<PAGE>
As filed with the Securities and Exchange Commission on March 28, 2000.
Registration No. 333-30684
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1 to
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
INFLOW, INC.
(Exact name of registrant as specified in its charter)
Delaware 4813 84-1439489
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification number)
incorporation or
organization) ---------------
938 Bannock Street
Suite 300
Denver, CO 80204
Telephone: (303) 942-2800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Arthur H. Zeile
Chief Executive Officer
InFlow, Inc.
938 Bannock Street
Suite 300
Denver, CO 80204
Telephone: (303) 942-2800
Facsimile: (303) 942-2801
(Name, address, including zip code, and telephone number, including area code
of agent for service)
---------------
Copies to:
Richard R. Plumridge, Esq. Scott M. Wornow, Esq.
John E. Hayes III, Esq. Paul, Hastings, Janofsky & Walker LLP
Jeff T. Harris, Esq. 399 Park Avenue
Brobeck, Phleger & Harrison LLP New York, NY 10022-4697
370 Interlocken Boulevard, Suite 500 (212) 318-6000
Broomfield, CO 80021
(303) 410-2000
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed maximum
Proposed Maximum aggregate Amount of
Title of each class of Amount to be Offering Price offering price registration fee
securities to be registered Registered (1) Per Unit (2) (1)(2) (3)
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<S> <C> <C> <C> <C>
Common stock, par value $0.001 per
share 8,050,000 $16.00 $128,800,000 $34,004
</TABLE>
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(1) Includes 1,050,000 shares of common stock issuable upon exercise of the
underwriters' over-allotment option.
---------------
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a).
(3) $1,004 paid herewith, and $33,000 was previously paid in connection with
the initial filing of this registration statement.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+The information in this prospectus is not complete and may be changed. +
+Although we are permitted by US Federal Securities law to offer these +
+securities using this prospectus, we may not sell them or accept your offer +
+to buy them until the documentation filed with the SEC relating to these +
+securities has been declared effective by the SEC. This prospectus is not an +
+offer to sell these securities or our solicitation of your offer to buy these +
+securities in any jurisdiction where that would not be permitted or legal. +
+ +
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 28, 2000
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PROSPECTUS
, 2000
LOGO OF INFLOW, INC.
7,000,000 Shares of Common Stock
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This is our initial public offering and no public market currently exists for
our shares. We anticipate that the initial public offering price for our shares
will be between $14.00 and $16.00 per share.
We have applied to have our common stock quoted on the NASDAQ National Market
under the symbol "INFL."
The underwriters expect to deliver the shares of common stock to purchasers on
, 2000.
See "Risk Factors" beginning on page 5 to read about risks that you should
consider before purchasing any shares of our common stock.
------------------------------------------------
<TABLE>
<CAPTION>
Per Share Total
----------------------------------------------
<S> <C> <C>
Public offering price: $ $
Underwriting fees:
Proceeds to InFlow, Inc.:
----------------------------------------------
</TABLE>
We have granted the underwriters an option to purchase an additional 1,050,000
shares of common stock from us.
- --------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette
Chase H&Q
First Union Securities, Inc.
DLJdirect Inc.
<PAGE>
Front Inside Cover Gatefold
- ---------------------------
Page 1
[MAP OF INFLOW'S EXISTING AND PLANNED SITES FOR 2000]
Page 2
[DEPICTION OF INFLOW'S SERVICE OFFERINGS -- INFLOWNET,
MONITORFLOW, SECUREFLOW]
[PICTURE OF FLOWTRACK]
Page 3
[INFLOW CORE VALUES GRAPHIC]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Prospectus Summary..................... 1 Business............................... 28
Risk Factors........................... 5 Management............................. 47
Forward-Looking Statements............. 17 Related-Party Transactions............. 55
Trademarks............................. 17 Principal Stockholders................. 58
Use of Proceeds........................ 17 Description of Capital Stock........... 60
Dividend Policy........................ 17 Shares Eligible for Future Sale........ 63
Capitalization......................... 18 Underwriting........................... 65
Dilution............................... 19 Legal Matters.......................... 68
Selected Financial and Other Data...... 20 Experts................................ 68
Where You Can Find Additional
Management's Discussion and Analysis of Information............................ 68
Financial Condition and Results of Index to Financial Statements.......... F-1
Operations............................ 21
</TABLE>
----------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different from that contained in this prospectus. This
prospectus may only be used where it is legal to sell these securities. The
information contained in this prospectus is only accurate as of the date of
this prospectus, regardless of the time of delivery of this prospectus or any
sale of our common stock.
----------------
i
<PAGE>
PROSPECTUS SUMMARY
Because this is only a summary, it does not contain all of the information
that may be important to you. You should read the entire prospectus, including
"Risk Factors" and the financial statements and the notes to the financial
statements, before deciding to invest in our common stock.
InFlow, Inc.
Overview
We provide colocation facilities, comprised of customized physical space and
network connections for our customers' computer equipment, along with value-
added services for their e-business and data communications applications. Our
highly secure data network exchange facilities, or DNXs, connect to multiple
communications carriers and power sources in order to minimize potential
downtime and maximize performance for our customers. We focus on small and
medium-sized businesses with complex networking needs, an underserved market
segment we believe is in need of reliable, high-performance outsourced
solutions that enable them to quickly expand as their e-businesses grow. We
opened our first state-of-the-art DNX in Denver in July 1998. Today we operate
DNXs in Denver (two locations), Minneapolis, Raleigh-Durham and San Diego. We
expect to have 15 geographically dispersed DNXs in operation by the end of 2000
and intend to build another 20 DNXs by the end of 2002. Our customers benefit
from the close proximity of our DNXs to their businesses and we benefit from
frequent interaction with them. As of March 15, 2000, we provided services to
87 customers, including 24 new customers since January 1, 2000.
We provide highly customized solutions through a broad range of network
connections, including high-speed Internet access and private-line services,
which offer more secure, higher-performing connections. We also offer our
customers a suite of value-added services, including MonitorFlow(TM) for
equipment and application monitoring, SecureFlow(TM) for firewall management
and InflowNet(TM) for redundant multi-carrier Internet connectivity. We have
also developed a proprietary software program, FlowTrack(TM), which is composed
of modules designed to integrate and automate our business processes. Together
with our standardized set of processes for selecting, constructing and staffing
new sites, FlowTrack(TM) allows us to rapidly and efficiently expand and
replicate our business across a broad network of DNXs.
Market Opportunity
We believe that there exists a significant opportunity to provide an
outsourced solution for connecting, monitoring and servicing e-business
applications of small and medium-sized businesses. The growth in e-commerce is
driving demand for increasingly complex, interactive e-business applications
that require secure, reliable, high-performance network infrastructures,
including more than simply Internet connectivity. At the same time, we believe
the shortage of information technology professionals is impairing the ability
of e-businesses to manage their networks. In addition, we believe the costs
associated with developing and maintaining network infrastructures internally
have become prohibitive for many companies.
We believe the challenges involved in managing complex network
infrastructures and connectivity are increasing the demand for outsourced
colocation, network and value-added service solutions such as ours. Forrester
Research estimates that revenues from Internet-related hosting and colocation
services will grow at a compound annual growth rate of 76%, from approximately
$875 million in 1998 to approximately $14.7 billion in 2003.
Our Solution
Our outsourced solutions enable our customers to quickly establish and
rapidly expand their on-line businesses, allowing them to better focus on their
core competencies and accelerate their time to market. In addition to the
performance advantages we offer, our customers benefit from economies of scale
through the sharing of infrastructure and personnel costs among multiple users.
1
<PAGE>
Our Strategy
Our objective is to be the leading provider of sophisticated services to
small and medium-sized businesses for the management of their complex e-
business and data communications applications. To achieve this objective, we
intend to:
. Rapidly expand into our target markets;
. Leverage our FlowTrack(TM) software and automated deployment processes;
. Continue to emphasize customer service;
. Exhance and cross-sell our suite of services; and
. Expand sales channels and increase brand awareness.
Our principal executive offices are located at 938 Bannock Street, Suite
300, Denver, Colorado 80204. Our telephone number at that location is (303)
942-2800. Our Web site is located at www.inflow.com. Information contained on
our Web site does not constitute part of this prospectus.
2
<PAGE>
The Offering
<TABLE>
<C> <S>
Stock offered by Inflow............................ 7,000,000 shares of voting common stock
Common stock to be outstanding after the offering.. 44,510,643 shares
Use of proceeds.................................... We estimate that the net proceeds to us
from this offering will be approximately
$96.2 million, or up to $110.8 million if
the underwriters exercise their over-
allotment option. We will use the net
proceeds as follows:
. approximately $60.0 million to fund
the capital costs of constructing
DNX facilities expected to average
approximately $6.0 million per
facility; and
. the remainder for working capital
and general corporate purposes.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol............. "INFL"
</TABLE>
The number of shares of common stock to be outstanding after the offering is
based on the number of shares outstanding as of March 15, 2000. This total
includes 3,907,832 shares of our non-voting common stock, all of which is
assumed to be held by First Union Capital Partners, Inc. and which does not
have voting rights but is convertible into and otherwise identical to our
common stock. The term common stock, unless otherwise noted, refers to both our
voting and non-voting shares of common stock. The number of shares of common
stock, both voting and non-voting, excludes:
. 7,646,665 shares reserved for issuance under our 2000 stock incentive
plan, of which 2,489,220 shares were subject to outstanding options at a
weighted average exercise price of $1.63 per share as of March 15, 2000;
. 750,000 shares reserved for issuance under our 2000 employee stock
purchase plan; and
See "Description of Capital Stock -- Common Stock" and "Management -- 2000
Stock Incentive Plan" and "-- 2000 Employee Stock Purchase Plan."
----------------
Unless otherwise indicated, all share information contained in this
prospectus:
. Gives effect to the conversion of all outstanding shares of preferred
stock, other than that held by First Union Capital Partners, Inc., into
16,786,504 shares of voting common stock upon the closing of this
offering;
. Gives effect to the conversion of all outstanding shares of preferred
stock held by First Union Capital Partners, Inc. into 11,042,991 shares
of common stock, including 3,907,832 shares of non-voting common stock
upon the closing of this offering;
. Assumes no exercise of the underwriters' over-allotment option; and
. Reflects an approximate 2.73-for-1 split of our common stock to be
effected prior to the closing of this offering.
3
<PAGE>
Summary Financial and Other Data
You should read the following summary financial and other data along with
the sections entitled "Use of Proceeds," "Selected Financial and Other Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and notes and other financial and
operating data included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Period from Inception Years Ended December 31,
(September 26, 1997) to --------------------------
December 31, 1997 1998 1999
----------------------- ------------ -------------
<S> <C> <C> <C>
Statement of Operations
Data:
Revenue.................... $ 0 $ 45,032 $ 1,998,164
Costs of data network
exchange facilities:
Direct.................... 0 118,848 2,681,591
Indirect.................. 0 173,846 866,254
---------- ----------- -------------
Gross profit (loss) from
data network exchange
facilities................ 0 (247,662) (1,549,681)
Total operating
expenses............... 72,193 469,248 3,871,931
---------- ----------- -------------
Loss from operations....... (72,193) (716,910) (5,421,612)
Other income (expense).. (9,314) (77,933) 691,987
---------- ----------- -------------
Net loss................... (81,507) (794,843) (4,729,625)
Accretion of convertible
preferred stock........... 0 0 (696,897)
Deemed dividend related to
beneficial conversion
feature of Series B
preferred stock........... 0 0 (5,655,173)
---------- ----------- -------------
Net loss available to
common stockholders....... $ (81,507) $ (794,843) $ (11,081,695)
========== =========== =============
Net loss per common share
(basic and diluted) (1)... $ (.01) $ (0.10) $ (1.35)
Weighted average common
shares (basic and diluted)
(1)....................... 8,179,929 8,179,929 8,180,040
Pro forma net loss per
common share (basic and
diluted) (1)(2)-
unaudited................. $ (.59)
Pro forma weighted average
common shares (basic and
diluted) (1)(2)-
unaudited................. 17,496,175
Other Financial Data:
Cash flow provided by (used
in):
Operating activities...... $ (43,868) $ (552,126) $ (4,443)
Investing activities...... (18,592) (819,413) (68,916,746)
Financing activities...... 603,000 854,604 69,862,642
Capital expenditures....... 18,592 819,413 12,005,820
Other Data:
Customers at end of
period.................... 0 12 63
Operational DNXs........... 0 1 3
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1999
---------------------------------------
Pro Pro Forma
Actual Forma(2) As Adjusted(3)
<S> <C> <C> <C>
----------- ----------- -----------
Balance Sheet Data:
Cash and cash equivalents............. $ 965,058 $ 965,058 $97,115,058
Short-term investments................ 56,387,515 56,387,515 56,387,515
Working capital....................... 54,715,399 54,715,399 150,865,399
Total assets.......................... 72,882,292 72,882,292 169,032,292
Long-term liabilities, including
current maturities................... 1,440,624 1,440,624 1,440,624
Mandatorily redeemable convertible
preferred stock...................... 77,793,139 -- --
Total stockholders' equity (deficit).. (11,453,573) 66,339,566 162,489,566
</TABLE>
- --------
(1) See note 1 of notes to financial statements for a description of the
computation of basic, diluted and pro forma net loss per share and the
number of shares used to compute basic, diluted and pro forma net loss per
share.
(2) Pro Forma data reflects the conversion of our convertible preferred stock
to common stock and non-voting common stock, which will occur automatically
upon the closing of this offering.
