed on or against or encumbering the Building or on or
against or encumbering Lessor's interest or estate therein ("Superior Leases and
Mortgages"), all without the necessity of having further instruments executed by
Tenant to effect such subordination; provided however; (i) with respect to that
certain deed of trust encumbering the Building of record as of the date of this
Lease in favor of Wells Fargo Bank (the "Bank"), Lessor covenants to use
commercially reasonable efforts (without any requirement to pay any fees to said
lender or to initiate litigation) to cause the Bank to execute and deliver on or
before the Delivery Date a non-disturbance agreement in the form attached hereto
as Exhibit I, attached hereto, in favor of Lessee; and (ii) with respect to any
Superior Leases and Mortgages encumbering the Building after the date of this
Lease, Lessee shall execute a subordination agreement in the form of Exhibit I,
provided that the subordination of this Lease shall be conditioned upon such
Lessor's mortgagee executing a non-disturbance agreement in favor of Lessee on
the current form used by such lender. In the event of a foreclosure of any such
mortgage or deed of trust or of any other action or proceeding for the
enforcement thereof, or of any sale thereunder or in the event of a termination
of any such
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ground lease, this Lease shall not be terminated or extinguished, nor shall the
rights and possession of Lessee hereunder be disturbed, if no default then
exists under this Lease, and Lessee shall attorn to the person who acquires
Lessor's interest hereunder through any such mortgage or deed of trust.
36.2 Execution of Documents. Lessee agrees to execute any documents
required to effectuate such subordination or to make this Lease prior to the
lien of any mortgage, deed of trust or ground lease, as the case may be, and
failing to do so within ten (10) days after written demand, does hereby make,
constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and in
Lessee's name, place and stead, to do so. It is understood by all parties that
Lessee's failure to execute the subordination documents referred to above may
cause Lessor serious financial damage by causing the failure of a financing or
sale transaction.
36.3 Attornment. Lessee shall attorn to any purchaser at any foreclosure
sale, or to any grantee or Transferee designated in any Deed given in lieu of
foreclosure.
37. ESTOPPEL CERTIFICATES
37.1 Execution by Lessee. Within ten (10) days of request therefor by
Lessor, Lessee shall execute a written statement acknowledging the commencement
and termination dates of this Lease, that it is in full force and effect, has
not been modified (or if it has, stating such modifications) and providing any
other pertinent information as Lessor or its agents might reasonably request.
Failure to comply with this Article shall be a material breach of this Lease by
Lessee giving Lessor all rights and remedies under Article 30 hereof, as well as
a right to damages caused by the loss of a loan or sale which may result from
such failure by Lessee.
37.2 Financing, Sale or Transfer. If Lessor desires to finance, refinance,
sell, ground lease or otherwise transfer the Leased Premises, or any part
thereof, or the Building, Lessee hereby agrees, within ten (10) days of request
therefor by Lessor, to deliver to any lender or to any prospective buyer, ground
lessor or other Transferee designated by Lessor such financial statements of
Lessee, its Guarantor and its parent company, if any, as may be reasonably
required by such party. Such statements shall include the past three (3) years'
financial statements of Lessee. All such financial statements shall be received
by Lessor in confidence and shall be used only for the purposes herein set
forth.
38. WAIVER
38.1 Effect of Waiver. The waiver by Lessor of any breach of any Lease
provision shall not be deemed to be a waiver of such Lease provision or any
subsequent breach of the same or any other term, covenant or condition therein
contained. The subsequent acceptance of rent hereunder by Lessor shall not be
deemed to be a waiver of any preceding breach by Lessee of any provision of this
Lease, other than the failure of Lessee to pay the particular rental so
accepted, regardless of Lessor's knowledge of such preceding breach at the time
of acceptance of such rent.
48.
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39. HOLDING OVER
39.1 Month-to-Month Tenancy on Acceptance. If Lessee should remain in
possession of the Leased Premises after the expiration of the Term and without
executing a new Lease, then, upon acceptance of rent by Lessor, such holding
over shall be construed as a tenancy from month-to-month, subject to all the
conditions, provisions and obligations of this Lease as existed during the last
month of the Term hereof, so far as applicable to a month-to-month tenancy,
except that the Minimum Rent shall be equal to twice the Minimum Rent payable
immediately prior to the expiration or sooner termination of the Lease.
40. SUCCESSORS AND ASSIGNS
40.1 Binding Effect. The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.
41. TIME
41.1 Time of the Essence. Time is of the essence of this Lease with respect
to each and every article, section and subsection hereof.
42. EFFECT OF LESSOR'S CONVEYANCE
42.1 Release of Lessor. If, during the Term, Lessor shall sell its interest
in the Building or Complex of which the Leased Premises form a part, or the
Leased Premises, then from and after the effective date of the sale or
conveyance, Lessor shall be released and discharged from any and all obligations
and responsibilities under this Lease, except those already accrued.
43. COMMON AREAS
43.1 Lessor shall, in Lessor's sole discretion, maintain the Common Areas
(subject to reimbursement pursuant to Article 8 hereof), establish and enforce
reasonable rules and regulations concerning such areas, close any of the Common
Areas to whatever extent required in the opinion of Lessor's counsel to prevent
a dedication of any of the Common Areas or the accrual of any rights of any
person or of the public to the Common Areas, close temporarily any of the Common
Areas for maintenance purposes and make changes `to the Common Areas including,
without limitation, changes in the location of driveways, corridors, entrances,
exits, vehicular parking spaces, parking area, the designation of areas for the
exclusive use of others, the direction of the flow of traffic or construction of
additional buildings thereupon. Lessor may provide security for the Common Areas
but is not obligated to do so.
44. TRANSFER OF SECURITY
44.1 Transfer to Purchaser. If any security be given by Lessee to secure
the faithful performance of all or any of the covenants of this Lease on the
part of Lessee, Lessor may transfer and/or deliver the security, as such, to the
purchaser of the reversion, in the event that the
49.
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reversion be sold, and thereupon Lessor shall be discharged from any further
liability in reference thereto.
45. LATE CHARGES
45.1 Late Payment by Lessee. Lessee acknowledges that late payment by
Lessee to Lessor of rent or any other payment due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impractical to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Lessor by the terms of any encumbrance and note secured by any
encumbrance covering the Leased Premises. Therefore, if any installment of rent,
or any other payment due hereunder from Lessee is not received by Lessor when
due, Lessee shall pay to Lessor an additional sum of ten percent (10%) of such
rent or other charge as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the cost that Lessor will incur by
reason of late payment by Lessee. Acceptance of any late charge shall not
constitute a waiver of Lessee default with respect to the overdue amount, or
prevent Lessor from exercising any other rights or remedies available to Lessor.
46. CORPORATE AUTHORITY
46.1 Authorization to Execute. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. Further, Lessee shall, within thirty (30) days after execution
of this Lease, deliver to Lessor a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the execution of this
Lease.
47. MORTGAGEE PROTECTION
47.1 Notice and Right to Cure Default. Lessee agrees to give any
mortgagees) and/or trust deed holders, by registered mail, a copy of any notice
of default served upon Lessor, provided that prior to such notice Lessee has
been notified, in writing (by way of Notice of Assignment of Rents and Leases,
or otherwise), of the address of such mortgagees and/or trust deed holders.
Lessee further agrees that if Lessor shall have failed to cure such default
within the time provided for in this Lease, then the mortgagees and/or trust
deed holders shall have an additional thirty (30) days within which to cure such
default or, if such default cannot be cured within that time, then such
additional time as may be necessary if, within such thirty (30) days, any
mortgagee and/or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.
48. MISCELLANEOUS PROVISIONS
48.1 Captions. The captions of this Lease are for convenience only and are
not a part of this Lease and do not in any way limit or amplify the terms and
provisions of this Lease.
50.
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48.2 Number and Gender. Whenever the singular number is used in this Lease
and when required by the context, the same shall include the plural, the plural
shall include the singular, and the masculine gender shall include the feminine
and neuter genders, and the word "person" shall include corporation, firm or
association. If there be more than one Lessee, the obligations imposed under
this Lease upon Lessee shall be joint and several.
48.3 Modifications. This instrument contains all of the agreements,
conditions and representations made between the parties to this Lease and may
not be modified orally or in any other manner than by an agreement in, writing
signed by all of the parties to this Lease.
48.4 Payments. Except as otherwise expressly stated, each payment required
to be made by Lessee shall be in addition to and not in substitution for other
payments to be made by Lessee.
48.5 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
48.6 No Offer. The preparation and submission of a draft of this Lease by
either party to the other shall not constitute an offer, nor shall either party
be bound to any terms of this Lease or the entirety of the Lease itself until
both parties have fully executed a final document and an original signature
document has been received by both parties. Until such time as described in the
previous sentence, either party is free to terminate negotiations with no
obligation to the other.
48.7 Disputed Sums. Under the terms of this Lease numerous charges are and
may be due from Lessee to Lessor including, without limitation, Operating Costs,
Real Estate Taxes and other items of a similar nature including advances made by
Lessor in respect of Lessee's default at Lessor's option. In the event that at
any time during the Term there is a bona fide dispute between the parties as to
the amount due for any of such charges claimed by Lessor to be due, the amount
demanded by Lessor shall be paid by Lessee until the resolution of the dispute
between the parties or by litigation. Failure by Lessee to pay the disputed sums
until resolution shall constitute a default under the terms of the Lease.
48.8 Lessee's Remedies. Notwithstanding anything to the contrary contained
in this Lease, if any provision of this Lease expressly or impliedly obligates
Lessor not to unreasonably withhold its consent or approval, an action for
declaratory judgment or specific performance will be Lessee's sole right and
remedy in any dispute as to whether Lessor has breached such obligation.
48.9 Light, Air and View. No diminution of light, air, or view by any
structure which may hereafter be erected (whether or not by Lessor) shall
entitle Lessee to any reduction of Rent, result in any liability of Lessor to
Lessee, or in any other way affect this Lease or Lessee's obligations hereunder.
48.10 Public Transportation Information. Lessee shall establish and
maintain during the Term hereof a program to encourage maximum use of public
transportation by personnel of Lessee employed on the Leased Premises,
including, without limitation, the distribution to such employees of written
materials explaining the convenience and availability of public
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transportation facilities adjacent or proximate to the Complex, staggering
working hours of employees, and encouraging use of such facilities, all at
Lessee's sole reasonable cost and expense. Lessee shall comply with all
requirements of any local transportation management ordinance.
48.11 Rules and Regulations. Lessee agrees to comply with all reasonable
rules and regulations adopted and promulgated by Lessor and applicable to all
tenants in the Complex for the lawful, orderly, clean, safe, aesthetic, quiet,
and beneficial use, operation, maintenance, management, and enjoyment of the
Complex. Lessor shall have no liability for violation by any other lessee in the
Complex of any rules or regulations, nor shall such violation or waiver thereof
excuse Lessee from compliance. The initial rules and regulations concerning the
Complex are attached hereto as Exhibit F. Lessor reserves the right to make
additional rules affecting the Complex throughout the Term hereof. All delivery
and dispatch of supplies, fixtures, equipment and furniture shall be by means
and during hours established by Lessor. Lessee shall not at any time park its
trucks or other delivery vehicles in the Common Areas, except in such parts
thereof as from time to time designated by Lessor.
48.12 Joint and Several Liability. Should Lessee consist of more than one
person or entity, they shall be jointly and severally liable on this Lease.
48.13 Survival of Obligations. All obligations of Lessee which may accrue
or arise during the Term or as a result of any act or omission of Lessee during
said Term shall, to the extent they have not been fully performed, satisfied or
discharged, survive the expiration or termination of this Lease.
48.14 Real Estate Brokers. Lessor and Lessee each represents and warrants
to the other party that it has not authorized or employed, or acted by
implication to authorize or employ, any real estate broker or salesman to act
for it in connection with this Lease other than the real estate brokers
specified in Section 1.10. Lessor shall pay the commission due Lessor's broker
and Lessee's broker pursuant to a separate agreement between Lessor and Lessor's
broker. Lessor and Lessee shall each indemnify, defend and hold the other party
harmless from and against any and all claims by any real estate broker or
salesman whom the indemnifying party authorized or employed, or acted by
implication to authorize or employ, to act for the indemnifying party in
connection with this Lease.
48.15 Nonliability of Lessor for Approvals. Except as may otherwise be
expressly stated by a provision of this Lease, and only to the extent so stated,
the consent or approval, whether express or implied, or the act, failure to act
or failure to object, by Lessor in connection with any plan, specification,
drawing, proposal, request, act, omission, notice or communication (collectively
"Act") by or for, or prepared by or for, Lessee, shall not create any
responsibility or liability on the part of Lessor, and shall not constitute a
representation by Lessor, with respect to the completeness, sufficiency,
efficacy, propriety, quality or legality of such Act.
48.16 Interest On Past Due Amounts. If any sum due Lessor from Lessee is
not received by Lessor within five (5) calendar days after the date such sum is
due and payable, such sum shall bear interest from the due date until paid by
Lessee at the rate of two percent (2%) above the Prime Rate (as herein defined),
not to exceed the maximum rate of interest allowed by
52.
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law in the state where the Leased Premises are located, and such interest shall
be, deemed to be additional rent. "Prime Rate" means the Prime Rate of interest
as quoted in the Wall Street Journal on the date such sum was due and payable.
48.17 Counterparts. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original, and all taken together shall
constitute one and the same instrument.
49. WAIVER OF CALIFORNIA CODE SECTIONS
49.1 Waiver by Lessee. In this Lease, numerous provisions have been
negotiated by the parties, some of which provisions are covered by statute.
Whenever a provision of this Lease and a provision of any statute or other law
cover the same matter, the provisions of this Lease shall control. Therefore,
Lessee waives (for itself and all persons claiming under Lessee) the provisions
of Civil Code Sections 1932(2) and 1933(4) with respect to the destruction of
the Leased Premises; Civil Code Sections 1941 and 1942 with respect to Lessor's
repair duties and Lessee's right to repair; Civil Code Section 1950.7, limiting
a lessor's right to claim sums from a security deposit only as necessary to
remedy defaults; Civil Code Section 1995.310, granting to a tenant all remedies
provided by law for breach of contract (including, without limitation, the right
to contract damages and the right to terminate the lease) in the event that the
landlord unreasonably withholds consent to a transfer in violation of the
tenant's rights under the lease; Code of Civil Procedure Section 1265.130,
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Leased Premises by Condemnation as herein
defined; and any right of redemption or reinstatement of Lessee under any
present or future case law or statutory provision (including Code of Civil
Procedure Sections 473 and 1179 and Civil Code Section 3275) in the event Lessee
is dispossessed from the Leased Premises for any reason. This waiver applies to
future statutes enacted in addition to or in substitution for the statutes
specified herein.
50. SHUTTLE SERVICE
50.1 Lessor presently maintains for the benefit of Lessee's employees at
the Leased Premises, a van shuttle service which shall operate Monday through
Friday from 7:00 a.m. to 7:00 p.m. with not less than one van vehicle operating
throughout the day and two vehicles operating during peak commute hours of 7:00
a.m. to 9:00 a.m. Monday through Friday and 5:00 p.m. to 7:00 p.m. Monday
through Friday. The shuttle will serve the major transportation centers of San
Francisco, i.e., the Transbay Terminal, BART, the nearest Municipal Railway
stop, the Ferry Building and CalTrain Terminal. The cost of the shuttle service
shall be included in Operating Costs. Lessor may terminate the shuttle service
if the City of San Francisco is, in Lessor's reasonable judgment, then providing
adequate public transportation to the area of the Building and no longer
requires that Lessor provide such shuttle service.
50.2 Parking. Lessee may lease on a monthly basis up to the number of
parking spaces described in Section 1.12 in the parking facility of the Complex.
Said parking spaces shall be on a non-exclusive, non-reserved basis. Lessee
shall pay a parking fee for each parking space which Lessee leases at the same
monthly rates as are established from time to time by Lessor or the owner or
operator of the parking facility. The use by Lessee, its employees or
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other users of such parking space shall be subject to the rules and regulations
established from time to time by Lessor, or the owner or operator of the parking
facility. If Lessee has not leased the number of parking spaces to which it is
entitled within three (3) months after the Commencement Date, or if at any time
thereafter, Lessee releases any parking spaces or if parking spaces to which
Lessee is entitled under this Section 50.2 exceeds the parking spaces actually
leased by Lessee, Lessee shall have no further right or entitlement to such
parking spaces and Lessor may permit others to use or lease such parking spaces
on a long or short term basis. If Lessor or the owner or operator of the parking
facility changes the parking arrangements in the parking facility, then Lessee's
rights under this Section 50.2 shall be subject to modification to reflect such
change, so long as Lessee is not disproportionately prejudiced by such changes
as compared to other lessees of the Building.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of
the day and year first written above.
LESSOR: LESSEE:
ZORO, LLC, NAVIANT TECHNOLOGY
a California limited liability company SOLUTIONS, INC., a Delaware
corporation
By: By:
___________________________________ _________________________________
Its Managing Member Its Vice President, Strategic
Accounts
By:
_________________________________
Its:
____________________________
54.
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EXHIBIT A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of
San Francisco, City of San Francisco, and is described as follows:
PARCEL ONE:
ALL OF LOT 9, Assessor's Block 3783, as shown on that certain Map entitled,
"Parcel Map of a portion of 100 Vara Block No. 412, also being a portion of
Assessor's Block No. 3783 which Map was filed for record in the Office of the
Recorder of the City and County of San Francisco, State of California, on
November 29, 1988 in Book 38 of Parcel Maps, at Page 36.
PARCEL TWO:
Non-exclusive easements as set forth in that certain Grant of Easement with
Covenants and Restrictions affecting land dated as of December 29, 1988 by and
between Bay West Showplace Investors, a California Limited Partnership, and
Portman/Bay West Apparel Partners, a California Partnership, recorded on
December 30, 1988 in Book E775 at Page 1598, Series No. E296406 in the Official
Records.
APN: Lot 009, Block 3783
COMMON KNOWN AS:
650 Townsend Street
SAN FRANCISCO, CA
<PAGE>
EXHIBIT B
[Insert graphic for Exhibit B here]
<PAGE>
EXHIBIT C
[Insert graphic for Exhibit C here]
<PAGE>
EXHIBIT D
Work Letter Agreement
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(Lessor's and Lessee's Work)
A. LESSOR'S WORK
The Leased Premises shall be delivered to Lessee in "AS-IS" condition, and
without any obligation on the part of Lessor to perform improvements to the
Leased Premises, except for the work expressly set forth in Schedule 1 (the
"Lessor's Work").
B. LESSEE'S WORK
1. Plans/Specifications
1.1 Plan Design
Prior to commencing work on the leasehold improvements to the Leased
Premises as hereinafter provided ("Tenant Improvements"), Lessee shall submit to
Lessor complete and detailed plans and specifications for the Tenant
Improvements ("Plans"). The Plans shall be prepared by Lessee's architect, who
shall be approved in writing by Lessor, which approval Lessor shall not
unreasonably withhold ("Architect") and by Mazzetti & Associates for mechanical
engineering and Camissa and Wipf as electrical engineers ("Engineers"), both
licensed to practice in the State of California.
1.2 (a) Coordination. The Architect shall coordinate with Lessor's
------------
Project Manager Joseph Mock to assure that the Plans are consistent with the
existing design and construction of the Leased Premises. Lessee acknowledges
that Lessor has provided Lessee with a set of base building drawings for the
Leased Premises ("Building Drawings"). However, Lessor does not warrant, and
Lessee should not rely upon, the accuracy of the Building Drawings. Lessee,
therefore, should undertake its own investigation of the Leased Premises to
confirm existing conditions, rather than relying on the Building Drawings.
(b) Governmental. Lessee acknowledges that Lessor has established
------------
procedures for relations with the Building and Planning Departments of the City
and County of San Francisco and that Lessee, Lessee's representatives,
architects, or agents shall not contact any representatives of the City and
County of San Francisco without the presence of Lessor's representative to
assure consistency of treatment of the Building and its lessees by such
governmental agencies. Any such contact by Lessee's representatives in
contravention of this provision which causes an alteration in governmental
treatment of the Building which results in additional costs to the Building or
any lessee therein, shall be borne by the Lessee.
1.3 Schematics
Lessee shall deliver to Lessor the schematic drawings ("Schematic
Drawings") upon which the Plans shall be based not later than ten (10) days
following the date the current tenant releases the Leases Premises (the "Release
Date"). The Schematic Drawings and the Plans shall conform with standards set
forth by Lessor for material specifications and construction
1.
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specifications which are applicable for the Building in general. Lessor shall
have ten (10) working days after receipt thereof to review and
approve/disapprove the Schematic Drawings. Once Lessor has approved the
Schematic Drawings, Lessee shall cause the Architect to prepare the Plans which
must be consistent with the approved Schematic Drawings. Provided Lessor has
approved the Schematic Drawings, Lessee shall deliver the Plans to Lessor for
its approval, in one or more stages, during the period between the Release Date
fifteen (15) days following the Release Date. Lessor shall not unreasonably
withhold its approval of the Plans so long as the Plans are consistent with the
Schematic Drawings. In scheduling the preparation of the Schematic Drawings and
the Plans, Lessee shall allow sufficient time for review and approval by Lessor
and by the appropriate government agencies: Lessee shall pay for the cost of
Lessor's architect and engineer to review Lessee's Schematic Drawings and Plans.
1.4 Schematics Approval
If Lessor disapproves of the Schematic Drawings or the Plans or any portion
of either, Lessor shall promptly notify Lessee thereof in writing and of the
revisions which Lessor requires in order for Lessee to obtain Lessor's approval.
As promptly as reasonably possible, but in no event later than fifteen (15) days
thereafter, Lessee shall submit to Lessor a revised set of Schematic Drawings or
Plans incorporating the changes required by Lessor. Said revisions shall also be
subject to Lessor's approval. Lessor shall have ten (10) working days after
receipt of the revised Schematic Drawings or Plans to notify Lessee in writing
of Lessor's approval or disapproval of same. If Lessor again disapproves of or
requests revisions to the Schematic Drawings or the Plans, Lessee shall submit
to Lessor, within ten (10) business days after receiving Lessor's written
disapproval or request for revisions, a further revised set of Schematic
Drawings or Plans incorporating the changes required by Lessor. This process
shall continue until Lessor has approved the Schematic Drawings and the Plans.
1.5 Final Plans
The Plans, approved by Lessor, shall be referred to as the "Final Plans."
The Final Plans shall be signed by Lessor and Lessee. After approval of the
Final Plans, Lessee shall not make any changes thereto without Lessor's prior
written approval in accordance with the provisions of this Exhibit D.
1.6 Permits
Subject to the provisions of paragraph 1.2(b), Lessee shall be solely
responsible for. obtaining all necessary governmental approvals and permits
(including but not limited to the approval of the San Francisco City Planning
Department) required to commence and complete the Tenant Improvements after
obtaining the prior approval of Lessor before making any submittal to any
governmental agency for permit, which approval of Lessor shall not be
unreasonably withheld; and immediately upon receipt thereof, Lessee shall
deliver copies of all such approvals and permits to Lessor.
1.7 Code Compliance
Except as expressly set forth to the contrary in the Lease with respect to
Code Compliance, it shall be Lessee's sole responsibility to satisfy all
applicable building code
2.
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requirements and governmental rules and regulations concerning the design and
construction of the Tenant Improvements. Lessor's approval of the Final Plans is
not intended, and should not be understood by Lessee, as an affirmation that the
Final Plans comply with applicable building codes or other governmental rules
and regulations or that the Final Plans are in conformance with standards of
good workmanship as practiced by architects/engineers in the San Francisco Bay
Area. Lessor's review of the Final Plans is solely for Lessor's benefit, and
Lessee shall not rely upon that review for any purpose whatsoever in connection
with the work on or the design of the Tenant Improvements.
1.8 Contractor
Lessor hereby approves Rudolph Commercial Interiors as general contractor
to perform the Tenant Improvements ("Contractor"), duly licensed in the State of
California and familiar with all applicable building code requirements.
2. Scheduling and Lessee's Prior Access to the Premises
2.1 Schedule
At least five (5) days prior to the start of construction of the Tenant
Improvements, Lessee shall deliver to Lessor the proposed schedule of the
Lessee's Work to be performed ("TI Schedule"). The TI Schedule shall be prepared
by the Contractor, and it shall show the schedule for the submission of all shop
drawings/submittals and for the performance of each portion of the Tenant
Improvements. Lessee and the Architect shall either consult with the Contractor
or the Architect shall perform the necessary investigation to determine the
availability of the equipment and materials to be incorporated into the Tenant
Improvements and which portions of the Tenant Improvements will require long
lead time for ordering and/or manufacturing. The TI Schedule shall be in the
form of a Critical Path Method schedule.
2.2 Commencement of Construction
Upon delivery of the Leased Premises to Lessee and Lessee's receipt of all
approvals of the Final Plans and the acquisition by Lessee of all necessary
permits, Lessee shall commence the construction of the Tenant Improvements.
Lessor and Lessee agree that Lessor must perform certain Lessor's Work, and that
both parties will use all commercially reasonable efforts, to coordinate their
respective work inside the space; however, in event of any conflict between
Lessor's Work and Lessee's Work, on one day's prior written notice Lessee shall
either accommodate Lessor's requirements or vacate the Leased Premises until
completion of Lessor's Work. In addition to the foregoing, Lessor shall permit
Lessee access to the Leased Premises, prior to approval of Final Plans and the
acquisition of permits, for the purposes of obtaining measurements of the Leased
Premises, confirming existing conditions and for space planning preparation
purposes. Lessee's entry to the Leased Premises prior to the Delivery Date for
such purposes shall be upon all of the terms and conditions of the Lease,
including, without limitation the provisions regarding insurance and
indemnification, but excepting the payment of Minimum Rent and additional Rent.
Lessee shall be solely responsible for all costs and expenses incurred in
connection with the Tenant Improvements and any pre-Delivery Date activities,
and Lessee
3.
<PAGE>
hereby agrees to indemnify, defend, and hold harmless Lessor from and against
any loss, cost, expense, liability, damage, or injury in connection therewith.
3. Payment for Tenant Improvements and the Construction Contract
3.1 Construction Costs
As an inducement to Lessee to enter into the Lease, but subject to
paragraph 3.2 below and as otherwise provided in the Lease and this Exhibit D,
Lessor agrees to reimburse Lessee for: (1) the cost of construction of the
Tenant Improvements identified on the approved Final Plans; (2) costs of any
permits or licensing fees; (3) payment of the fees of the Architect and Engineer
for the Tenant Improvements; and (4) any other costs approved by Lessor
including planning and design costs ("Tenant Improvement Costs") up to a cost
not to exceed fifteen dollars ($15) for each Adjusted Rentable Square Foot in
the Leased Premises (the "Allowance"). If the Allowance is not used for Tenant
Improvement Costs, the unused portion shall revert to Lessor and shall not be
available for any other purpose by Lessee.
3.2 Payment of Allowance
(a) Payment Procedure. Lessor shall reimburse Lessee for the Tenant
-----------------
Improvement Costs up to the Allowance upon the last to occur of: (i) substantial
completion of the Tenant Improvements; (ii) receipt by Lessor of invoices for
all portions of the Tenant Improvements from the persons) performing the work or
rendering the services, together with such supporting documentation as Lessor
may reasonably request in connection therewith, and (iii) receipt by Lessor of
unconditional lien releases with respect to the entirety of the Tenant
Improvements from all contractors, subcontractors and materialmen who performed
the work or rendered services or materials. Lessor shall have no obligation to
pay all or any portion of the Allowance at any time following the occurrence,
and during the continuance, of any event of default by Lessee under the Lease.
(b) Primary Obligation. Lessee shall pay all costs incurred in
-------------------
connection with the construction of the Tenant Improvements.
(c) Project Management Services. In consideration of the supervisory,
---------------------------
logistical and oversight and review work to be performed by Lessor in connection
with the Tenant Improvements, Lessee agrees that Lessor shall be entitled to
charge against the Allowance a construction management fee (the "Coordination
Fee") in the amount of three percent (3%) of the total cost of the Tenant
Improvements. Lessor shall deduct the Coordination Fee from the Allowance.
3.3 Contract Terms
The construction contract for the Tenant Improvements shall include all
of the provisions which are included herein and identified as "Construction
Contract Terms;" provided, however, that the Construction Contract Terms may be
revised with Lessor's approval, which approval shall not be unreasonably
withheld, in a manner which does not expose Lessor to additional liability.
4.
<PAGE>
4. Changes, Additions, and Alterations
4.1 Materiality
From time to time Lessee may make nonmaterial changes in the Final Plans
prior to final completion with Lessor's prior approval, which approval shall not
be unreasonably withheld. Lessee shall not make any material changes to the
Final Plans (which shall mean a change the cost of which will be in excess of
$5,000.00, or is visible from the exterior of the Leased Premises, or affects
the structure, roof, central building systems or exterior walls of the Leased
Premises) without securing the prior written approval of Lessor, which approval
may be withheld by Lessor in its sole discretion. In seeking Lessor's approval
for changes to the Final Plans, Lessee shall deliver to Lessor such
documentation as the Construction Contract shall require for changes in the
Contract Price or an extension of the Completion Date.