(3) Pro Forma As Adjusted balance sheet data reflects the conversion of our
outstanding preferred stock to common stock and non-voting common stock,
which will occur automatically upon the closing of this offering, the sale
of the 7,000,000 shares of common stock in this offering and the receipt of
the net proceeds from this offering, after deducting underwriting fees and
estimated offering expenses.
4
<PAGE>
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You
should carefully consider the following information about these risks, together
with the other information contained in this prospectus, before you decide to
buy our common stock. If any of the following events described below actually
occurs, our business, financial results and market price of our common stock
may suffer.
Risks Related To Our Business
We are an early-stage company which makes evaluating our business difficult.
We were founded in 1997 and our first DNX was opened in Denver in July 1998.
Our first dollar of revenue from this DNX was not recognized until September
1998. Since that date, we have opened four additional DNXs. Our financial
statements primarily reflect the results of a single DNX, our initial Denver
location, the operations of which may not be indicative of the results we will
achieve at other locations or of the future results at our initial Denver DNX.
Our limited operating history and lack of meaningful historical financial or
operating data make evaluating our planned business operations difficult.
Additionally, evaluating whether our plan to build additional DNXs, which will
require significant capital expenditures and management resources, will be
successful is difficult because the revenue and income potential of our
business and market is unproven. Many of the revenue and pricing assumptions in
our plan may not conform with future results. Moreover, we are an early stage
company and our business plan may not address key risks or be implemented on a
timely basis. We may not successfully address any or all of these challenges
and our failure to do so would adversely affect our business, operations and
the market price of our stock.
We have incurred losses since our inception and expect our losses to continue.
We have incurred net losses in each quarterly and annual period since our
inception. As of December 31, 1999, our cumulative net losses were
approximately $10.1 million. We expect to incur net losses and negative cash
flows from operations on a quarterly and annual basis for the foreseeable
future as we build additional DNXs and increase our sales and marketing
activities. Our ability to achieve profitability depends on many factors which
are beyond our control. Even if we are able to achieve profitability, we may
not be able to sustain profitability during any future periods.
Our quarterly operating results may fluctuate, which may make it difficult to
forecast our future performance and may result in volatility in our stock
price.
We expect that our revenue growth, and our cost structure, will be
unpredictable as we continue to implement our business plan. This
unpredictability will likely result in significant fluctuations in our
quarterly results. Therefore, you should not rely on quarter-to-quarter
comparisons of results of operations as an indication of our future
performance. Because of our limited operating history and the emerging nature
of our industry, we anticipate that securities analysts may have difficulty in
accurately forecasting our results. If our operating results are below market
expectations, the price of our stock will likely decline.
In addition, a large portion of our expenses is fixed in the short-term,
particularly with respect to communications, depreciation, real estate and
interest expenses, and therefore our results of operations are particularly
sensitive to fluctuations in revenue. The timing of customer installations and
discounts, as well as the fluctuations in bandwidth used by customers and our
overall capacity utilization, will also affect our revenues. Because of this,
period-to-period comparisons of our operating results may not necessarily be
meaningful and may not be an indication of our future performance.
Additionally, fluctuations in our results of operations could cause us to fail
to meet the expectations of securities analysts or investors, which could
negatively affect the market price of our common stock.
5
<PAGE>
To implement our business plan we will require additional capital in the future
and may not be able to secure adequate funds on terms acceptable to us.
We believe the net proceeds of this offering, together with cash on hand,
will be sufficient to fund our anticipated operating and capital needs for the
next 12 months. After that time, we will require significant additional funds
to support our operations and fund the expansion of our business. Moreover, due
to our limited operating history, the nature of our industry and the
possibility that we will encounter delays or cost overruns in building our
planned new DNXs in 2000, our future capital needs are difficult to predict,
and we may need additional capital before that time. We may not be able to
obtain additional funding in amounts or on terms acceptable to us. Our
inability to raise additional funds could impede our growth, may force us to
scale back or cease our operations or may negatively affect our financial
condition or the market price of our stock.
Our newer DNXs are larger than our first DNX, which may make it difficult for
us to forecast future expenses.
Our first DNX, located in Denver, Colorado, is significantly smaller than
our recently completed DNXs in Denver, Minneapolis, Raleigh-Durham and San
Diego and one-fourth the size of those DNXs which we are developing for
deployment during the rest of 2000. This increase in DNX size adds uncertainty
to our ability to accurately forecast ongoing costs of running our business.
Our lack of experience operating larger facilities could adversely affect our
business, operations and the market price of our stock if we do not
successfully address the complications associated with operating larger DNXs.
If we fail to expand the number of our DNXs or to properly manage our
expansion, our revenues will not grow and we may not be profitable.
The timely expansion, completion and opening of additional DNXs is a key
element of our business strategy. To execute our growth plan, we must:
. Identify appropriate locations;
. Negotiate leases on acceptable terms;
. Design each DNX;
. Obtain permits and the timely approvals of local regulatory authorities;
. Manage the timing and magnitude of capital expenditures;
. Depend upon contractors to construct our additional DNXs in a timely
manner while controlling costs;
. Obtain and install the necessary equipment on a timely basis; and
. Hire, train, motivate and retain qualified employees to assist in our
expansion, as well as to staff our DNXs.
All of these factors involve risks and uncertainties beyond our control and
problems in any other areas could delay the opening of a DNX. Consequently,
opening a new DNX requires significant management time and attention.
Accordingly, you should be aware that we have limited experience in building
DNXs, particulary in building multiple DNXs concurrently, and may not be able
to replicate any success we have had to date in any of our future DNXs. Our
planned expansion will place a significant strain on our limited financial,
administrative, operational and management resources. Our existing operating
and financial control systems, infrastructure and other resources may not be
sufficient to adequately manage the opening of the planned number of DNXs in a
cost-effective and timely manner. Consequently, it may be difficult for us to
meet our growth plan while controlling costs.
Additional DNXs, if completed, will result in substantial new operating
expenses, including expenses associated with hiring, training, retaining and
managing new employees, purchasing new equipment, implementing new systems,
leasing additional real estate and incurring additional depreciation expense.
If we
6
<PAGE>
do not implement adequate management and financial controls, reporting systems
and procedures to operate multiple DNXs in geographically diverse locations,
our operations could be significantly harmed.
If we are unable to obtain real estate leases on acceptable terms, our business
will suffer.
In order to meet our expansion goals, we will need to enter into a
substantial number of leases in new markets. Our site selection template
specifies the size, location and other technical specifications we consider
optimal for our DNXs. Real estate that conforms to our template is often
located in high quality buildings in the central business district of a city.
This type of space may be scarce or in great demand in our target markets, many
of which are experiencing substantial economic growth and shortages of prime
real estate. Even if we are able to locate satisfactory sites in these
potential markets, these sites may be difficult for us to lease on acceptable
terms. If we are unable to obtain leases for new sites on acceptable terms, we
will not be able to achieve our growth plans.
Our dependence on third parties for telecommunications services increases the
risk that we will not be able to timely or cost-effectively meet our customer
needs.
The presence of connections from multiple communications carriers' networks
to our DNXs is critical to our ability to attract new customers. For most of
the services we provide, we are not a communications carrier, and therefore
rely on third parties to provide us with telecommunications circuits which we
then resell to our customers. In offering certain services, we may be deemed a
communications carrier, by reselling those services, but we are still dependent
on underlying third-party carrier services and facilities.
We rely on various local, national and international telecommunications
companies such as ICG, AT&T Local Services, and U.S. West to provide the local
connections from our DNXs to the points of presence of other national and
international telecommunications companies. These national and international
telecommunications companies, such as Intermedia/Digex, GTE, AT&T, UUNet and
Cable and Wireless, provide the telecommunications circuits which we resell to
our customers. Any of these carriers may decide not to offer their services to
us for competitive or other reasons or may increase the cost of their services.
The construction required to provide the local connections to our DNXs is
complex and involves factors outside our control, including regulatory
processes and the availability of construction resources. If we are unable to
establish the necessary bandwidth connectivity to our DNXs, if the connections
are materially delayed, or if the bandwidth provided to us is subject to
capacity bottlenecks and other reliability problems or is at increased costs,
our business, operations and the market price of our stock will be negatively
affected. There are a limited number of local providers in each of our markets
and we cannot control any delays or deficiencies associated with this
provisioning function. Additionally, any national or international carrier may
refuse to provide us with services which our customers need or may provide
connectivity which has reliability problems or is at increased costs. Any
failure by us to procure the connections necessary to serve our customers or
any increased costs of such connections may harm our business, operations and
the market price of our stock may be negatively affected.
Our dependence on third parties for components and services used in our DNXs
and electronic systems increases the risk we will not be able to timely or
cost-effectively complete our expansion plans.
We depend on third parties to timely provide critical components of our
reliability solution, such as state-of-the-art equipment and continuous power.
Some of the communications and networking equipment may be available only from
limited sources. We do not carry significant inventories of components and have
no guaranteed supply arrangements with vendors. We are also dependent upon our
suppliers providing products or components that must comply with evolving
Internet and communications standards or that inter-operate with other products
or components we use. Our performance and reliability are also highly dependent
upon continuous power being supplied by our third party providers. Although
continuous power availability is critical to our business, we have no control
or assurance that we will be supplied with adequate power. If the equipment or
power that we need are unavailable or are not delivered on a timely basis, our
business will be harmed.
7
<PAGE>
We are also dependent upon third parties for the timely construction and
design of our DNXs. The unavailability of these services or the failure of
these services to be timely performed in a professional manner will negatively
affect our business, operations and the market price of our stock.
If we were to lose any of our top customers, we would lose a substantial
portion of our revenue.
A relatively small number of customers account for a large percentage of our
total revenues and we expect this concentration will continue for the
foreseeable future. For the year ending December 31, 1999, our top five
customers accounted for approximately 46% of our revenue, including Verio, a
potential competitor, which alone accounted for approximately 14% of our
revenue during this period. As of December 31, 1999, this customer represented
approximately 13% of gross accounts receivable. No other customer individually
represented more than 10% of revenue for the year ended December 31, 1999. Our
business will be seriously harmed if we do not generate as much revenue as we
expect from these customers or experience a loss of any significant customer.
Any of our key employees could terminate his or her employment at will.
We depend on the continued services and performance of our senior management
team and other key personnel. The loss of any member of our executive
management team, particularly Arthur H. Zeile, our President and Chief
Executive Officer, or Joel C. Daly, our Vice President, Chief Operating Officer
and Secretary, would significantly harm us. We do not have employment
agreements with any of our officers or employees. Any of our officers or
employees can terminate his or her employment with us at any time. Although we
maintain $2.5 million "key person" life insurance policies on the lives of each
of Arthur H. Zeile and Joel C. Daly, we believe this amount would not
sufficiently compensate us for the loss of either of their services. The loss
of the services of one or more of our key personnel could seriously interrupt
our business, and because the demand for employees in the communications and
network management services market is intense, we may not be able to
successfully locate, hire, assimilate and retain replacements or other key
management personnel on a timely and cost-effective basis.
It may be difficult for us to hire and retain highly qualified personnel,
particularly as we open additional DNXs in highly competitive markets.
To achieve our growth goals, we will need to hire a substantial number of
people in each new market where we open a DNX. New hires at each DNX will
include a local general manager as well as sales and marketing personnel. The
success of a DNX will depend largely upon the efforts of the people we hire for
those positions. The demand for employees in the communications and network
management services market is intense. Moreover, many of our DNXs are in highly
competitive geographic labor markets. If we are unable to locate, hire and
retain qualified personnel in these markets on a timely and cost-effective
basis, we will face delays in our planned expansion and our financial results
may fail to meet our growth expectations.
If we are unable to compete successfully against new entrants and established
companies with greater resources, our business will suffer.
We believe that new competitors will enter our market. Our success is
dependent upon our ability to substantially differentiate our solutions from
existing and future offerings of our competition. We believe that we may
compare unfavorably with some of our competitors with regard to, among other
things, brand recognition, existing relationships with potential customers,
available pricing discounts, capital availability, strategic relationships and
existing contracts. We may not be able to compete effectively in our target
markets. Moreover, our strategy depends largely upon the rapid deployment of
our solutions. If we are slowed in our rollout of our DNXs, other companies may
gain competitive advantages in markets we are targeting. We expect significant
competition from several areas, including:
.Web hosting and colocation companies;
.National and regional Internet service providers;
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.Global, regional and local communications companies; and
.Global technology companies.
Our competition may operate in one or more of these arenas and include
companies such as AboveNet Communications, AT&T Corp., Digital Island, Exodus
Communications, Equinix, Frontier GlobalCenter, Globix, GTE Corporation,
InterNAP, Level 3 Communications, MCI WorldCom, PSINet, Qwest, Sprint, Verio
and the regional Bell operating companies.
Some of our competitors and potential competitors have longer operating
histories and significantly greater financial, technical, marketing and other
resources than we do. In particular, other communications carriers and several
Web hosting and colocation companies have extensive customer bases and customer
relationships, including relationships with many of our potential customers.
These companies also have significantly greater customer support and
professional services capabilities than we do and, in many cases may also own
their own networks and thereby incur lower operating expenses. Because of their
greater financial resources, some of these companies have the ability to adopt
aggressive pricing policies and may be better able to compete in a price
competitive market. These companies may also be able to bundle their products
or incorporate colocation and other services in a manner that is more
attractive to our potential customers than using our solutions. New competitors
or alliances among competitors may emerge and rapidly acquire significant
market shares. Our competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements than we can. Our
revenue model contains many assumptions which may be invalidated by our
competitors, such as demand and market acceptance for our services, our ability
to successfully introduce new products each year, the absence of competing
products for certain of our solutions and our ability to cross-sell multiple
services to each customer. Competitive products may reduce demand for or render
certain of our offerings obsolete. In addition, we believe that the market in
which we compete is likely to face consolidation in the future, which could
have the effect of increasing price and service competition and would
negatively affect our business, operations and the market price of our stock.