4.2 Rent Commencement
No such changes in the Final Plans shall delay the Rent Commencement Dates
set forth in the Lease. Lessor shall approve or disapprove any such changes
within ten (10) working days after the receipt of a request from Lessee. Upon
approval by Lessor, such change shall be included within the phrase "Final
Plans."
5. Construction and Delays
5.1 The performance of the Tenant Improvements shall be subject to the
following terms and conditions:
(a) Compliance by Lessee and the Contractor and its subcontractors,
material suppliers, and equipment renters of whatever tier ("Lessee's
Contractors") with the applicable provisions of the Lease; (b) All of the Tenant
Improvements, which are performed by Lessee's Contractors, shall be scheduled
through Lessee;
(c) All of -the Tenant Improvements shall be performed in accordance
with the reasonable rules and regulations which Lessor may issue from time to
time;
(d) Lessor shall have no responsibility whatsoever for the
supervision or coordination of Lessee's Contractors, the Architect, or the
Engineer, the quality of their work or any other matter with respect to Lessee's
Contractors, the Architect, or the Engineer; however, Lessee shall coordinate
all Tenant Improvements with Lessor's Project Manager as described herein and as
set forth in the TI Schedule.
(e) Although Lessor shall have no responsibility as set forth in
subparagraph (d) above, Lessor's Project Manager may, at his option, demand a
stop in Lessee's Work if any terms of this Exhibit D are violated or threatened
to be violated by Lessee or Lessee's contractor or if the Tenant Improvement
Work is not being performed in accordance with the approved Final Plans.
5.
<PAGE>
(f) In connection with the construction of the Tenant Improvements,
Lessee's Contractor and subcontractors shall not be charged for the use of
utilities, loading dock and freight elevators during normal business hours.
6. Substantial Completion
6.1 Definition
For purposes of this Exhibit D and the Lease, "Substantial Completion" of
the Tenant Improvements shall mean the date that (i) the Architect certifies to
Lessor that the Tenant Improvements have been completed in accordance with the
Final Plans; and (ii) the Rent Commencement Date under the Lease has occurred,
and (iii) Lessor has received unconditional lien releases with respect to the
Tenant Improvement work performed.
7. Default
7.1 Any default by Lessee under this Exhibit D shall be deemed an
immediate event of default under the Lease, entitling Lessor to exercise any and
all of its rights and remedies available to Lessor under the Lease, at law or in
equity for nonpayment of Rent. In addition to all other amounts payable by
Lessee hereunder, upon the default by Lessee under this Exhibit D, and
notwithstanding anything to the contrary contained herein, Lessee shall pay
Lessor upon demand all costs and expenses incurred by Lessor in connection with
its review of the Plans, the Final Plans, the TI Schedule and any construction
documents, and in connection with the construction of the Tenant Improvements.
8. Construction Contract Terms
8.1 Indemnification by Contractor
Contractor shall defend, protect, indemnify, and hold harmless Lessee and
Lessor and their respective, directors, officers, shareholders, members,
managers, agents and employees (collectively referred to as "Indemnitees") from
and against all liability, liens, injuries, claims, damages, fines, penalties,
costs, and expenses, including attorneys' fees and litigation or arbitration
costs, arising out of or resulting from the performance of the Work and/or
breach of the Contract Documents, provided that any such liability, lien,
injury, claim, damage, cost; or expense is caused, in whole or in part, by any
act of omission of Contractor, its subcontractors of any lower tier, anyone
directly or indirectly employed by any of them, or anyone for whose acts any of
them may be liable. Contractor's indemnity obligation shall be binding upon
Contractor regardless of whether any of the Indemnitees is negligent, actively,
passively, or not at all. However, Contractor shall not be required to indemnify
any Indemnitee whose sole negligence or willful misconduct is responsible for
the liability, lien, injury, claim, damage, cost, or expense. Contractor shall,
upon demand by any of its Indemnitees, defend any action of proceeding brought
against any of its Indemnitees with respect to the matters set forth in this
Construction Contract; but any of the Indemnitees shall have the right to
conduct its own defense if it chooses to do so.
6.
<PAGE>
8.2 Insurance Required to be Carried by Contractor
Contractor shall at all times carry with companies acceptable to Lessee all
necessary Worker's Compensation and other insurance required by law and a
Commercial General Liability Insurance policy in amounts not less than
$5,000,000.00 per occurrence for bodily injury and property damage. Such policy
or policies shall include coverage for premises and operations liability,
contractual liability (including, but not limited to, Contractor's indemnity
obligation to the Indemnitees), completed operations coverage, products
liability, broad form property damage liability, liability which Contractor may
incur as a result of the operations, acts, or omissions of its subcontractors,
suppliers, or materialmen, and their agents or employees, automobile liability,
including owned, non-owned, and hired vehicles. Such policy or policies shall be
endorsed to include all Indemnitees as additional insureds and to stipulate that
such insurance shall be primary insurance and that any insurance carried by any
Indemnitees shall be excess and not contributory insurance.
8.3 Insurance Requirements
All insurance coverage procured by the Contractor shall (i) list all of the
named insureds under the policy, (ii) be issued by an insurer admitted to
transact insurance in the State of California with a financial rating of at
least an A:VII as rated in the most recent edition of Best's Insurance Reports,
(iii) contain an endorsement requiring at least thirty (30) days written notice
form the insurance company to all of the named additional insureds before any
cancellation or material change in coverage, scope, or amount of the insurance
policy, and (iv) contain an endorsement stating that no additional insured will
be excluded from coverage in the event that the additional insured is alleged or
found to be negligent in connection with any claim made under the policy or
otherwise.
8.4 Delivery of Certificates of Insurance and Policy Endorsements to
Lessor, and Lessee
If Contractor fails to deliver to Lessor and Lessee insurance certificates
and' policy endorsements which reflect the requirements specified in this
Construction Contract within forty-eight (48) hours after demand, and in any
event prior to commencement of Contractor's Work on the Project, Lessor may, but
shall not be obligated to, obtain such insurance for Contractor and pay the
premiums thereon, and Contractor shall repay Lessor, on demand, any sum or sums
paid therefor, or Lessor may deduct such premiums from any money due or to
become due to Contractor under this Agreement. In the alternative, Lessor may
declare Contractor in default under this Construction Contract.
7.
<PAGE>
Schedule 1 to
Exhibit D
Lessor agrees to perform the following in or for the Leased Premises at
its sole cost and expense:
1. Building Standard window film on all demising windows of the Leased
Premises.
2. Lessor shall not install but shall give Lessee a credit against Rent
next coming due for the purchase and installation of one (1) strobe light and
one (1) horn for life safety. All other life safety requirements shall be at
Lessee's sole cost and expense.
As used herein, the term "Building Standard" refers to the materials
maintained in stock by Lessor for use in the improvements of Lessee's space in
the Building.
1.
<PAGE>
Exhibit E
ACKNOWLEDGMENT OF COMMENCEMENT
Location: 650 Townsend Street
San Francisco, CA
This Acknowledgment is made as of _________________, with reference to that
certain Lease (hereinafter referred to as the "Lease") dated _______________, by
and between Zoro, LLC as "Lessor" therein, and __________________ as "Lessee."
The undersigned hereby confirms the following:
1. That Lessee accepted possession of the Leased Premises (as described
in the Lease) on the following date; that the Leased Premises are as
represented by Lessor and in good order, condition and repair; and that the
improvements, if any, required by the Lease to be constructed for Lessee by
Lessor have been so constructed and are satisfactorily completed in all
respects.
2. That all conditions of the Lease to be performed by Lessor
prerequisite to the full effectiveness of the Lease have been satisfied and
Lessor has fulfilled all of its duties of an inducement nature, except
3. That in accordance with the provisions of Article 4 of the Lease the
Commencement Date for the Leased Premises is and that unless sooner terminated,
the Expiration Date of the original term of the Lease is
4. That the Lease is in full force and effect and that the same
represents the entire agreement between Lessor and Lessee concerning the subject
matter of the Lease.
5. That there are no existing defenses or offsets which Lessee has
against the enforcement of the Lease by Lessor, arid no presently exercisable
offsets or credits against rentals, except
6. That Lessee's obligation for payment of Minimum Rent under the
Lease is presently in effect and that all rentals, charges and other obligations
on the part of Lessee under the Lease commenced to accrue on the date set forth
in Section 3 of this Acknowledgment
1.
<PAGE>
7. That the undersigned Lessee has not made any prior assignment,
hypothecation or pledge of the Lease or of the rents thereunder.
LESSOR LESSEE
Zoro, LLC,
a California Limited Liability Company ___________________________________
By:____________________________________ By: _______________________________
Its Managing Member
Dated: _____________, 19__ Dated: ______________, 19__
2.
<PAGE>
EXHIBIT F
Rules and Regulations
---------------------
In the event the Lease expressly permits Lessee to perform any act that is
prohibited by these Rules and Regulations, the specific provisions) of the Lease
shall control.
1. Common Areas. The sidewalks, halls, passages, exits, entrances,
------------
elevators and stairways of the Complex shall not be obstructed by Lessee or used
for any purpose other than for ingress to and egress from the Leased Premises.
The halls, passages, exits, entrances, elevators and stairways are not for the
general public and Lessor shall in all cases have the right to control and
prevent access thereto of all persons (including, without limitation, messengers
or delivery personnel not having proper identification) whose presence in the
judgment of Lessor would be prejudicial to the safety, character, reputation or
interests of the Complex and its Lessees. Neither Lessee nor any agent,
employee, contractor, invitee or licensee of Lessee shall go upon the roof of
the Complex other than for parking purposes or as expressly set forth to the
contrary in the Lease. Subject to the limitations set forth in Section 3.2 of
the Lease, Lessor shall have the right at any time, without the same
constituting an actual or constructive eviction and without incurring any
liability to Lessee therefor, to change the arrangement or location of entrances
or passageways, doors or doorways, corridors, elevators, stairs, toilets and
common areas of the Complex, but Lessor shall at all times provide reasonable
access to the sixth floor of the Building from the parking facility of the
Complex.
2. Prohibited Uses. The Leased Premises shall not be used for lodging. No
---------------
cooking shall be done or permitted on the Leased Premises except that private
use by Lessee of microwave ovens and/or Underwriters' Laboratory-approved
equipment for brewing coffee, tea, hot chocolate and similar beverages will be
permitted, provided that such use is in accordance with all applicable federal,
state and municipal laws, codes, ordinances, rules and regulations.
3. Janitorial Service. Lessee shall not employ any person other than the
------------------
janitor of Lessor for the purpose of cleaning the Leased Premises unless
otherwise agreed to by Lessor in writing. Except with the written consent of
Lessor, no persons other than those approved by Lessor shall be permitted to
enter the Complex for the purpose of cleaning the Leased Premises. Lessee shall
not cause any unnecessary labor by reason of Lessee's carelessness or
indifference in the preservation of good order and cleanliness. Except as
otherwise expressly set forth in the Lease, Lessor shall not be responsible to
Lessee for any loss of property in the Leased Premises, however occurring, or
for any damage done to the effects of Lessee by the janitor or any other
employee or any other person.
4. Keys. Lessor will furnish Lessee without charge with five (5) keys to
----
each exterior door to the Leased Premises. Lessor may make a reasonable charge
for any additional keys. Lessee shall not have any such keys copied or any keys
made. Lessee shall not alter any lock or install a new or additional lock or any
bolt on any door of the Leased Premises. Lessee, upon the termination of this
Lease, shall deliver to Lessor all keys to doors in the Complex.
5. Moving Procedures. Lessor shall designate appropriate entrances for
-----------------
deliveries or other movement to or from the Leased Premises of equipment,
materials, supplies, furniture or
F-1
<PAGE>
other property, and Lessee shall not use any other entrances for such purposes.
All moves shall be scheduled and carried out during nonbusiness hours of the
Complex. All persons employed and means or methods used to move equipment,
materials, supplies, furniture or other property in or out of the Complex must
be approved by Lessor prior to any such movement. Lessor shall have the right to
prescribe the maximum weight, size and position of all equipment, materials,
furniture or other property brought into the Complex. Heavy objects shall, if
considered necessary by Lessor, stand on a platform of such thickness as is
necessary properly to distribute the weight. All damage done to the Complex by
moving or maintaining such property shall be repaired at the expense of Lessee.
6. No Nuisances. Lessee shall not use or keep in the Leased Premises or
------------
the Complex any kerosene, gasoline or inflammable or combustible fluid or
material other than limited quantities thereof reasonably necessary for the
operation or maintenance of office and multimedia equipment. Lessee shall not
use any method of heating or air conditioning other than that supplied by
Lessor. Lessee shall not use or keep or permit to be used or kept any foul or
noxious gas or substance in the Leased Premises, or permit or suffer the Leased
Premises to be occupied or used in a manner offensive or objectionable to Lessor
or other occupants of the Complex by reason of noise, odors or vibrations, or
interfere in any way with other Lessees or those having business in the Complex,
nor shall any animals be brought or kept in the Leased Premises or the Complex.
7. Change of Address. Lessor shall have the right, upon adequate written
-----------------
notice to Lessee, to change the name or street address of the Complex or the
room or suite number of the Leased Premises.
8. Access to Complex. Lessor reserves the right to exclude from the
-----------------
Complex during the evening, night and early morning hours beginning at 6 P.M.
and ending at 8 A.M. Monday through Friday, beginning at 1 P.M. and ending at 8
A.M. on Saturdays, and at all hours on Sundays, union holidays and legal
holidays, all persons who do not present identification acceptable to Lessor.
Lessee shall provide Lessor with a list of all persons authorized by Lessee to
enter the Leased Premises and shall be liable to Lessor for all acts of such
persons. Lessor .shall in no case be liable for damages for any error with
regard to the admission to or exclusion from the Complex of any person. In the
case of invasion, mob, riot, public excitement or other circumstances rendering
such action advisable in Lessor's opinion, Lessor reserves the right to prevent
access to the Complex during the continuance of the same by such action as
Lessor may deem appropriate, including closing doors.
9. Complex Directory. The directory of the Complex will be provided for
-----------------
the display of the name and location of Lessee and a reasonable number of the
principal officers and employees of Lessee at the expense of Lessee. Lessor
reserves the right to restrict the amount of directory space utilized by Lessee.
10. Window Coverings. No curtains, draperies, blinds, shutters, shades,
----------------
screens or other coverings, hangings or decorations shall be attached to, hung
or placed in, or used in connection with any window of the Complex without the
prior written consent of Lessor. In any event, with the prior written consent of
Lessor, such items shall be installed on the interior side of Lessor's standard
window covering and shall in no way be visible from the exterior of the
F-2
<PAGE>
Complex. Lessee shall keep window coverings closed when the effect of sunlight
(or the lack thereof) would impose unnecessary loads on the Complex's air
conditioning systems.
11. Food and Beverages. Lessee shall not obtain for use in the Leased
------------------
Premises ice, drinking water, food, beverage, towel or other similar services,
except at such reasonable hours and under such reasonable regulations as may be
established by Lessor.
12. Procedures When Leaving. Lessee shall ensure that the doors of the
-----------------------
Leased Premises are closed and locked and that all water faucets, water
apparatus and utilities are shut off before Lessee and its employees leave the
Leased Premises so as to prevent waste or damage. For any default or
carelessness in this regard, Lessee shall be liable and pay for all damage and
injuries sustained by Lessor or other Lessees or occupants of the Complex. On
multiple-tenancy floors, Lessee shall keep the doors to the Complex corridors
closed at all times except for ingress and egress.
13. Bathrooms. The toilet rooms, toilets, urinals, wash bowls and other
---------
apparatus shall not be used for any purpose other than that for which they were
constructed, no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be paid by Lessee if caused by Lessee or its
agents, employees, contractors, invitees or licensees.
14. Prohibited Activities. Except with the prior written consent of Lessor
---------------------
or as otherwise expressly set forth in the Lease, Lessee shall (a) not sell
newspapers, magazines, periodicals, theater or travel tickets or any other goods
or merchandise to the general public in or on the Leased Premises, (b) not carry
on or permit or allow any employee or other person to carry on the business of
stenography, typewriting, printing or photocopying or any similar business in or
from the Leased Premises for the service or accommodation of occupants of any
other portion of the Complex, and (c) not allow the Leased Premises to be used
for manufacturing of any kind, or any business or activity other than that
specifically provided for in this Lease.
15. Vehicles. There shall not be used in any space or in the public halls
--------
of the Complex, either by Lessee or others, any hand trucks except those
equipped with rubber tires and side guards and such other material handling
equipment as Lessor approves. No vehicles of any kind shall be brought by Lessee
into the Complex (except as set forth in Section 49.1 of the Lease) or kept in
or about the Leased Premises.
16. Trash Removal. Lessee shall store all its trash and garbage within the
-------------
Leased Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of Complex trash and
garbage in the city or county in which the Complex is located without being in
violation of any law or ordinance governing such disposal. All garbage and
refuse disposal shall be made only through entryways and elevators provided for
such purposes and at such times as Lessor shall designate. Lessee shall crush
and flatten all boxes, cartons and containers. Lessee shall pay extra charges
for any unusual trash disposal.
F-3
<PAGE>
17. No Soliciting. Canvassing, soliciting, distribution of handbills or
--------------
any other written material and peddling in the Complex are prohibited, and
Lessee shall cooperate to prevent the same.
18. Services. The requirements of Lessee will be attended to only upon
--------
application in writing at the office of the Complex. Personnel of Lessor shall
not perform any work or do anything outside of their regular duties unless under
special instructions from Lessor.
19. Waiver. Lessor may waive any one or more of these Rules and
------
Regulations for the benefit of any particular Lessee or Lessees, but no such
waiver by Lessor shall be construed as a waiver of such Rules arid Regulations
in favor of any other Lessee or Lessees, nor prevent Lessor from thereafter
enforcing any such Rules and Regulations against any or all of the Lessees of
the Complex.
20. Supplemental to Lease. These Rules and Regulations are in addition to,
--------------------
and shall not be construed to in any way modify or amend, in whole or in part,
the covenants of this Lease.
21. Amendments and Additions. Lessor reserves the right to make such other
------------------------
rules and regulations, and to amend or repeal these Rules and Regulations, as in
Lessor's judgment may from time to time be desirable for the safety, care and
cleanliness of the Complex and for the preservation of good order therein.
F-4
<PAGE>
EXHIBIT G
BUILDING STANDARDS
That certain Redevelopment Masterplan for the Townsend Center dated
January 20, 1998 and revised on February 5, 1998.
<PAGE>
Exhibit H
JANITORIAL SPECIFICATIONS
A. Janitorial Service Specifications for Day Porter
------------------------------------------------
Day Porter shall be on duty from 8:30 a.m. to 5:00 p.m., Monday through
Friday; Saturdays, Sundays and holidays excepted. The duties of the Day
Porter, who is under the exclusive direction of the Chief
Engineer/Operations Manager and Property Manager, shall be, but is not
limited to, the following:
1. Entrance Lobby
The entrance lobby is to be kept neat and clean at all times and the
following minimum cleaning operations shall be maintained to attain this
effect:
a. Wipe down metal surfaces daily.
b. Clean cigarette urns as necessary.
c. Wash glass doors and mirrored surfaces daily and as needed.
d. Empty garbage receptacles as necessary.
2. Elevators/Escalators
a. Vacuum carpets daily and as needed. Include spot cleaning as
required in base contract.
b. Spot clean lobby elevator saddles, doors and frames daily.
c. Spot clean sides of elevator cars daily.
d. Spot clean sides of escalators daily.
3. Toilets - Daily
a. Fill soap dispensers and paper towel dispensers (towels and soap
to be furnished by Lessor).
b. Report all mechanical deficiencies (i.e., dripping faucets, etc.)
to the Property Manager.
c. Wash all mirrors, powder shelves and lavatory tops.
d. Empty paper towel receptacles and debris as needed but not less
than once daily.
e. Stock and maintain all sanitary product machines.
4. Public Areas
a. Remove all foreign matter and debris from all public corridors as
necessary.
b. Handles special requests as directed by Manager (i.e., unplug
toilets, remove trash, etc.)
1.
<PAGE>
5. Building Service Areas
a. Remove foreign matter and debris from planters and sidewalks
along 8th and Townsend Streets daily.
b. Lay down and remove lobby runners, as necessary.
c. Ensure that the loading dock area, including the Mail Room, is
free of debris.
B. Janitorial Service Specifications for Common Areas and Tenant Suites
--------------------------------------------------------------------
1. Nightly Services Sunday through Thursday.
a. Secure all lights as soon as possible each night.
b. Vacuum all Common Area carpets and tenanted areas.
c. Dust mop all resilient and composition floors with treated dust
mops. Damp mop to remove spills and water stains as required.
d. Feather dust all desks and office furniture, excluding chairs.
e. Papers and folders on desks are not to be moved.
f. Empty all ash trays and ash urns. Clean and sanitize as required.
g. Empty all waste paper baskets and other trash containers.
h. Remove all trash from floors to designated trash areas.
i. Remove fingerprints, dirt smudges, graffiti, etc., from all
doors, frames, glass partitions, windows, light switches, walls,
elevator do or jambs and elevator interiors.
j. Return chairs and waste baskets to proper positions.
k. Clean sanitize and polish drinking fountains.
2. Weekly Services
a. Dust all low reach and high reach areas, including but not
limited to, structural ledges, mirror tops, partition tops and
edges, air conditioning diffusers and return air grilles.
3. Monthly Services
a. Wipe down all walls and metal partitions. Partitions shall be
left clean and not streaked after this work.
b. Clean all ventilation grilles.
c. Dust all doors and door jambs.
4. Quarterly Services
a. Thoroughly clean and reseal all ceramic tile floors, using
approved sealers.
2.
<PAGE>
C. Main Floor Elevator/Escalator Lobbies and Public Corridors Specifications
-------------------------------------------------------------------------
1. Nightly Services
a. Thoroughly wash all swinging glass doors exclusive of tenant
door.
b. Spot clean all glass including low partitions and the corridor
side of all windows and glass doors to tenant premises.
c. Spot clean all chrome brightwork including swinging door
hardware, kick plates, base, partition tops, handrails, waste
paper receptacles, planters, elevator call button plates, hose
cabinets and visible hardware on the corridor side of tenant
entry doors.
d. Spot clean all interior architectural finishes including the
corridor side of all tenant area window and door frames and
bases.
e. Thoroughly clean all door saddles of dirt and debris.
f. Spot clean and dust directory boards and ledges.
g. Empty, clean and sanitize as required all waste paperbaskets and
refuse receptacles.
h. Vacuum all carpets and minor spot clean, as necessary.
i. Spot clean all elevator doors and frames.
j. Police all areas for debris at least once during day time
operating hours.
2. Monthly Services
a. Thoroughly clean all chrome and architectural interior finishes.
D. Basement Corridors. Service Office (Engineering. Security. Cleaning) Store
--------------------------------------------------------------------------
Rooms, Service Corridors, Roof and Service Sink Closets:
-------------------------------------------------------
Note: Nightly and periodic services for offices, corridors, locker rooms
----
and restrooms included in the above areas shall be per specifications previously
outlined for tenant areas and common areas on tenant floors. Additional work not
previously specified shall be as follows:
1. Nightly Services
a. Remove trash from all the above areas.
b. Maintain an orderly arrangement of all janitorial supplies and
paper products in the storage rooms and service sink closets.
c. Maintain an orderly arrangement of all equipment stored in these
areas such as mops, buckets, brooms, vacuum cleaners, scrubbers,
etc.
d. Clean and disinfect service sinks:
e. Sweep and damp mop service sink closet floors; deodorize and
disinfect as required.
f. Sweep store room floors.
g. Receive and store all janitorial supplies in an orderly manner.
3.
<PAGE>
2. Weekly Services
a. Damp mop all composition floors in store rooms; deodorize and
disinfect as required.
b. High dusting of these areas, including all pipes, ducts,
conduits, ventilating diffusers and grills, mechanical,
electrical equipment exposed beneath the hung ceilings outside of
the mechanical equipment rooms.
E. Passenger Elevator/Escalator Cleaning Specifications.
----------------------------------------------------
1. Nightly Services
a. Spot clean walls and interior door.
b. Spot clean outside surfaces of all doors and frames.
c. Clean all floors thoroughly. Edge thoroughly.
d. Vacuum all thresholds.
e. Spot clean elevator carpets
2. Weekly Services
a. Thoroughly clean entire interior surfaces and finish of all doors
and frames and outside surfaces of all doors and frames.
b. Steel wool clean all thresholds.
c. Wipe thoroughly all handrails.
3. Monthly Services
a. Shampoo all elevator cab floor carpets.
b. Wipe clean elevator cab lamps.
c. Wipe clean entire cab ceiling
F. Trash Area and Service Entrance Specifications
----------------------------------------------
1. Nightly Services
a. Place all miscellaneous trash and debris except construction
material, in the Property's trash receptacles or compactor.
b. Neatly stack all trash in the designated area.
c. Sweep entire area.
G. Exterior Structure and Grounds Services Specifications.
------------------------------------------------------
1. Nightly Services
4.
<PAGE>
EXHIBIT I
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
WELLS FARGO BANK, NATIONAL ASSOCIATION
Real Estate Group, AU #AU NO.
400 Capitol Mall, Suite 700
Sacramento, CA 95814
Attn: LOAN ADMINISTRATOR'S NAME HERE
Loan No. LOAN NO.
================================================================================
SUBORDINATION AGREEMENT; ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL,
ATTORNMENT AND NON-DISTURBANCE AGREEMENT
(Lease To Deed of Trust)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE
PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF
SOME OTHER OR LATER SECURITY INSTRUMENT.
THIS SUBORDINATION AGREEMENT; ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL,
ATTORNMENT AND NON-DISTURBANCE AGREEMENT ("Agreement") is made DATE OF DOCUMENTS
by and between BORROWER NAME, a general partnership ("Owner"), NAME OF LESSEE
HERE ("Lessee") and WELLS FARGO BANK,. NATIONAL ASSOCIATION ("Lender").
R E C I T A L S
---------------
A. Pursuant to the terms and provisions of a lease dated DATE OF LEASE HERE
("Lease"), Owner, as "Lessor", granted to Lessee a leasehold estate in and
to a portion of the property described on Exhibit A attached hereto and
incorporated herein by this reference (which property, together with all
improvements now or hereafter located on the property. is defined as the
"Property").
B. Said Lease contains provisions and terms granting Lessee an option to
purchase the Property (the "Option To Purchase").
C. Owner has executed, or proposes to execute, a deed of trust with absolute
assignment of leases and rents, security agreement and fixture filing
("Deed of Trust") securing, among other things, a promissory note ("Note")
in the principal sum of LOAN AMOUNT AND N0/100THS DOLLARS ($LOAN AMOUNT
NOS.), dated DATE OF DOCUMENTS, in favor of Lender, which Note is payable
with interest and upon the terms and conditions described therein ("Loan").
The Deed of Trust is to be recorded concurrently herewith.
Page 1 of 9
<PAGE>
D. As a condition to making the Loan secured by the Deed of Trust, Lender
requires that the Deed of Trust be unconditionally and at all times remain
a lien on the Property, prior and superior to all the rights of Lessee
under the Lease and the Option To Purchase and that the Lessee specifically
and unconditionally subordinate the Lease and the Option To Purchase to the
lien of the Deed of Trust.
E. Owner and Lessee have agreed to the subordination, attornment and other
agreements herein in favor of Lender.
NOW THEREFORE, for valuable consideration and to induce Lender to make the Loan,
Owner and Lessee hereby agree for the benefit of Lender as follows:
1. SUBORDINATION. Owner and Lessee hereby agree that:
-------------
1.1 Prior Lien. The Deed of Trust securing the Note in favor of Lender,
----------
and any modifications, renewals or extensions thereof, shall
unconditionally be and at all times remain a lien on the Property
prior. and superior to the Lease and the Option To Purchase;
1.2 Subordination. Lender would not make the Loan without this agreement
-------------
to subordinate; and
1.3 Whole Agreement. This Agreement shall be the whole agreement and only
----------------
agreement with regard to the subordination of the Lease and the Option
To Purchase to the lien of the Deed of Trust and shall supersede and
cancel, but only insofar as would affect the priority between the Deed
of Trust and the Lease and the Option To Purchase, any prior
agreements as to such subordination, including, without limitation.
those provisions, if any, contained in the Lease which provide for the
subordination of the Lease and the Option To Purchase to a deed or
deeds of trust or to a mortgage or mortgages.