In addition, the incumbent local exchange carriers, or ILECs, are subject to
federal regulations that require them to offer colocation to other local
telephone companies and long distance carriers on an efficient,
nondiscriminatory basis. Some of those rules recently were vacated by the
decision of the Court of Appeals for the D.C. Circuit. However, the rules that
remain in effect are likely to enhance the attractiveness of the ILEC's
colocation offerings and may make them more competitive with our own. The FCC
may also seek to reinstate the recently vacated rules in a remand proceeding,
which would further enhance the attractiveness of an ILEC's colocation
offerings and thus pose an even greater competitive risk to us.
A system failure could cause significant delays and interruptions of service to
our customers, which could reduce our revenue and harm our reputation.
Our business depends on our ability to avoid system failures and provide our
customers with fast, efficient and highly reliable network solutions. Our
operations are subject to failure resulting from numerous factors, including
human error, physical or electronic security breaches, network software flaws,
fire, earthquake, flood or other natural disasters, power loss and sabotage or
vandalism. Additionally, if our communications providers fail to provide the
communications capacity that we require, that failure could also result in
interruptions in our services, which could damage our reputation. Our customer
contracts currently provide a service level guarantee related to circuit
performance including service up-time and time to restore a circuit once a
problem is encountered. This guarantee provides a billing credit to customers
if a performance parameter is not met and we may be required to provide
significant credits. If we encounter significant system downtime, we may incur
substantial harm to our reputation and obligations that our liability insurance
may not adequately cover, which could negatively affect our business,
operations and the market price of our stock.
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We must retain and expand our customer base and increase the services used by
each customer in order to meet our financial goals.
Our future revenues will depend on our ability to retain and expand our
customer base as we open additional DNXs. Our ability to attract customers to
our DNXs will depend on a variety of factors, including the willingness of
businesses to outsource their network operations, the availability of multiple
communications carriers to provide connections, our operating reliability and
security, our ability to effectively market and cross-sell our services and our
ability to increase the bandwidth capacity we offer to customers as they grow.
We typically begin building a DNX before we have agreements with customers to
use that DNX. If we open a new DNX and cannot attract customers, we will not be
able to cover costs associated with that DNX and we will not be profitable. In
addition, the Internet and communications industries are intensely competitive
and some of our customers will face competitive pressures and may not
ultimately be successful. If our customers fail, they will not continue to use
our DNXs, which may be disruptive to our business and adversely affect our
operating results and the market price of our stock.
Our success is also dependent upon our ability to successfully introduce new
products to our customers and cross-sell our product offerings to customers in
order to increase our revenue per customer. Although we intend to develop new
services and market these services to customers, we do not know if these or
other services will be accepted by the marketplace or if customers will
purchase multiple products or services. We also may not be able to offer some
of our services in certain jurisdictions without requisite regulatory approval.
Because we have no experience operating internationally, our international
expansion may be limited.
We currently operate five DNXs in four domestic metropolitan markets.
Although we expect to continue to expand further domestically, we also
anticipate initiating development of a DNX in Europe by the end of 2000. We
expect to continue to evaluate further opportunities for international
expansion; however, we have no experience operating internationally. We may not
be able to adapt our services to international markets or market and sell these
services to customers abroad. We may also face difficulties or increased costs
in locating, building and opening DNXs in foreign countries and managing those
DNXs across disparate geographic areas. Leasing rates and customs in
international markets may vary substantially from domestic markets and delay
our ability to quickly and cost-effectively roll out additional DNXs. We are
unfamiliar with the international labor markets and practices and we may face
difficulty or increased costs hiring and maintaining employees to staff our
international DNXs.
The buildings located in the central business districts of many
international cities may be too old or structurally unsuited for our standard
renovation specifications. As a result, we may be forced to locate outside of
central business districts despite our business model and our lack of
experience in operating outside of central business districts. We may also be
unable to locate in areas with sufficient fiber concentration and may face
additional operational costs associated with increased geographic distance from
sufficiently dense cable areas. International operations may also expose us to
additional taxes and currency risks with which we currently have no experience.
We are also unfamiliar with the laws, permits, policies and regulations in
foreign countries and may face difficulty or increased costs in complying with
such requirements.
If we fail to develop our Inflow brand, we may not be able to effectively
compete.
A key element of our strategy is to increase awareness of the Inflow brand.
If we fail in our efforts to build our brand awareness, we may not be able to
effectively compete and our strategic and financial objectives might not be
met. Many of our competitors, including AT&T Corp., Exodus Communications, GTE
Corporation, MCI WorldCom, Qwest and Sprint, have well-established brands. To
date, our market presence has been limited principally to the Denver market. We
have attracted our existing customers primarily through a small sales force,
the visibility of our founders, Arthur H. Zeile and Joel C. Daly, in the Denver
entrepreneurial community, and our reputation in the Denver marketplace. Our
founders do not have this reputation and visibility in the markets into which
we are expanding. To increase awareness of our brand, we plan to significantly
increase our sales and marketing budget and activities, which may not be
successful.
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Breaches of our network security could damage our reputation and cause us to
lose customers.
Unauthorized access, computer viruses and accidental or intentional actions
may cause delays or interruptions in our services. Confidential information,
such as credit card and bank account numbers, may be stored in our customers'
computer systems, and breach of the security protecting such confidential
information could result in liability to us and the loss of existing customers
and/or the deterrence of potential customers. Although we intend to continue to
implement industry-standard security measures, such measures could be
circumvented. The costs required to eliminate computer viruses and alleviate
other security problems could be prohibitively expensive and the efforts to
address such problems could result in interruptions, delays or cessation of
service to our customers, which could negatively affect our business,
operations and the market price of our stock.
If we are unable to adequately protect our proprietary rights, our business
will suffer.
We have not sought patent protection on any of our products, services or
processes. We rely upon a combination of trademark and copyright law, trade
secret protections, and confidentiality agreements and other contractual
arrangements with our employees, consultants and third parties to establish and
protect our proprietary rights. The steps we have taken to protect our
intellectual property rights will likely provide less protection than the level
given by patents and may prove to be inadequate and third parties may still
infringe or misappropriate our proprietary rights. Moreover, effective
trademark, copyright and trade secret protection may not be available in every
country in which we eventually operate to the same extent available in the
United States. We may be unable to detect the unauthorized use of our
intellectual property or take appropriate steps to enforce our intellectual
property rights. Defending our intellectual property rights could also result
in the expenditure of significant financial and managerial resources, which
could negatively affect our business, operations and the market price of our
stock.
Although we enter into proprietary information and invention assignment
agreements with our employees and consultants and control access to and
distribution of our proprietary information, unauthorized parties, including
departing employees, business partners and others, may attempt to copy or
otherwise obtain and use our products and technology. Monitoring unauthorized
use of our products and technology is very difficult, and we may be unable to
prevent misappropriation of our products and technology.
If we become subject to infringement claims by third parties, we may be forced
to divert significant resources away from the operation of our business.
Third parties may in the future assert copyright, trademark, patent and
other intellectual property rights claims or initiate litigation against us or
our suppliers or customers with respect to existing or future products and
services. Other parties may assert claims against us that we have
misappropriated a trade secret or infringed a patent, copyright, trademark or
other proprietary right belonging to them. Any infringement or related claims,
even if not meritorious, could be costly and time consuming to litigate, may
distract management from other tasks of operating the business and may result
in the loss of significant rights and the loss of our ability to operate our
business.
Our failure to hold required authorizations and to be registered with, or
certified by, applicable regulatory authorities could result in potential
penalties or other adverse consequences.
Certain telecommunications services that we offer, and intend to offer in
the future, including private-line services, which offer more secure, higher
performing connections, are, or may be, subject to regulation and certification
requirements at the state level. To date, we have not registered as a public
utility in any state or been certified to provide any form of regulated
telecommunications services within any jurisdiction. While we believe that the
law regarding regulation of these and similar types of services is unclear in
certain jurisdictions in which we currently operate or intend to operate, and
we continue to evaluate our status with counsel, it is possible that we have
provided certain telecommunications services without the requisite regulatory
approval or
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certification in a limited number of jurisdictions. Our failure to have held
any required authorizations and to have been registered or certified previously
could expose us to risks, including substantial fines, third-party lawsuits and
potential inability to continue our operations.
We may encounter difficulties if we are required to apply for, and obtain,
necessary authorizations in other states in which we expect to operate.
As certain of our current and planned telecommunications services are, or
may be subject to regulation and certification requirements at the state level,
we may be required to apply for and obtain authorizations in states where we
plan to offer our services. The public utility application and registration
process could be lengthy and time-consuming, requiring substantial resources
and management time.
Any past failure to have held required authorizations and been registered
with, or certified by, applicable regulatory authorities could expose us to the
risk that such regulators could refuse to grant our applications to provide
such services due to prior non-compliance. We do not know if we will be allowed
to register in particular jurisdictions or if our applications will be
accepted. We also do not know whether our applications would be granted without
onerous terms, or at all.
Delays in obtaining or failure to obtain regulatory approvals could negatively
affect our intended rollout of services.
If we are required in particular states to apply for and obtain
authorizations to provide certain of our services, we could incur delays in the
approval process. Any significant delays in obtaining any requisite regulatory
approvals could result in our being unable to provide those services during the
period in which we have not been certified or authorized to provide those
services. In addition, we may be unable to obtain required regulatory
authorizations in some states, in which case we would be unable to provide
certain services in those states.
Regulation as a carrier will subject us to ongoing regulation at the state and
federal levels and could result in increased costs and other competitive
disadvantages.
If we become authorized as a carrier in a particular state or at the federal
level, we will be subject to the regulatory directives of the applicable
regulatory authorities. Such regulation could subject us to increased costs as
a result of having to comply with these requirements, such as reporting
obligations and the payment of various regulatory fees and surcharges. We may
not be able to pass these costs along to our customers. Compliance with
regulatory requirements, including, but not limited to, regulation of the rates
and terms and conditions of our services, may make it more difficult for us to
operate.
It is possible that many of our competitors may not be subject to the type
of telecommunications regulation to which we may become subject. Some
regulators may seek, among other things, to regulate our charges and terms of
service. If our competitors are not similarly regulated, they may have an
additional competitive advantage in the event we become regulated.
Changes in current or future regulations, or legislative or judicial
initiatives related to the telecommunications industry could negatively affect
our business.
The enactment of new legislation or regulatory requirements or changes in
the interpretation of existing legislation and/or changes in regulatory
requirements could negatively affect us. Unlike some of our competitors,
including the incumbent local exchange carriers, or ILECs, we are not subject
to some of the burdensome regulations imposed by federal and state regulation.
For example, we do not have to allow competitors to access portions of our
network (such as transmission lines and equipment used to connect calls), we do
not have to file FCC tariffs for our access services, and our rates are not
currently subject to stringent regulation by the FCC or state public utility
commissions. Our ability to compete may largely will depend upon
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a continued favorable, pro-competitive regulatory environment, and could be
negatively affected by new regulations or legislation affording greater
flexibility and regulatory relief to certain of our competitors. For example,
the FCC is reviewing whether the regional Bell operating companies may provide
certain data services free from ILEC regulation through a separate affiliate.
Legislation has been introduced in Congress that would grant the regional Bell
operating companies permission to provide data services in areas where they are
currently restricted from doing so. The ability of regional Bell operating
companies to provide data services on a broader basis could have a negative
effect on us.
Risks Related To Our Industry
Because the market for colocation and network management services is new and
its viability is uncertain, our services may not be accepted and we may not be
profitable.
The market for colocation and network management services has only recently
begun to develop and is evolving rapidly. Our future growth, if any, will be
dependent on:
. The growth of the Internet as a global communications and commerce
medium;
. The growth of non-Internet forms of network access;
. The growth of applications that depend on the absence of delays or down
time;
. The willingness of enterprises to colocate and outsource network access
for their critical applications; and
. Our ability to successfully and cost-effectively market our services to a
sufficiently large number of customers.
The market for our services may not fully develop. Our services may not be
adopted or businesses, organizations or consumers may not significantly
increase use of the Internet and other types of networks for commerce and
communication. If this market fails to develop, develops more slowly than
expected or if our services do not achieve widespread market acceptance, our
business, operations and market price of our stock would be adversely affected.
Because the demand for our services depends on continued growth in the use of
the Internet and other forms of network access, a slowing of this growth could
harm the development of the demand for our services.
Our success will depend in large part on the continued growth of e-business
applications, including the underlying growth of the Internet. The increased
use of the Internet for retrieving, sharing and transferring information among
businesses, consumers, suppliers and partners has only recently begun to
develop. Our success will depend in large part on continued growth in the use
of the Internet, which in turn will depend on a variety of factors including
security, reliability, cost, ease of access, quality of service and necessary
increases in bandwidth availability. The recent attacks on major Web sites have
drawn much media attention and may threaten to slow Internet growth. If the
Internet as a commercial or business medium fails to develop or develops more
slowly than expected, our business, results of operations and financial
condition could be materially adversely affected. The recent growth in the use
of the Internet has caused frequent periods of performance degradation,
requiring the upgrade of circuits, communications links and other components
forming the infrastructure of the Internet by Internet service providers and
other organizations with links to the Internet. Any perceived degradation in
the performance of the Internet as a whole could undermine the benefits of our
services. Potentially increased performance provided by our services is
ultimately limited by and reliant upon the speed and reliability of the
networks operated by third parties. Consequently, the emergence and growth of
the market for our services is dependent on improvements being made to the
entire Internet infrastructure to alleviate overloading and congestion.