AND FURTHER, Lessee individually declares, agrees and acknowledges for the
benefit of Lender, that:
1.4 Use of Proceeds. Lender, in making disbursements pursuant to the Note,
---------------
the Deed of Trust or any loan agreements with respect to the Property,
is under no obligation or duty to, nor has Lender represented that it
will, see to the application of such proceeds by the person or persons
to whom Lender disburses such proceeds, and any application or use of
such proceeds for purposes other than those provided for in such
agreement or agreements shall not defeat this agreement to subordinate
in whole or in part;
1.5 Waiver, Relinquishment and Subordination. Lessee intentionally and
----------------------------------------
unconditionally waives, relinquishes and subordinates all of Lessee's
right, title and interest in and to the Property to the lien of the
Deed .of Trust and understands that in reliance upon, and in
consideration of, this waiver, relinquishment and subordination,
specific loans and advances are being and will be made by Lender and,
as part and parcel thereof, specific monetary and other obligations
are being and will be entered into which would not be made or entered
into but for said reliance upon this waiver, relinquishment and
subordination.
2. ASSIGNMENT. Lessee acknowledges and consents to the assignment of the Lease
----------
by Lessor in favor of Lender.
3. ESTOPPEL. Lessee acknowledges and represents that:
--------
Page 2 of 9
<PAGE>
3.1 Lease Effective. The Lease has been duly executed and delivered by
---------------
Lessee and, subject to the terms and conditions thereof, the Lease is
in full force and effect, the obligations of Lessee thereunder are
valid and binding and there have been no modifications or additions to
the Lease, written or oral;
3.2 No Default. To the best of Lessee's knowledge, as of the date hereof:
----------
(i) there exists no breach, default, or event or condition which, with
the giving of notice or the passage of time or both, would constitute
a breach or default under the Lease: and (ii) there are no existing
claims, defenses or offsets against rental due or to become due under
the Lease;
3.3 Entire Agreement. The Lease constitutes the entire agreement between
----------------
Lessor and Lessee with respect to the Property and Lessee claims no
rights with respect to the Property other than as set forth in the
Lease; and
3.4 No Prepaid Rent. No deposits or prepayments of rent have been made in
---------------
connection with the Lease, except as follows: (if none, state "None")
4. ADDITIONAL AGREEMENTS. Lessee covenants and agrees that, during all such
---------------------
times as Lender is the Beneficiary under the Deed of Trust:
4.1 Modification, Termination and Cancellation. Lessee will not consent to
------------------------------------------
any modification, amendment, termination or cancellation of the Lease
(in whole or in part) without Lender's prior written consent and will
not make any payment to Lessor in consideration of any modification,
termination or cancellation of the Lease (in whole or in part) without
Lender's prior written consent;
4.2 Notice of Default. Lessee will notify Lender in writing concurrently
-----------------
with any notice given to Lessor of any default by Lessor under the
Lease, and Lessee agrees that Lender has the right (but not the
obligation) to cure any breach or default specified in such notice
within the time periods set forth below and Lessee will not declare a
default of the Lease, as to Lender, if Lender cures such default
within fifteen (15) days from and after the expiration of the time
period provided in the Lease for the cure thereof by Lessor; provided,
however, that if such default cannot with diligence be cured by Lender
within such fifteen (15) day period, the commencement of action by
Lender within such fifteen (15) day period to remedy the same shall be
deemed sufficient so long as Lender pursues such cure with diligence;
4.3 No Advance Rents. Lessee will make no payments or prepayments of rent
----------------
more than one (1) month in advance of the time when the same become
due under the Lease; and
4.4 Assignment of Rents. Upon receipt by Lessee of written notice from
-------------------
Lender that. Lender has elected to terminate the license granted to
Lessor to collect rents, as provided in the Deed of Trust, and
directing the payment of rents by Lessee to Lender, Lessee shall
comply with such direction to pay and shall not be required to
determine whether Lessor is in default under the Loan and/or the Deed
of Trust.
5. ATTORNMENT. Lessee agrees for the benefit of Lender (including for this
----------
purpose any transferee of Lender or any transferee of Lessor's title in and
to the Property by Lender's exercise of the remedy of sale by foreclosure
under the Deed of Trust) as follows:
Page 3 of 9
<PAGE>
5.1 Payment of Rent. Lessee shall pay to Lender all rental payments
---------------
required to be made by Lessee pursuant to the terms of the Lease for
the duration of the term of the Lease:
5.2 Continuation of Performance. Lessee shall be bound to Lender in
---------------------------
accordance with all of the provisions of the Lease for the balance of
the term thereof, and Lessee hereby attorns to Lender as its landlord,
such attornment to be effective and self-operative without the
execution of any further instrument immediately upon Lender succeeding
to Lessor's interest in the Lease and giving written notice thereof to
Lessee;
5.3 No Offset. Lender shall not be liable for, nor subject to, any offsets
---------
or defenses which Lessee may have by reason of any act or omission of
Lessor under the Lease, nor for the return of any sums which Lessee
may have paid to Lessor under the Lease as and for security deposits,
advance rentals or otherwise, except to the extent that such sums are
actually delivered by Lessor to Lender; and
5.4 Subsequent Transfer. If Lender, by succeeding to the interest of
-------------------
Lessor under the Lease, should become obligated to perform the
covenants of Lessor thereunder, then, upon, any further transfer of
Lessor's interest by Lender, all of such obligations shall terminate
as to Lender.
6. NON-DISTURBANCE. In the event of a foreclosure under the Deed of Trust, so
---------------
long as there shall then exist no breach, default, or event of default on
the part of Lessee under the Lease, Lender agrees for itself and its
successors and assigns that the leasehold interest of Lessee under the
Lease shall not be extinguished or terminated by reason of such
foreclosure, but rather the Lease shall continue in full force and effect
and Lender shall recognize and accept Lessee as tenant under the Lease
subject to the terms and provisions of the Lease except as modified by this
Agreement; provided, however, that Lessee and Lender agree that the
-------- -------
following provisions of the Lease (if any) shall not be binding on Lender:
any option to purchase with respect to the Property; any right of first
refusal with respect to the Property; any provision regarding the use of
insurance proceeds or condemnation proceeds with respect to the Property
which is inconsistent with the terms of the Deed of Trust.
7. MISCELLANEOUS.
-------------
7.1 Heirs, Successors, Assigns and Transferees. The covenants herein shall
------------------------------------------
be binding upon, and inure to the benefit of, the heirs, successors
and assigns of the. parties hereto; and
Page 4 of 9
<PAGE>
7.2 Notices. All notices or other communications required or permitted to
-------
be given pursuant to the provisions hereof shall be deemed served upon
delivery or, if mailed, upon the first to occur of receipt or the
expiration of three (3) days after deposit in United States Postal
Service, certified mail, postage prepaid and addressed to the address
of Lessee or Lender appearing below:
"OWNER" "LENDER"
BORROWER NAME, a general partnership WELLS FARGO BANK, NATIONAL
STREET ADDRESS ASSOCIATION
CITY, STATE ZIP Real Estate Group (AU #AU N0.)
400 Capitol Mall, Suite 700
Sacramento, CA 95814
Attn: LOAN ADMINISTRATOR'S NAME HERE
Loan No. LOAN NO.
"LESSEE"
NAME OF LESSEE HERE
LESSEE'S ADDRESS (STACKED) HERE
provided, however, any party shall have the right to change its address for
-------- -------
notice hereunder by the giving of written notice thereof to the other party
in the manner set forth in this Agreement; and
7.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of
which together shall constitute and be construed as one and the same
instrument; and
7.4 Remedies Cumulative. All rights of Lender herein to collect rents on
--------------------
behalf of Lessor under the Lease are cumulative and shall be in
addition to any and all other rights and remedies provided by law and
by other agreements between Lender and Lessor or others; and
7.5 Paragraph Headings. Paragraph headings in this Agreement are for
-------------------
convenience only and are not to be construed as part of this Agreement
or in any way limiting or applying the provisions hereof.
INCORPORATION. Exhibit A and Lease Guarantor's Consent are attached hereto and
- ------------- ---------
incorporated herein by this reference.
IN WITNESS WHEREOF, the patties hereto have executed this Agreement as of the
day and year first above written.
NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE.
PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A
PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT
OF THE LAND.
Page 5 of 9
<PAGE>
IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES
CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.
"OWNER"
BORROWER NAME,
a general partnership
By:________________________________________
Its:_______________________________________
"LENDER"
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________________
Signee's Name
Its:_______________________________________
Signee's Title
"LESSEE"
NAME OF LESSEE HERE
LESSEE SIGNATURE BLOCK HERE
(ALL SIGNATURES MUST BE ACKNOWLEDGED)
Page 6 of 9
<PAGE>
LEASE GUARANTOR'S CONSENT
The undersigned ("Lease Guarantor") consents to the foregoing Subordination
Agreement; Acknowledgment of Lease Assignment, Estoppel, Attornment and
Non-Disturbance Agreement and the transactions contemplated thereby and
reaffirms its obligations under the lease guaranty ("Lease Guaranty") dated DATE
OF LEASE GUARANTY HERE. Lease Guarantor further reaffirms that its obligations
under the Lease Guaranty are separate and distinct from Lessee's obligations.
AGREED:
- ------
Dated as of: DATE OF DOCUMENTS "LEASE GUARANTOR"
LEASE GUARANTOR BLOCK HERE
Page 7 of 9
<PAGE>
EXHIBIT A
Loan No. LOAN NO.
DESCRIPTION OF PROPERTY
EXHIBIT A to Subordination Agreement; Acknowledgment of Lease Assignment,
- ---------
Estoppel, Attornment and Non-Disturbance Agreement dated as of DATE OF
DOCUMENTS, executed by BORROWER NAME, a general partnership as "Owner", NAME OF
LESSEE HERE, as "Lessee", and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
"Lender".
All that certain real property located in the County of PROPERTY COUNTY, State
of California. described as follows:
APN
Page 8 of 9
<PAGE>
STATE OF CALIFORNIA )
ss.
COUNTY OF ___________________ )
On this ______________ day of ________________, 19__, before me,
____________________________, a Notary Public in and for the State of
California, personally appeared personally known to me (or proved on the basis
of satisfactory evidence) to be the person(s) whose names) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the persons) acted, executed the instrument.
WITNESS my hand and official seal
Signature _________________________________
My commission expires ____________________.
Page 9 of 9
<PAGE>
IMPCO
100 Town Center Drive
Rochester, NY 14623
<PAGE>
October 15, 1998
Mr. John W. Dobbertin
IMPCO Enterprises Inc.
100 Town Centre Drive
Rochester, NY 14623
RE: Lease Dated July 1, 1998
18,000 Square Feet
100 Town Center Drive, Rochester, NY
Dear John:
This letter will serve to make the following change to the above referenced
lease.
RENT
The Landlord has agreed to amortize $8,012.00 of improvements into the
lease term. With these amortized costs the revised rent shall now be
$182,138.00 annually, to be paid in equal consecutive monthly installments
of $15,178.16.
All other terms and conditions of the lease shall remain the same.
We look forward to a long relationship with your company. Should you have any
questions please feel free to call.
/s/ John W. Dobbertin 10/16/98
- --------------------------------------------------
John W. Dobbertin, V.P. of Finance Date
/s/ Richard R. LeFrois 10/15/98
- --------------------------------------------------
Richard R. LeFrois Date
<PAGE>
THIS AGREEMENT OF LEASES, dated as of the 1st day of July 1998, between RICHARD
R. LEFROIS, having an office and place of business located at 1020 Lehigh
Station Road, Henrietta, New York, hereinafter described as "Landlord" and IMPCO
Enterprises, Inc., a Subsidiary of Webcraft, Inc. a Corporation organized under
the laws of the State of Delaware, with an address of 1200 University Avenue,
Rochester, New York, hereinafter described as "Tenant".
WITNESSETH:
1. DESCRIPTION
-----------
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord the
premises described on "Exhibit A" attached hereto, consisting of approximately
18,000 square feet of floor area in the building ("Building") known as and
located at 100 Town Centre Drive, Rochester, New York 14623, (the "Premises").
2. TERM
----
(A). The term of this Lease (The "Lease Term") shall be five (5) years, to
commence on September 1, 1998, (the "Commencement Date") and to end at midnight,
August 31, 2003, (the "Expiration Date"), subject to the further provisions of
subparagraphs (C) and (D) hereof.
(B). The term "Lease Year" as used herein is defined to be a period of
twelve consecutive calendar months beginning September 1st of each year of the
Lease Term.
(C). Notwithstanding the foregoing, in the event that the Building is not
substantially completed by August 15, 1998 (the "Tenant Installation
Commencement Date"), in order to permit Tenant to begin making its own tenant
improvement installations in accordance with the provisions of Article 5 hereof,
then the Commencement Date (on which the payment of rent under Article 3 hereof
is to commence), shall be delayed one day for each day beyond the date of August
15, 1998, until the Building shall be so substantially completed, with the
intention that Tenant shall have fifteen (15) days prior to rent commencement
during which it may perform its Tenant installation work. In no event shall the
Expiration Date be adjusted by reason of any such delay. In the event that the
Tenant Installation Commencement date has not occurred on or before September
30, 1998, then Tenant by notice to Landlord delivered at any time from and
1
<PAGE>
after that date, and prior to the actual Tenant Installation Commencement Date
(as measured by Landlord's substantial completion of the Premises), may cancel
this Lease, effective as of the date of such notice, and this Lease upon the
delivery thereof shall be and be deemed to be null and void and of no further
force and effect, and Landlord shall promptly return the security deposit made
in accordance with Article 37 hereof.
(D). Tenant shall have the option to extend the Lease Term by an additional
period of five (5) years, from September 1, 2003, through August 31, 2008, on
the same terms and conditions (except that there shall be no further right to an
extension of the term hereof), provided that Tenant shall give Landlord notice
of its intent to renew not less that nine (9) months prior to the original Lease
Term Expiration Date (i.e., by notice given on or before November 30, 2002), at
a Lease Rate to be negotiated not to exceed a 10% increase.
(E). Tenant shall be permitted to enter the Premises after the Tenant
Installation Commencement Date and prior to the Commencement Date, not for the
purpose of conducting business therein, but solely for the purpose of effecting
the Tenant installation work, without liability for the payment of fixed rent
hereunder; notwithstanding the foregoing, Tenant shall be liable for the payment
of any utilities consumed in the course of its installation work.
3. RENT
----
The rent during the term of this Lease shall be $180,000.00 annually, to be paid
in equal consecutive monthly installments of $15,000.00 in advance on the first
(1st) day of each month during the term hereof, without deduction, setoff or
prior demand which rent Tenant agrees to pay in lawful money of the United
States, which shall be legal tender in payment of all debts and dues, public and
private, by check subject to collection drawn to the order of the Landlord, Mr.
Richard R. LeFrois, P. O. Box 92878, Department No. 102, Rochester, New York
14692, or such other place as the Landlord may designate by notice to Tenant.
This Lease is granted and accepted upon the foregoing and upon the following
covenants and conditions and subject to the following restrictions, to all and
every one of which the parties consent; and each of the parties hereby expressly
covenants and agrees to keep, perform and observe all the terms, covenants and
conditions herein contained on its part to be kept, performed and observed.
2
<PAGE>
4. USE
---
The Premises may be used and occupied exclusively by Tenant as an office and
warehouse (collectively, the "approved use"). Tenant will not at anytime use or
occupy the Premises in violation of its approved use. No part of the Premises
shall be occupied or used by any persons for any purpose or, in any manner so as
to increase the insurance risk or rates or prevent the obtaining of insurance
for the approved use; nor so that, in accordance with any requirement or law or
any public authority, the Landlord shall be obligated, on account of the purpose
or manner of said approved use or occupation, to make any addition or alteration
to or in the building. If, by reason of Tenant's failure to comply with this
provision, the fire insurance rate at any time shall be higher than it otherwise
would have been then Tenant shall reimburse Landlord, as additional rent, for
that part of all fire insurance premiums thereafter paid by Landlord by reason
or such violation by Tenant.
5. LANDLORD'S REPAIRS
------------------
Landlord Shall Maintain and Repair:
1. All Structural Elements of the Premises.
2. Exterior walls.
3. Roofs.
4. Major Repairs to the Pipes, Fixtures.
Tenant is responsible for the maintenance of the Landlord-installed on-site
Building system appliances and equipment (which includes the HVAC units),
and for which all operations and maintenance manuals (or true and complete
copies thereof) have been delivered to Tenant. As long as damages have not
been caused by tenant's failure to maintain appliances and equipment
properly, Landlord shall be responsible for major repairs or replacement to
the appliances and equipment, and shall promptly commence and complete same
or to Landlord following receipt of the bill therefor.
As used herein, the term "major repairs" shall mean repairs costing more
than Five Hundred Dollars, ($500.00) individually or aggregating more than
One Thousand Dollars, ($1,000.00) in any lease year in respect of any one
such Building system.
3
<PAGE>
6. UTILITIES
---------
(A). Tenant shall pay, as additional rent, either to the utility providing
same or to Landlord following receipt of the bill therefor, all charges for
light, heat, power, electric, gas, water, sewerage charges, pollution charges,
Pure Water charges, fuel charges and such other similar services furnished or
used in connection with the Premises during the Lease Term.
(B). Landlord agrees to install separate utility meters for the Premises at
Landlord's sole cost prior to the Tenant Installation Commencement Date (and the
installation thereof shall be required for determination of substantial
completion.)
7. REMEDIES OF TENANT REGARDING
----------------------------
PROVISION OF SERVICES AND UTILITIES
-----------------------------------
No diminution or abatement of rent or other compensation shall be claimed or
allowed for inconvenience or discomfort arising from the making of repairs or
improvements to the Building or to its appliances required by law or the
provisions of this Lease; provided, however, that Landlord agrees to perform
such work only during regular business hours, and with due care for the
minimization of interference with Tenant's conduct of business, and to give
Tenant reasonable advance notice (except in the case of emergency threatening
damage to persons or property) of any intended Landlord entry for the purposes
of Lease-mandated repairs or maintenance or legally-required improvements.
However, for any space taken to comply with any law, ordinance or order of a
governmental authority, the rent shall be apportioned ratably. In respect to the
various "services", if any, herein expressly or impliedly agreed to, be
furnished by the Landlord to the Tenant, it is agreed that there shall be no
diminution or abatement of the rent, or any other compensation, for interruption
or curtailment of such "services" when such interruption or curtailment shall be
due to accident, alterations or repairs desirable or necessary to be made or to
some other cause, not gross negligence or willful misconduct on the part of the
Landlord. No such interruption or curtailment of any such "services" shall be
deemed a constructive eviction. The Landlord shall not be required to furnish,
and the Tenant shall not be entitled to receive, any of such "services" during
any period wherein the Tenant shall be in default in respect to the payment of
rent following notice and opportunity to cure as required hereunder. Such
repairs, alterations, etc., shall be done with reasonable dispatch.
4
<PAGE>
8. PREPARATION OF PREMISES AND TENANT ALTERATIONS
Landlord's Improvements:
(A). Space to be divided into:
Approximately 15,000 square feet of finished office space. Approximately
3,000 square feet of unfinished warehouse space, located within the
Premises as agreed with Tenant.
(B). The finished office space to incorporate:
1. Office space to be open "bull pen".
2. The office area will have dropped ceilings with 2' x 4' lay-ins
and recessed lighting fixtures of sufficient candle power to
eliminate need of desk lighting.
3. The office area will have nine (9) feet of drywall painted.
4. Each office door will be equipped with different only individual
locks and keys, but all locks "master Keyed" for the Branch
Manager (including the door opening into the warehouse area).
5. If Tenant desires window treatments, Tenant shall provide any and
all window treatments. Any interior window treatment shall be per
Tenants design, any exterior window treatment shall be verticals
to maintain a similar exterior appearance.
(C). Tenant may make leasehold improvements as reasonably required for the
conduct of Tenant's business, including additional partitions, wall,
floor and ceiling coverings, window blinds and shades and draperies or
other window hangings (subject to item 5 above), and other fixtures
and equipment necessary to the conduct of the Tenant's business, upon
compliance with the terms of this Article 8.
5
<PAGE>
1. Not less than twenty (20 days prior to undertaking any
alteration, addition or improvement, Tenant shall notify
Landlord, specifying in detail the alterations or additions
contemplated. Such notice shall be accompanied by a plan,
blueprint, or diagram showing such proposed alterations or
additions, and a bid or contract signed by a reputable builder or
contractor, undertaking to perform said work as show in said
plan, blueprint or diagram for a specified cost stated therein.
2. Tenant agrees it will not proceed with any alteration, addition
or improvement without first obtaining .the Landlord's written
consent to such alterations, addition or improvement (but such
approval shall not be unreasonably withheld or delayed if the
installations are customary or appropriate for Tenant's allowed
use and the design, construction standards, quality standards and
finish are all equivalent to or better than what is present in
the Premises at the Commencement Date, and if not disapproved by
notice given by Landlord within then (10) business days of
Tenant's submission, shall be deemed approved). It is understood
and agreed that Landlord shall have approval rights concerning
compatibility with the facilities within the Building and to
assure that such changes are compatible with and do not exceed
the rated operating capacity of the Building systems, including
electrical and HVAC, which approval shall not be unreasonably
withheld or delayed if same do not adversely impact the Building
systems.
3. If Landlord approves thereof and the specified cost as above
stated is less than $3,000, such approval shall constitute the
necessary consent to such alterations or additions. If, however,
the aforesaid specified cost is in excess of $3,000, then no
consent of the Landlord shall be valid or binding upon it unless
and until Tenant furnishes Landlord with a certificate evidencing
liability insurance with limits of $1,000,000/$100,000/ $250,000
protecting Landlord from any liability for injury to persons or
property arising, directly or indirectly, from the making of such
alterations
6
<PAGE>
or additions by Tenant, its agents, servants, employees, and/or
independent contractors.
4. In making alterations, Tenant shall conform to all applicable
laws and ordinances of the appropriate governmental and quasi-
governmental authorities having jurisdiction over the Premises.
Any alterations, additions or improvements to the Premises,
including, without limitation, additions of the Tenant fixtures
and equipment, shall be done in a manner which minimizes damage
or potential damage to the Premises.
9. MAINTENANCE AND REPAIRS
-----------------------
Tenant (a) except as specifically set forth in section 5, shall, at the Tenant's
own expense, take good care of the Premises, and the pipes, fixtures,
appliances, equipment and appurtenances belonging thereto, and keep the same in
good order and repairs (if any) shall be in quality and class at least equal to
the original work; on default of Tenant to do such work, the Landlord (following
required notice to Tenant and opportunity to cure) may do it for Tenant's
account, and Tenant shall have no claim for inconvenience on account thereof;
(b) shall not cut or drill or otherwise deface or injure the building, except as
permitted in connection with alterations and additions under Article 8 hereof;
(c) shall not use or permit the use of the roof except as shall be expressly
permitted in writing by Landlord, including, without limitation, for the
installation thereon of any antenna, airlines, masts, or other radio or
television equipment; (d) shall not, without the Landlord's prior written
consent first obtained in each instance, permit any matter or thing to be
extended or projected from the window sash, window sill, cornice or fire escape
of the Premises; (e) shall, within ten (10) days after the Landlord's demand
thereof, pay to Landlord as additional rent hereunder, an amount equal to the
increase, if any, in the amount of the fire insurance premium applicable to the
building for and during the demised term resulting from the Tenant's use and
occupancy of the Premises in violation of the use permitted in this Lease, or
from the Tenant's failure to comply with any requirements of law or the
recommendation of any insurance carrier; (f) shall not, without the Landlord's
prior written consent first obtained in each instance, make alteration or
addition to the electric wiring, equipment, or appliances, including, without
limitation, any heating, air conditioning system, water systems, or gas pipe
systems, or tap any mains or pipes to supply water for refrigeration or air
conditioning apparatus, except as
7
<PAGE>
permitted in connection with alterations and additions under Article 8 hereof;
(g) shall not, without Landlord's prior written consent first obtained in each
instance, make any alterations, decorations or improvements in or to the
Premises, except as permitted in connection with alterations and additions under
Article 8 hereof provided however, Landlord's consent to non-structural interior
alterations or decorations shall not be unreasonably withheld; (h) shall comply
with all reasonable and uniform written regulations and orders of Landlord
designated to promote the safety or good order of the building; and (i) shall
promptly discharge by filing the necessary bond, or otherwise, any mechanic's
lien or other lien filed against the Premises because of any work or material
done or famished to the Tenant. All alterations, additions or improvements made
to the Premises by either party, including railings, galleries, decorations,
paneling and similar items, unless Landlord shall otherwise elect in writing,
shall become the property of Landlord and be surrendered as part of the Premises
at the expiration or earlier termination of this Lease.
10. COVENANT AGAINST ASSIGNMENT AND SUBLETTING
------------------------------------------
(A). Without the previous written consent of the Landlord, neither the
Tenant, nor the Tenant's legal representatives or successors in interest by
operation of law or otherwise, shall assign or mortgage this Lease, or sublet
the whole or any part of the Premises or any part thereof to be used by others:
Any consent by Landlord to any act of assignment or subletting shall be held to
apply only to the specific transaction thereby authorized. Such consent shall
not be construed as a waiver of the- duty of Tenant, or the legal
representatives or assigns of tenant, to obtain from the legal representatives
or assigns of Tenant, to obtain from Landlord consent to any other or subsequent
assignment or subletting, or as modifying or limiting the rights of Landlord
under the foregoing covenant by Tenant not to assign or sublet without such
consent. Any violation of any provision of this Lease, whether by act or
omission, by any assignee, subtenant, or undertenant, or occupant shall be
deemed a violation of such provision by Tenant, it being the intention and
meaning of the parties hereto that Tenant shall assume and be liable to Landlord
for any and all acts and omissions of any and all assignees, sub-tenants and
undertenants and occupants. If this Lease be assigned, the Landlord may, and is
hereby empowered to collect rent from the assignee if the Premises or any part
thereof be underlet or occupied by any person or Corporation other than Tenant.
Landlord, in the event of Tenant's
8
<PAGE>
default may, and is hereby empowered to, collect rent from the undertenant or
occupant; in either of such events, Landlord may apply the net amount received
by it to the rent herein reserved, and no such collection shall be deemed a
waiver of the covenant herein against assignment and underletting, or the
acceptance of the assignee, undertenant, or a release of the Tenant from the
further performance of the covenants herein contained on the part of the Tenant.
(B). Notwithstanding the provision of paragraph 10 (A) hereof, the Tenant
may, without the Landlord's consent, assign this Lease to any parent, affiliated
or subsidiary corporation, provided such assignment does not relieve the
original Tenant of any liability hereunder and may also assign this lease
without Landlord's consent in connection with the merger or consolidation of
Tenant with or into any other corporation or entity, or in connection with the
sale or transfer of a majority of the assets and liabilities of Tenant, so long
as, with respect to either of the foregoing, (i) the shareholder's equity
(determined in accordance with generally accepted accounting principles) of any
assignee is equal to or greater than the shareholders' equity equivalently
determined in Tenant as of the effective date of said assignment, (ii) the
assignee is engaged in a business customarily acceptable for a tenant in a
building such as the Building in metropolitan Rochester, New York, (iii) any
assignee shall assume all of the obligations of Tenant under this Lease, (iv) at
the time of such assignment, this lease is in full force and effect and there is
no event of default under this Lease on the part of Tenant, (v) assignee's
proposed use provision of this Lease, and (vi) such transaction was not entered
into as a subterfuge to avoid obligations and restrictions under this Lease
(such assignee complying with clauses (i) through (vi) hereinafter a "Permitted
Assignee"). At least ten days prior to the effective date of any such assignment
to a Permitted Assignee, Tenant agrees to furnish Landlord with notice of such
assignment and copies of the instruments intended to effect such assignment, and
with thirty days after the effective date of any such assignment to a Permitted
Assignee, to furnish Landlord with copies of the fully executed instruments
effecting any such assignment and documentation establishing Tenant's
satisfaction of the requirements set forth above applicable to any such
assignment. Any such permitted Assignee of Tenant must assume and agree in
writing to fully perform and observe all of the obligations and agreements of
Tenant under this Lease. No such assignment shall relieve any Tenant of this
Lease of any covenants or obligations under this Lease and any Tenant shall
remain fully liable hereunder.
9
<PAGE>
11. RIGHT OF ENTRY
--------------
Tenant, during the term hereof, shall permit inspection of the demised Premises
during reasonable business hours by Landlord's agents or representatives, and by
or on behalf of prospective purchasers on reasonable advance notice; and shall
permit access by the Landlord, or Landlord's agents or representatives during
reasonable hours for the purpose of making repairs, renovations or decorations
on reasonable advance notice.
12. COVENANT TO SURRENDERS REMOVAL OF PERSONAL PROPERTY
---------------------------------------------------
On the last day of the Lease Term or on the sooner termination thereof, Tenant
shall peaceably and quietly leave, surrender and yield up unto the Landlord all
and singular the Premises broom-clean arid in good order and repair, ordinary
wear and tear and damage by fire, condemnation or other casualty as is insurable
under present or future standard forms of fire and extended coverage insurance
policies, excepted, together with all alterations, additions and improvements
which may have been made upon the Premises with Landlord's permission except
movable furniture or movable trade fixtures put in at the expenses of Tenant. If
the last day of the Lease Term falls on Sunday, this Lease shall expire on the
business day immediately preceding it. Tenant, on or before said date, shall
remove all its property from the Premises, and all property not so removed shall
be deemed abandoned by Tenant. If said Premises be not surrendered at the end of
the term, Tenant shall make good to Landlord all damage which Landlord shall
suffer by reason thereof, and shall indemnify Landlord against all claims made
by any succeeding tenant against Landlord in delivering possession of the
Premises to such succeeding tenant, so far as such delay is occasioned by
failure of Tenant to surrender the Premises.
13. FIRE OR CASUALTY DAMAGE
-----------------------
In case of damage to the Premises or the building of which the Premises are a
part by fire, or other casualty as is insurable under present or future standard
forms of fire and extended coverage insurance policies, Landlord, unless it
shall otherwise elect as hereinafter provided, shall repair the same with
reasonable dispatch after written notice of damage. If the Premises, or any part
thereof, are damaged by fire, enemy action, or other casualty to such an extent
as to be rendered untenantable, but are, nevertheless, repaired by Landlord,
then the rent shall be abated to an extent corresponding with the time during
which and the extent to which said Premises may
10
<PAGE>
have been untenantable. If such repairs,, however, are delayed because of
Tenant's failure to adjust Tenant's own insurance claim, no reduction shall be
made beyond a reasonable time allowed for such adjustment. If such repairs shall
be reasonably estimated to take more than ninety (90) days to accomplish, and
Landlord has determined not to terminate this lease as hereinafter set forth,
then Landlord shall promptly notify Tenant of the actual estimated time of
repair and Tenant shall have the option, exercisable within ten (10) days of
receipt of Landlord's repair time estimate to terminate this Lease by notice to
Landlord, and the rent shall be adjusted as of the time of the occurrence of any
such fire, enemy actions, or other casualty. If the Landlord in its exclusive
discretion, shall decide, within a reasonable time after the occurrence of any
such fire, enemy action, or other casualty, to demolish, rebuild or reconstruct
the building, then, upon at least thirty (30) days written notice given by
Landlord to Tenant, this lease shall terminate on a .date to be specified in
such notice as if that date had been originally fixed as the expiration date of
the Lease Term, and the rent shall be adjusted as of the time of the occurrence
of any such fire, enemy action, or other casualty. Tenant shall give immediate
notice to Landlord in case of fire or other casualty or in the event of
accidents to or defect in any fixtures or equipment of the building. Landlord,
for itself and its insurers, hereby releases Tenant with respect to any
liability (including that deriving from the fault or neglect of Tenant,
assignees, sub-tenants, its agents, employees or other persons under its or
their direction or control) which Tenant might otherwise have for any damage to
the building or the Premises by fire, explosion, or any other perils covered by
Landlord's insurance, occurring during the Lease Term. Whenever Landlord elects
to insure the Premises or the building against fire or other casualty with an
insurance company selected by Landlord, Landlord shall cause all policies
evidencing such insurance to include a provision permitting such release of
liability if such a provision is obtainable from such insurer at no additional
expense to Landlord. If such insurer will not include such a provision in said
policy, or if the inclusion of such provision in such policy would ,involve an
additional expense for Landlord, Landlord shall so advise Tenant within a
reasonable time. Where such a provision is obtainable from such insurer and
Tenant notifies Landlord in writing within a reasonable time thereafter the
Tenant desires Landlord to cause such a provision to be included in such policy
at the expense of Tenant, Landlord shall cause such a provision to be included,
and Tenant agrees to pay promptly all expenses incurred by Landlord as a result
of such inclusion.
11
<PAGE>
In case Landlord shall fail to complete such repairs within ninety (90) days
from the date of such damage, the Tenant may at any time after such ninety (90)
day period give Landlord thirty (30) days notice in writing of termination of
this lease, then at the expiration of such thirty day period, this lease shall
terminate as completely as if that were the date fixed for expiration of the
term of this lease unless, Landlord shall have substantially completed repairs
prior to the expiration of such thirty day period.
14. CONDEMNATION
------------
If the whole or a substantial part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof by a public body vested with the power of eminent
domain, then, when possession shall be taken thereunder of the Premises, or any
part thereof, the term herein demised and all rights of Tenant hereunder shall
immediately cease and terminate, and the rent shall be adjusted as of the time
of such termination. The termination shall be without prejudice to the rights of
either Landlord or Tenant to recover compensation from the condemning authority
for any loss or damage caused by the condemnation. Neither Landlord nor Tenant
shall have any rights in or to any award made to the other by the condemning
authority. If, after any condemnation and taking of a part of the Premises, the
remainder of the Premises is suitable, in the reasonable opinion of Tenant, for
continuation of the business of Tenant, this Lease shall not terminate but the
rent and additional rent payable shall abate to the extent to which the Premises
have been reduced by the taking. If the remainder is not so suitable, then
Tenant may terminate this Lease by notice effective as of the date of the
taking. In the event that any repair or rebuilding is necessary to restore the
Premises to a proper condition for the Tenant's use, the costs of such repair or
rebuilding shall be paid by the Landlord, except for costs of replacing trade
fixtures, equipment, furnishings and other elements of the Premises not
originally famished the Tenant by Landlord, which costs shall be paid by Tenant.
15. RELEASE FROM LIABILITY IF UNABLE TO PERFORM
-------------------------------------------
In case Landlord is prevented from making any repairs, decorations or installing
any fixtures or articles of equipment, or performing any other covenant or duty,
whether expressed herein or implied, to be performed on Landlord's part, due to
the Landlord's inability to obtain, or
12
<PAGE>
difficulty in obtaining, labor or materials necessary thereof, or due to any
governmental rules or regulations relating to the priority of national defense
requirements or due to any other cause beyond Landlord's control, Landlord shall
not be liable to Tenant for damages resulting therefrom; nor shall the same give
rise to a claim in the Tenant's favor that such failure constitutes actual or
constructive, total or partial eviction from the Premises; provided, however,
that Landlord's time to perform shall only be delayed for the period of force
majeure, and Landlord shall give Tenant prompt notice of any occasion of force
majeure which is expected to affect Landlord's fulfillment of any period of
performance hereunder.
16. INSURANCE
---------
(A). Tenant covenants and agrees, at its sole cost and expense, throughout
the duration of this Lease, to obtain, keep and maintain in full force and
effect for the mutual benefit of Landlord and Tenant, comprehensive liability
insurance claims for damage to persons or property arising out of the use and
occupancy of the Premises or any part or parts in limits not less than One
Million Dollars, ($1,000,000.00) for a combined single limit bodily injury,
property damage policy. Such public liability policy or policies shall name
Landlord as an additional insured. Tenant will supply Landlord with certificates
of insurance evidencing the term of this Lease prior to taking occupancy.
(B). All insurance provided for in this paragraph 16 may be in the form of
a general coverage, floater policy or so called blanket policies which may be
furnished by Tenant, or the parent corporation of Tenant or any related entity.
(C). Landlord shall keep the building containing the Premises insured
against loss or damage by fire with extended coverage endorsement in an amount
not less than 80% of the full insurable value thereof. Tenant agrees to pay its
proportionate share of the cost of said insurance during the term hereof. Said
proportionate share shall be determined by multiplying the cost of said
insurance by a fraction, the numerator of which shall be the square foot area of
the Premises and the denominator the total rentable square foot area of the
building of which the Premises are a part. A statement of the cost of said
insurance shall be rendered to Tenant and shall be payable on or before the end
of the month in which said statement is rendered.
13
<PAGE>
17. INDEMNITY
---------
Except as otherwise provided in Article 13 hereof, Tenant shall indemnify
Landlord against any expense, loss or liability paid, suffered or incurred as
the result of any breach by Tenant, Tenant's agents, servants, employees,
contractors, invitees or licensees, of any covenant or condition of this Lease,
or the carelessness, negligence or improper conduct of Tenant, Tenant's agents,
servants, employees, contractors or invitees. Tenant's liability under this
Lease extends to the acts and omissions of any sub-tenant, and any agent,
servant, employee, invitee or licensee of any such sub-tenant. Except as
otherwise provided in Articles 13 and 18 hereof, Landlord shall indemnify Tenant
against any expense, loss or liability paid, suffered or incurred as a result of
any breach by Landlord, Landlord's agents, servants, employees, contractors,
invitees or licensees, of any covenant or condition of this Lease, or the
carelessness, negligence or improper conduct of Landlord, Landlord's agents,
servants, employees, contractors or invitees.
18. WAIVER OF SUBROGATION
---------------------
Tenant hereby releases Landlord from any and all liability for any loss or
damage caused by fire, or other casualty to the property of Tenant on the
Premises or the contents of the Premises even if such fire or other causality
shall be brought about by the fault or negligence of Landlord or its agents.
19. MECHANIC'S LIEN
---------------
Tenant shall not do or suffer anything to be done whereby the Premises may be
encumbered by any mechanic's lien and shall, whenever and as often as any
mechanic's lien is filed against the Premises for labor or material furnished or
to be furnished to Tenant, discharge the same of record within thirty (30) days
after the date of filing. Notice is hereby given that Landlord shall not be
liable for any labor or materials furnished or to be furnished to Tenant upon
credit; and that no mechanic's or other lien for any such labor or materials
shall attach to or affect the reversionary or other estate or interest of
Landlord in and to the Premises herein demised.
20. DEFAULT CLAUSE
--------------
Each of the following shall be deemed a default by Tenant and a breach of this
Lease:
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<PAGE>
(A). A default in the payment of the rent herein reserved, or any part
thereof, for a period of ten (10) days after written notice delivered to the
Tenant.
(B). Default in the performance of any other covenant or condition of this
Lease on the part of Tenant to be performed for a period of thirty (30) days
after service of notice thereof by Landlord on Tenant, provided however, that if
the nature of Tenant's default is such that it cannot be cured solely by payment
of money and that more than thirty (30) days may be reasonably required for such
cure, then Tenant shall not be deemed to be in default if Tenant shall
[PAGE 14 OF ORIGINAL MISSING]
21.
22.
23.
24.
(A). An amount equal to all expenses, if any, including reasonable counsel
fees incurred by the Landlord in recovering possession of the Premises, and all
reasonable costs and charges for the care of said Premises while vacant, not
otherwise the obligation of Landlord. which damages shall be due and payable by
Tenant to Landlord at such time or times as such expenses are incurred by
Landlord; and
(B). An amount equal to the amount of all rent and additional rent reserved
under this Lease, less the net rent, if any, collected by Landlord on reletting
the Premises, which shall be immediately due and payable by Tenant to Landlord
and Landlord shall be entitled thereupon to recover same from Tenant on the
several days on which the rent and additional rent reserved in this Lease would
have become due and payable; that is to say, upon each of such days Tenant shall
pay to Landlord the amount of deficiency then existing. Such net rent collected
on reletting by Landlord shall be computed by deducting from the gross rents
collected all reasonable expenses incurred by the Landlord in connection with
the reletting, but shall not include the cost of performing any covenant
contained in Article 24.
15
<PAGE>
Without any previous notice or demand, separate actions may be maintained by
Landlord against Tenant from time to time to recover any damages, which, at the
commencement of any such action, have then or theretofore become due and payable
to Landlord under Article 24, without waiting until the end of the original
Lease Term.
25. COVENANTS INDEPENDENT
---------------------
Each and every covenant contained in this Lease shall be deemed separate and
independent, and not dependent on other provisions of this Lease or the use and
occupation of the Premises b3 Tenant, and the performance of any such covenant
shall not be considered to be rent or other payment for the use of said
Premises.
26. LANDLORD MAY CURE DEFAULTS
--------------------------
In the event of any breach hereunder by Tenant, Landlord shall have the right to
cure such breach for the account and at the expense of Tenant. However, Landlord
shall give Tenant prior written notice of its intention to exercise its said
right hereunder and a reasonable opportunity to cure and such breach. If
Landlord at any time, by reason of such breach, is compelled to pay, or elects
to pay, any sum of money or do any act which will require the payment of any sum
of money, or is compelled to incur any expense, including reasonable attorney's
fees, in instituting, prosecuting and/or defending any action or proceeding to
enforce Landlord's rights hereunder, the sum o: sums so paid by Landlord, with
all interest, and costs, shall be deemed to be additional rent hereunder and
shall be due from Tenant to Landlord on the first day of the month following the
incurring of such respective expenses.
27. REAL ESTATE TAXES AND ASSESSMENTS
---------------------------------
(A). Tenant shall in all instances, pay as additional rent a portion of all
real estate taxes including extraordinary and/or special assessments (and all
costs and fees incurred by Landlord in contesting the fees) which may be levied
or assessed by apparent lawful taxing authority .against the land, building and
all other improvements of which the Premises are a part. Such portion shall be
determined as follows: the Tenant shall pay that portion of such taxes as shall
be equal to the product obtained by multiplying said taxes by a fraction, the
numerator of which shall be the square foot area of the Premises and the
denominator the total rentable square feet of the building of which the Premises
are a part. Statement of such additional rent, including all
16
<PAGE>
taxes levied or assessed in each calendar year, shall be rendered to Tenant and
shall be paid on or before the end of the month in which the statement is
rendered. A tax bill submitted to Tenant shall be conclusive evidence of the
amount of taxes assessed or levied. Such additional rent attributable to the
year in which the term of this lease terminates shall be apportioned from the
date of the commencement of the term of this lease to the end of the calendar
year in which the lease commences or from the beginning of the calendar year in
which this lease terminates to the date of the termination of the term of this
Lease as the case may be and shall be paid within five (5) days after demand
therefore. Each tax or assessment levied during the calendar years in which this
lease commences and terminates shall be included in the computation of Tenant's
portion regardless of the date of the commencement or termination of the term of
this lease.
(B). Tenant shall pay before delinquency any and all taxes, assessments,
license fees and public charges levied, assessed or imposed and which become
payable during the lease term upon leasehold improvements, fixtures, furniture,
appliances and personal property installed or located in or on the Premises. If
any such taxes, assessments, license fees, or public charges are not levied,
assessed or imposed separately upon such property, a fair and equitable
allocation of such taxes, assessments, license fees or public charges shall be
made between such property included in the same tax assessment or other bill.
28. LATE CHARGES
------------
A charge equivalent to five percent (5%) of the payment amount will be due for
any rent received after the 7th day of the month. Notwithstanding the above
charges, this Lease shall be considered in default if payment is not received
when due following notice to Tenant as provided hereunder.
29. COMMON AREAS
------------
(A). Common areas and facilities furnished by Landlord shall include
parking area, access driveways, and such other areas, facilities, and exterior
utilities as may be furnished by Landlord and designated for the benefit of the
Tenants, all of which areas and facilities shall be subject to exclusive control
and management by Landlord. Landlord shall have the right from time to time to
establish, modify and enforce all reasonable rules and regulations in respect to
such areas, facilities and exterior utilities and use thereof.
17
<PAGE>
(B). Tenant shall pay to Landlord as additional rent a portion (as
determined pursuant to Paragraph (C) hereof) of each year's cost of the snow
plowing for the parking areas and sidewalks, landscaping, lawn maintenance,
driveway maintenance and exterior utilities.
(C). At the termination of each maintenance year for snow plowing,
landscaping, lawn maintenance, driveway maintenance and exterior utilities, the
Landlord shall submit to Tenant a statement of the operating cost for such
services. Tenant shall pay as Tenant's portion of annual operation cost of the
common area an amount equal to the product obtained by multiplying the estimate
by a fraction, the numerator of which is the square foot area of the Premises
demised by this Lease and the denominator of which is the square foot area of
the total leasable area of the building of which the Premises are a part.
30. HOLDING OVER
------------
Any holding over after the expiration of the term hereof, with the consent of
the Landlord, shall be construed to be a tenancy from month to month at the
rents herein specified (pro-rated on a monthly basis) and shall otherwise be on
the terms and conditions herein specified so far as applicable.
31. BANKRUPTCY
----------
In order to more effectively secure to the Landlord the rent and other terms
herein provided, it is agreed as. a further condition of this Lease that the
filing of any petition in bankruptcy, or assignment for the benefit of creditors
by or against the Tenant or any guarantor of Tenant's obligations hereunder
shall be deemed to constitute a breach of this Lease, and thereupon ipso facto
and without entry or any other action by the Landlord this Lease shall become
and be terminated and notwithstanding any other provision of this Lease the
damages for such breach in an amount equal to the amount of the rent reserved in
this Lease for the residue to the term hereof, less the fair rental value of the
Premises for the residue of said term plus all costs of resenting.
32. SIGNS
-----
Tenant shall not place, erect or install any signs on the outside or the inside
or upon the roof of the building or allow printed displays or show window
lettering in such manner as to be seen
18
<PAGE>
from the exterior of building without prior written approval by Landlord.
Landlord grants approval for signage displayed on the inside windows of the
demised premises. Any such sign permitted shall comply with sign regulations
which shall be established by Landlord. All such signs shall be maintained in
good and safe condition and appearance by the Tenant at its own expense. Tenant
shall repair damage to the Premises, either inside or outside, resulting from
the erection, maintenance or removal of said signs.
33. VENDING MACHINES
----------------
Tenant may, if Tenant so elects, install on the Premises and operate vending
machines to dispense hot and cold beverages, ice cream, candy and cigarettes.
Such machines shall be maintained in a neat and sanitary condition and shall
comply with all applicable laws and ordinances. Any contract entered into by
Tenant with third parties or the installation and/or maintenance of such vending
machines shall provide that Landlord shall have no liability in connection
therewith.
34. RULES
-----
In the event that Landlord receives written notification that the Premises do
not conform to applicable requirements of law, requirements of duly constituted
authority, or any Board of Underwriters, Landlord shall cause the Premises to be
brought into compliance with said laws or regulations. In the event that Tenant
receives written notice that it is not in full compliance with all applicable
statutes, ordinances, rules and regulations pertaining to Tenant's use of the
Premises, or to any Tenant's alterations or additions to the Premises, then
Tenant shall fully comply with all such applicable statutes or rules. In each
instance, the noticed party shall perform the required work at its own cost and
expense.
35. REMEDIES CUMULATIVE
-------------------
The rights given to Landlord herein are in addition to any rights that may be
given to Landlord by any statute or otherwise.
36. WAIVER OF RIGHT OF REDEMPTION
-----------------------------
Tenant, for itself and for all persons claiming through or under it, hereby
expressly waives any and all rights which are or may be conferred upon Tenant by
a present or future law to redeem
19
<PAGE>
said Premises, or to any new trial in any action of ejectment under any
provision of law, after re-entry thereupon by Landlord. If Landlord shall
acquire possession of said Premises by summary proceedings, or in any other
lawful manner without judicial proceedings, it shall be deemed a re-entry within
the meaning of that word as used in this Lease.
37. SECURITY DEPOSIT
----------------
Tenant has deposited with Landlord the sum of $15,000.00 as security for the
faithful performance and observance by Tenant of the teens, provisions and
conditions of this Lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this Lease, including,
but not limited to, the payment of rent and additional rent, Landlord may at its
option use, apply or retain the whole or any part of the security so deposited
to the extent required for the payment of any rent and additional rent or any
sum as to which Tenant is in default or for any sum which Landlord may expend or
may be required to expend by reason of Tenant's default in respect of any of the
terms, covenants and conditions of this Lease, including but not limited to, any
damages or deficiency in the relating of the Premises whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Landlord. Landlord shall deposit the security into an interest bearing account
in a bank to be selected, from time to time, by Landlord in its sole discretion
(with interest at the rate payable generally by commercial banks in Rochester,
New York, from time to time on lease security commercial accounts), which
account shall be separate from Landlord's funds and shall be designated as
Tenant's security deposit account. Landlord agrees to hold the said security in
such an account for the entire Lease Term, subject, however, to the terms of
this Article with respect to the application of such security in the event of
Tenant's default hereunder. To the extent permitted by law, Tenant agrees that
Landlord shall be entitled to receive and retain, as an administrative fee, a
sum equal to one (1%) percent per annum upon the security, and Landlord shall
have the right to withdraw such sum from time to time as Landlord shall
determine, in its sole discretion. The balance of the interest earned on such
security shall be paid to Tenant at least once during each year of the Lease
Term hereof, upon the request of Tenant. In the event that Tenant shall fully
and faithfully comply with all of the terms, provisions, covenants and
conditions of this Lease, the security shall be returned, without interest, to
Tenant after the date fixed as the end of the Lease and within a reasonable time
after delivery of entire possession of
20
<PAGE>
the demised Premises to Landlord. In the event of a sale of the land and
building or leasing of the buildings, of which the demised Premises form a part,
Landlord shall have the right to transfer the security to the vendee or lessee,
and Landlord shall thereupon be released by Tenant from all liability for the
return of such security; and Tenant agrees to look to the new Landlord solely
for the return of said security; and it is agreed that the provisions hereof
shall apply to every transfer or assignment made of the security to a new
Landlord. Tenant further covenants that it will not assign or encumber or
attempt to assign or encumber the movies deposited herein as security and that
neither Landlord nor its successors or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or attempted encumbrance.
38. SUBORDINATION TO MORTGAGES
--------------------------
This lease is and shall be subject and subordinate to any mortgage or mortgages
and to any extensions or modifications thereof now in force or which shall at
any time be placed upon the Premises or any part thereof or the building of
which the Premises is a part of. The Tenant agrees that it will, upon demand,
execute and deliver such instruments as necessary to effect more fully such
subordination of this lease to the lien of any such mortgage or mortgages as
shall be desired by any mortgagee or proposed mortgagee and in the event of the
failure of the lessee to execute such instrument, the Lessee hereby nominates
and appoints the Lessor attorney-in-fact for the purpose of executing any such
instrument of subordination.
39. COVENANT OF QUIET ENJOYMENT
---------------------------
If and so long as Tenant pays the rent and additional rent reserved by this
Lease, and performs and observes all the covenants and provisions hereof, Tenant
shall quietly enjoy the Premises, subject, however, to the terms of this Lease.
This covenant shall be construed as a covenant running with the land and shall
not be construed as a personal covenant of Landlord, but is subject to the
provisions of Article 41 of this Lease respecting transfer of Landlord's
interest.
40. ENTIRE AGREEMENT
----------------
This instrument contains all the agreements and conditions made between the
parties hereto and supersedes all prior or other leases, agreements and
representations in connection with the Premises and may not be modified orally
or in any other manner than by an agreement in writing, signed by all the
parties hereto or their respective successors in interest. The receipt of
21
<PAGE>
rent by Landlord, with knowledge of any breach of this Lease by Tenant or of any
default on the part of Tenant in this observance or performance of any of the
conditions or covenants of this Lease shall not be deemed to be a waiver of any
provision of this Lease. If the Tenant makes any payment of any amount less than
that due hereunder, Landlord, without notice, may accept the same as a payment
on account; Landlord shall not be bound by any notation on any check involving
such payment or any statement in any accompanying letter. No failure on the part
of Landlord to enforce any covenant herein contained nor any waiver of any right
thereunder by Landlord, unless in writing, shall discharge or invalidate such
covenant or provision or affect that right of Landlord to enforce the same in
the event of any subsequent breach or default. The receipt by Landlord of rent
or any other sum of money or any other consideration hereunder paid by Tenant
after the termination, in any matter of the term herein demised shall not
reinstate, continue extend the term demised or destroy 1 in manner impair the
efficiency of any such notice of termination as may have been give hereunder by
Landlord or Tenant prior to the receipt of any such sum of money or other
consideration, unless so agreed to in writing and signed by Landlord. Neither
acceptance of the keys nor any other act or thing done by Landlord or any agent
or employee during the term herein demised shall be deemed to be an acceptance
of a surrender of said Premises, excepting only an agreement in writing signed
by Landlord accepting or agreeing to accept such a surrender.
41. EFFECT OF CONVEYANCE
--------------------
The term "Landlord" as used in this Lease, means only the owner for the time
being of the Premises so that, in the event of any sale of the Premises or in
the event of a lease by Landlord of the Premises subject to this Lease or
assignment by Landlord of this Lease, and the security deposited hereunder
Landlord shall be and hereby is entirely freed and relieved of all covenants and
obligations of the Landlord hereunder arising subsequent to any such transfer
and provided any such transferee assumes in writing the obligations of Landlord
hereunder and a copy of such assumption is delivered to Tenant, and it shall be
deemed and construed without further agreement between the parties or between
the parties and the purchaser at any such sale or the new lessee of the Premises
or assignee of this Lease that such purchaser or said new lessee, or said
assignee has assumed and agreed to carry out any and all covenants and
obligations of Landlord hereunder. If any landlord named herein be acting in a
fiduciary or representative
22
<PAGE>
capacity, the termination, in whole or in part, of such capacity shall be deemed
a transfer within the meaning of this paragraph.
42. TOWN REGULATIONS AND OBLIGATIONS
--------------------------------
Tenant shall have full responsibility of complying with all Town regulations
including but not limited to, use as described by zoning ordinances etc;
provided, however, that Landlord warrants (i) that the Building Premises as
delivered to Tenant in accordance with Article 8 hereof are in conformity with
all said building and zoning ordinances and all applicable Federal Ordinances
such as the Americans With Disabilities Act, and any violation thereof noted
after the Commencement Date (and not caused by any alteration of Tenant) shall
be cured at Landlord's sole cost and expense, and (ii) that the approved use of
the Premises is permitted by said zoning ordinances and the certificate of
occupancy for the building containing the Premises so provides.
43. CONSTRUCTION OF LEASE
---------------------
Words of any gender used in the Lease shall be held to include any other gender,
and words in the singular number shall be held to include the plural, when the
sense requires. Consents required of Landlord hereunder shall not be
unreasonably withheld or delayed.
44. MARGINAL NOTES
--------------
The marginal notes as to contents of particular paragraphs herein are inserted
only for convenience and are in no way to be constructed as a part of this Lease
or as a limitation on the scope of the particular paragraphs to which they
refer.
45. RIGHTS OF SUCCESSORS AND ASSIGNS
--------------------------------
The covenants and agreements contained in the within Lease shall apply to, enure
to the benefit of, and be binding upon the parties hereto and upon their
respective successors in interest and legal representatives, except as expressly
otherwise hereinabove provided.
46. ENVIRONMENTAL LAWS
------------------
(A). Tenant covenants and agrees as follows:
23
<PAGE>
(1). Tenant shall keep the Premises free of all Hazardous
Substances and shall not cause or permit the Premises or any part thereof to be
used for the treatment, generation, transportation, processing, production,
disposal, storage or handling of any hazardous substances, and shall promptly
remove from the Premises and shall dispose of all Hazardous Substances by-
products, arising from Tenant's use of the Premises, in compliance with all
applicable Environmental Laws.
(2). Tenant shall comply with all applicable Environmental Laws and
shall obtain and comply with all Environmental Permits relating to Tenant's use
of the demised premises.
(3). Tenant shall not cause or permit any change to be made in the
present or intended use of the demised premises which would (1) involve the
storage, treatment, generation, transportation, processing, handling, production
or disposal of any Hazardous Substance or the use of the demised premises as a
landfill or other waste disposal site or for military, manufacturing or
industrial purposes or for the storage of petroleum or petroleum based products,
(2) violate any applicable Environmental Law, (3) constitute non-compliance with
any Environmental Permit or (4) increase the risk of a release of any Hazardous
Substance.
(4). Tenant shall promptly provide Landlord with a copy of all
notifications which it gives or receives with respect to any past or present
release or the threat of a release of any Hazardous Substance on, at or from the
demised premises given by or on behalf of Tenant to any federal, state or local
governmental agencies or authorities or received by or on behalf of Tenant from
any source whatsoever.
(5). Tenant shall undertake and complete all investigations,
studies, sampling and testing and all removal and other remedial actions
necessary to contain, remove and clean up all Hazardous Substances that are
determined to be present at the demised premises, arising from Tenant's use of
the demised premises, in accordance with all applicable Environmental Laws and
all Environmental Permits.
(6). Tenant shall at all times allow Landlord and its officers,
employees, agents, representatives, contractors and subcontractors reasonable
access to the demised premises for the purpose of ascertaining site conditions,
including, but not limited to, subsurface conditions.
24
<PAGE>
(7). If at any time Tenant obtains any evidence or information
which suggests that potential environmental problems may exist at the demised
premises arising from Tenant's use of the demised premises, Landlord may require
that a full or supplemental environmental inspection and audit report with
respect to the demised premises of a scope and level of detail satisfactory to
Landlord be prepared by an environmental engineer or other qualified person
acceptable to Landlord, at Tenant's sole cost and expense. If said audit report
indicates the presence of any Hazardous Substance or a release or the threat of
a release on, at or from the demised premises arising from Tenant's use of the
demised premises, Tenant shall promptly undertake and diligently pursue to
completion all necessary, appropriate and legally authorized investigative,
containment, removal, clean up and other remedial action, using methods
recommended by the environmental engineer or other person who prepared said
audit report and acceptable to the appropriate federal, state and local
regulatory authorities.