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In addition to the Internet, we are dependent on customers continuing to
require non-Internet forms of network access that may provide more flexibility,
security, capacity or speed. The continued demand and acceptance of these
alternative forms of network access will be critical to the success of our
business. Any decreased use of these forms of network access or degradation in
the reliability, security or speed of these forms of network access could harm
our business, operations and market price of our stock.
If the government modifies or increases its regulation of the Internet, the
provision of our services could become more costly and the use of the Internet
may decline.
There is currently only a limited body of law and regulation directly
applicable to access to or commerce on the Internet. However, due to the
increasing popularity and use of the Internet, it is possible that a number of
laws and regulations may be adopted at the international, federal, state and
local levels with respect to the Internet and that existing laws and
regulations may become applicable to the Internet. Federal, state and foreign
legislatures have proposed or are currently considering a number of laws and
regulations relating to the Internet. The adoption of any future laws or
regulations, or the application of existing laws and regulations, might
decrease the growth of the Internet, decrease demand for our services, impose
taxes or other costly regulatory or technical requirements on us, or otherwise
increase the cost of doing business. In addition, because our services are
currently available in multiple states and we plan to expand our operations
internationally, such jurisdictions may claim that we are required to qualify
to do business as a foreign corporation in each state or foreign country where
we operate, which could increase our operating costs and negatively affect our
business, operations and the market price of our stock.
If we do not respond to rapid technological change and evolving industry
standards, we will lose customers.
Our future success will depend, in part, on our ability to offer services
that address the increasingly sophisticated and varied needs of our current and
prospective customers and to respond to technological advances and emerging
industry standards and practices on a timely and cost-effective basis. Internet
operations and e-business applications are complex and are characterized by
rapidly changing and unproven technology, evolving industry standards, changes
in customer needs, emerging competition and frequent new service introductions.
Future advances in technology may not be beneficial to, or compatible with, our
business. In addition, we may not be able to incorporate such advances on a
cost-effective or timely basis into our business or such advances, including
alternate delivery systems like cable or satellite, may make our services
unnecessary or less cost-effective than using the new technology. Technological
advances may have the effect of encouraging certain of our current or future
customers to rely on in-house personnel and equipment to furnish the outsourced
solutions that we currently provide. Keeping pace with technological advances
in our industry may require substantial lead time and capital expenditures. We
may not be able to conform to these new standards in a timely fashion and we
may be unable to maintain a competitive position in the market, which could
negatively affect our business, operations and the market price of our stock.
We may be held liable for information disseminated over our network.
The law relating to the liability of online services companies and Internet
access providers for information carried on or disseminated through their
networks is currently unsettled. It is possible that claims could be made
against us under both United States and foreign law for defamation, negligence,
copyright or trademark infringement or other theories based on the nature and
content of the materials disseminated through our networks. Legislation has
been enacted or proposed that imposes liability for, prohibits or limits the
transmission over the Internet of certain types of information, including
obscene materials and pornography. The imposition upon us of liability for
information carried on or disseminated through our systems could require us to
implement measures to reduce our exposure to such liability, which may require
us to expend substantial resources, or to discontinue certain service
offerings. Our general liability insurance may not adequately compensate us, if
at all, or may not cover us if we are held liable for information carried on or
disseminated through our networks, which would negatively affect our business,
operations and market price of our stock.
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If our systems encounter year 2000 compliance problems, our business could be
harmed.
We have tested our key computer systems and, to date, we have not
encountered any material Y2K related disruptions or failures of our systems or
services, nor have we been notified of any disruption or failures in the
systems of any of our third parties with whom we deal. There is an ongoing risk
that Y2K related problems could still occur, which could harm our business.
Risks Related To This Offering
There has been no prior market for our common stock and our common stock may
experience extreme price and volume fluctuations.
Prior to this offering, investors could not buy or sell our common stock
publicly. An active public market for our common stock may not develop or be
sustained after the offering. The initial public offering price will be
determined by negotiations between us and the representatives of the
underwriters. The market price of our common stock may decline below the
initial public offering price after this offering.
Fluctuations in market price and volume are particularly common among
securities of Internet-related companies. The market price and volume of our
common stock may fluctuate significantly. In the past, companies that have
experienced volatility in the market price of their stock have been the objects
of securities class action litigation. If we were to become the object of
securities class action litigation, it might result in substantial costs and a
diversion of our management's attention and resources, which could negatively
affect our business, operations and the market price of our stock.
Substantial future sales of our common stock in the public market may depress
our stock price.
Sales of substantial amounts of common stock in the public market following
this offering, or the appearance that a large number of shares is available for
sale, could adversely affect the market price for our common stock. The number
of shares of common stock available for sale in the public market will be
limited by lock-up agreements under which certain holders of our outstanding
shares of common stock will agree not to sell or otherwise dispose of any of
their shares for a period of 180 days after the date of this offering without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation. However, holders of such restricted shares who have not been
officers or directors of us on or since the date of this prospectus may offer,
sell or otherwise dispose of 25% of their shares on the earlier of 90 days
after the date of this offering or on the second trading day after the first
public release of our quarterly results if the last recorded sale price on the
NASDAQ National Market for 20 of the 30 trading days ending on such date is at
least twice the price per share in the initial public offering. These
stockholders may also offer, sell or otherwise dispose of an additional 25% of
their shares 135 days after the date of this offering if the price per share of
common stock has achieved the same target level. Additionally, DLJ may, in its
sole discretion and at any time without notice, release all or any portion of
the shares subject to lock-up agreements. In addition to the adverse effect a
price decline could have on holders of common stock, that decline would likely
impede our ability to raise capital through the issuance of additional shares
of common stock or other equity securities.
Our current stockholders hold a substantial number of shares, which, subject
to the lock-up agreements described above, they will be able to sell in the
public market in the near future. All of the 7,000,000 shares sold in this
offering will be eligible for sale, with the 37,510,643 other shares
outstanding, based on the number of shares outstanding as of March 15, 1999,
being restricted securities as defined in Rule 144 of the Securities Act of
1933 as amended. Approximately 14,263,109 of those shares will be eligible for
sale upon the expirations of or their release from the lock-up agreements
described above. The remainder of these shares will become eligible for sale at
various times thereafter. In addition, 1,310,356 shares will be eligible for
sale at various times after the date of this prospectus under Rule 701. The
holders of 13,206,505 restricted shares of our stock are entitled to certain
rights with respect to registration of such shares for resale in the public
market. Sales of a substantial number of shares of our common stock after this
offering could cause our stock price to fall. As of March 15, 2000, options to
purchase 2,489,220 shares of our common stock were outstanding under
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our 1997 stock incentive plan, all of which will be outstanding under our 2000
stock incentive plan upon its adoption. The exercise or transfer of these
options or underlying shares may also cause our stock price to fall.
Our executive officers, directors and entities affiliated with them will
continue to have substantial control over us after the offering.
Our executive officers, directors and entities affiliated with them, if
acting together, would be able to significantly influence all matters requiring
approval by our stockholders, including the election of directors and the
approval of mergers or other business combination transactions. These
stockholders will beneficially own, in the aggregate, approximately 64.65% of
our common stock following the completion of this offering. The interests of
these stockholders may differ from the interests of other stockholders.
We may spend the net proceeds of this offering in ways with which you do not
agree.
The net proceeds of this offering are not allocated for specific uses. Our
management will have broad discretion to spend the net proceeds from this
offering in ways with which investors may not agree. The failure of our
management to apply these funds effectively would result in unfavorable
returns, which could cause the price of our stock to decline.
We have anti-takeover provisions that may make it difficult for a third party
to acquire us.
Provisions of our certificate of incorporation, our bylaws and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
might be beneficial to our stockholders. See "Description of Capital Stock--
Anti-Takeover Effects of Various Provisions of Delaware Law and Our Certificate
of Incorporation and Bylaws" for a discussion of these anti-takeover
provisions.
Investors in this offering will suffer immediate and substantial dilution.
The initial public offering price of our common stock will be substantially
higher than the book value per share of our outstanding common stock
immediately after the offering. Accordingly, if you purchase common stock in
the offering, you will incur immediate dilution of approximately $11.25 in the
book value per share of our common stock from the price you pay for our common
stock. See "Dilution."
The terms of any future financing arrangements may restrict our operations.
We may in the future enter into financing arrangements with equipment
lessors, financial institutions or other investors that could be secured by our
assets. These financing arrangements would likely require that we satisfy many
financial covenants and could limit our ability to incur other indebtedness or
engage in certain types of transactions. If we encounter difficulties with our
business, we could default under any then-existing financing arrangements,
which would make it very difficult for us to obtain financing in the future on
acceptable terms. If we were to default under financing arrangements that were
secured by our assets, our creditors under those arrangements could foreclose
upon the assets securing our obligations.
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements relate
to future events or our future business or financial performance. In some
cases, you can identify forward-looking statements by terminology--for
instance, may, will, should, would, could, expect, plan, anticipate, believe,
estimate, predict, potential or continue, the negative of these terms, or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, you should
specifically consider various factors, including the risks outlined in the risk
factors section. These factors may cause our actual results to differ
materially from any forward-looking statement. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements.
TRADEMARKS
We have received trademark and service mark registration for the mark
"Inflow." We have applied for protection for the marks "InflowNet(TM)",
"MonitorFlow(TM)", "SecureFlow(TM)" and "Uptime all the Time(TM)." Other
trademarks and service marks appearing in this prospectus are the property of
their respective holders.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the sale of 7,000,000
shares of common stock in this offering of $96.2 million, assuming an initial
public offering price of $15.00 per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses. If the
underwriters exercise their over-allotment option in full, we estimate that our
net proceeds will be $110.8 million.
We intend to use the net proceeds of this offering as follows:
. approximately $60.0 million to fund the capital costs of constructing DNX
facilities, expected to average approximately $6.0 million per facility;
and
.the remainder for working capital and general corporate purposes.
Portions of the net proceeds of this offering may be used to fund potential
international expansion. We have not determined the amount of net proceeds to
be used specifically for each of the foregoing purposes. Pending any such uses,
we intend to invest the net proceeds in interest bearing securities. We are not
currently engaged in negotiations to acquire any other company.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We
currently anticipate that we will retain any future earnings for the operation,
development and proposed expansion of our business. Accordingly, we do not
anticipate declaring or paying any cash dividends in the foreseeable future. In
addition, any future financing arrangements may contain limitations on our
ability to declare and pay cash dividends.
17
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999.
The pro forma information gives effect to the conversion of all of our
outstanding preferred stock as of December 31, 1999, including the conversion
of 1,433,202 shares held by First Union Capital Partners, Inc. into 3,907,832
shares of non-voting common stock. The pro forma as adjusted information
reflects, in addition to the pro forma adjustments, the issuance and sale of
the 7,000,000 shares of common stock offered by us in this offering at the
assumed initial public offering price of $15.00 per share.
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and accompanying notes and other financial data included elsewhere
in this prospectus.
<TABLE>
<CAPTION>
As of December 31, 1999
---------------------------------------
Pro Forma
Actual Pro Forma as Adjusted
------------ ----------- ------------
<S> <C> <C> <C>
Long-term liabilities................. $ 1,308,867 $ 1,308,867 $ 1,308,867
------------ ----------- ------------
Mandatorily redeemable convertible
preferred stock at redemption value,
$0.001 par value:
Series A mandatorily redeemable
convertible preferred stock;
3,310,000 shares authorized;
3,309,953 shares issued and
outstanding actual; none
authorized, issued and outstanding
pro forma and pro forma as adjusted
(unaudited)......................... 12,108,201 0 0
Series B mandatorily redeemable
convertible preferred stock;
7,000,000 shares authorized;
6,896,552 shares issued and
outstanding actual; none
authorized, issued and outstanding
pro forma and pro forma as adjusted
(unaudited)......................... 65,684,938 0 0
------------ ----------- ------------
Total mandatorily redeemable
convertible preferred stock........ 77,793,139 0 0
------------ ----------- ------------
Stockholders' equity (deficit):
Common stock, voting, $0.001 par
value; 54,532,860 shares authorized
actual and pro forma and
150,000,000 shares authorized pro
forma as adjusted; 8,452,593 shares
issued and outstanding actual;
32,374,255 shares issued and
outstanding on a pro forma basis
(unaudited); 39,374,255 shares
issued and outstanding on a pro
forma as adjusted basis
(unaudited)......................... 8,452 32,374 39,374
Common stock, non-voting, $0.001 par
value; 4,089,964 shares authorized
actual and pro forma and 5,000,000
authorized pro forma as adjusted, 0
shares issued and outstanding
actual, 3,907,832 shares issued and
outstanding on a pro forma and on a
pro forma as adjusted basis (1) (2)
(unaudited)......................... 0 3,907 3,907
Additional paid-in capital........... 7,680,316 85,445,626 181,588,626
Deferred compensation................ (8,905,223) (8,905,223) (8,905,223)
Stock subscriptions receivable and
other............................... (150,911) (150,911) (150,911)
Accumulated deficit.................. (10,086,207) (10,086,207) (10,086,207)
------------ ----------- ------------
Total stockholders' equity
(deficit)......................... (11,453,573) 66,339,566 162,489,566
------------ ----------- ------------
Total capitalization.............. $ 67,648,433 $67,648,433 $163,798,433
============ =========== ============
</TABLE>
- --------
(1) 4,089,964 shares of non-voting common stock will be authorized by the
stockholders prior to the closing of this offering but, for purposes of
this table, are assumed to have been authorized as of December 31, 1999.