(B). Tenant covenants and agrees, at its sole cost and expense, to
indemnify, protect, defend and save harmless Landlord from and against any and
all damages, losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, actions, proceedings, costs, disbursements
and/or expenses (including, without limitation, attorneys' and experts' fees,
expenses and disbursements) of any kind or nature whatsoever which may at any
time be imposed upon, incurred by or asserted or awarded against Landlord and
Tenant relating to, resulting from or arising out of (i) Tenant's use of the
demised premises for the storage, treatment, generation, transportation,
processing, handling, production or disposal of any Hazardous Substance or as a
landfill or other waste disposal site or for military, manufacturing or
industrial purposes or for the storage of petroleum or petroleum based products,
(ii) the presence of any Hazardous Substance or a Release or the threat of a
release on, at or from the demised premises arising from Tenant's use of the
demised premises, (iii) the failure to promptly undertake and diligently pursue
to completion all necessary, appropriate and legally authorized investigative,
containment, removal, clean up and other remedial actions with respect to a
Release or the threat of a Release on, at or from the demised premises arising
from Tenant's use of the demised premises, (iv) human exposure to any Hazardous
Substance, noises, vibrations or nuisances of whatever kind to the extent the
same arise from the use and operation of the demised premises, (v) a violation
by Tenant of any applicable Environmental Law, (vi) non-compliance by Tenant
with any Environmental Permit or (vii) a material misrepresentation or
25
<PAGE>
inaccuracy in any representation or warranty or a material breach of or failure
to perform any covenant made by Tenant in this Paragraph 46.
(C). All capitalized terms used in this Section and not heretofore
defined shall have the meanings set forth below.
"Environmental Laws" means all federal, state and local environmental, land
------------------
use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to the protection of the Environment and/or
governing the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of hazardous substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of federal, state and local governmental agencies and authorities
with respect thereto.
"Environmental Permits" means all permit, licenses, approvals,
---------------------
authorizations, consents or registrations required by any applicable
Environmental Law in connection with the ownership, use and/or operation of the
demised premises for the storage, treatment, generation, transportation,
processing, handling, production or disposal of hazardous substances or the
sale, transfer or conveyance of the demised premises.
"Hazardous Substance" means, without limitation, any flammable explosive,
-------------------
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyl's, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances or related materials,
as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the
------
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et
--
seq.),the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section
- ---
6901, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section
------
2601, et seq.), Articles 15 and 27 of the New York State Environmental
------
Conservation Law or any other applicable Environmental Law and the regulations
promulgated thereunder.
"Release" has the same meaning as given to that term in the Comprehensive
-------
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601, et seq.), and the regulations promulgated thereunder.
------
(D). Landlord makes no warranties or representations with respect to the
condition of the demised premises, except that Landlord warrants and represents
that it has no knowledge of
26
<PAGE>
any violation of any Environmental Laws or Environmental Permits affecting the
demised premises. In the event of any violation of Environmental Laws or
Environmental Permits for one or more conditions existing at the Building Prior
to the Commencements Date but noted or issued thereafter, Landlord agrees that
Landlord shall be responsible for the cure and/or redemption thereof at
Landlord's sole cost and expense.
47. NOTICES
-------
All notices given under this Lease by either party must be in writing and
delivered to an officer, principal, employee or agent of the party being given
notice to or at the address of that party as stated below, or any address
subsequently provided -by such party to the other in writing as the address for
notices, in any one of the following ways: (1) personal service, (2) by any
nationally recognized courier service which provides written evidence of
delivery, or (3) shall be sent by registered mail, return receipt requested, to
the following addresses:
LANDLORD
--------
Mr. Richard R. LeFrois
1020 Lehigh Station Road
P.O. Box 230
Henrietta, New York 14467
TENANT
------
Mr. John W. Dobbertin, VP. of Finance
IMPCO Enterprises, Inc.
1200 University Avenue
Rochester, New York 14607
Any notice shall be considered to have been given, in the case of letter, at
5:00 p.m. local time on the date set forth on the post mark appearing on the
envelope. Such notice shall be deemed to be effective upon receipt, regardless
of the method of delivery, as evidence by affidavit of service (if served
personally) or the return receipt provided by the U.S. Postal Service or
nationally recognized courier.
48. PAYMENTS
--------
All payments shall be sent by to the following address:
27
<PAGE>
PAYMENTS
--------
Mr. Richard R. LeFrois
P.O. Box 92878
Department No. 102
Rochester, New York 14692
49. CONSTRUCTION AND VENUE
----------------------
This Lease shall be construed and enforced in accordance with the internal laws
of the State of New York without reference to the principles of conflicts of
laws. Any suite which may be brought to interpret or enforce any of the terms or
obligations of a party hereunder shall be brought in State Supreme Court, Monroe
County, New York.
50. BROKER
------
Landlord and Tenant each represent to the other that each has not had any
dealing with any broker, agent or finder in connection with this Lease, other
than Landlord's engagement of Pyramid Brokerage Company of Rochester, and
Landlord and Tenant each agree to hold the other harmless from and indemnify the
other against any cost, expense or liability for any compensations, commission,
fee charge or damages, including reasonable attorneys' fees an expenses, as a
result of any claim of any other broker, agent or finder claiming under or
through the indemnifying party with respect to this Lease or the negotiation of
this Lease; provided that the Landlord shall pay all fees to Pyramid Brokerage
Company of Rochester pursuant to the terms, covenants and conditions of a
separate agreement.
28
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the
day and year first above written.
Richard R. LeFrois
LANDLORD By: /s/ Richard R. LeFrois
--------------------------------------------
Mr. Richard R. LeFrois, Landlord
7-1-98
--------------------------------------------
Date
WITNESS /s/ Wendy W
--------------------------------------------
7-1-98
--------------------------------------------
Date
IMPCO ENTERPRISES, INC.
A Subsidiary of Webcraft, Inc.
LANDLORD By: /s/ John W. Dobbertin
--------------------------------------------
John W. Dobbertin, V.P. of Finance
7-1-98
--------------------------------------------
Date
WITNESS /s/ Wendy W.
--------------------------------------------
7-1-98
--------------------------------------------
Date
29
<PAGE>
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HTHIS WARRANT
AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS BY REASON OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND SUCH STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED, ASSIGNED OR
OTHERWISE DISPOSED OF IN ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL TO NAVIANT, INC., AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No. ___ Warrant to Purchase Shares of
Common Stock.
NAVIANT, INC.
This certifies that, for value received, ___________, or its
registered assigns, is entitled to subscribe for and purchase, a number of duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
equal to the Number of Warrant Shares (as defined below), at an exercise price
per share equal to the Warrant Price (as defined below), upon the terms and
subject to the conditions hereinafter set forth.
1. Definitions. For the purposes of this Warrant, the following terms
-----------
have the following meanings:
"Common Stock" shall mean the Corporation's Common Stock, par value
------------
$.01 per share, and any capital stock into which such Common Stock may hereafter
be changed.
"Common Stock Warrant" shall mean this Warrant.
--------------------
"Common Stock Warrants" shall mean this Common Stock Warrant and all
---------------------
other Common Stock Warrants issued by the Corporation pursuant to the Stock
Purchase Agreement.
"Corporation" shall mean Naviant, Inc., a Delaware corporation, and
-----------
its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
-------
"Exercise Price" shall mean the product of the Warrant Price and the
--------------
number of shares of Common Stock for which this Warrant is being exercised.
<PAGE>
"Holder" or "Holders" shall mean the Person or Persons who shall from
------ -------
time to time own of record this Warrant.
"IPO" shall mean an initial public offering of Common Stock under the
---
Securities Act.
"Number of Warrant Shares" shall mean a number of shares of Common
------------------------
Stock, rounded to the nearest whole number equal to the Holder's Pro Rata Share
of 5% of the aggregate number of shares of Common Stock sold in an IPO
(excluding shares sold pursuant to any over-allotment option). The Number of
Warrant Shares shall be subject to adjustment as set forth herein.
"Person" shall mean an individual, a corporation, a partnership, a
------
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Pro Rata Share" shall mean, with respect to a Holder, (X) the
--------------
aggregate number of shares of Series C Convertible Redeemable Preferred Stock
and Series D Non-Voting Convertible Redeemable Preferred Stock purchased by such
Holder pursuant to the Stock Purchase Agreement, divided by (Y) sum of all
shares of Series C Convertible Redeemable Preferred Stock and Series D Non-
Voting Convertible Redeemable Preferred Stock sold by the Company pursuant to
the Stock Purchase Agreement.
"Securities Act" shall mean as of any date the Securities Act of 1933,
--------------
as amended, or any similar Federal statute then in effect.
"Stock Purchase Agreement" shall mean the Preferred Stock Purchase
------------------------
Agreement dated as of the date hereof, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Warrant Price" shall equal the gross offering price per share of
-------------
Common Stock sold in the IPO. The Warrant Price shall be subject to adjustment
as set forth in Section 4.
2. Duration. The Holder may exercise this Warrant to subscribe for and
--------
purchase shares of Common Stock represented hereby on the effective date of an
IPO, provided that the exercise shall be conditioned upon the closing of the
IPO. The Company shall send a notice to the Holder five days prior to the
effective date of any IPO describing the anticipated number of shares to be
included in the IPO, the anticipated offering price and the date on which the
IPO is expected to be declared effective.
-2-
<PAGE>
3. Method of Exercise; Payment; Issuance of New Warrant; Transfer and
------------------------------------------------------------------
Exchange.
- --------
3.1 The Holder hereof may exercise this Warrant, in whole or in part,
by delivery to the Corporation at its office at 14 Campus Blvd., Suite 200, New
Town Square, PA 19073, Attention: Chief Executive Officer (or such other
address as the Corporation may specify to Holder from time to time), of (a) a
written notice of Holder's election to exercise this Warrant, which notice shall
specify the number of shares of Common Stock to be purchased, (b) payment of the
Exercise Price in the manner provided below and (c) this Warrant. Such notice
shall be substantially in the form of the subscription form appearing at the end
of this Warrant as Exhibit A, duly executed by Holder or its agent or attorney.
Payment of the Exercise Price shall be made at the option of Holder by (i) wire
transfer to an account in a bank located in the United States designated for
such purpose by the Corporation, (ii) certified or official bank check, (iii)
cancellation of indebtedness of the Corporation to Holder at the time of
exercise, (iv) cancellation as of the date of exercise of a portion of this
Warrant (calculated as the net fair market value of such cancelled portion at
the time of exercise), (v) the surrender of one share of Common Stock for each
share of Common Stock to be received upon exercise of this Warrant, by
delivering to the Company certificates representing the number of shares of
Common Stock to be surrendered, duly endorsed by or accompanied by appropriate
instruments of transfer duly executed by the Holder or (vi) any combination of
the foregoing. The net fair market value of any portion of this Warrant
cancelled in full or partial payment of the Exercise Price shall be determined
by (A) multiplying (i) the number of shares of Common Stock for which the
portion of this Warrant to be cancelled was exercisable by (ii) the average of
the closing bid prices of a share of Common Stock for the ten trading days
preceding the date of exercise on the principal securities market on which the
Common Stock is traded (the "Average Price") and (B) subtracting from such
product the aggregate Exercise Price of the shares of Common Stock for which the
portion of this Warrant to be cancelled was exercisable. In the event of any
exercise of the rights represented by this Warrant, (x) certificates for the
shares of Common Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time and the Holder hereof
shall be deemed for all purposes to be the Holder of the shares of Common Stock
so purchased as of the date of such exercise, and (y) unless this Warrant has
expired pursuant to Section 3 hereof, a new Warrant representing the number of
shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder hereof. Any such warrant shall be
dated the date hereof and shall represent the right to purchase the remaining
number of shares of Common Stock issuable pursuant thereto.
3.2 Subject to compliance with Section 6 hereof, this Warrant may be
transferred on the books of the Corporation by the Holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant at the principal office
of the Corporation, properly endorsed and upon payment of any necessary transfer
tax or other governmental charge imposed upon such transfer. Subject to
compliance with Section 6 hereof, this Warrant is exchangeable at the aforesaid
principal office of the Corporation for two or more warrants for
-3-
<PAGE>
the purchase of the same aggregate number of shares of Common Stock, each new
warrant to represent the right to purchase such number of shares of Common Stock
as the Holder hereof shall designate at the time of such exchange. Any such
warrants shall be dated the date hereof and shall be identical with this Warrant
except as to the number of shares of Common Stock issuable pursuant thereto.
4. [Intentionally omitted.]
5. Stock Fully Paid; Reservation of Shares.
---------------------------------------
5.1 The Corporation covenants and agrees that all shares of Common
Stock which may be issued upon the exercise of the rights represented by this
Warrant will, after receipt of payment of the Exercise price and upon issuance,
be fully paid and non-assessable and free from all taxes, liens and charges with
respect to issuance. The Corporation further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Corporation will at all times have authorized and reserved for the purpose
of the issue upon exercise of this Warrant a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this
Warrant. In no event shall the Exercise Price per share of Common Stock be less
than the par value of the Common Stock.
5.2 The Corporation shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against impairment. Without limiting the generality
of the foregoing, the Corporation will (a) not increase the par value of any
shares of Common Stock above the amount payable therefor upon the exercise of
this Warrant immediately prior to such increase in par value and (b) take all
such action as may be necessary or appropriate in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions (other than
as provided herein) upon the exercise of this Warrant.
6. Restrictions on Transferability. The Warrant and the Common Stock
-------------------------------
issued upon exercise of the Warrant shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this Section 6,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Common Stock issued upon
exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to be
bound by the provisions of this Section 6.
-4-
<PAGE>
6.1 Restrictive Legend.
------------------
6.1.1 Except as otherwise provided in this Section 6, each
certificate for Common Stock issued upon exercise of this Warrant and each
certificate for Common Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR BLUE SKY LAWS OF ANY
STATE. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT AND LAWS OR THE RULES AND REGULATIONS THEREUNDER."
6.1.2 Except as otherwise provided in this Section 6, each
Warrant or share of Common Stock issuable upon conversion thereon, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND
MAY NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO NAVIANT, INC., AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE."
6.2 Transfers. Each certificate, if any, evidencing shares of Common
---------
Stock issued upon any transfer of shares of Common Stock issuable upon exercise
of this Warrant shall bear the restrictive legend set forth in Section 6.1.1,
and each Warrant issued upon any transfer of this Warrant shall bear the legend
set forth in Section 6.1.2, unless in the written opinion of Counsel addressed
to the Corporation such legend is not required in order to ensure compliance
with the Securities Act and applicable state securities or "blue sky" laws.
7. Fractional Shares. No fractional shares of Common Stock will be
-----------------
issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the Average Price.
8. Amendment and Waiver. Any term, covenant, agreement or condition in
--------------------
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
-5-
<PAGE>
9. Successors and Assigns. Subject to the provisions of Section 3.2,
----------------------
this Warrant will be binding upon any entity succeeding to the Company by
merger, consolidation or acquisition of all or substantially all of the
Company's assets or if such entity is a subsidiary of another entity, will be
binding upon, and shall become an obligation of, the entity which is the
ultimate parent entity of such entity.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH
CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION")
ARISING OUT OF OR RELATING TO THIS WARRANT AND THE TRANSACTIONS CONTEMPLATED
HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN
SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR
DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS
WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST
IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY
-6-
<PAGE>
JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Dated: December 7, 1999 NAVIANT, INC.
Attest: By:_____________________________________
William J. Tobia
Chief Financial Officer
_________________________
James M. Flynn
President
-7-
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
To be executed only upon exercise of Warrant
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Common
Stock, $.01 par value, of Naviant, Inc. and herewith makes payment therefor, all
at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _______________________ whose address is __________________
__________________________ and, if such shares of Common Stock shall not include
all of the shares of Common Stock issuable as provided in this Warrant, that a
new Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
________________________________
Name of Registered Owner
________________________________
Signature of Registered Owner
________________________________
________________________________
Address
________________________________
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
-8-
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
- ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint __________________ attorney-
in-fact to register such transfer on the books of Naviant, Inc. maintained for
the purpose, with full power of substitution in the premises.
Dated:_____________________________
Name:_____________________________
Signature:__________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
-9-
<PAGE>
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS ARE DENOTED BY ASTERISKS.
JOINT DATABASE LICENSE AGREEMENT
SECTION I - LICENSED USE
------------------------
A. PARTIES ("PARTIES")
InfoUSA: infoUSA Inc., a Delaware corporation
5711 S. 86th Circle, Omaha, NE 68127
Naviant: Naviant, Inc., a Delaware corporation
14 Campus Blvd, Suite 200, Newtown Square, PA
Effective Date: September 30, 1999
WHEREAS, infoUSA owns proprietary databases of approximately 10 million
businesses and 105 million households in the United States, and desires to
license these databases to Naviant on the terms provided in this Agreement.
WHEREAS, Naviant owns proprietary databases of approximately 2 million
businesses and 12.2 million households in the United States, and desires to
license these databases to infoUSA on the terms provided in this Agreement.
WHEREAS, infoUSA and Naviant each desire to license the other's proprietary
databases on the terms provided in this Agreement.
Now therefore the Parties mutually agree as follows:
This is a Joint Database License Agreement ("Agreement") between InfoUSA, Inc.
("infoUSA") and Naviant, Inc. ("Naviant"). This Agreement supercedes all prior
agreements with respect to the Products and Services described below and all
other subject matter hereof and supersedes the following agreements: (1)
FDS/Intelliquest Database License and Services Agreement dated December 22,
1997, as amended in two separate amendments dated May 5, 1998, and as amended on
December 30, 1998, and as assigned by Intelliquest Information Group, Inc. to
iQ2.net, Inc. an August 12, 1989; and (2) Intelliquest/FDS Data License and
Distribution Agreement dated December 22, 1997, as amended December 30, 1898,
and as assigned by Intelliquest Information Group, Inc. to IQ2.net, Inc. on
August 12, 1999. For purposes of clarification, Intelliquest Information Group,
Inc. ("Intelliquest") ) assigned the above agreements to its Affiliate and
wholly-owned subsidiary, IQ2.net, Inc.; and the stock of IQ2.net has now been
acquired by Naviant, Inc.
Within 30 days of the Effective Date the Parties will begin good faith
negotiations to execute a separate agreement wherein Naviant will license the
HTHH Flag to infoUSA.
<PAGE>
B. TERM ("Term") The term of this Agreement will be for five (5) years
commencing from the Effective Date, unless earner terminated pursuant to Section
III, paragraph 5.1 or 5.2, or for "No-Cause" as follows:
NO-CAUSE TERMINATION AFTER YEAR 3 OF THE AGREEMENT. After year three of the
Agreement, either party may, in its sole discretion, terminate the Agreement by
giving the other party 6 months prior written notice.
a) In the event this Agreement is terminated by Naviant for No-Cause,
Naviant acknowledges that such termination shall not terminate, diminish or
otherwise affect Naviant's obligations to pay License Fees and Royalties
Incurred up to date of termination or otherwise affect License Fees or
Royalties which have been paid to infoUSA by Naviant up to date of
termination.
b) In the event this Agreement is terminated by infoUSA for No-Cause,
Naviant shall be refunded the prorated balance of the Annual Minimum
Royalty paid by Naviant calculated from the date the Agreement terminates.
c) All other post-termination obligations remain as otherwise set forth in
this Agreement.
C. DATA TO BE DELIVERED The following databases are subject to the license set
forth in this Agreement, and are more particularly described in Section IV.
1) "InfoUSA Database" refers to a database of information on approximately 10
million businesses (the "Business File") and 105 million households (the
"Consumer File") in the United States.
2) "Naviant Database" refers to a database of information on approximately 2
million high-tech businesses (the "HTB File") and 12.2 million high-tech
households (the "HTHH File") in the United States, and is sometimes
referred to as IQ2 Net.
D. USE OF THE DATABASES (The "Databases" and the "Service(s)")
1.1) Naviant's license to infoUSA: Naviant grants infoUSA a limited, non-
exclusive, non-transferable license for the Term and subject to the Terms
and Conditions set forth In Section III, to transfer, sell, market,
distribute, and transmit the HTHH & HTB Files in the following Services:
a) HTHH & HTB List Rental: Lists which are created solely from the HTHH &
----------------------
HTB Files and subsequently rented to Users for the Users' internal
marketing purposes only. Lists may be rented to Users for either one-
time or annual, multiple-internal use subject to the fees described in
Section II, F1a.
infoUSA shall license the HTHH & HTB Files to Users' for Users'
internal marketing purposes only on an annual contractual basis.
2
<PAGE>
Lists and files rented or licensed pursuant to the foregoing shall be
subject to the use restrictions defined in paragraph 3 of this
Agreement.
At such point that Naviant secures licensing rights to e-mail addresses
from its registration clients, Naviant shall grant infoUSA a limited, non-
exclusive, non-transferable license to infoUSA for the e-mail addresses for
the remaining term of this Agreement and subject to the Terms and
Conditions set forth in Section III for incorporation of the e-mall
addresses Into the Products and Services.
1.2) Fulfillment: Naviant shall fulfill all orders for HTHH and HTB files and
for infoUSA list products for Naviant's customers, If from time to time,
other fulfillment options are required, i.e., cheshire labels, etc.,
infoUSA shall provide such services at a price to be agreed upon by the
Parties. lnfoUSA shall fulfill all orders for HTHH and HTB files for
InfoUSA's respective customers.
2.1) infoUSA's license to Naviant: InfoUSA grants Navlant a limited, non-
exclusive, non-transferable license for the Term and subject to the Terms
and Conditions set forth in Section Ill, to transfer, sell, market,
distribute, and transmit the infoUSA Database for the following purposes:
a) Data Append/File Enhancement of the HTHH & HTB Files and List Rental.
--------------------------------------------------------------------
Naviant may append elements from the lnfoUSA Database to the HTHH and HTB
Files. Such appending shall include the following elements, where
available:
From the Consumer File: Name; Address; Number of members in household; Age
of adult family members; Presence of children, Gender of family members;
Estimated Age of Head of HH; Estimated Income; FIND; Length Of Residence;
Telephone Numbers; Area Codes, Dwelling Unit Size.
From the Business File: SIC Code with Descriptions and Employee Size Code.
Such appended HTHH & HTB File shall be used by Navlant for rental to end
users for one-time or annual, multiple use subject to the use restrictions
defined In paragraph 3 of this Agreement
b) Customer Database Enhancement. Naviant appends data from the lnfoUSA
-----------------------------
Database to a Users' customer database for that Users' Internal marketing
applications only.
c) infoUSA Database List Rental. Naviant rents the lnfoUSA Database to Users
----------------------------
for the Users' internal marketing purposes only, provided however, that
Naviant will obtain InfoUSA's prior written permission to rent more than
500,000 records from the lnfoUSA Database Business File, or 5 million
records from the infoUSA Consumer File to a single User in one calendar
year, provided however that this restriction does not apply to the Naviant
Grandfathered customers as described In Section I D5 of this Agreement.
d) Naviant e-Targeting Application. Naviant appends data from the lnfoUSA
-------------------------------
Database to databases of its customers' website visitors. The enhanced data
will be used by website
3
<PAGE>
owners or Ad Serving Networks to assist in displaying more highly targeted
advertisements on their websites.
e) Naviant e- Registration Application. Naviant displays data elements (which
-----------------------------------
selection criteria has been chosen by a User) from the Neviant Database for
that User to view the data in a tabulated form on a computer screen. Users
will not be permitted to download any data from a Naviant Database Screen
Viewing.
f) Internal Marketing Analysis. Naviant uses data elements from the lnfoUSA
---------------------------
Database for Its own internal marketing analysis and testing, including the
creation of models. Naviant shall not use the lnfoUSA Database for any
other direct marketing applications such as direct mail and telemarketing,
without the prior written approval of lnfoUSA.
Except for the Naviant e-Registration Application, Naviant may license the
infoUSA Database in the above-described Products and Services to Users' for
Users' Internal marketing purposes only for one-time or annual, multiple use
subject to the use restrictions defined In paragraph 3 of this Agreement.
2.2) In making its determination whether to permit distribution of records under
paragraph 2.1.c, infoUSA, in its sole discretion, may withhold and deny
permission If the proposed distribution would adversely impact lnfoUSA or
any of infoUSA's customers In any way, provided however that Naviant shall
not be restricted from providing more records to its Grandfathered
customers as described in Section 1,D,5
3) END-USER AGREEMENTS: infoUSA and Naviant shall enter into End-User
Agreements with all Users who license the Databases, or, pursuant to
Section 1.D.6 below, with applicable brokers or agents on behalf of Users.
The End-User Agreements shall include prohibitions against using the
Databases for anything other than the Users' own internal marketing use,
and will include the following prohibitions for use of the Consumer File
and the HTHH File:
"User will not use the infoUSA Database [or, as applicable, the HTHH File]
or the Information or data obtained therefrom in part or whole as a factor
in: (i) establishing an individual's eligibility for credit or insurance,
(ii) connection with underwriting individual insurance, (iii) evaluating an
Individual for employment or for promotions, reassignment or retention as
an employee, (iv) connection with a determination of an individual's
eligibility for a license or other benefit granted by a governmental
Instrumentality, (vi) connection with any sweepstakes, contest game or
similar promotional devices, (vii) connection with any pornographic product
or service or other product or service which caters to prurient interests
or, (viii) connection with criminal investigations or other law enforcement
purposes."
"User shall use the Database In compliance with (a) all federal, state and
local laws, statutes, rules, regulations and ordinances Including, without
limitation, the Fair Credit Reporting Act (15 U.S.C. Sections 1681-1681t,
as such act may be amended, modified or supplemented from time to time),
(b) all applicable privacy and data protection laws,
4
<PAGE>
rules and regulations, and (c) all regulations, rules and policies
published by the Direct Marketing Association and such other associations
or groups"
4) TRANSFER OF NAVIANT'S DATA PROCESSING CUSTOMERS: On the Effective Date,
Naviant will transfer its ongoing data processing customers, as specified
In Appendix A and the management of the future revenues for these customers
who have, prior to the Effective Date, procured processing services from
Intelliquest or any related companies in return for this lnfoUSA will pay
to Naviant a Fee equal to 30% of the gross revenue billed to these
customers for supplying databases and 20% of the gross revenue billed to
these customers for data processing services. Provided however, that
Naviant will continue to maintain the customer relationship it has with
Sprint, and will pay infoUSA the same fees and royalties as were agreed to
in that certain FDS/Intelliquest Database License and Services Agreement
dated December 22, 1997, as amended in two separate amendments dated May 5,
1998, and as amended on December 30, 1998.
5) GRANDFATHER PROVISION FOR OUTSTANDING INTELLIQUEST CUSTOMER CONTRACT
OBLIGATIONS: lnfoUSA agrees that it will honor the Terms, Conditions, and
Pricing for the remaining term of those IntelliQuest customer contracts
which exist for the Donnelley File, DQI, Shareforce, or Demobase. A list of
these customers are contained in Appendix C. Naviant shall pay infoUSA 50%
of the gross revenue billed to these customers for products or services
incurred after the Effective Date.
6) Notwithstanding anything herein to the contrary, (except for rental of the
infoUSA Database described in this section D.2.1,c) in connection with all
other rental of lists to Users, either party may rent the lists to a User
by means of a third party intermediary, such as a broker or agent, provided
that such broker or agent assumes responsibility for imposing all
appropriate restrictions and conditions on the User.
7) For purposes of this Section D, a User's "internal marketing purposes"
shall include such User engaging in direct marketing campaigns for its
products or services.
E. LEGAL AND COPYRIGHT NOTICES
Naviant shall display the following copyright notice wherever data from the
infoUSA Database is displayed, published or distributed : "Certain data provided
by lnfoUSA Inc, [Donnelley] Omaha, Nebraska, Copyright (C) 1999, All Rights
Reserved".
infoUSA shall display the following copyright notice wherever data from the
Naviant Database is displayed published or distributed: "Certain data provided
by Naviant, Newtown Square, Pa. Copyright (C) 1999, All Rights Reserved".
Subject to the terms and conditions of this Agreement, each party hereby grants
the other party a limited, nonexclusive, non-transferable, fully-paid license
for.the Term to use, reproduce and display each party's trademarks, service
marks, logos and other distinctive brand features (collectively "Brand
Features").
Each party may only use, reproduce end display the Brand Features as necessary
In order to perform Its obligations under this Agreement and shall have no right
to sublicense or co-brand the Brand Features. Each party acknowledges the
other's ownership in the Brand Features, and
5
<PAGE>
any trademark applications and/or registrations thereto, and agrees that lit
will do nothing Inconsistent with such ownership and agree that all use of each
other's Brand Features by the other party shall inure to the benefit of the
owner.
6
<PAGE>
SECTION II - LICENSE FEES & ROYALTIES
-------------------------------------
F. LICENSE FEES & ROYALTIES
The relevant prices from lnfoUSA's 1999 Business and Consumer Retail Price
List are attached hereto as Attachment A, and Naviants 1999 Retail Price
List is attached hereto as Attachment D. These Retail Price Lists are
hereinafter referred to each as the "Naviant RPL" and the "infoUSA RPL".