(2) Excludes 1,269,457 shares of common stock issued between January 1, 2000
and March 15, 2000 upon the exercise of options. Also excludes 2,489,220
shares of common stock issuable upon the exercise of outstanding options as
of March 15, 2000.
18
<PAGE>
DILUTION
Our pro forma net tangible book value as of December 31, 1999 was
approximately $66.3 million, or $1.83 per share of common stock. Pro forma net
tangible book value per share is determined by dividing the amount of our total
tangible assets less total liabilities by the number of shares of common stock
outstanding as of December 31, 1999 on a pro forma basis including conversion
of all of our preferred stock into shares of common stock and non-voting common
stock. Dilution in net tangible book value per share represents the difference
between the assumed initial public offering price and the net tangible book
value per share of common stock immediately after the completion of this
offering.
After giving effect to the issuance and sale of the shares of common stock
offered by us at an assumed initial public offering price of $15.00 per share
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us, our pro forma net tangible book
value as of December 31, 1999 would have been $162.5 million or $3.75 per share
of common stock. This represents an immediate increase in pro forma net
tangible book value to our existing stockholders of $1.92 per share of common
stock and an immediate dilution to purchasers in this offering of $11.25 per
share of common stock.
The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of common stock... $15.00
Pro forma net tangible book value per share of common stock at
December 31, 1999................................................ $1.83
Increase in pro forma net tangible book value per share of common
stock attributable to this offering after giving affect to
conversion of our preferred stock................................ 1.92
-----
Pro forma net tangible book value per share of common stock after
this offering and after giving effect to conversion of our
preferred stock.................................................. 3.75
------
Dilution per share of common stock to new investors............... $11.25
======
</TABLE>
The following table summarizes, on a pro forma basis, as of December 31,
1999, the differences between the number of shares of common stock purchased
from us, the aggregate cash consideration paid to us and the average price per
share paid by existing stockholders and new investors purchasing shares of
common stock in this offering. The calculation below is based on an assumed
initial public offering price of $15.00 per share, before deducting estimated
underwriting discounts and commissions and estimated offering expenses payable
by us:
<TABLE>
<CAPTION>
Average
Shares Purchased Total Consideration Price
------------------ -------------------- Per
Number Percent Amount Percent Share
---------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders........... 36,282,088 83.8% $ 71,664,538 40.6% $ 1.98
New investors................... 7,000,000 16.2 105,000,000 59.4 15.00
---------- ----- ------------ ----- ------
Total........................... 43,282,088 100.0% $176,664,538 100.0% $ 4.08
========== ===== ============ ===== ======
</TABLE>
The foregoing discussion and tables assume no exercise of any stock options
outstanding as of December 31, 1999. As of December 31, 1999, there were
options outstanding to purchase a total of 2,317,782 shares with a weighted
average exercise price of $0.63 per share. To the extent that any of these
options are exercised, there will be further dilution to new investors.
19
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The following selected financial data is qualified by reference to, and
should be read in conjunction with, our financial statements and the notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing elsewhere in this prospectus. The statement of
operations data presented below for the period from September 26, 1997
(inception) through December 31, 1997 and for each of the years ended December
31, 1998 and 1999 and the selected balance sheet data at December 31, 1997,
1998 and 1999 is derived from our financial statements that have been audited
by PricewaterhouseCoopers LLP, independent accountants, included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
Period from Inception Years Ended December 31,
(September 26, 1997) to --------------------------
December 31, 1997 1998 1999
----------------------- ---------- --------------
<S> <C> <C> <C>
Statements of Operations
Data:
Revenue.................... $ 0 $ 45,032 $ 1,998,164
Costs of data network
exchange facilities:
Direct.................... 0 118,848 2,681,591
Indirect.................. 0 173,846 866,254
---------- ---------- --------------
Gross profit (loss) from
data network exchange
facilities................ 0 (247,662) (1,549,681)
Total operating
expenses............... 72,193 469,248 3,871,931
---------- ---------- --------------
Loss from operations....... (72,193) (716,910) (5,421,612)
Other income (expense).. (9,314) (77,933) 691,987
---------- ---------- --------------
Net loss................... (81,507) (794,843) (4,729,625)
Accretion of convertible
preferred stock........... 0 0 (696,897)
Deemed dividend related to
beneficial conversion
feature of Series B
preferred stock........... -- -- (5,655,173)
---------- ---------- --------------
Net loss available to
common stockholders....... $ (81,507) $ (794,843) $ (11,081,695)
========== ========== ==============
Net loss per common share
(basic and diluted) (1)... $ (.01) $ (.10) $ (1.35)
Weighted average common
shares (basic and diluted)
(1)....................... 8,179,929 8,179,929 8,180,040
Pro forma net loss per
common share (basic and
diluted) (1)(2)-
unaudited................. $ (.59)
Pro forma weighted average
common shares (basic and
diluted) (1)(2)-
unaudited................. 17,496,175
Other Financial Data:
Cash flow provided by (used
in):
Operating activities...... $ (43,868) $ (552,126) $ (4,443)
Investing activities...... (18,592) (819,413) (68,916,746)
Financing activities...... 603,000 854,604 69,862,642
Capital expenditures....... 18,592 819,413 12,005,820
Other Data:
Customers at end of
period.................... 0 12 63
Operational DNXs........... 0 1 3
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
----------------------------------
1997 1998 1999
-------- ----------- -----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................. $540,540 $ 23,605 $ 965,058
Short-term investments.................... 0 0 56,387,515
Working capital........................... (96,750) (1,226,804) 54,715,399
Total assets.............................. 558,783 832,142 72,882,292
Long-term liabilities, including current
maturities............................... 600,000 1,596,595 1,440,624
Mandatorily redeemable convertible
preferred stock.......................... -- -- 77,793,139
Total stockholders' equity (deficit)...... (78,507) (873,350) (11,453,573)
</TABLE>
- --------
(1) See note 1 of notes to financial statements for a description of the
computation of basic, diluted and pro forma net loss per share and the
number of shares used to compute basic, diluted and pro forma net loss per
share.
(2) Pro Forma data reflects the conversion of our convertible preferred stock
to common stock and non-voting common stock, which will occur automatically
upon the closing of this offering.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes to those statements included elsewhere in this prospectus.
Overview
We provide colocation facilities, comprised of customized physical space and
network connections for our customers' computer equipment, along with value-
added services for their e-business and data communications applications. We
provide these solutions through our secure, multi-carrier DNXs. We were
incorporated in September 1997 and opened Denver 1, our first DNX, in July 1998
and our first dollar of revenue was realized in September 1998.
Our customers demand high-performance, reliable network connections to
maximize the performance of their applications for their partners and
customers. We provide customized solutions by providing a broad range of
network connections including Internet hosting and more secure, higher
performing private-line services using ATM, T-1, fractional T-1, frame relay,
ISDN and simple modem lines. In addition, we offer our customers value-added
services, including equipment and application health monitoring, firewall
management, data backup and redundant multi-carrier Internet connections.
Our activities in 1999 consisted primarily of:
. Operating our first Denver DNX;
. Locating space and constructing our DNXs in Raleigh-Durham, Minneapolis,
Denver and San Diego;
. Developing and further refining our template for designing and building
future DNXs;
. Raising private equity to fund the deployment of additional DNXs;
. Developing our first three value-added service offerings--InflowNet(TM),
SecureFlow(TM) and MonitorFlow(TM);
. Introducing and continuing development of FlowTrack(TM), our proprietary
software application that allows us to rapidly and efficiently expand by
automating our business processes; and
. Further developing technical resources and our sales and management
teams.
The following table provides an overview of our DNX deployment as of March
15, 2000.
<TABLE>
<CAPTION>
Operational First Dollar of Number of
DNX Location Date Revenue Realized Customers
<S> <C> <C> <C> <C>
Denver 1 Lincoln Street, Denver, CO August 1998 September 1998 53
Minneapolis Eleventh Avenue South, Minneapolis, MN October 1999 November 1999 9
Raleigh-Durham South Miami Blvd., Durham, NC November 1999 December 1999 11
Denver 2 Bannock Street, Denver, CO January 2000 February 2000 9
San Diego Scranton Road, San Diego, CA January 2000 March 2000 4
- -------------------------------------------------------------------------------------------------
</TABLE>
We have formed several wholly-owned subsidiaries through which we will
conduct our operations in the states in which we have or are currently
constructing a DNX, and expect to form additional subsidiaries as we expand our
geographic footprint.
We intend to have 15 geographically dispersed DNXs in operation by the end
of 2000 and another 20 by the end of 2002. Each new DNX is expected to be
constructed to our current template of approximately 30,000 to 35,000 gross
leased square feet, of which approximately 20,000 square feet will be dedicated
to raised-floor hosting facilities. Each DNX is expected to be fully-staffed at
its initial opening date, in advance of receiving
21
<PAGE>
any revenue and we expect to incur both personnel-related costs in this pre-
opening period as well as costs for power, telecommunications services and
other administrative costs. Over the first 24 months of development, we expect
to invest approximately $10.5 million to fund the capital expenditures and
initial operating losses of each additional DNX, of which we expect, as a
general matter, that approximately 60% will be expended prior to receiving any
revenue.
Description of Financial Components
Revenue. Revenue consists of monthly fees for colocation, network
connectivity, systems management and value-added services. Customer contracts
for the lease of cabinet space, network connectivity and our value-added
services are renewable and range from one to three years in duration with
payments due on a monthly basis. Although we do not charge our customers for
initial consulting required in the design and implementation of complex network
solutions, we do realize revenue from charges related to initial network
capacity provisioning, equipment installation and other one-time set-up fees.
Monthly recurring service revenue is recorded in the month the services are
rendered. Fees related to installation services are recorded as deferred
revenue and recognized on a straight-line basis over the term of the customer
service contracts. The incremental direct costs incurred related to the
origination of customer contracts are capitalized and recognized on a straight-
line basis over the same term.
Costs of DNXs. Direct costs of DNXs consist primarily of the incremental
costs of installation services, costs for private-line and Internet
connectivity, net rent expense, utilities and maintenance, operations personnel
salaries and benefits, and depreciation and amortization related to our DNXs.
Indirect DNX costs consist primarily of costs related to sales, marketing and
administrative personnel working in DNXs. We expect direct and indirect costs
of DNXs to increase significantly as we execute our strategy of rapidly
developing additional DNXs, due to costs related to construction and
maintenance, network provisioning, and hiring and training new DNX employees.
Sales and Marketing, General and Administrative and Product Development
Expenses. Sales and marketing expenses consist primarily of salaries and
benefits of our Denver headquarters' sales and marketing personnel, advertising
costs for national and regional campaigns and costs for national marketing and
collateral materials. General and administrative expenses include costs related
to our finance and accounting, legal, human resources, construction and
business development functions as well as costs associated with our central
network operations center located at our headquarters. Product development
expenses consist primarily of salaries and benefits of our employees devoted to
software and product development at our headquarters. We expect to add a
significant number of people centrally in sales and marketing, general and
administrative and product development functions as well as dramatically
increase our advertising and marketing efforts as we build out our DNXs.
Stock Compensation Expense. Stock compensation expense substantially
reflects the difference between the deemed fair market value of our common
stock for accounting purposes and the exercise price of the options as of the
date of grant. Deferred compensation is reflected as a reduction of
stockholders' equity and is generally being amortized as a charge to operations
over the 48-month vesting period of the options. This amortization is generally
recorded in an accelerated manner consistent with Financial Accounting
Standards Board ("FASB") Interpretation No. 28.
22
<PAGE>
We do not intend to issue stock options below fair market value subsequent
to the date of the effective date of this offering. We will record deferred
compensation expense of approximately $15,974,000 for the difference between
the exercise price of the stock options and deemed fair market value of our
common stock at the date of grant for all stock options granted to employees in
January, February and through March 15, 2000. This deferred compensation will
be amortized to expense over the vesting period of the options, generally four
years, using an accelerated method as described in Financial Accounting
Standards Board Interpretation No. 28. The deferred compensation for the above
stock options will be amortized to stock compensation expense as follows:
<TABLE>
<S> <C> <C> <C>
2000 $7,631,700
2001 $4,655,800
2002 $2,494,100
2003 $1,109,800
2004 $ 82,600
</TABLE>
Beneficial Conversion Feature Related to Preferred Stock. In September 1999,
we agreed to sell shares of our $0.001 par value Series B preferred stock at
$8.70 per share. In October and November 1999, we closed this round of
financing and issued a total of 6,896,552 shares of Series B preferred stock at
$8.70 per share and received proceeds, net of issuance costs, totalling
$59,931,035. The difference between the offering price and the deemed fair
value of the Series B preferred stock resulted in a beneficial conversion
feature in the amount of approximately $5,655,000 which was calculated in
accordance with Emerging Issues Task Force No. 98-5,
Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios. The beneficial conversion feature is
reflected as a deemed dividend in the statement of operations for the year
ended December 31, 1999.
Comparison of Fiscal Years Ended December 31, 1999 and 1998
The Denver 1 DNX was opened in July 1998 and our first dollar of revenue was
realized in September 1998. Our Minneapolis and Raleigh-Durham DNXs were opened
in October and November 1999 respectively; however, we generated limited
revenue from those DNXs in 1999. Pre-opening direct and indirect costs of DNXs
were incurred for Denver 2, Minneapolis, Raleigh-Durham and San Diego during
1999.
Revenue. Our revenue increased to $1,998,164 in 1999 from $45,032 in 1998.
This growth in revenue resulted primarily from an increase in the number of
customers to 63 at the end of 1999 from 12 at the end of 1998, as well as
increases in revenue per customer from our first Denver DNX.
The number of our customers increased due to our expanded sales and
marketing efforts. Our revenue per customer increased as we sold new value-
added services to our existing customers as well as because our customers
contracted for more cabinet space and network connectivity as their own
applications expanded. At December 31, 1999, approximately 51% of our customers
purchased value-added services from us, compared to 8% as of December 31, 1998.
We expect increases in the revenue per customer to continue as our customers
grow to meet their own customer's demands as well as with continued sales of
new and existing value-added services.
Because we now rely on a number of smaller customers for the majority of our
revenue, and expect this trend to continue, we must effectively compete in our
target markets to gain new customers and revenue. Customers increased during
1999 to 63, and we have contracted to provide services to an additional 24
customers since December 31, 1999, bringing our total customer count to 87 at
March 15, 2000. Competition may have a negative effect on business and
financial condition if it reduces our ability to attract new customers or cause
us to reduce the prices we charge our customers for our services.
Direct Costs of DNXs. Our direct costs of DNXs increased to $2,681,591 in
1999 from $118,848 in 1998. Approximately $716,000 of this increase resulted
from hiring 31 additional operations technicians during 1999
23
<PAGE>
to support our growing customer base. In addition our network and power costs
increased approximately $599,000 and $179,000 respectively from 1998 to 1999
primarily from an increase in the number of customers and the resultant
increase in network bandwidth and power use. Network bandwidth costs are based
upon minimum monthly service charges and monthly usage, and power costs are
based upon monthly usage.
Indirect Costs of DNXs. Our indirect costs of DNXs increased to $866,254 in
1999 from $173,846 in 1998 due principally to incurring additional personnel-
related costs in sales, management and administration at our DNXs.
Sales and Marketing. Sales and marketing costs increased to $653,186 in 1999
from none in 1998. Approximately $216,000 of this increase is from our attempt
to create a national sales support infrastructure during 1999 by hiring 11
additional corporate sales people. In addition, during 1999 in an attempt to
promote brand awareness we established a corporate marketing department by
hiring five marketing employees. We spent approximately $437,000 on marketing
salaries and other marketing activities including market research, public
relations, trade shows, and advertising.
General and Administrative. General and administrative expenses increased to
$1,937,254 in 1999 from $298,985 in 1998 as we hired more personnel to support
our growth.
Product Development. Product and development costs increased to $706,008 in
1999 from $170,263 in 1998. This growth is attributable to increased personnel
costs related to development of FlowTrack(TM), MonitorFlow(TM), SecureFlow(TM)
and InflowNet(TM).
Stock Compensation. During 1999, we recorded aggregate deferred stock
compensation of $9,480,706. We recorded amortization of this deferred
compensation of $575,483 in 1999. Prior to 1999, we did not record any deferred
compensation.
Other Income (expense). Other income (expense) was ($77,933) in 1998 as
compared with $691,987 in 1999. The change was due to interest income earned on
capital raised in our equity financings.
Comparison of Fiscal Year Ended December 31, 1998 and Period from Inception
(September 26, 1997) through December 31, 1997
We did not generate any revenue during 1997. During this time, we were
primarily refining our business plan, developing the design of our first DNX,
and gathering requirements to start writing a proprietary operating software,
which evolved into FlowTrack(TM). Our costs and expenses consisted primarily of
salaries, travel and legal fees related to start-up activities and capital
expenditures related to personal computers and peripheral equipment.
Revenue. Our revenue increased to $45,032 in 1998 from none in 1997. This
revenue growth is attributable to signing our first customer and commencing
operations in the third quarter of 1998.
Cost of DNXs. Our direct and indirect costs of DNXs increased to $292,694 in
1998 from none in 1997 as we opened our first DNX in Denver and incurred costs
related to facility rent, network connectivity and customer service personnel.
Sales and Marketing, General and Administrative Product Development and
Stock Compensation. Our operating expenses increased from $72,193 in 1997 to
$469,248 in 1998 due principally to hiring of additional sales, marketing,
technical and administrative personnel.
24
<PAGE>
Quarterly Results of Operations
The following table sets forth certain statement of operations data on a
quarterly basis for the three months ended March 31, 1999, June 30, 1999,
September 30, 1999 and December 31, 1999. This information has been derived
from our unaudited financial statements. In our opinion, this quarterly
information has been prepared on a basis consistent with the audited financial
statements and includes all adjustments, consisting only of normal recurring
adjustments which are necessary for a fair presentation of the financial
information for the quarters presented. This information should be read in
conjunction with the financial statements and notes thereto included elsewhere
in this prospectus. The results of operations for any one quarter are not
necessarily indicative of the results of operations for any future period:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------
March 31, June 30, September 30, December 31,
1999 1999 1999 1999
<S> <C> <C> <C> <C>
--------- --------- ----------- -----------
<CAPTION>
(unaudited)
<S> <C> <C> <C> <C>
Statements of Operations Data:
Revenue....................... $ 126,396 $ 360,074 $ 596,571 $ 915,123
Costs of DNXs:
Direct...................... 215,287 326,004 681,105 1,459,195
Indirect.................... 48,530 91,266 241,238 485,220
--------- --------- ----------- -----------
Gross profit (loss) from
DNXs..................... (137,421) (57,196) (325,772) (1,029,292)
Other operating expenses:
Sales and marketing......... 15,534 73,638 221,272 342,742
General and administrative.. 93,418 213,586 441,310 1,188,940
Product development......... 13,302 73,962 244,472 374,272
Stock compensation.......... 3,768 38,137 169,958 363,620
--------- --------- ----------- -----------
Total operating expenses...... 126,022 399,323 1,077,012 2,269,574
Operating loss................ (263,443) (456,519) (1,402,784) (3,298,866)
Net interest income
(expense).................... (35,148) 91,745 109,613 525,777
--------- --------- ----------- -----------
Net loss...................... $(298,591) $(364,774) $(1,293,171) $(2,773,089)
========= ========= =========== ===========
</TABLE>
Revenue increased 261% during the quarter ended March 31, 1999, 185% during
the quarter ended June 30, 1999, 66% during the quarter ended September 30,
1999 and 53% during the quarter ended December 31, 1999, as the number of
customers and revenue per customer increased. Direct and indirect costs of DNXs
increased in each quarter due to the increase in the number of customers.
Overhead expenses and deferred stock compensation expenses increased quarter
over quarter primarily due to the addition of personnel as our business
increased.
Liquidity and Capital Resources
We have used cash in our operating and investing activities during all
periods since inception. These cash usages have been funded by sales of stock.
Those sales amounted to $3,000, $0 and $70,210,002 in 1997, 1998 and 1999,
respectively. In April 1999, we sold our Series A preferred stock to First
Union Capital Partners, Inc., our co-founders Joel C. Daly and Arthur H. Zeile
and certain other private investors for aggregate proceeds to us of
approximately $10.2 million. During the fourth quarter of 1999, we sold our
Series B preferred stock to Meritage Investment Partners, First Union Capital
Partners, Inc., J.P. Morgan Investment Corporation, General Electric Capital
Corporation and Stolberg, Meehan and Scano for aggregate proceeds to us of
approximately $60.0 million.
Net cash used in operating activities in 1997, 1998 and 1999 was $43,868,
$552,126 and $4,443, respectively. Net cash used for operating activities in
each of these periods was primarily the result of operating losses and changes
in working capital.
25
<PAGE>
Net cash used for investing activities in 1997, 1998 and 1999 was $18,592,
$819,413 and $68.9 million, respectively. Net cash used for investing
activities in each of 1998 and 1997 was primarily the result of capital
expenditures for DNXs, as well as leasehold improvements, furniture and
fixtures and computers and other equipment. Net cash used in 1999 for investing
activities also includes $56.4 million of purchases of short-term investments.
Although we have plans to invest significantly in property and equipment, we
have no material commitments for such items at this time. We enter into non-
cancelable operating lease agreements for our corporate offices and DNXs.
Future annual minimum lease payments, net of deferred rent, as of March 15,
2000, totaled approximately $47.6 million.
We anticipate that we will have significant cash requirements for several
years as we build additional DNXs, increase our employee base to support DNX
operations, develop additional value-added services and expand our marketing
efforts. In addition, we expect to invest significantly in the purchase of
property and equipment. We expect to receive net proceeds from this offering of
approximately $96.2 million, or up to $110.8 million if the underwriters
exercise their over-allotment option. We intend to use the net proceeds of this
offering as follows: approximately $60.0 million to fund the capital costs of
constructing DNX facilities, expected to average approximately $6.0 million per
facility; and the remainder for working capital and general corporate purposes.
Based on our DNX development plan, we believe the net proceeds of this offering
together with cash on hand will be sufficient to fund our anticipated operating
and capital needs for the next 12 months. After that time, we will require
significant additional funds to support our operations and fund the expansion
of our business. Moreover, due to our limited operating history, the nature of
our industry and the possibility that we will encounter delays or cost overruns
in building our planned new DNXs in 2000, our future capital needs are
difficult to predict, and we may need additional capital before this time. We
may not be able to obtain additional funding in amounts or on terms acceptable
to us. Our inability to raise additional funds could impede our growth, may
force us to scale back or cease our operations or may negatively affect our
financial condition or the market price of our stock.
As of December 31, 1999 our commitments under non-cancellable operating
lease agreements in 2000, 2001, 2002, 2003, 2004 and thereafter are $1,828,386,
$2,309,735 and $2,339,295, respectively.
Year 2000 Compliance
Many currently-installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These
systems may recognize a date using "00" as the year 1900 rather than the year
2000. As a result, computer systems and/or software used by many companies and
governmental agencies may need to be upgraded to comply with Year 2000
requirements or risk system failure or miscalculations causing disruptions of
normal business activities.
We expect most material Year 2000 compliance problems to have arisen on or
immediately after January 1, 2000. As of March 15, 2000, we are not aware of
any Year 2000-related problems associated with our internal systems or software
or with the software or systems of other parties with which our systems
interface. It is possible, however, that Year 2000-related problems could still
arise.
Although we have not been a party to any litigation or arbitration
proceeding to date involving our products or services and related to Year 2000
compliance issues, we do not know if in the future we will be required to
defend our products or services in such proceedings, or to negotiate
resolutions of claims based on Year 2000 issues. The costs of defending and
resolving Year 2000-related disputes, regardless of the merits of such
disputes, and any potential liability on our part for Year 2000-related
damages, including consequential damages, could cause our business and
financial results to suffer. In addition, we believe that purchasing patterns
of customers and potential customers may be affected by Year 2000 issues as
companies may continue to expend significant resources to correct or upgrade
their current software systems for Year 2000 compliance. These expenditures may
reduce funds available to purchase software products and services such as those
offered by us. To the extent that Year 2000 issues cause significant delay in,
or cancellation of, decisions to purchase our products or services, our
business and financial results could suffer.
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<PAGE>
In the event that any of our external vendors cannot timely provide us with
products, services or systems that meet the Year 2000 requirements, we may
incur unexpected expenses to remedy any problems. These expenses could
potentially include purchasing replacement hardware or software. In addition,
our business and our ability to deliver our products and services could be
severely affected, at least for a certain period of time, in the event that
Year 2000 related problems were to cause disruption or failure in the Internet
or other forms of network access as a means of delivery of our products and
services or more generally, disruption to the infrastructure. The total cost of
our Year 2000 compliance activities has not been, and is not anticipated to be,
material to our business, results of operations and financial condition. We may
not be able to remediate all significant Year 2000 problems on a timely basis
and may incur costs in excess of our management's estimates. Our remediation
efforts may involve significant time and expense, and could cause our business
and prospects to suffer.
To date, we have experienced no material complications to our operations due
to Year 2000 issues nor do we expect to experience any material adverse effects
on our business, financial condition or results of operations internally or
from any other party who may experience Year 2000 problems.
Recent Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants, or
AICPA, issued statement of position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." Statement of position 98-1 is
effective for financial statements for years beginning after December 15, 1998
and provides guidance on accounting for the costs incurred for computer
software developed or obtained for internal use including the requirement to
capitalize specified costs and the amortization of such costs. We have adopted
the provisions of statement of position 98-1 in the fiscal year beginning
January 1, 1999. The adoption of statement of position 98-1 is not expected to
have a material effect on our results of operations, financial position or cash
flows.
In December 1999 the SEC issued staff accounting bulletin No. 101, "Revenue
Recognition in Financial Statements." Staff accounting bulletin 101 provides
specific guidance, among other things, as to the recognition of revenue related
to up-front non-refundable fees and services charges received in connection
with a contractual arrangement. We have applied the provisions of staff
accounting bulletin 101 for the year ended December 31, 1999. The adoption of
staff accounting bulletin 101 did not have a material impact on our financial
condition or results of operations.
Qualitative and Quantitative Disclosures about Market Risk
Our exposure to market risk is limited to interest income sensitivity, which
is affected by changes in the general level of U.S. interest rates. Our cash
equivalents are invested with high-quality issuers and limit the amount of
credit exposure to any one issuer. Due to the short-term nature of our cash
equivalents, we believe that we are not subject to any material market risk
exposure.