Retail prices area subject to change.
1) ACTUAL ROYALTIES DUE TO NAVIANT
In consideration for the grant of the license, lnfoUSA shall pay Naviant as
follows:
a) HTHH & HTB Firm List Rental - For each List Rental, lnfoUSA will pay
---------------------------
Naviant fifty percent (50%) of the relevant rates shown for List Rental on
Naviant's then-current RPL (Attachment D).
2) ROYALTIES AND LICENSE FEES DUE TO INFOUSA:
In consideration for the grant of the license, and for all sales of the
Databases through Naviant, Naviant shall pay lnfoUSA as follows:
2.1) ANNUAL MINIMUM ROYALTY FEES DUE TO INFOUSA:
Naviant shall pay infoUSA the greater of:
a) All actual royalties, fees, and payments as described in paragraph 2.2
below; or
b) An annual, nonrefundable Minimum Royalty Fee as follows:
Year 1: *****
Year 2: *****
Year 3: *****
Year 4: *****
Year 5: *****
The Minimum Royalty fee shall be a credit against the Actual Royalties Fees and
Payments. Naviant shall pay infoUSA the annual Minimum Royalty Fee as follows:
25% on the Effective Date, 25% 90 days following Effective Date, 25% 180 days
following Effective Date, and 25% 270 days following Effective Date in Year 1 of
the Agreement, and similarly on each anniversary date of the Effective Date for
Years 2-5 of the Term.
2.2) ACTUAL ROYALTIES, FEES AND PAYMENTS DUE TO INFOUSA
a) Data Append/File Enhancement for HTHH & HTB Files and Naviant
-------------------------------------------------------------
e-Registration Application
--------------------------
Naviant shall pay lnfoUSA the following monthly fees for use of the infoUSA
Database in Data Append/File Enhancement and Naviant e-Registration
Application Products and Services as described in sections I.D.2.1 (a) and
I.D.2.1 (e) of this Agreement:
7
<PAGE>
<TABLE>
<CAPTION>
Monthly Fee for Monthly Fee for
Volume of HTHH & HTB records Consumer Data Business Data
---------------------------- --------------- ---------------
<S> <C> <C>
i. Less than 15 million $20,000 $20,000
ii. From 15 million to 25 million $25,000 $25,000
iii. Over 25 million $30,000 $30,000
</TABLE>
b) HTHH & HTB List Rentals: Naviant shall pay infoUSA the following royalties
-----------------------
per thousand records (which include lnfoUSA data) rented to end Users as
described in section I.D.2.1 (a) of this Agreement, provided however, that
no such royalties shall be due under this paragraph 2.2.b for those records
fulfilled by Naviant on behalf of infoUSA:
Business Records ***** per thousand
Consumer Records ***** per thousand
For each HTHH annual list (where lnfoUSA data is included) rental over
5,000,000 records to one customer in one year Naviant shall pay lnfoUSA
***** of the gross revenue billed to the Naviant customer for such rental
but no less than *****, per such list rental. The above list rental fee
and royalties shall increase each contract year by a percentage equal to
the increase in the cost of living index.
c) infoUSA Database List Rental: For each Individual list rented, ***** of the
----------------------------
relevant rates shown for List Rental on infoUSA's then-current RPL. (See
Attachment A, page 1)
d) Naviant e-Targeting, Application: 10% of the gross revenue billed by
--------------------------------
Naviant for the Naviant e-Targeting Application where such e-Targeting uses
data from the infoUSA Database.
3) REPORTING: Within thirty (30) days following the close of each month during
the term of this Agreement, the Parties will supply each other with a Usage
Report In the format shown in the next paragraph and all royalties and all
other license fees due that month.
4) ROYALTY USAGE REPORTING FORMAT - CALCULATED ON A PER-ORDER BASIS: For each
single order fulfilled and each service Naviant performs for its customers,
Naviant shall pay infoUSA actual royalties. If Naviant offers discounts
based on volume commitments other than as shown on infoUSA's RPL, Naviant
shall pay lnfoUSA actual royalties based on the volume of each order and
not on any discount agreed to between Naviant and the User.
Naviant Royalty Contact: Tom Perkins Phone: (610) 355 7115
infoUSA Royalty Contact: Debra Houghton Phone: (402) 537-8745
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
INVOICE CUSTOMER NAME SERVICE AND/OR PRODUCT QUANTITY PRICE ROYALTY
SOLD INCURRED
- ------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
SECTION III - TERMS & CONDITIONS
1. DEFINITIONS.
------------
1.1 User refers to any company, organization or individual, which has access to
the infoUSA Database Naviant Database for its own Internal use through the
Products and Services described In Section I.
1.2 Codemaster refers to the Codemaster Data Table and Abbreviation Table. The
Codemaster is to be used by Navtant for internal data processing purposes only,
and is provided by infoUSA so that Naviant is able to interpret the infoUSA
Database Business File raw data.
1.3 Database(s) means the Naviant Database and the infoUSA Database, as
applicable.
1.4 Licensee, Licensee Party, licensee or licensee party means each party In
Its capacity as a licensee of its Database to the other party hereunder.
1.5 Licensor, Licensor Party, licensor or licensor party means each party in
its capacity as a licensor of its Database to the other party hereunder.
2. UNAUTHORIZED USE.
-----------------
2.1 Any use by either party or Users of the Databases, which is not expressly
authorized in this Agreement is strictly prohibited. Without limiting the
generality of the foregoing, unless specifically permitted by this Agreement or
unless authorized in writing by the other party (which authorization may be
withheld unreasonably), the parties and Users are expressly prohibited from (i)
Sublicensing or reselling the Databases, or providing the Service on behalf of
any third-party, (ii) using or allowing third parties to use the Databases for
the purpose of compiling, enhancing, verifying, supplementing, adding to or
deleting from any mailing list, geographic or trade directories, business
directories, classified directories, classified advertising, or other
compilation of information which is sold, rented, published, furnished or in any
manner provided to a third party; (iii) using the Databases in any service or
product not specifically authorized in this Agreement, offering it through any
third party or disclosing it to anyone other than a User; (iv) disassembling,
decompiling, reverse engineering, modifying or otherwise altering the Databases;
or (v) providing any data from the licensor party Database to a direct
competitor of the licensor party or other party (as described in Appendix B).
Each party agrees that it will notify the other promptly in the event it becomes
aware of or suspects any use or disclosure of the Databases which is not
permitted by this Agreement.
2.2 if a party houses the Database of the other party on the Internet, such
party will do so behind firewalls and make its best effort to prevent
unauthorized usage or copying of the Database of the other party.
Without limiting the foregoing each party will implement a system of controls
that will: a) Protect the integrity of the Databases; b) Control access to the
Databases and c) Reasonably ensure that the amount of usage of the Databases is
accurately recorded.
2.3 Each party acknowledges that any unauthorized use of the Databases will
cause irreparable harm and injury to the other party for which there is no
adequate remedy at law. In addition to all other remedies available under this
Agreement, at law or in
9
<PAGE>
equity, each party further agrees that the other party shall be entitled to
injunctive relief in the event one party uses the Databases in violation of the
limited license granted hereunder.
3. LICENSE FEES AND ROYALTIES
--------------------------
3.1 Any royalties or fees payable under this Agreement, which are not paid when
due, shall accrue Interest at the rate of 1.5% per month, or the highest
percentage permitted by applicable state law, from the due date until paid.
3.2 The parties shall permit each other to audit its accounts, books and
records, and to perform data stream analysis, as they relate to the licensee
party's rights or obligations hereunder, at the auditing party's expense and
upon reasonable notice. The right granted under this Section 3.2 shall exist
during the term of this Agreement and for one year thereafter. Upon concluding
any audit, the auditing party shall notify the other party of the results
thereof. In the event that an adjustment must be made to the royalties and/or
fees previously paid by party hereunder, the parties shall use their best
efforts in good faith to agree upon the amount of any such adjustment. Any such
adjustment shall be paid within 5 business days after such agreement is reached.
In the event the parties agree that the total amount of royalties and/or fees
previously paid was less than the amount required to be paid under this
Agreement and such deficiency is 10% or more of the amount previously paid, the
audited party shall pay the reasonable audit costs incurred by the auditing
party, including all reasonable out-of-pocket expenses.
3.3 Unless otherwise specified in this Agreement, the parties acknowledge that
termination of this Agreement shall not terminate, diminish or otherwise affect
either party's obligation to pay license fees or any fees or costs which have
accrued under this Agreement.
4. DELIVERY.
---------
4.1 if either party should be in material default of the Agreement the non-
defaulting party may, in its sole discretion, withhold Database updates.
5. TERMINATION.
------------
5.1 Either party may terminate this Agreement as follows: (a) if the other
party materially breaches any term or condition of this Agreement (except as
otherwise provided in paragraphs 5.2 or 5.3 of this Agreement) and fails to
remedy such breach within thirty (30) days after written notice of such breach;
or (b) if the other party becomes subject to any receivership. insolvency,
bankruptcy, moratorium or similar proceeding for more than thirty (30) days
5.2 Either party may terminate this Agreement immediately if (a) the otter
party wilfully participates in any material unauthorized use of the Databases
(including, without limitation, participating In or allowing a third party's
unauthorized use thereof or failing to maintain controls as outlined in
paragraph 2.2 above); (b) either party fails to pay any amount due hereunder
within 10 days after receiving notice from the other party that such payment is
past due; (c) all or substantially all of the assets of one party are sold,
assigned or otherwise transferred to any individual or entity ("Person") other
then a Person controlling, under common control with or controlled by party,
except however, for those provisions of assignment in this Section III,
paragraph 10; (d) 50% or more of the equity securities or voting Interests of
one party or the
10
<PAGE>
ultimate parent of that party is sold, assigned or otherwise transferred in a
single transaction or a series of related transactions, except however, for
those provisions of assignment In Section III, paragraph 10; (e) either party or
Its ultimate parent is a party to a merger, consolidation or other similar
transaction, except however, for those provisions of assignment in Section III,
paragraph 10; or (e) either party has materially breached any term or condition
of this Agreement on 3 or more occasions, even if previous breaches were cured
in accordance with the provisions of Paragraph 5.1(a).
5.3 Upon termination of this Agreement for any reason, both parties shall (i)
ensure that all copies of the other party's Databases and any related data and
information is deleted from its computers and, if applicable the computers of a
third-party Processor; (ii) cease any and all use of the licensed Databases
(iii) return all copies, whether In print, tape or other media, of any of the
licensed Databases In its possession to the licensor no later than five (5) days
after termination of this Agreement; and, (iv) certify in writing within ten
(10) days after termination of this Agreement that party and Processor have
deleted or returned to the licensor all copies of the licensed Databases.
6. PROPRIETARY RIGHTS. Each party acknowledges that all rights, title and
------------------
Interest to the other's Databases, regardless of the forms of media in which
such may be contained, shall be and are retained by Licensor subject to the
license granted to party under this Agreement.
7. CONFIDENTIALITY. The Confidentiality, Non-Disclosure and Non-Solicitation
---------------
Agreement executed on December 14, 1998 by Intelliquest, Inc. and infoUSA (the
"NDA"), attached as Attachment F is expressly incorporated herein by this
reference, and the terms thereof shall survive the termination of this
Agreement. Navlant agrees to be bound by the NDA as the successor in interest to
intelliquest.
8. DISCLAIMER OF WARRANTY, LIMITATION OF REMEDY. AND LIMITATION OF LIABILITY.
--------------------------------------------------------------------------
8.1 Each party warrants and represents that (a) it has the necessary power and
authority to enter into and perform its obligations under this Agreement and has
property authorized the same by all requisite action; (b) it has all necessary
rights to grant the license granted to the other party under this Agreement; and
(c) their Databases and associated trademarks do not infringe upon any
copyright, patent, trademark or proprietary right (collectively "Intellectual
Property Rights") of any third party.
8.2 Except for those warranties previously set forth in paragraph 8.1, the
Databases are licensed on an "AS IS" basis without guarantee, and neither party
guarantees that their Databases will meet the Licensee' Party's or Users
requirements; that they will operate in the combinations, or In the equipment,
selected by the Licensee Party or Users; or that its operation will be error-
free or without interruption.
Notwithstanding any other provision In this Agreement, each party shall
Indemnify, hold harmless and defend or settle at its own expense any claim or
suit against the other party to the extent it arises out of or in connection
with an assertion that the licensor party's Database or any portion thereof
infringes any copyrights or other Intellectual Property Rights, and the licensor
party shall indemnify and hold harmless the licensee party from damages, costs,
and attorneys' fees, if any, finally awarded in such suit or the amount of the
settlement
11
<PAGE>
thereof. In the event that an allegation of infringement of Intellectual
Property Rights is made against the licensee party, such party will i) give the
licensor party prompt written notice of and control over the defense and
settlement of any demand, claim, action, or lawsuit for which the licensee party
believes it is entitled to indemnification under this paragraph and ii)
cooperate fully in such defense and settlement.
If any such claim of infringement of Intellectuai Property Rights has occurred
or in the applicable licensor party's opinion is likely to occur, then the
licensor party may, in addition to Indemnifying Licensee party as set forth In
the preceding paragraph and at its option and expense, i) procure for licensee
party the right to use the infringing data; or ii) at no expense to licensee
party replace the licensor party Database with an equally suitable, compatible
and functionally equivalent compilation of data, or iii) modify the infringing
data without reducing the quality or effectiveness thereof so that the same is
no ionger subject to any such infringement claim. If neither of the foregoing
solutions is available on commercially reasonable terms, then licensor party may
request that Licensee party cease all use of the Infringing data and return the
infringing data to licensor party, for a pro-rated refund of the consideration
paid therefor. If the licensee party does not comply with such request, the
licensee party may continue to use the infringing data but licensor party shall
have no indemnity obligation therefor under this paragraph 8.
Licensor party shall have no obligation under this Agreement to indemnify or
defend the licensee party against a claim of infringement of Intellectual
Property Rights resulting from the modification or alteration by the licensee
party of the licensor party Database provided hereunder by the licensee party,
or the combination of such data with any date not supplied by licensor party, as
long as the licensor party Database in the form supplied by licensor party could
not Itself constitute an infringement.
8.3 EXCEPT AS STATED HEREIN, licensor party MAKES NO EXPRESS OR IMPLIED
WARRANTIES, INCLUDING. WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY.
8.4 NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL OR INCIDENTAL
DAMAGES OR FOR ANY LOST PROFITS OR ANY CLAIM OR DEMAND OF A SIMILAR NATURE OR
KIND, WHETHER ASSERTED BY LICENSEE PARTY AGAINST LICENSOR PARTY OR AGAINST
LICENSEE PARTY BY ANY OTHER PARTY, EVEN IF EACH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES; AND EACH PARTY AGREES TO DEFEND, INDEMNIFY AND HOLD
HARMLESS THE OTHER PARTY FROM ANY AND ALL CLAIMS, ACTIONS, DEMANDS, OR OTHER
LIABILITY (INCLUDING COSTS AND ATTORNEYS' FEES) TO THIRD PARTIES TO THE EXTENT
THEY RESULT FROM THE USE OF THE OTHER PARTY'S DATABASE BY SUCH PARTY.
8.5 EXCEPT FOR INDEMNITY SET FORTH IN PARAGRAPHS 8.2 AND 8.4, EACH PARTY'S
ENTIRE AGGREGATE LIABILITY FOR DAMAGES, IF ANY, IN CONNECTION WITH THIS
AGREEMENT AND THE USE OF THE LICENSOR PARTY DATABASE PROVIDED TO LICENSEE PARTY
OR
12
<PAGE>
PROVIDED BY LICENSEE PARTY TO USERS (WHETHER BASED IN CONTRACT, TORT OR
OTHERWISE), SHALL NOT EXCEED THE FEES AND ROYALTIES DUE BY EITHER PARTY
(WHICHEVER IS GREATER) DURING THE PREVIOUS ONE YEAR OF THE AGREEMENT, OR AN
ANNUALIZED AMONT THEREOF, IF APPLICABLE.
9. FORCE MAJEURE. Except for the payment of money, neither party shall be
-------------
liable for delays or failures in performance resulting from acts beyond the
reasonable control of such party. Such acts shall include but not be limited to
acts of God, riots, acts of war, and other disasters. In the event such an act
occurs, the party whose performance is delayed or affected will give prompt
notice to the other party, stating the period of time the delay or failure is
expected to continue.
10. ASSIGNMENTS. Neither party shall assign this Agreement, or delegate or
-----------
subcontract any of its obligations hereunder, provided however, that Naviant
shall be permitted to assign its rights under this Agreement in the event that
all or substantially all of its assets are sold, assigned or otherwise
transferred to any individual or entity other than an infoUSA competitor (as
described In Appendix B); or 50% or more of the equity securities of Naviant are
sold, assigned, or transferred In a single transaction, or series of
transactions to any individual or entity other than to an infoUSA competitor (as
described in Appendix B). Notwithstanding the above, Navlant shall first seek
permission from infoUSA for any assignment, which permission will not be
unreasonably withheld by infoUSA.
11. MODIFICATION. No modification of this Agreement shall be binding upon
-------------
either party unless made in writing and signed by duty authorized officers of
both parties.
12. WHOLE AGREEMENT. This Agreement constitues the entire understanding of the
---------------
parties with respect to the subject matter hereof.
13. WAIVERS. The failure of either party to require the performance of any
-------
term or condition of this Agreement shall not prevent any subsequent enforcement
of this term or condition, nor shall it be deemed a waiver of any other
different or subsequent breach.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Nebraska, without regard to Nebraska's
conflicts of laws principles and both parties consent to the exclusive
jurisdiction of the state or federal courts located In Omaha, Douglas County,
Nebraska.
15. SEVERABILITY. A decision by any court of competent jurisdiction
------------
invalidating or holding unenforceable any part of this Agreement will not affect
the validity and enforceability of any other part of this Agreement. If any part
of this Agreement is found to be invalid or unenforceable, that part will be
amended to achieve as nearly as possible the objectives of the original
provision within the limits of applicable law.
16. NO THIRD PARTY BENEFICIARIES. This Agreement is made solely and
----------------------------
specifically between and for the benefit of the parties signatory hereto, and no
other person or entity whatsoever shall have any rights, interests or claims
hereunder or be entitled to any benefits under or on account of this
13
<PAGE>
Agreement as a third party beneficiary or otherwise.
17. RELATIONSHIP OF PARTIES. This Agreement does not create a joint venture,
-----------------------
agency relationship or partnership between the parties, and each will act
independently of the other. Neither party is empowered to bind or commit the
other to any contract or other obligation.
18. COMPLIANCE. Both parties shall use, and shall ensure that its Users use,
----------
the Databases in strict compliance with all applicable federal, state and local
laws, rules and regulations, including but not limited to those concerning fax
and/or e-mall transmissions, and direct marketing.
19. TAXES. Each party shall be responsible to pay all taxes of any type,
-----
nature or description (including, but not limited to, sale, use, gross receipts,
excise, import or export) imposed on the transactions, products or services
described in this Agreement, except for taxes imposed on or measured by either
parties corporate Income.
20. HEADINGS. The title of each Attachment or Appendix and the headings or
--------
titles preceding the text of the Sections or Paragraphs are inserted solely for
convenience of reference, and shall not constitute a part of this Agreement, nor
shall they affect the meaning, construction or effect of this Agreement. The
parties have each participated in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
21. QUALITY STANDARDS. Each party shall at all times conduct all aspects of
-----------------
its business which relate to this transaction in a professional manner that will
reflect favorably upon the other party, so as to protect the reputation of the
other party, its products and services.
22. INCLUSION OF NOTICES. Neither party will alter or impair any
--------------------
acknowledgment of copyright or other intellectual property right that may appear
in the Databases, and shall include all copyright, trademark and other similar
notices that either party may reasonably request on Services.
23. REMEDIES. Except as otherwise provided in this Agreement, the remedies
--------
contained in this Agreement are cumulative and non-exclusive and may be utilized
in addition to all other remedies available to either party at law or in equity.
24. NON-SOLICITATION. The parties agree that, during the Term, they will not
----------------
directly or indirectly initiate communications with an employee of the other
relating to possible employment with such party.
SECTION IV - DATABASE SPECIFICATIONS AND NOTICES
<TABLE>
<CAPTION>
<C> <S>
1) INFOUSA DATA SPECIFICATIONS AND DELIVERY
1.1) InfoUSA will provide Naviant the infoUSA Database containing data
elements, where available, as follows:
</TABLE>
14
<PAGE>
a) Business File:
DESCRIPTION State Numeric Code Primary SIC
Company Name County Code Secondary SIC Code #1
Address Phone Secondary SIC Code #2
City (16) Professional Last Name Secondary SIC Code #3
State Abbreviation Professional First Name Secondary SIC Code #4
Zip Code Professional Title
Zip+4 Employee Size Code
Carrier Route ABI Number
b) Consumer File: The layout for the lnfoUSA Database, Consumer File is
attached hereto as Attachment B.
In the event that Naviant desires to license data elements that are not itemized
above or on Attachment B, the parties will negotiate In good faith a
commercially reasonable fee to be paid for the additional data elements.
1.2) infoUSA will provide Naviant:
a) the lnfoUSA Database within fifteen working days of the Effective
Date;
b) quarterly full file updates ("Update"); and
c) an updated Codemaster with each Business File Update.
1.3) Database deliveries on behalf of Naviant to a third party shall be subject
to all the terms and conditions of the third-party processor agreement
(`Third-Party Agreement") (attached hereto as Attachment E). The Database
shall be delivered to and shall be used exclusively In the following two
locations:
eData.Com, Inc., ATTN: Liz Elliot
6601 Park of Commerce Blvd.
Boca Raton, Florida, 33487
email- [email protected]
Fax- 561 999 4501
Phone- 561 999 4454
Naviant
ATTN: Jim Inscoe
14 Campus Blvd Suite 200
Newtown Square, PA 19073
[email protected]
-------------------
770-937-5901
610-355-7054 fax
15
<PAGE>
2) NAVIANT DATABASE SPECIFICATIONS
2.1) Naviant will provide lnfoUSA the Naviant Database containing data elements,
where available, as follows:
a) For the HHTH File: See Attachment C
b) For the HTB File: Format to be mutually agreed upon by the parties
In the event that infoUSA desires to license data elements that are not itemized
above, the parties will negotiate in good faith a commercially reasonable fee to
be paid for the additional data elements.
2.2) Naviant will provide infoUSA:
a) the Naviant Database within fifteen working days of the Effective Date;
and
b) quarterly full file updates.
3) DATABASE DATA PROCESSING, SPECIFICATIONS AND DELIVERY
3.1) Naviant shall use the lnfoUSA Database per the terms of this Agreement only
at the Naviant headquarters, unless infoUSA and a third-party processor
enter into a Third-Party Agreement as defined In paragraph 1.3 above. If
Naviant elects to use Database America as its database processor, Naviant
and Database America will negotiate the terms of a separate agreement for
database processing.
3.2) Naviant will provide infoUSA:
a) the HTHH File within 15 business days of the Effective Date; and
b) quarterly full file updates.
3.3) Database deliveries to lnfoUSA (as described In this Section IV.2) shall be
delivered to and Databases shall be used exclusively at:
infoUSA Inc.
ATTN: Monica Messer,
5711 So 86 Circle
Omaha, NE 68127
4) The data elements and actual formats and layouts of the Databases provided
by each party (as described on Attachments B and C) will substantially
conform as shown, provided however, that the content and format may be
revised from time-to-time by written agreement of the parties.
16
<PAGE>
NOTICES/CORRESPONDENCE
----------------------
5) All correspondence to Navlant required by this Agreement shall be addressed
as follows:
Naviant, Inc.
ATTN: Raymond T. Butkus
475 Park Avenue South, 17th Floor
New York, NY 10018
Phone: 212-448-8000
Fax: 212-448-0819
E-Mail: [email protected]
Web Address: www.iq2.net
6) All correspondence to InfaUSA required by this Agreement shall be addressed
as follows:
infoUSA Inc. with a copy to: infoUSA Inc.
Director, License Division Corporate Counsel
5711 So 88 Circle 5711 So 88 Circle
Omaha, NE 68127 Omaha, NE 68127
READ AND APPROVED
Naviant infoUSA
- ------------------------------ --------------------------------
Signature Signature
- ------------------------------ --------------------------------
Name Name
- ------------------------------ --------------------------------
Title Title
- ------------------------------ --------------------------------
Date Date
17
<PAGE>
AMENDMENT NUMBER 1 TO
DATABASE LICENSE AGREEMENT
A. PARTIES ("PARTIES")
InfoUSA: infoUSA Inc.
Naviant: Naviant, Inc.
Effective Date of
Agreement: September 30, 1999
Effective Date of
this Amendment: November 24, 1999
This is Amendment Number 1 to the Database License Agreement by and between
lnfoUSA Inc. ("infoUSA") and Naviant, Inc. ("Naviant").
The parties agree to amend the Agreement, as follows:
1. Unless otherwise set forth herein, all defined terms shall have the
meanings ascribed to them in the Agreement.
2. Section ID1.1, "Naviant's License to lnfoUSA" is amended by adding two
additional uses of the Naviant Database:
ID1.1.b is added:
. 1.1.b) HTTH & HTB Data Append/File Enhancement. lnfoUSA may append
---------------------------------------
elements from the Naviant Database to a customer's own database.
. Such appended data elements shall be appended and rented to Users
for one-time or annual, multiple use subject to the use restrictions
defined in paragraph 3 of this Agreement.
ID1.1.c. is added, as follows:
. 1.1.c) HTHH & HTB Flag: lnfoUSA may append the HTHH and HTB flag to
---------------
the lnfoUSA Database for use as selection criteria for customers who
desire to rent lists based on, among other infoUSA data elements,
the HTHH and HTB Flags.
. Anytime after Year 1 of the Agreement, infoUSA may, in its sole
discretion, terminate this certain HTHH and HTB Flag provision by
giving Naviant six (6) month prior written notice.
3. IIF1. "Actual Royalties Due to Naviant" is amended by adding IIF1.b:
18
<PAGE>
. IIF1.b) HTTH & HTB Data Append
----------------------
infoUSA will pay Naviant fifty percent (50%) of the relevant rates
shown for data appending an Naviant's then-current RPL (Attachment D).
IIF is amended by adding paragraph lIF1.2 entitled "License Fees due to
Naviant for the HTHH and HTB Flag"
. License Fees due to Naviant for the HTHH and HTB Flag
-----------------------------------------------------
infoUSA shall pay Naviant an annual fee of $100,000.00 for each year of the
Agreement infoUSA licenses the HTHH and HTB Flag. This annual fee shall
increase each contract year by a percentage equal to the increase In the
cost of living index. lnfoUSA will pay the annual fee In equal quarterly
Installments beginning on the Effective Date.
4. ID2.1.a) is amended to add the following lnfoUSA Consumer File data
elements which Naviant may use for the "Data Append/File Enhancement of the
HTHH & HTB Files and List Rental"
a) Geographic: Census Track and Block, Area Code & Time Zone
b) Demographic: Ethnic Surname and Foreign Language Indicator
c) Share Force: Data elements, where available, as shown on
Attachment G.
5. IIF2.1, ANNUAL MINIMUM ROYALTY FEES DUE TO INFOUSA is amended by increasing
the annual minimum royalty by ***** each Contract Year.
IIF2.2.a is amended by Increasing the Monthly Fees due to lnfoUSA for Data
Append/File Enhancement for HTHH & HTB Files and Naviant e-Registration
Application, as follows:
(Naviant shall pay lnfoUSA the following monthly fees for use of the
lnfoUSA Database in Data Append/File Enhancement and Naviant e-Registration
Application Products and Services as described In sections I.D.2.1(a) and
I.D.2.1(e) of this Agreement)
<TABLE>
<CAPTION>
Monthly Fee for Monthly Fee for
Volume of HTHH & HTB records Consumer Data Business Data
---------------------------- --------------- ---------------
<S> <C> <C>
i. Less than 15 million $25,000 $25,000
ii. From 15 million to 25 million $31,250 $31,250
iii. Over 25 million $37,500 $37,500
</TABLE>
19
<PAGE>
6. IIF2.2 "Actual Royalties, Fees and Payments Due to infoUSA" is amended by
adding IIF2.2.e:
. For each Share Force variable Naviant appends to a customer's database,
Naviant will pay lnfoUSA ***** (per thousand).
. For each Shane Force variable Naviant appends to a HTHH List Rental,
Naviant will pay lnfoUSA the List Rental royalties (as described in
Section II 2.2 b); plus ***** (per thousand) for each Share Force
variable appended.
For each HTHH annual list (where Shane Force and Consumer (DQI2) data is
included) rental over 5,000,000 records to one customer In one year Naviant
shall pay infoUSA ***** of the gross revenue billed to the Naviant customer
for such rental but no less than ***** per such list rental. The above list
rental fee and royalties shall Increase each contract year by a percentage
equal to the Increase In the cost of living Index.
. For each data element Naviant appends to a customer's database from the
additional DQI data elements licensed hereunder, Naviant will pay
infoUSA the following actual royalties:
Ethnic Surname Indicator *****
Foreign Language Indicator *****
SESI *****
7. ID2.1.e "Naviant e-Registration Application" is amended to include
prohibitions against using data elements about children In this
application. Such paragraph is replaced In its entirety as follows:
"Naviant e- Registration Application. Naviant displays data elements
------------------------------------
(which selection criteria has been chosen by a User) from the Naviant
Database for that User to view the data in a tabulated form on a computer
screen. Users will not be permitted to download any data from a Naviant
Database Screen Viewing, or be able to view information about children or
the presence of children when such information is displayed In conjunction
with zip+4 or physical address geographic criteria.
8. IIF2.2. "Actual Royalties Due to infoUSA" is amended by adding IIF2.2.e:
. IIF1.b) infoUSA Database Data Append
----------------------------
Naviant will pay lnfoUSA fifty percent (50%) of the relevant rates shown
for data appending on InfoUSA's then-current RPL (Attachment A).
20
<PAGE>
9. Except as set forth In this Amendment Number 1, the Agreement shall remain
unchanged and in full force and effect.
WHEREBY, the parties enter into this Amendment Number 1 as of the later of the
two signature dates below.
<TABLE>
<CAPTION>
<S> <C>
Naviant infoUSA
- ------------------------------------- ----------------------------------------
Signature Signature
- ------------------------------------- ----------------------------------------
Name Name
- ------------------------------------- ----------------------------------------
Title Title
- ------------------------------------- ----------------------------------------
Date Date
</TABLE>
21
<PAGE>
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS ARE DENOTED BY ASTERISKS.
DATABASE
DEVELOPMENT AGREEMENT
---------------------
This Agreement (this "Agreement") is dated as of September 7, 1999
between Naviant Technology Solutions, Inc. ("NAVIANT"), a Delaware corporation
with an address at 14 Campus Boulevard, Suite 200, Newton Square, Pennsylvania
19073-3279, and 24/7 Media, Inc. ("24/7"), a Delaware corporation with an
address at 1250 Broadway, 28th fl, New York, NY 10001 (each of 24/7 and NAVIANT,
a "Party" and together, the "Parties").
WITNESSETH
WHEREAS, NAVIANT has acquired assets from IntelliQuest Information
Group, Inc. ("IntelliQuest") relating to customer registration services for
computer hardware, software and peripheral companies, and, in connection with
such services, NAVIANT obtains identification data of technology users, and by
employing such identification data, develops demographic profiles of such
technology users;
WHEREAS, 24/7 operates networks (the "24/7 Networks") of Internet web
sites for which it solicits advertisers regarding the placement of advertising
for display on such web sites and obtains identification data from registrants
thereto; and
WHEREAS, the Parties desire to enter into this Agreement to supersede
the existing Database Development Agreement between IntelliQuest and 24/7 dated
October 2, 1998 (the "Original Agreement").
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is agreed as follows:
1. License of NAVIANT data to 24/7.
-------------------------------
A. License of Data. NAVIANT hereby licenses in perpetuity, and
-- ---------------
shall use commercially reasonable efforts to deliver to 24/7, data files
("NAVIANT Data File Records") (as defined below). The NAVIANT Data File Records
shall consist of the name, addresses and phone numbers of those consumers who
have granted the necessary permissions (in determining its whether necessary
permissions have been granted, NAVIANT shall consider the views of 24/7 and its
advisors) and all data available to NAVIANT from the NAVIANT High Tech Household
Database and other databases that are or become the property of NAVIANT
(collectively, the "HTHH Database"), where permissible and consistent with data
collection procedures associated with the HTHH Database. Each NAVIANT Data File
Record will also contain (i) a unique ID number, as mutually agreed to by the
Parties, that NAVIANT sets on the Internet browsers of registrants during the
registration process (each such number may be referred to as a cookie and the
process shall be referred to as "setting cookies"), in a manner mutually agreed
upon by 24/7 and NAVIANT, and (ii) certain other non-royalty based elements of
the HTHH Database as may be mutually agreed upon by the Parties. 24/7 shall not
provide any NAVIANT data to third parties; provided, however, that 24/7 may use
such data to enable
<PAGE>
Web sites affiliated with the 24/7 Networks to demographically segment their
audiences for targeted ad delivery via 24/7. All licenses granted hereunder
shall be subject to any pertinent third party data use restrictions that are
made known in writing to the licensee. In the event that the any such use
restrictions become unduly burdensome to the licensee, the licensor shall employ
commercially reasonable efforts to thereafter source demographic profiles from
an alternative source.
B. Schedule. NAVIANT shall use commercially reasonable efforts to
-- --------
start setting "cookies" in the registration process immediately after the
Effective Date. NAVIANT will employ commercially reasonable efforts to provide
new data (cookie ID number and appended data elements) monthly during the term
of this Agreement.
C. Audits. During the term of the Agreement NAVIANT will have the
-- ------
right to audit certain matters as related to the provision of NAVIANT Data File
Records, up to two times per year. NAVIANT may at certain intervals designate an
independent auditor to examine books and records pertaining to the provision of
NAVIANT Data File Records. Such examinations will take place during business
hours with five (5) days prior written notice and be performed in such a manner
as not to interfere with normal business operations. The audits will be
conducted at the expense of NAVIANT, unless the audit reveals non-conformance
with the terms of this Agreement.
2. Fees. Beginning on February 1, 2001, and continuing through the end of
----
the Term, 24/7 shall purchase all NAVIANT Data File Records made available to it
by NAVIANT for a fee no higher than the lowest fee that NAVIANT sells to any
similarly situated customer, but, in any event, not more than ***** per Data
File Record. NAVIANT shall not charge 24/7 for any records that are NAVIANT Data
File Records that are duplicates of 24/7 Data File Records furnished by 24/7 to
NAVIANT or duplicates of records previously provided by NAVIANT to 24/7.
3. Data Services: Data Matching. NAVIANT will provide data matching
-----------------------------
services for 24/7 for the purpose of targeting ads through the 24/7 Networks.
The data matching process includes; address standardization, validation, NCOA,
and appending of the HTHH data. NAVIANT shall charge 24/7 a fee for this
matching process, provided however, that said fee shall be no higher than the
lowest fee that NAVIANT charges for said services to any similarly situated
customer.
4. Banner Advertising. 24/7 will provide banner advertising inventory to
------------------
NAVIANT for the purpose of enabling NAVIANT to resell such inventory to its
clients for targeted banner advertising by consumer via the 247 Network.
NAVIANT shall make commercially reasonable efforts to resell such banner
inventory. 24/7 shall charge NAVIANT for this banner inventory a ***** CPM for
such inventory.
5. License of 24/7 Data to NAVIANT.
-------------------------------
A. License. Where permissible (in determining its whether necessary
-- -------
permissions have been granted, 24/7 shall consider the views of NAVIANT and its
advisors) and consistent with data collection procedures associated with 24/7,
24/7 hereby licenses in
2
<PAGE>
perpetuity, and shall use commercially reasonable efforts to deliver to NAVIANT
the names, phone numbers, addresses and other information of all individuals who
are identified to the 24/7 Networks, plus all on-line channel preference
activity information (based on, among other things, frequently visited sites)
(to be mutually defined by NAVIANT and 24/7, consistent with the terms of this
paragraph), for such individuals and for any of the NAVIANT Data File Records
provided by NAVIANT to 24/7 pursuant to Section 1, for NAVIANT's use (the "24/7
Data File Records"). NAVIANT shall not provide any 24/7 data to third parties,
provided, however, that NAVIANT shall have the right to use 24/7 data solely to
identify households that are Internet-enabled households for inclusion in the
NAVIANT HTHH Database.
B. Delivery. 24/7 will collect, and deliver to NAVIANT, 24/7 Data File
-- --------
Records as soon as it is technologically able to do so and will deliver new
records on a monthly basis.
C. Fees. NAVIANT, at its option, may purchase all 24/7 Data File
-- ----
Records made available to it by 24/7 for the lowest fee that 24/7 sells 24/7
Data File Records to any similarly situated customer, but not more than *****
per 24/7 24/7 Data File Record. 24/7 shall not charge NAVIANT Data File Records
furnished by NAVIANT to 24/7 or duplicates of records previously provided by
24/7 to NAVIANT.
D. Audits. During the term of the Agreement 24/7 will have the right
-- ------
to audit certain matters as related to the provision of 24/7 Data File Records,
up to two times per year. 24/7 may at certain intervals designate an independent
auditor to examine books and records pertaining to the provision of 24/7 Data
File Records. Such examinations will take place during business hours with five
(5) days prior written notice and be performed in such a manner as not to
interfere with normal business operations. The audits will be conducted at the
expense of 24/7, unless the audit reveals non-conformance with the terms of this
Agreement.
6. Exclusivity.
-----------
A. Prior to January 1, 2002, NAVIANT will not, without 24/7's written
consent, provide any products or services for DoubleClick, Flycast, ADSmart,
Real Media ValueClick, Winstar Interactive, Cybereps, Latitude 90, Burst,
AdForce, NetGravity, LinkExchange, Engage Technologies, and NetPerceptions and
any other companies that compete directly in a material manner with 24/7 Media's
business of selling inventory on behalf of third party Web sites. It is
understood and agreed that NAVIANT may perform any services and provide all
products to @Home/Excite.
B. Until January 1, 2002, 24/7 will use NAVIANT as its exclusive data
source of data derived from the business of processing third party product
registration data (registration data) and will not enter into a similar
agreement with other providers of technology customer or product registration
services such as Husdawg, Leader, SoftBank, Axtive, and Encompass.
C. NAVIANT acknowledges that 24/7 seeks to solicit registration data
from 24/7's networks of Web sites for inclusion in 24/7 Profilz.
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D. Prior to January 1, 2002, 24/7 Media will not, without NAVIANT's
written consent, provide any user registration data to Experian, Polk, or Axciom
and other data source providers that compete directly in a material manner with
NAVIANT's business of selling demographic records that identify Internet enabled
households. 24/7 and NAVIANT shall confer regularly during the Term and shall
each negotiate diligently and in good faith to minimize to the greatest extent
possible any sales conflicts between the parties, including conflicts with
24/7's Web sites.
7. Intellectual Property.
---------------------
A. All hardware, software, programs, codes, trade names, technology,
intellectual property, licenses, patents, trademarks, copyrights, trade secrets,
know-how, and processes (collectively, the "24/7 Technology") used by 24/7 under
this Agreement shall remain the sole property of 24/7. NAVIANT shall have no
rights, title or interest in the 24/7 Technology. All hardware, software,
programs, codes, trade names, technology, intellectual property, licenses,
patents, trademarks, copyrights, trade secrets, know-how, and processes
(collectively, the NAVIANT Technology") used by NAVIANT under this Agreement
shall remain the sole property of NAVIANT. 24/7 shall have no rights, title or
interest in the NAVIANT technology. Upon the expiration or termination of this
Agreement, each party shall promptly return all information, documents, manuals
and other materials belonging to the other party except as otherwise provided in
this Agreement.
B. Upon termination or expiration of this Agreement, NAVIANT shall
retain ownership of the 24/7 Data File Records and 24/7 shall retain ownership
of the NAVIANT Data File Records, subject to the terms of each party's license
of such data from third parties.
8. Confidentiality. 24/7 and NAVIANT covenant to each other that neither
---------------
party shall disclose to any third party (other than its employees and directors,
in their capacity as such, and the employees and directors of any affiliate on a
need-to-know basis so long as such persons are bound by the terms of this
Agreement) any information regarding the terms and provisions of this Agreement
or any non-public confidential information which has been identified in writing
as such by the other Party hereto except (i) to the extent necessary to comply
with any law or valid order of a court of competent jurisdiction (or any
regulatory or administrative tribunal), in which event the party so complying
shall so notify in writing the other party as promptly as practicable (and, if
possible, prior to making any disclosure) and shall seek confidential treatment
of such information, if available; (ii) as part of its normal reporting or
review procedure to its auditors or its attorneys, as the case may be, so long
as such persons are notified of the provisions of this Agreement and subject to
the confidentiality provisions herein; (iii) in connection with any filing with
any governmental body or as otherwise required by law, including the federal
securities laws and any applicable rules and regulations of any stock exchange
or quotation system, provided that the written consent of the non-disclosing
party is obtained; and (iv) in a confidential disclosure made in connection with
a contemplated financing, merger, consolidation or sale of capital stock of 24/7
or NAVIANT, provided that the third parties receiving such information are
subject to the confidentiality provisions herein. Information which is or should
be reasonably understood to be confidential or proprietary includes, but is not
limited to, the NAVIANT Data File Records, the 24/7 Data File Records,
information about the 24/7 Network, sales, cost and other unpublished financial
information,
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product and business plans, projections, marketing data, and sponsors but shall
not include information (a) previously lawfully known to or independently
developed by a third party, (b) disclosed in publicly available materials, (c)
generally known to the public or (d) lawfully obtained from any third party.
This Section 7 shall survive the termination or expiration of this Agreement for
a period of three (3) years.
9. Term. The term of this Agreement (the "Term") shall commence on the date
----
hereof and shall continue in effect until December 31, 2002. If a party
materially breaches a material provision of this Agreement, the other party may
terminate this Agreement upon thirty (30) days written notice unless the breach
is cured within the notice period.
10. 24/7 and NAVIANT agree not to employ or solicit for employment, directly
or indirectly, any of the other's employees during the term of this Agreement
and for a period of one (1) year after termination of this Agreement, including
all renewal periods.
11. Indemnification. NAVIANT shall defend, indemnify and hold harmless 24/7
---------------
against and in respect of any and all claims, suits, actions, proceedings
(formal and informal), investigations, judgments, deficiencies, damages,
settlements, liabilities, and legal and other expenses (including reasonable
legal fees and expenses of attorneys chosen by 24/7) ("Claims") as and when
incurred, arising out of or based upon any act or omission or alleged act or
alleged omission by NAVIANT in connection with the acceptance of, or the
performance or non-performance by NAVIANT of, any of its duties under this
Agreement or arising from the breach by NAVIANT of its warranties,
representations or covenants contained in this Agreement. 24/7 shall defend,
indemnify and hold harmless NAVIANT, against and in respect of any and all
Claims as and when incurred, arising out of or based upon any act or omission or
alleged act or alleged omission by 24/7 in connection with the acceptance of, or
the performance or non-performance by 24/7 of, any of its duties under this
Agreement or arising from the breach by 24/7 of its warranties, representations
or covenants contained in this Agreement.
12. Limitation of Liability. Neither party will be liable for any failure
-----------------------
to perform any obligation hereunder, or from any delay in the performance
thereof, due to causes beyond its control, including industrial disputes of any
nature, acts of God, acts of any public enemy, acts of government, failure of
telecommunications, fire or other casualty. Under no circumstances will either
party, its affiliates or their respective officers, directors, employees be
liable for any incidental, special or consequential damages with respect to each
party's obligations under this Agreement, regardless of whether such damages
could have been foreseen or prevented.
13. Representations and Warranties.
------------------------------
A. 24/7 represents and warrants to NAVIANT that (a) the execution,
delivery and performance by 24/7 of this Agreement do not and will not (i)
violate the organization documents of 24/7, (ii) violate any applicable law,
rule, regulation, judgment, injunction, order or decree, including, but not
limited to, privacy laws, or (iii) require any notice or consent or other action
by any person under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of 24/7 or
to a loss of any benefit to which 24/7 is entitled under, any agreement or other
instrument binding upon 24/7 or any license, franchise, permit or other similar
authorization held by 24/7, and (b) all obligations
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owed to third parties with respect to 24/7's performance of its obligations
hereunder shall be fully paid by 24/7, so that NAVIANT shall not have any
obligations with respect thereto.
B. NAVIANT hereby represents and warrants to 24/7 that (a) the
execution, delivery and performance by NAVIANT of this Agreement does not and
will not (i) violate the organizational documents of NAVIANT, (ii) violate any
applicable law, rule, regulation, judgment, injunction, order or decree, or
(iii) require any notice or consent or other action by any person under,
constitute a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of NAVIANT or to a loss
of any benefit to which NAVIANT is entitled under, any agreement or other
instrument binding upon NAVIANT or any license, franchise, permit or other
similar authorization held by NAVIANT, and (b) all obligations owed to third
parties with respect to NAVIANT's performance of its obligations hereunder shall
be fully paid by NAVIANT, so that 24/7 shall not have any obligations with
respect thereto.
14. Publicity. Neither party will make or issue any public statement or
---------
announcement regarding the existence of this Agreement unless (a) it has
received the express written consent of the other party, which will not be
unreasonably withheld or (b) it is required to do so by law or regulation,
including the federal securities laws and any applicable rules and regulations
of any stock exchange or quotation system.
15. No Waiver. No provision of this Agreement shall be waived or modified
---------
except by a written consent to that effect signed by each of NAVIANT and 24/7.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York applicable to contracts made
and performed therein, without regard to principles of conflicts of laws.
17. Notices. All notices required or permitted to be given hereunder shall
-------
be in writing and either hand-delivered, telecopied, mailed by certified first
class mail, postage prepaid, or sent via electronic mail to the other party
hereto at the addresses set forth in the preamble hereto. A notice shall be
deemed given when delivered personally, when the telecopied notice is
transmitted by the sender, one day after mailing by overnight courier, three
business days after mailing by certified first class mail, or on the delivery
date if successfully transmitted by electronic mail. Notice shall be given to
the addresses set forth in the first paragraph of this Agreement, and shall be
addressed to "Legal Department".
18. Assignment. Neither this Agreement, nor the license granted hereunder,
----------
may be assigned to any third party by operation of law or otherwise without the
express written consent of the other party, which may not be unreasonably
withheld. Notwithstanding the foregoing, if a successor in interest acquires
more than 51% of the assets of NAVIANT, it shall have the right to terminate all
exclusivity portions of this Agreement on six months' notice to 24/7, but not
prior to January 31, 2001. If a successor in interest acquires more than 51% of
the assets of 24/7, NAVIANT shall have the right to consent to such entity's
assumption of this agreement, such consent not to be unreasonably withheld. If
a successor in interest acquires more than 51% of the assets of NAVIANT, 24/7
shall have the right to consent to such entity's assumption of this Agreement,
such consent not to be unreasonably withheld.
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19. Entire Agreement. This Agreement constitutes the entire agreement and
----------------
supersedes all prior agreements of the Parties with respect to the transactions
set forth herein and, except as otherwise expressly provided herein, is not
intended to confer upon any other person any rights or remedies hereunder.
20. Counterparts. This Agreement may be executed by facsimile in
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document.
21. Acknowledgement and Consent. 24/7 and NAVIANT each hereby acknowledge
---------------------------
that IntelliQuest has assigned its rights and obligations under the Amended
Database License Agreement. NAVIANT, and 24/7 hereby consents to and approves
such assignment and 24/7 and NAVIANT agree that NAVIANT shall be entitled to all
of IntelliQuest's rights and subject to all of IntelliQuest's obligations
thereunder from and after the date hereof. This Agreement shall replace and
supersede the Original Agreement in its entirety.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
24/7 MEDIA, INC.
By:___________________________
Name:_________________________
Title:________________________
NAVIANT TECHNOLOGY SOLUTIONS, INC.
By:___________________________
Name:_________________________
Title:________________________
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Naviant
14 Camputs Boulevard
Suite 200
Newton Square, PA 19073-3279
February 10, 2000
24/7 Media, Inc.
1250 Broadway, 28th Floor
New York, New York 10001-3701
Attn: Mr. David J. Moore
Dear David:
As you may know, Naivant, Inc. ("Naviant") proposes to enter into a strategic
relationship (the "Strategic Relationship") with Young & Rubicam Inc. ("Y&R").
One component of the Strategic Relationship is a license of certain portions osf
Naviant's proprietary database (the "Database") to Y&R for purposes of data
mining, analyticas and modeling by Y&R for its own behalf and on behalf of its
clients.
This letterserves to confirm our agreement that Naviant may include as part of
the Database licensed to Y&R the data fields licensed by 24/7 Media, Inc.
("24/7") to Naviant pursuant to that certain Database Development Agreement
dated September 7, 1999 between 24/7 and Naviant, (the "Agreement") provided,
that (i) Naviant and Y&R must represent and wrrant to 24/7 that the use and
distribution by Naviant Or Y&R of all 24/7 Data File Records (as defined in the
Agreement) shall comply fully with all of 24/7's policies relating to the
collection of electronic information, and use and distribution of such
information, in effect at the time of the collection, use or distribution of
such data fields; (ii) Naviant shall agree that the amount payable by Naviant
per 24/7 Data File Record under Section 5.C of the Agreement shall be increased
effective immediately to the lower of (a) ***** or (b) ***** higher than the
lowest fee at which 24/7 sells 24/7 Data File Records to any similarly situated
customer; and (iii) Y&R must agree that any data mining, analytics and/or
modeling results generated by Y&R using data of 24/7 origin shall be owned by
Y&R, but Naviant and 24/7 shall be granted a non-exclusive perpetual license in
such results.
If you believe the foregoing represents the understanding of Naviant and 24/7
regarding this matter, please indicate so by signing this letter agreement in
the space provided below.
Very truly yours,
NAVIANT, INC.
By: /s/ Charles W. Stryker
--------------------------------------
Name: Charles W. Stryker, Ph.D.
Title: President and Chief Executive Officer
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AGREED AND ACCEPTED:
24/7 MEDIA, INC.
By: /s/ David J. Moore
-----------------------------------
Name: David J. Moore
Title: President and Chief Executive Officer
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<PAGE>
CONFIDENTIAL
------------
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS ARE DENOTED BY ASTERISKS.
CUSTOMER ACQUISITION AND ADVERTISING AGREEMENT
This agreement ("Agreement") is entered into as of the 10th day of September,
1999 ("Effective Date"), by and between Excite, Inc., a wholly owned subsidiary
of At Home Corporation, located at 450 Broadway, Redwood City, California 94063
("Excite") and Naviant Technology Solutions, Inc., a Delaware corporation,
located at 14 Campus Boulevard. Suite 200, New Town Square PA 19073 ("Naviant").
RECITALS
A. Excite maintains a site on the Internet at http://www.excite.com (the "Excite
Site"), which, among other things, allows its users to search for and access
content and other sites on the Internet.
B. Naviant operates an electronic registration service (the "Naviant
Registration Service") for vendors of various products and services
("Registration Client").
C. Excite and Naviant wish to enable users of the Naviant Registration Service
to have an Excite membership created for them when registering under the
Naviant Registration Service and Naviant wishes to sell advertising on the
Excite Site targeted to such users.
Therefore, the parties agree as follows:
1. NAVIANT REGISTRATION
a) Beginning on October 1, 1999 (the "Launch Date"), Naviant will
offer all potential registrants of the Naviant Registration Service the
option of having an Excite membership created for them, at the time they
register for a client product; provided the applicable Registration
Client allows Naviant to offer Excite membership to registrants. Naviant
will use commercially reasonable efforts to encourage Registration
Clients to permit the inclusion of the Excite membership option.
b) The Excite membership option will be displayed prominently on
all registration pages. The parties will work together to develop the
copy and placement of this Excite membership option.
c) Excite and Naviant will collaborate on the development of a
compelling PC OEM/ISP registration process for combined ISP and Excite
registration.
<PAGE>
d) Naviant will collect the data set out in Exhibit A hereto (the
"Excite Registration Data") from registrants who opt for Excite
membership (the "Excite Registrants").
e) Naviant and Excite will determine mutually agreeable methods for
the transmission of the Excite Registration Data to Excite, such that,
where possible, the Naviant registration will be integrated with the
Excite Universal Registration System on a real time basis and the user
is sent to an Excite URL to complete Excite registration upon completion
of the Naviant registration process.
f) Naviant will have sole responsibility for providing, hosting and
maintaining at its expense, the Naviant Registration Service. Excite
will have sole responsibility for providing, hosting and maintaining at
its expense, the. Excite Universal Registration System.
g) Naviant will cause the Naviant Registration Service software to
modify the browsers of the Excite Registrants to (1) start at
www.excite.com or another Excite URL to be determined by Excite; (2)
have the home button reprogrammed to www.excite.com, or another Excite
URL to be determined by Excite; and (3) have the browser search button
point to an Excite URL determined by Excite.
h) Excite may, upon fifteen (15) days prior notice to Naviant,
request reasonable revisions to the Excite membership registration
option as needed to reflect changes that will not adversely affect
Naviant, such as changes to the user data collected, changes to Excite's
name and/or brand, or changes to the URLs for the links to the Excite
Site. Naviant will use reasonable efforts to accommodate Excite's
requested changes within the fifteen (15) day period.
i) During the term of this Agreement, Naviant shall not (i)
integrate its registration system with, (ii) market its registration
data with Excite membership or usage as a selection or identifying
criteria to, or (iii) collect or participate in the collection of
registration data for a competing product ***** services. Not more than
once per quarter, Excite may update this list of competitors.
2. ADVERTISING ON EXCITE SITE AND PAYMENT TO NAVIANT
a) Except as specifically provided in this Agreement, Excite will
be solely responsible for selling advertising on the Excite Site
Beginning on the Launch Date, Excite will pay Naviant on a quarterly
basis forty percent (40%) of the "Net Advertising Revenue" that accrues
to Excite during the term of this Agreement from banner advertising that
appears on those page views generated by Excite Registrants sourced from
Naviant. "Net Advertising Revenue" means all banner advertising revenue
that accrues to Excite during the applicable payment period, minus forty
percent (40%) of such revenue (representing Excite's costs for internal
and external sales commissions, hosting expenses and content).
b) Payments by Excite to Naviant will be due within forty five (45)
days of the end of each calendar quarter.
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c) With each payment, Excite will provide to Naviant documentation
reasonably detailing the calculation of the payment.
d) Excite will maintain accurate records with respect to the
calculation of all payments due under this Agreement. Naviant may, upon
no less than thirty (30) days prior written notice to Excite and no more
than once per year, cause an independent Certified Public Accountant to
inspect the records of Excite reasonably related to the calculation of
such payments during Excite's normal business hours. The fees charged by
such Certified Public Accountant in connection with the inspection will
be paid by Naviant, unless the Certified Public Accountant discovers an
underpayment of greater than 10%, in which case Excite will pay such
fees.
3. PROMOTION
Neither party will make any public statement, press release or other
announcement relating to the terms of or existence of this Agreement
without the prior written approval of the other.
4. NAVIANT PURCHASE OF ADVERTISING ON THE EXCITE SITE
a) Naviant shall provide to Excite a copy of the Naviant High-Tech
Household Database (the "HTHH Database") for use by Excite to match such
records against the Excite registered users database to create a
database of users (the "Naviant User Pool") for use by Naviant and its
clients to target advertisements on the Excite Site. Excite will provide
Naviant with a cookie or other identifying number for Naviant to
identify the users Included in the Naviant User Pool.
b) Subject to availability as determined by Excite, Naviant shall
purchase banner advertisements, on the Excite Site for resale to its
Registration Clients and other clients in the minimum quarterly amounts
set forth in Exhibit B ("Minimum Quarterly Purchase Amount") to be
targeted to users registered on Excite through the Naviant registration
service. Fees for advertising inventory made available shall be payable
on a monthly basis as set forth in Exhibit B.
c) Banner impression purchased for delivery to users registered on
Excite through the Naviant Registration Service shall be charged against
the. Minimum Quarterly Purchase Amount at the rate of *****, Naviant may
purchase banner impressions to be sold to their clients for delivery to
users in the Naviant User Pool, but not registered to Excite via the
Naviant registration service at the rate of *****; provided however,
such purchases shall be credited against the Minimum Quarterly Purchase
Amount at a rate of *****. The ***** price includes targeting to the
Naviant User Pool. Naviant shall have right to resell purchased
inventory at any price to its clients.
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d) Naviant may, subject to availability and approval of Excite,
purchase additional inventory from Excite for resale to Registration
Clients at the rate of *****.
e) Naviant shall comply with all Excite guidelines for advertisers
in effect from time to time, including but not limited to those
guidelines set out in Exhibit C hereto. Excite will have the right to
reject any advertisement which does not comply with such guidelines. In
addition, in the event that Excite deems, in its sole discretion, that
any advertising sold by Naviant is inappropriate to Excite's interests,
Excite may choose not to display the advertising. Due to the one-to-one
targeting of these impressions, MatchLogic, Inc. will need to perform
all ad serving under this Agreement and Naviant and its advertisers will
need to coordinate directly, at Excite's option, with either MatchLogic
Inc. or Excite for ad serving. The cost of ad serving is included in the
*****.
f) Naviant will not sell banner advertising to be displayed on the
Excite Site to Excite's Competitors advertising or promoting competing
products to those offered by Excite as provided in Exhibit D, or any
other Web site promoting itself as a provider of Internet search and
navigation services. Not more than once per quarter, Excite may update
this list of competitors. Within twenty-four (24) hours of delivery of
Excite's written update, Excite will be entitled to remove any Naviant
client advertising from Excite's listed competitors.
g) Excite will have the right to determine, in its sole discretion,
where on the Excite Site it will serve the purchased impressions to the
designated users. Excite will use commercially reasonable efforts to
serve all purchased banner inventory to the specified users from the
Naviant User Pool. However, in the event that Excite is not able to
serve all purchased impressions to the users requested, Excite will
deliver such impressions through either targeted inventory from
subsequent quarters, or targeted email. If at the expiration of the term
Excite has not provided the purchased impressions, the term will be
extended for the lesser of (i) 90 (ninety) days or (ii) the number of
days necessary to provide purchased impressions. This obligation states
Excite's entire liability for Excite's delivery of the purchased
impressions under this Agreement.