We do not have any foreign currency hedging or other derivative financial
instruments.
27
<PAGE>
BUSINESS
Overview
We are a rapidly growing provider of colocation facilities, comprised of
customized physical space and network connections for our customers' computer
equipment, along with value-added services for their e-business and data
communications applications. We provide reliable outsourced solutions to small
and medium-sized businesses with sophisticated networking needs through our
secure, multi-carrier data network exchange facilities. We opened our first
state-of-the-art DNX in Denver in July 1998 and today operate DNXs in Denver
(two locations), Minneapolis, Raleigh-Durham and San Diego. We expect to have
15 geographically dispersed DNXs in operation by the end of 2000 and intend to
build another 20 by the end of 2002. Our customers benefit from the close
proximity of our DNXs to their businesses and we benefit from frequent
interaction with them. As of March 15, 2000, we provided services to 87
customers, including 24 new customers since January 1, 2000.
Our customers are in need of high-performance, reliable network connections
to maximize the performance of the applications they provide for their business
partners and customers. Using a consultative sales approach, which involves our
sales engineers and network designers, we tailor solutions for our customers
using a broad range of network connections. We optimize our customers'
applications by providing high-speed Internet access and private line services,
which offer more secure, higher-performing connections, using different types
of connections depending on the customers' transmission rate and bandwidth
needs. We offer our customers a suite of value-added services including
MonitorFlow(TM) for equipment and application monitoring, SecureFlow(TM) for
firewall management and InflowNet(TM) for redundant multi-carrier Internet
connectivity. We have also developed a proprietary software program,
FlowTrack(TM), which is composed of modules designed to integrate and automate
our business processes. Together with our standardized set of processes for
selecting, constructing and staffing new sites, FlowTrack(TM) allows us to
rapidly and efficiently expand and replicate our business across a broad
network of DNXs.
We believe that our solutions provide our customers not only a significant
performance advantage but also a compelling cost and time-to-market advantage.
Our customers benefit from economies of scale through the sharing of
infrastructure and personnel costs among multiple users. Our outsourced
solutions enable our customers to quickly establish and rapidly expand their e-
business applications, allowing them to better focus on their core
competencies. Our customers include eBags.com, Email Knowledge, Factual Data
Corp., High Speed Access Corp., MapQuest.com, MessageMedia Inc., Northpoint
Communications, Inc., SciQuest.com and Worldprints.com.
Market Opportunity
We believe that a significant opportunity exists to provide colocation
services, management of complex network connections and value-added services to
small and medium-sized companies focused on e-business, due in large part to
the following trends:
Growth of Internet Use for Business. Since the early 1990's, the Internet
has experienced tremendous growth and its use as a medium for communications
and commerce is increasing. According to Forrester, the number of U.S.
enterprises online is expected to grow from 1.8 million in 1998 to
approximately 4.3 million in 2003.
We believe that businesses are increasingly using the Internet for a variety
of reasons, including:
. Engaging in e-commerce, both business-to-business, or B2B, and business-
to-consumer, or B2C;
. Communicating and conducting business more efficiently with customers,
suppliers and employees; and
. Delivering application services to businesses on a usage-based model,
such as the application service provider, or ASP, model.
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<PAGE>
The greatest area of online growth is in the area of small to medium-sized
companies. According to International Data Corporation, Web-related
expenditures by small businesses in the United States are expected to grow from
$9.6 billion in 1999 to over $32 billion by 2003. In addition, Forrester
estimates that the B2B e-commerce market is expected to grow dramatically, from
$43 billion in 1998 to $1.3 trillion in 2003, a compound annual growth rate of
98%.
Increasing Network Complexity. Businesses are seeking to improve
efficiencies by capitalizing on lower network costs and new technologies and
are requiring greater connectivity to their customers, business partners and
employees in geographically dispersed locations. At the same time, many
businesses have been unable to capitalize on the Internet. Growth of Internet
usage and lack of Internet infrastructure development have led to quality and
reliability problems in the delivery of Internet-related services, particularly
at the increasingly congested points of direct connection to the Internet,
known as network access points. In addition, communications infrastructures are
becoming increasingly complex and difficult to manage as businesses create and
deploy data networking solutions to meet their growing needs. Small and medium-
sized businesses, in particular, are finding that designing, implementing and
managing their network infrastructures is an inefficient use of their
resources.
Network management has been made even more difficult by the ongoing shortage
of information technology professionals. According to the Information
Technology Association of America, there were over 345,000 open information
technology positions at the end of 1998 in the United States, which represents
approximately 10% of the total number of current core information technology
employees. According to a report released by the Department of Commerce in
1998, companies were already reporting severe difficulties in filling these
positions.
We believe that small and medium-sized businesses are particularly hard hit
by the scarcity of information technology professionals and have a difficult
time attracting and retaining these individuals. At best, the loss of a key
information technology professional at a small or medium-sized business can
result in a difficult search for a replacement. At worst, this could mean the
loss of all knowledge regarding a business' customized network infrastructure.
Growth in Outsourcing. An increasing number of businesses, especially small
and medium-sized e-businesses, are outsourcing significant aspects of their
complex, time-sensitive information technology needs due to the:
. High cost and complexity of establishing and maintaining a Web presence;
. Challenge of maintaining state-of-the-art technology and back-up systems
to support their e-business applications; and
. Difficulty in attracting and retaining qualified information technology
talent.
As businesses become increasingly comfortable outsourcing their critical
applications and equipment, the market for hosting and colocation services is
expected to grow rapidly. Forrester estimates that revenues from Internet-
related hosting and colocation services will grow from approximately $875
million in 1998 to approximately $14.7 billion in 2003, a compound annual
growth rate of 76%. Within this market, Forrester predicts that the market for
customized and colocation hosting services, segments on which we largely focus,
will grow from approximately $427 million in 1998 to approximately $7.6 billion
in 2003, a compound annual growth rate of 80%. The market for colocation
services is relatively new and rapidly evolving and neither we nor this market
may achieve or maintain this level of growth or acceptance. See "Risk Factors--
Risks Related to Our Industry."
Need for Comprehensive Advanced e-Business Application Solutions. A variety
of companies offer products and services that attempt to address the
infrastructure needs of e-businesses. However, we believe that the solutions
offered by these companies fail to meet the requirements of small and medium-
sized e-businesses
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<PAGE>
for their complex, time-sensitive applications. Most providers of colocation
facilities merely provide connectivity and fail to offer the value-added
services necessary to support emerging e-businesses. Additionally, many of
these companies offer only Internet connectivity and do not provide complex
data networking and private-line solutions that are needed by growing B2B
enterprises. Many of these companies provide these services in large facilities
centrally located near the major network accesss points, far from their
customers. This has created a significant opportunity for a complete outsourced
solution for connecting, monitoring and servicing e-business applications of
small and medium-sized businesses.
Our Solution
We provide our customers with a comprehensive range of high-performance
services for their advanced e-business and data communications applications.
Through our state-of-the-art DNXs, we provide multi-carrier network
connectivity, value-added services and a secure environment for our customers'
application hardware. Our outsourcing solution offers meaningful performance,
cost and time-to-market benefits to our customers. Specifically, we provide our
customers with the following key advantages:
Reliable Facilities and Multiple Carrier Connections. As more complex, time-
critical information and applications migrate onto the Internet and other data
networks, our customers are increasingly demanding not only more bandwidth but
more reliable bandwidth. Our DNXs have been engineered and constructed to
eliminate any single point of system failure, which reduces the possibility of
application downtime for our customers. For instance, our DNXs offer back-up
power, fire suppression, environmental controls and security systems. Because
communications networks may fail, our DNXs also offer access to multiple
carriers, thereby providing redundant high-speed network connectivity. We
choose these carriers based on their performance, network architecture, ability
to avoid congested network access points and available bandwidth.
Complex Network Connectivity. Many businesses require more secure, higher-
performance private-line connectivity solutions than basic Internet
connections. We design, provision and maintain complex network connections
tailored to each customer's needs. We provide customized solutions by using
different types of connections designed to optimize each connection's price and
performance characteristics. Private-line connections also allow for enhanced
security by using a dedicated channel over which no other data may travel. We
believe that this tailored approach to network connections is integral to
serving the emerging e-business community.
Value-Added Services. We offer services that improve the reliability and
performance of our customers' e-business applications. Our InflowNet(TM)
service provides redundant Internet connectivity by dynamically allocating data
among multiple Internet pathways. Other branded services include SecureFlow(TM)
for firewall management and MonitorFlow(TM) for equipment and application
status monitoring. In addition, we provide data backup and other support
services. These services, in the aggregate, are designed to provide a high
degree of reliability, protection of our customers' applications in the event
of a system failure and ongoing security.
Geographic Proximity. We target an underserved customer base in geographic
markets with a significant number of e-businesses. We believe that building
facilities in a large number of cities versus concentrating on a few locations
provides a number of psychological and practical benefits to our customers and
distinguishes us from other colocation providers. Our geographic proximity to
our customers allows customer technicians to easily access their equipment for
maintenance, upgrades and changes, as well as better manage potential
emergencies. Because most fast growing e-businesses frequently change their
hardware and software configurations to take advantage of new and improved
technologies, having their equipment readily accessible is critical. This
regular contact with our customers enables us to sell tailored value-added
services and enhance our service offerings through better identification of
customer needs. Moreover, the geographic dispersion of our DNXs allows our
customers' data traffic to avoid the congested network access points, thereby
increasing the performance and reliability of their data transmissions.
Accelerated Time-to-Market and Scalability. Because we believe that speed to
market and the ability to rapidly grow are critical to our customers,
particularly e-businesses, we offer an outsourced solution that
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<PAGE>
provides accelerated deployment and expansion, or scalability, of their
applications. Building an in-house data center is an expensive, complicated and
time-consuming process. In contrast, we guarantee that we will be ready to
implement our customers' applications within 30 days from signing of a
contract. Our robust proprietary database, FlowTrack(TM), facilitates DNX and
network capacity planning that allows us to rapidly fulfill our customers'
orders for additional space and connectivity, typically within days of their
request. Our outsourced solution enables our customers to quickly establish and
rapidly expand their e-business applications, allowing them to better focus on
their core competencies.
Our Strategy
Our objective is to be the leading provider of sophisticated services to
small and medium-sized businesses for the management of their complex e-
business and data communications applications. To achieve this objective, we
intend to:
Rapidly Expand Into Our Target Markets. We believe significant opportunities
exist to provide complex networking solutions to small and medium-sized e-
businesses. To establish a leadership position in providing these solutions, we
believe we have to expand quickly into multiple markets. We intend to increase
the number of our DNXs from five today to 35 geographically dispersed DNXs by
the end of 2002. We are focused primarily on domestic expansion but intend to
initiate development of a DNX in Europe by the end of 2000 and to continue to
evaluate further international opportunities. In addition, our expansion into
metropolitan areas that have previously been underserved by our competitors is
designed to enable us to be the first mover in many of these markets, an
important advantage given the low customer turnover rate in our industry.
Leverage Our Infrastructure. We have developed an infrastructure and
proprietary software systems to help us rapidly and efficiently expand into
multiple markets. We have built a team and set of automated processes to
accelerate the design, construction, staffing and marketing of future DNXs. Our
deployment team consists of nine full-time professionals who manage outside
consultants and the key elements of the data center construction process. We
have developed a robust proprietary software system, FlowTrack(TM), which
integrates and automates our business processes and allows us to effectively
manage rapid deployment across a broad network of DNXs. In addition, we hire a
general manager for a DNX approximately six months in advance of DNX activation
along with up to seven sales professionals and nine network engineers and
operations technicians to launch each DNX. Automating our deployment processes,
where possible, allows us to more quickly expand into new markets.
Continue to Emphasize Customer Service. We believe that delivering complete
customer satisfaction is vital to growing our business. We target customers who
are underserved by existing colocation providers or who have a small
information technology staff in need of outside expertise and consultation. Our
emphasis on customer service and support has resulted in a strong, loyal base
of customers and provides us many benefits, including potentially shortened
sales cycles, greater incremental sales opportunities to our existing customers
and new and improved services resulting from customer feedback. We intend to
remain focused on providing the highest level of satisfaction to our customers
by continuing to hire superior sales, technical and customer support personnel
and maintaining our intensive training programs.
Enhance and Cross-Sell Our Suite of Services. We intend to continue to
develop new and enhanced services that we believe will be attractive to
potential and existing customers and currently employ 16 full-time engineers
and technicians devoted to this development effort. Our sales force is trained
to effectively communicate the benefits of these new services and is motivated
to sell them as they become available to new or existing customers. For
example, we introduced InflowNet(TM) in September 1999. Of our 42 customers as
of September 30, 1999, 36% currently purchase InflowNet(TM). Additionally, 81%
of the new customers contracted since September 30, 1999 have purchased
InflowNet(TM). New services currently under development include FlowShare, a
load-balancing solution that manages server congestion, and Inflow Portal,
which will provide customers with real-time monitoring statistics and access to
FlowTrack(TM). We are currently developing enhancements to SecureFlow(TM),
which will include the ability to create customized temporary networks and
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<PAGE>
our data backup services. In addition, our geographically dispersed footprint
may provide us with significant advantages in providing future services such as
placing information closer to the user in order to make it more readily and
speedily accessible, or caching.