Within thirty (30) days following the end of each calendar quarter, Excite
shall provide to Naviant a detailed report outlining the impressions
served by Excite for the quarter just ended.
//
//
//
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5. USER DATA
a) Subject to Subsection 5 b), below Naviant will retain all right,
title and interest in and to the HHTD Database worldwide (including, but
not limited to, ownership of all copyrights and other intellectual
property rights therein). Subject to the terms and conditions of this
Agreement, Naviant hereby grants to Excite and its affiliates a royalty-
free, non-exclusive, license to use the HHTD Database in accordance with
this Agreement.
b) Excite and Naviant will jointly own, the user data collected by
Naviant and used to generate Excite registrations. Naviant will not,
during the term of this Agreement or anytime, sell, disclose, transfer
or rent any data or any selection of data which is identifiable as
having Excite registration, membership or usage.
6. TRADEMARK OWNERSHIP AND LICENSE
a) Excite will retain all right, title and interest in and to its
trademarks, service marks and trade names worldwide, subject to the
limited license granted to Naviant in section 6(c) below.
b) Excite hereby grants to Naviant a non-exclusive, limited license
to use the Excite trademarks, service marks or trade names only as
specifically described in this Agreement. All such use shall be in
accordance with Excite's reasonable policies regarding advertising and
trademark usage as established from time to time.
c) Upon the expiration or termination of this Agreement, Naviant
will cease using the trademarks, service marks and/or trade names of
Excite.
7. TERM
The term of this Agreement will begin on the Effective Date and will
continue until December 31, 2001.
8. TERMINATION
a) Either party may terminate this Agreement if the other party
materially breaches its obligations hereunder and such breach remains
uncured for thirty (30) days following the notice to the breaching party
of the breach.
b) Excite shall be entitled to terminate this Agreement upon notice
to Naviant in the event of a Change of Control of Naviant. A "Change of
Control" is defined as: (i) a merger or consolidation with an Excite
Competitor where Naviant is not the surviving entity; (ii) a merger,
consolidation or equity issuance where the equity holders immediately
prior to such transaction own or control less than a majority of the
voting equity of Naviant after the transaction; or (iii) a sale of all
or substantially all of the assets of Naviant to an Excite Competitor.
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c) All payments that have accrued prior to the termination or
expiration of this Agreement will be payable in full within thirty (30)
days thereof.
d) The provisions of Subsection 5 b) (User Data and Trademark
License), Section 9 (Confidentiality), Section 10 (Warranty and
Indemnity), Section 11 (Limitation of Liability) and Section 12 (Dispute
Resolution) will survive any termination or expiration of this
Agreement.
9. CONFIDENTIALITY
a) For the purposes of this Agreement, "Confidential Information"
means information about the disclosing party's (or its suppliers')
business or activities that is proprietary and confidential, which shall
include all business, financial, technical and other information of a
party marked or designated try such party as "confidential" or
"proprietary"; or information which, by the nature of the circumstances
surrounding the disclosure, ought in good faith to be treated as
confidential.
b) Confidential Information will not include information that (i)
is in or enters the public domain without breach of this Agreement, (ii)
the receiving party lawfully receives from a third party without
restriction on disclosure and without breach of a nondisclosure
obligation or (iii) the receiving party knew prior to receiving such
information from the disclosing party or develops independently.
c) Each party agrees (i) that it will not disclose to any third
party or use any Confidential Information disclosed to it by the other
except as expressly permitted in this Agreement and (ii) that it will
take all reasonable measures to maintain the confidentiality of all
Confidential Information of the other party in its possession or
control, which will in no event be less than the measures it uses to
maintain the confidentiality of its own information of similar
importance.
d) Notwithstanding the foregoing, each party may disclose
Confidential Information (i) to the extent required by a court of
competent jurisdiction or other governmental authority or otherwise as
required by law or (ii) on a "need-to-know" basis under an obligation of
confidentiality to its legal counsel, accountants, banks and other
financing sources and their advisors.
e) The terms and conditions of this Agreement will be deemed to be
the Confidential Information of each party and will not be disclosed
without the written consent of the other party.
10. WARRANTY AND INDEMNITY
a) Naviant warrants that it owns, or has obtained the right to
distribute and make available as specified in this Agreement, any and
all data and content provided to Excite or made available to third
parties in connection with this
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Agreement, including but not limited to the HTHH Database, Excite
Registration Data and the banner advertisements of its clients (the
"Third Party Ads").
b) Naviant represents and warrants that ,any and all data and
content transmitted to Excite is designed to be used prior to, during,
and after the calendar year 2000 A.D., and will operate during each such
time period without error relating to date data, specifically including
any error relating to, or the product of, date data which represents or
references different centuries or more than one century.
c) Naviant will indemnify, defend and hold harmless Excite, its
affiliates, officers, directors, employees, consultants and agents from
any and ail third party claims, liability, damages and/or costs
(including, but not limited to, attorneys fees) arising from:
i) Its breach of any warranty, representation or covenant in this
Agreement; or
ii) Any claim that the Excite Registration Data, HTHH Database,
Third Party Advertisements or any other content or data provided by
Naviant hereunder infringes or violates any third party's
copyright, patent, trade secret, trademark, right of publicity or
right of privacy or contains any defamatory content; or
iii) Any claim that the Excite Registration Data, HTHH Database,
Third Party Advertisements or any other content or data provided by
Naviant hereunder violates any state, federal or local laws,
regulations or statutes; or
iv) Any claim arising from the data or information contained in the
Excite Registration Data, HTHH Database, Third Party Advertisements
or any other content or data provided by Naviant hereunder.
Naviant's obligation to indemnify Excite is conditioned upon Excite
promptly notifying Naviant of any and all such claims, unless the
failure to notify does not materially and adversely affect
Naviant's defense. Excite will reasonably cooperate with Naviant
with the defense and/or settlement thereof; provided that, if any
settlement requires an affirmative obligation of, results in any
ongoing liability to or prejudices or detrimentally Impacts Excite
in any way and such obligation, liability, prejudice or impact can
reasonably be expected to be material, then such settlement shall
require Excite's written consent (not to be unreasonably withheld
or delayed) and Excite may have its own counsel in attendance at
all proceedings and substantive negotiations relating to such claim
at Excite's sole cost and expense.
d) Excite will indemnify, defend and hold harmless Naviant, its
affiliates, officers, directors, employees, consultants and agents from
any and all third party
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claims, liability, damages and/or costs (including, but not limited to,
attorneys fees) arising from:
i) Its breach of any warranty, representation or covenant in this
Agreement; or
ii) Any claim arising from content displayed on the Excite Site
other than the Third Party Advertisements.
Excite's obligation to indemnify Naviant is conditioned upon
Naviant promptly notifying Excite of any and all such claims,
unless the failure to notify does not materially and adversely
affect Excites defense. Naviant will reasonably cooperate with
Excite with the defense and/or settlement thereof; provided that,
if any settlement requires an affirmative obligation of, results in
any ongoing liability to or prejudices or detrimentally impacts
Naviant in any way and such obligation, liability, prejudice or
impact can reasonably be expected to be material, then such
settlement shall require Naviant's written consent (not to be
unreasonably withheld or delayed) and Naviant may have its own
counsel in attendance at all proceedings and substantive
negotiations relating to such claim at Naviant's sole cost and
expense.
e) EXCEPT AS SPECIFIED 1N THIS AGREEMENT, NEITHER PARTY MAKES ANY
WARRANTY IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT AND
HEREBY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
REGARDING SUCH SUBJECT MATTER.
11. LIMITATION OF LIABILITY
EXCEPT UNDER SECTION 10(c) and 10(d), IN NO EVENT WILL EITHER PARTY BE
LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
OTHERWISE, WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE. EXCEPT UNDER 10(c) AND 10(d), THE LIABILITY OF EITHER PARTY
FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY
OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED, THE AMOUNTS
ACTUALLY PAID BY THE OTHER PARTY HEREUNDER.
12. DISPUTE RESOLUTION
a) The parties agree that any breach of either of the parties'
obligations regarding trademarks, service marks or trade names and/or
confidentiality would result in irreparable injury for which there is no
adequate remedy at law. Therefore, in the event of any breach or
threatened breach of a party's obligations
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<PAGE>
regarding trademarks, service marks or trade names or confidentiality,
the aggrieved party will be entitled to seek equitable relief In
addition to its other available legal remedies in a court of competent
jurisdiction. For the purposes of this section only, the parties consent
to venue in either the state courts of the county in which Excite has
its principal place of business or the United States District Court for
the Northern District of California.
b) In the event of disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement, other
than disputes arising from or concerning trademarks, service marks or
trade names and/or confidentiality, the parties will first attempt to
resolve the dispute(s) through good faith negotiation. In the event that
the dispute(s) cannot be resolved through good faith negotiation, the
parties will refer the dispute(s) to a mutually acceptable mediator for
hearing in the county in which Excite has its principal place of
business.
c) In the event that disputes between the parties .arising from or
concerning in any manner the subject matter of this Agreement, other
than disputes arising from or concerning trademarks, service marks or
trade names and/or confidentiality, cannot be resolved through good
faith negotiation and mediation, the parties will refer the dispute(s)
to the American Arbitration Association for resolution through binding
arbitration by a single arbitrator pursuant to the American Arbitration
Association's rules applicable to commercial disputes. The arbitration
will be held in the county in which Excite has its principal place of
business.
13. GENERAL
a) Assignment. Neither party may assign this Agreement, in whole
----------
or in part, without the other party's written consent (which will not be
unreasonably withheld), except that no such consent will be required in
connection with a merger, reorganization or safe of all, or
substantially all, of such party's assets. Any attempt to assign this
Agreement other than as permitted above will be null and void.
b) Governing Law. This Agreement will be governed by and construed
-------------
in accordance with the laws of the State of California, notwithstanding
the actual state or country of residence or incorporation of Naviant.
c) Notice. Any notice under this Agreement will be in writing and
------
delivered by personal delivery, express courier, confirmed facsimile,
confirmed email or certified or registered mail, return receipt
requested, and will be deemed given upon personal delivery, one (1) day
after deposit with express courier, upon confirmation of receipt of
facsimile or email or five (5) days after deposit in the mail. Notices
will be sent to a party at its address set forth below or such other
address as that party may specify in writing pursuant to this Section.
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<PAGE>
d) No Agency. The parties are independent contractors and will have
---------
no power or authority to assume or create any obligation or
responsibility on behalf of each other. This Agreement will not be
construed to create or imply any partnership, agency or joint venture.
e) Force Majeure. Any delay in or failure of performance by either
-------------
party under this Agreement will not be considered a breach of this
Agreement and will be excused to the extent caused by any occurrence
beyond the reasonable control of such party including, but not limited
to, acts of God, power outages and governmental restrictions.
f) Severability. In the event that any of the provisions of this
------------
Agreement are held by to be unenforceable by a court or arbitrator, the
remaining portions of the Agreement will remain in full force and
effect.
g) Entire Agreement. This Agreement is the complete and exclusive
----------------
agreement between the parties with respect to the subject matter hereof,
superseding any prior agreements and communications (both written and
oral) regarding such subject matter. This Agreement may only be
modified, or any rights under it waived, by a written document executed
by both parties.
Naviant Technology, Inc. Excite, Inc.
By:_____________________________________ By:___________________________
Name:___________________________________ Name:_________________________
Title:__________________________________ Title:________________________
Date:___________________________________ Date:_________________________
430 Broadway
Redwood City, California 94083
415.588.6000 (voice)
413.588.8030 (fax)
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<PAGE>
AMENDMENT
TO
CUSTOMER ACQUISITION AND ADVERTISING AGREEMENT
DATED
SEPTEMBER 10, 1999
Whereas the entities known as, d.b.a Excite@Home ("Excite") and Naviant
-----------
Technology Solutions, Inc., ("Naviant") entered into the aforementioned
agreement (the "Agreement") on September 10, 1999, and
Whereas Naviant has changed its name to Naviant, Inc., and
Whereas both parties agree to changes to certain dates and other provisions of
the Agreement, and
Both parties agree that the following amendment, with respect to the contractual
sections identified, further clarifies the beginning dates of the particular
services referred to in the original contract, and better clarifies Naviant's
ability to identify program users.
The following sections will replace the contract sections in their entirety. All
other terms and conditions of the Agreement remain unchanged.
Section 1. NAVIANT REGISTRATION
a) Beginning on January 1, 2000, Naviant will offer all
potential registrants of the Naviant Registration Service
the option of having an Excite registration created for
them at the time they register for a client product;
provided the applicable Registrant Client allows Naviant to
offer Excite membership to registrants. Naviant will use
commercially reasonable efforts to encourage Registration
clients to permit the inclusion of the Excite membership
option.
Section 4. NAVIANT PURCHASE OF ADVERTISING ON THE EXCITE SITE
a) Naviant shall provide to Excite a copy of the Naviant High-
Tech Household Database (the "HTHH Database") for use by
Excite to match such records against the Excite registered
users database, hereby define as all registered users
legally available to Excite whether from internal
registration or merger/acquisition activity, to create a
database of users (the "Naviant User Pool") for use by
Naviant and its clients to target advertisements on the
Excite Network. The Excite Network is defined as the sum of
all Internet sites where Excite can influence the content
and advertising space. Excite will provide Naviant with a
cookie or other identifying number for Naviant to identify
the users included in the Naviant User Pool.
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Section 5. USER DATA
b) Excite and Naviant will jointly own, the user data
collected by Naviant and used to generate Excite
registrations. Naviant will not, during the term of this
agreement or anytime, sell, disclose, transfer or rent any
data or any selection of data, which is identifiable as
having Excite registration, membership or usage. Naviant
reserves the right to identify any Excite registrant in the
HHTD using the term: "Member of Internet Search and
Navigation Service."
Section 7. TERM The Term of this agreement will begin on effective date and
will continue until March 31, 2002.
Exhibit B. MINIMUM QUARTERLY PURCHASE AMOUNT
Quarter Cumulative Minimum Total
----------- ------------------------
Q3, 1999 $0
Q4, 1999 $0
Q1, 2000 $0
Q2, 2000 $ 250,000
Q3, 2000 $ 500,000
Q4, 2000 $1,000,000
Q1, 2001 $1,750,000
Q2, 2001 $2,500,000
Q3, 2001 $3,250,000
Q4, 2001 $4,250,000
Q1, 2002 $5,500,000
By signing the attached document, both parties agree to be bound by the new
terms created by this Amendment.
_______________________________ ________________________________
Naviant, Inc. Excite@HOME
_______________________________ ________________________________
Printed Name Printed Name
_______________________________ ________________________________
Title Title
_______________________________ ________________________________
Date Date
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<PAGE>
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS ARE DENOTED BY ASTERISKS.
DATA SUBLICENSING AGREEMENT
This Agreement effective October 1, 1999 (the "Effective Date") by and between
Naviant Technology Solutions Inc., d/b/a Naviant, a Delaware corporation) , with
principal offices at 14 Campus Boulevard, Newtown Square, Pennsylvania 19073
(hereinafter "NAVIANT") and eData.com, Inc., a Florida corporation, with
principal offices at 6601 Park of Commerce Boulevard, Boca Raton, Florida 33487
(hereinafter "EDATA").
Whereas, EDATA is licensed by Trans Union LLC to market its PerformanceData
consumer database and has obtained the right from Trans Union LLC to enter into
this Agreement; and
Whereas, NAVIANT desires the right to append information from the
PerformanceData Database to its files, and the ability to market lists developed
from the PerformanceData Database;
Now, therefore, in consideration of the premises and promises set forth
herein, EDATA agrees to sublicense the PerformanceData Database Information
under the following terms and conditions:
1. REPRESENTATIONS AND WARRANTIES
EDATA represents and warrants to NAVIANT, as of the Effective Date, that it has
full rights to license the PerformanceData Database Information to NAVIANT for
the purposes set forth herein.
2. TERM
The initial term of this Agreement shall be for five (5) years.
3. DEFINITIONS
a. "NAVIANT Database" means the information and/or databases collected
and maintained by NAVIANT from time to time during the term of this
Agreement.
b. "PerformanceData Database" means the consumer database licensed by
EDATA from Trans Union LLC. The file layout and format of the
PerformanceData Database is attached hereto as Exhibit A.
c. "Database Information" means information contained in a database.
d. "Database Lists" means marketing lists containing PerformanceData
Database Information.
e. "Contract Year" means any of the twelve month periods commencing on
October 1st and ending on September 30th during the term of this
Agreement.
<PAGE>
4. LICENSE; RESTRICTIONS AND OTHER CONDITIONS ON THE USE OF THE DATABASE
a. Permitted Use of PerformanceData Database Information. PerformanceData
Database Information (1) may be appended to any NAVIANT Database and
used for NAVIANT's own internal purposes and/or to develop consumer
marketing lists to be rented to NAVIANT customers, and/or (2) may be
used to develop consumer marketing lists directly from the
PerformanceData Database to be rented to NAVIANT customers.
b. Use Restrictions.
(i) Appended Data- Marketing lists prepared from NAVIANT Databases and
enhanced by PerformanceData Database Information may be rented by
NAVIANT to its customers on such terms as it may choose so long as
said terms do not violate the provisions of this Agreement, and so
long as title to PerformanceData Database Information is not sold
or otherwise permanently conveyed to a NAVIANT customer. The rights
to use of the appended data terminate upon the termination of this
Agreement, or no later than twelve months thereafter for rentals
occurring prior to termination:
(ii) Lists prepared solely from the PerformanceData Database may be
rented by NAVIANT to its customers only on a one-time-use or a one-
year-unlimited-use basis. Title to a PerformanceData Database List
will not be sold, or otherwise permanently conveyed to any
customer.
(iii) All lists prepared or enhanced by NAVIANT shall be used in
connection with responsible marketing programs.
(iv) No Database List containing PerformanceData Database Information
will be provided by NAVIANT to any of its customers without first
securing an express agreement from the customer that (a) the
customer will comply with the terms of 2 (b)(ii) and (iii) above;
(b) the solicitation, advertisement or other material made or
distributed using the Database List by the customer will make no
reference to any selection criteria or presumed knowledge regarding
the intended recipient of such solicitation, advertisement, or
material, or the source of the recipient's name and address; (c)
there shall be no mailings that advertise, sell or exchange any
products or services that involve sexual paraphernalia, drug
paraphernalia, adult films or other media, gambling services,
weapons or other illicit activities, chain letters, pyramid fund
raising, or other similar types of material using the Database
List; and (d) use of any PerformanceData Database Information will
comply with all federal, state, and local regulations.
(v) NAVIANT shall take reasonable precautions to ensure that the data
supplied hereunder is provided only to appropriate users and are
not used for fraudulent or illegal purposes. If NAVIANT determines
that any data is being used for fraudulent or illegal purposes, it
agrees to take
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<PAGE>
commercially reasonable steps to terminate such user's access to
the data.
5. DELIVERY AND CHARGES
EDATA shall maintain the PerformanceData Database at its production facility in
Boca Raton, Florida during the term of this Agreement, and it shall deliver the
lists prepared for or on behalf of NAVIANT, via security encrypted electronic
mail and/or security encryption over the Internet, in hard copy, or by means of
a tape, disk, CD or other tangible medium. Charges for order fulfillment will
be assessed to NAVIANT under the Processing Agreement between parties dated
October 1, 1999. The PerformanceData Database will be updated by EDATA as
frequently as EDATA receives updates from Trans Union LLC.
6. RETENTION OF RIGHTS
NAVIANT acknowledges that it has no right or interest in the PerformanceData
Database except as expressly provided by this Agreement, that its rights to use
and copy information from the database are limited to those expressly provided
in this Agreement, and that title to the PerformanceData Database Information in
all Database Lists furnished to NAVIANT is vested exclusively in
PerformanceData.
7. INDEMNIFICATION; LIABILITY
a. NAVIANT agrees to indemnify, defend and hold EDATA and PerformanceData
harmless from and against any and all losses, damages, liabilities and
expenses ("Losses") based upon claims made by any third party to the
extent arising out of or in any way connected with (i) any breach by
NAVIANT of any warranty, agreement, covenant or obligation set forth
herein, or (ii) NAVIANT's utilization of the PerformanceData Database
Information or, any list based upon or derived from the database, or
utilization of the foregoing by any third party gaining access to the
PerformanceData Database Information through NAVIANT.
b. EDATA agrees to indemnify, defend and hold NAVIANT harmless from and
against any and all Losses based upon claims made by any third party to
the extent arising out of or in any way connected with (i) any breach by
EDATA of any warranty, agreement, covenant or obligation set forth
herein, or (ii) EDATA'S provision of the PerformanceData Database
Information or any list based upon or derived therefrom to NAVIANT for
the purposes set forth herein.
c. Except as expressly otherwise provided in this Agreement, EDATA
disclaims all representations and warranties of any kind or nature,
express or implied, arising out of or related to this Agreement and the
PerformanceData Database, including, without limitation, any warranties
regarding quality, correctness, completeness, comprehensiveness,
suitability, merchantability, fitness for a particular purpose, title
and non-infringement or otherwise (irrespective of any course of
dealing, custom or usage of trade) and each of which is hereby excluded
by agreement of the parties.
d. Notwithstanding any provision of this Agreement to the contrary, with
the exception of claims arising from a claim by a third party arising
from a breach of
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<PAGE>
this Section 7, neither party shall be liable to the other for lost
profits, lost revenues, lost business opportunities, exemplary,
punitive, or consequential damages.
8. PAYMENT FOR PERFORMANCEDATA
a. EDATA shall provide to NAVIANT, by the tenth day of each month, a
written usage and charges report of (1) NAVIANT Database records
enhanced with data from the PerformanceData Database during the previous
month, and (2) lists produced by NAVIANT exclusively from the
PerformanceData Database during the previous month.
b. NAVIANT will pay EDATA usage charges of ***** per thousand for records
enhanced by PerformanceData Database. NAVIANT's use of the enhanced
records is unlimited during the term of this Agreement.
c. In cases where NAVIANT resells the PerformanceData Database Information
as a standalone offering, NAVIANT will pay EDATA usage charges of *****
per thousand records for any single use marketing lists; or (2) *****
per thousand records for any one-year-unlimited-use marketing lists.
d. Credits for Minimum Charges for Appended Data- As set forth in the
Processing Agreement between the parties of October 1, 1999 ("Processing
Agreement"). NAVIANT has obligated itself to pay a minimum annual fee of
Five Hundred Thousand Dollars ($500,000.00) to EDATA for PerformanceData
Database Information appended to NAVIANT's records. NAVIANT shall pay
EDATA the greater of the actual usage charges of the PerformanceData
Database Information appended to NAVIANT Databases pursuant to pursuant
to subsection (b) above or the monthly sum due under the Processing
Agreement, whichever is greater.
e. Limited Carry Over of Credits for Appended Charges- In the event
NAVIANT's payment of minimum charges for appended data [pursuant to
subsection 8(d)] in any given month exceeds the amount of charges that
would be due pursuant to subsection (b) above, the excess payment shall
be carried over as a credit to NAVIANT's charges due pursuant to
subsection (b) in the following months. In no event will credits under
this paragraph be carried over to the next ensuing Contract Year or
beyond the termination of this Agreement or the Processing Agreement.
f. Taxes and Other Charges- In addition to the foregoing charges, NAVIANT
agrees to pay when due, all taxes, fees or assessments of whatsoever
kind and nature now or hereafter imposed by any governmental authority
upon the data from the PerformanceData Database provided by EDATA
hereunder, or otherwise arising out of the transactions contemplated by
this Agreement, excluding any taxes based upon the income of EDATA.
g. Invoice Terms- NAVIANT shall pay EDATA within thirty (30) days of the
end of the month the usage charges, all taxes and other charges for the
previous month. If NAVIANT fails to pay invoice within sixty days of its
due date which is later determined to be valid, NAVIANT agrees to pay
all of EDATA's costs of
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<PAGE>
collection of such payments, including but not limited to EDATA's
reasonable attorney's fees.
9. TERMINATION
a. If any material undisputed fees and charges incurred by NAVIANT under
this Agreement are not paid when due and for a period of 30 days
thereafter, in addition to any other remedy which EDATA may have, EDATA
may immediately suspend its performance under this Agreement by giving
written notice to NAVIANT, which suspension may, at EDATA's option,
continue until such breach has been cured by NAVIANT.
b. Each party has the right to terminate this Agreement immediately upon
the occurrence of any one or more of the following events: (i) if the
other party materially breaches any other material term or provision of
this Agreement which, if capable of remedy, is not remedied within 30
days of written notice requiring remedy of the breach, (ii) or become
insolvent, makes an assignment for the benefit of its creditors, calls a
meeting of the creditors to obtain material greater financial
accommodation, suspends business or commences or has commenced against
it any case or proceeding under any provisions of the Bankruptcy Code.
10. FORCE MAJEURE
Neither party shall be liable for delays or nonperformance of this Agreement
occasioned by strikes, fires, accidents, or any other causes beyond its'
control, including, but not limited to, lack of availability of materials, fuel
or utilities.
11. NOTICES
Any notice required or permitted to be given under the terms of this Agreement
shall be in writing and delivered (i) by hand; (ii) by certified or registered
mail, postage prepaid, return receipt requested; or (iii) by overnight courier,
as follows;
NAVIANT
Attn: Charles Stryker, Ph.D., CEO
14 Campus Boulevard
Suite 200
Newtown Square, PA 19073
eDATA.com
Attn: Hank Asher, CEO
6601 Park of Commerce Boulevard
Boca Raton, FL 33431
Or to such other address of which either party has given the other written
notice. All notices shall be deemed received on the date of delivery or, if
mailed, on the date of receipt appearing on the return receipt card. Rejection
or other refusal to accept any notice, request or demand or the inability to
deliver the same because of a changed address of which no notice was given, will
be deemed receipt of the notice, request or demand.
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<PAGE>
12. ASSIGNMENT
The rights or obligations under this Agreement are not assignable by either
party without written consent from the other party.
13. INDEPENDENT CONTRACTORS
The parties are independent contracting entities and there is not partnership or
agency relationship between them. Neither party will represent to third parties
that it is the agent or representative of the other.
14. GENERAL PROVISIONS
a. During the term and for a period of two years thereafter, the
parties will each keep strictly confidential all non-public
information provided by the other party during the term
("Confidential Information"), except to the extent required to be
disclosed under applicable law or by a governmental order, decree,
regulation, rule or process (provided that the receiving party
gives written notice to the disclosing party as far in advance as
reasonably possible prior to disclosure and the receiving party
reasonably cooperates in seeking to dispute such disclosure and/or
receive confidential treatment for the disclosed information).
Confidential Information shall not include information the
receiving party can document (i) was or has become readily publicly
available without restriction through no fault of the receiving
party or its employees or agents; (ii) is received without
restriction from a third party lawfully in possession of such
information and lawfully empowered to disclose such information; or
(iii) was rightfully in possession of the receiving party without
restriction prior to its disclosure by the other party.
b. Any controversy or claim relating to this Agreement shall be
exclusively settled by binding arbitration by one arbitrator
administered by the American Arbitration Association ("AAA"), in
accordance with the then current Commercial Arbitration Rules of
the AAA.
c. The terms and conditions stated herein are the complete and
exclusive statement of the agreement between the patties with
respect to the obtaining of the products or services described
herein. There are no representations, warranties, promises,
covenants or undertakings between the parties except as described
in this Agreement.
d. If any of the provisions of this Agreement are found to be invalid
under an applicable statute or rule of law, they are to be enforced
to the maximum extent permitted by Law and beyond such extent are to
be deemed omitted from this Agreement, without affecting the
validity of any other provision of this Agreement.
e. The headings and captions in this Agreement are for convenience only
and shall be used to construe the meaning of this Agreement.
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f. This Agreement will be governed by and construed in accordance with
the laws of the State of Florida, and the exclusive jurisdiction and
venue for any proceeding brought pursuant to this Agreement shall be
Palm Beach County.
IN WITNESS WHEREOF, the parties have executed this Agreement through their duly
authorized representatives.
eData.com. Inc. Naviant Technology Solutions, Inc., d/b/a
NAVIANT
By:____________________________ By:_______________________________
Print Name:____________________ Print Name:_______________________
Title:_________________________ Title:____________________________
7