Expand Sales Channels and Increase Brand Awareness. We intend to
significantly grow our direct sales organization to expand coverage and
penetration of small and medium-sized businesses as we build out our DNXs. We
believe that we can further accelerate customer growth by using indirect sales
channels such as relationships with Internet service providers, distributors,
companies which package standard products with software solutions and those
which integrate and maintain network systems or computing operations. We
believe that building our brand awareness is important to attracting and
expanding our customer base. In addition to the branding achieved by our
various sales channels, we intend to increase our brand recognition through a
variety of marketing and promotional techniques, including traditional
advertising, hosting on-site conferences and seminars, attending trade shows,
establishing and maintaining close relationships with recognized industry
analysts and entering into co-marketing and co-branding agreements with
strategic partners and customers.
Our Services
Our services are designed to provide high-performance, reliability,
scalability and expertise to our customers. Our services are generally covered
by service level agreements which specify exacting performance levels
associated with availability and service repair time. We believe that our
service level agreements and customer support are among the best in our
industry. Our services are delivered from our geographically dispersed, state-
of-the-art DNXs and fall within the following general categories, each of which
is designed to enhance the performance, reliability and security of our
customers' mission-critical applications:
<TABLE>
<CAPTION>
Category Services
<C> <S>
Equipment Colocation . Network Design
. Secure Equipment Colocation
. Back-up Power
- -----------------------------------------------------------------------------
Network Access and
Connectivity . Local Network Connectivity
. National Network Connectivity
- -----------------------------------------------------------------------------
Valued-Added Services . Multi-provider Internet Connectivity
. Advanced Monitoring Applications, including
SecureFlow(TM) and MonitorFlow(TM)
- -----------------------------------------------------------------------------
</TABLE>
For the year end December 31, 1999, revenue from equipment colocation,
network access and connectivity, and value added services accounted for 51%,
32%, and 17% of total revenue, respectively. We derive revenue from both
installation charges and monthly recurring service fees. For the year ended
December 31, 1999, installation revenue represented 7.9% of our total revenue
during this period.
Equipment Colocation
Our DNXs are designed to provide our customers with a protected environment
for their data communications equipment. For instance, our DNXs offer back-up
power and fire suppression systems, high levels of physical security and
sophisticated environmental controls. We began offering colocation services in
September of 1998.
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<PAGE>
Our colocation services include space rental and power supply. We charge an
installation fee for each of these services, as well as monthly fees based on
space and power usage. Additionally, we provide customers initial consulting
and design assistance at no additional charge to help them optimize their
complex communications solutions. We offer our customers a variety of choices
for these services as follows:
<TABLE>
<CAPTION>
Service Description
<C> <S>
Network Design . Custom engineered solutions
. Network installation, configuration and
testing
. Documentation of network operations and
trouble shooting procedures
- -------------------------------------------------------------------------------
Secure Equipment Colocation . Dedicated, lockable cabinet space rental--19
or 23 inches wide, 7 feet high and 31 or 36
inches deep
. Raised-floor environment for easy, controlled
access to power and network connections
. 24x7 on-site technical support
. Consistent temperature and humidity
. Guaranteed 30 day installation
- -------------------------------------------------------------------------------
Redundant Power . Surge-protected power
. Multiple utility feeds from separate grids,
uninterruptible power supplies and backup
diesel-powered generators
. Multiple A/C and D/C power distribution
offerings
. Guaranteed 30 day installation and 100%
uptime
- -------------------------------------------------------------------------------
</TABLE>
Network Access and Connectivity
We provide access and connectivity to multiple carriers, including major
Internet pathways such as UUNet, Intermedia/Digex, GTE, Verio, AT&T and Cable &
Wireless. Through local connections with incumbent local exchange carriers and
competitive local exchange carriers, such as US WEST, AT&T Local, MCI WorldCom,
Time Warner Telecommunications and ICG, we can deliver customized services
directly to a customer's cabinet. We purchase various types of communication
circuits in bulk quantities and resell them to our customers. Because of our
carrier neutrality, we can further enhance the reliability of our customer's
applications by providing customized solutions to route traffic to alternative
networks in the event of a failure of any single network. Additionally, we
select the network connections which offer our customers the most appropriate
performance and security characteristics for their business.
By ordering carrier circuits and maintaining our own circuit connection
equipment, we take responsibility for the link from the customers' equipment to
the carrier's network. We connect our DNXs to these networks through multiple
pathways. We guarantee the performance of our own network connections and also
pass along the guarantees made by the carriers. Because we do not own the
necessary pathways, we have contracts with several third party service
providers, such as U.S. West, AT&T Local, MCI WorldCom and ICG. Terms of our
agreements with these service providers, generally commit us to purchase fixed
amounts of bandwidth and may include the ability to increase bandwidth as
necessary. These agreements are generally non-cancellable by either us or the
third party and include service fees based on rates negotiated on a contract-
by-contract basis.
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<PAGE>
Our network access and connectivity services include ongoing 24 hours a day,
seven days a week, or 24x7, monitoring of network performance. We began
offering network access and connectivity services in September of 1998. We
receive both initial setup fees and recurring monthly revenue for these
services. Our customers enjoy a variety of resold network connectivity options
as follows:
<TABLE>
<CAPTION>
Connectivity Options Description
<C> <S>
Local Network Connectivity . Multiple types of private-line connections
. Remote access modem lines
. Guaranteed 30 day installation
. Guaranteed 4 hour maximum time to repair
. Match carrier service level agreements for
availability
- ----------------------------------------------------------------------------
National Network Connectivity . Multiple types of private-line connections
. Internet
. Guaranteed 30 day installation
. Guaranteed 4 hour maximum time to repair
. Match carrier service level agreements for
availability
- ----------------------------------------------------------------------------
</TABLE>
Value-Added Services
We believe that our customers seek value-added services to enhance the
reliability and performance of their applications. We employ 16 full-time
engineers and technicians devoted to the evaluation, development and deployment
of new value-added services. We intend to continue to develop new and enhanced
services which we believe will be attractive to potential and existing
customers.
Redundant Internet Access: InflowNet(TM) is an innovative Internet access
solution which provides direct Internet access to the pathways of multiple
major Internet providers such as UUNet, Intermedia/Digex, GTE, AT&T and Cable &
Wireless. Many providers offer limited redundancy within their own network, but
if individual networks fail, so does a customer's application. By using Border
Gateway Protocol v 4.0, an advanced Internet routing protocol, InflowNet(TM)
provides reliability by instantaneously routing traffic to another pathway
should a customer's primary Internet pathway fail. In addition, we choose
providers based on end-user reach, performance, architecture, ability to avoid
congested network access points and available bandwidth, providing a very
reliable, high-performance solution which we believe is appealing to e-
businesses. We introduced InflowNet(TM) in September of 1999. We offer
InflowNet(TM) with varying levels of Internet access capacity as follows:
<TABLE>
<CAPTION>
Branded Service Description
<S> <C>
InflowNet(TM) Max . Multi-provider Internet access solution
. Fixed (known as dedicated) or dynamic (known as burstable)
bandwidth capacity
. Expandable with increased demand
.Dual Ethernet connections
.Guaranteed 100% uptime
.Minimal time-delay guarantee
.On-line bandwidth reports
.Guaranteed 30 day installation
- ---------------------------------------------------------------------------------
InflowNet(TM) SX .Multi-provider Internet access solution
.Fixed bandwidth capacity
.Fixed-rate pricing
. Single Ethernet connection
.Guaranteed 99% uptime
.Minimal time-delay guarantee
.Guaranteed 30 day installation
- ---------------------------------------------------------------------------------
</TABLE>
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<PAGE>
Advanced Monitoring Applications: Our managed monitoring applications are
designed to enhance the reliability and security of our customers' e-business
applications. We began offering monitoring applications during the fourth
quarter of 1998. These value-added services are based on applications developed
in-house or by third-party software vendors. We receive both initial setup fees
and recurring monthly revenue for these services. We currently offer our
customers the following branded services on a 24x7 basis:
<TABLE>
<CAPTION>
Branded Service Description
<S> <C>
MonitorFlow(TM) . Multi-dimensional equipment status monitoring
. Based on Hewlett-Packard Open View, MediaHouse
Enterprise Monitor technologies and in-house
developed software
. Various levels of service from equipment level
monitoring to application transaction testing
. Available end-user impact monitoring to help our
customers identify problems before their users do
. Advance troubleshooting plan ensures speedy
resolution upon identification of a problem
. Monthly customer reports provide statistics and
tracking information to help evaluate performance
trends and help in growth planning
. Guaranteed 30 day installation and 100% uptime
- ----------------------------------------------------------------------
. Review and consultation on customer-developed
SecureFlow(TM) security policy
. Based on Checkpoint Firewall-1 technology
. Perimeter-based managed firewall system tailored to
individual security policy
. Guaranteed 30 day installation
- ----------------------------------------------------------------------
</TABLE>
Scalable Technology Platform
FlowTrack(TM) is a robust proprietary software program developed in-house
that integrates and automates our business processes. This program allows us to
quickly implement network and equipment provisioning through electronic work
orders issued to technicians in each DNX. FlowTrack(TM) is a critical component
to our 30 day up and running guarantee because it allows us to rapidly and
efficiently scale across a broad network of fully-functional DNXs.
Additionally, through Inflow Portal, our customers will soon be able to access
FlowTrack(TM) through the Internet and receive real-time status updates
regarding their specific work orders.
FlowTrack(TM) gives our sales force online access to the latest Inflow
service and pricing information, enabling them to provide service proposals to
new and existing customers on a real-time basis. Using FlowTrack(TM), our sales
force can instantly review pricing information, analyze profit margins and
network and space capacity factors. This on-the-spot analysis allows our sales
force to respond quickly and accurately to customer inquiries.
FlowTrack(TM) is composed of the following three modules, each of which
focuses on a different aspect of customer management:
. Asset Management. This module records the configuration of customer
applications, including equipment, communication circuits, cabling and
power. Each record is given a unique serial number to allow us to better
manage and monitor customer applications. Using this module, we are able
to track network and space capacity and identify and plan for impending
shortages.
. Network Operations. This module records monitoring alarms and suggests
operational procedures, maintenance and/or work orders to remedy the
problems identified by the alarms. Also, as trouble tickets are generated
and subsequently resolved, they are added to our database, which allows
us to
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more efficiently manage future problems for our customers and develop
troubleshooting policies and maintenance activities. In addition, this
module contains built-in intelligence relating to managing multiple
networks and equipment.
. Customer Account and Billing Management. The functions necessary to
efficiently administer a customer account, including customer contact
information, service requirements and service level agreements, are
automated using this module. All billing information is contained in this
module, which generates bills on a monthly basis, including monthly
charges for recurring services as well for non-recurring charges based on
work orders generated in the network operations module.
FlowTrack(TM) is a multi-module enterprise system based on the Microsoft NT
platform. FlowTrack(TM) v1.7, the current version, is designed to be quickly
deployed across our DNX network, enabling its use as a "requirements gathering"
tool to enhance future versions of the software. Version 1.7 supports multiple
sites using a central database in a client-server environment.
FlowTrack(TM) v2.0, scheduled for release in mid-2000, is a Web-based
application that will be accessible to our customers and employees.
FlowTrack(TM) v2.0 is also based on the NT platform and takes advantage of new
technologies to provide scalability and support for a larger number of DNXs and
users. FlowTrack(TM) v2.0 is expected to further integrate with other external
systems used in delivering our value-added services, managing sales leads and
contacts, accounting and financial systems and human resources. We believe that
this integration will more fully automate additional aspects of our business
and provide us a competitive advantage by offering our customers the benefits
of full functionality with these best-in-class systems.
FlowTrack(TM) is designed to enable us to quickly and effectively integrate
new applications and services such as caching, load balancing and data storage
and backup into our offerings. We believe that FlowTrack(TM) will also allow us
to efficiently integrate the delivery of software applications to end-users
remotely using the Internet, as more businesses seek to take advantage of the
emerging application service provider, or ASP, model. ASPs combine software,
hardware and networking technologies to provide applications to customers for a
fixed monthly per-user fee. As more of these applications become available,
FlowTrack(TM) will enable us to take advantage of these new service offerings.
Our DNXs
Our DNXs were originally designed with approximately 5,000 to 12,000 square
feet of dedicated raised-floor hosting capacity and 10,000 to 20,000 gross
square feet. During 1999, we increased the planned size of our future DNXs to
approximately 30,000 to 35,000 gross square feet, of which approximately 20,000
square feet is dedicated to raised-floor hosting facilities. We believe that
raised floor facilities of approximately 20,000 square feet are the optimal
size due to the following reasons:
. More Rapid Deployment. By limiting the size of a facility to
approximately 35,000 gross square feet, it is typically easier to locate
satisfactory sites. We generally lease properties in central business
districts, which tend to have higher concentrations of carriers and
fiber. This size facility also uses primarily off-the-shelf power and
heating, ventilation and air conditioning, or HVAC, components, which are
more readily available than the custom-built equipment required in larger
facilities. This significantly speeds the site selection and deployment
process. Our construction time is also reduced compared to that of larger
facilities.
. Lower Construction Costs. We have designed our facilities to maximize the
efficiency of data center construction. For example, the size of our DNXs
enables us to maximize the use of standardized power and HVAC components.
Data centers with over 20,000 square feet of raised floor space typically
require special-order components, which are more costly because of their
limited production and the special architectures required to interconnect
them.
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. Reduced Site Selection Risk. We believe that building raised floor
facilities of approximately 20,000 square feet significantly reduces the
risks of site selection when compared to larger data centers. Although we
project that our present DNX size will sustain our customers' space needs
for approximately three years after opening, we have the technology and
expertise to add data centers in the same city and interconnect them. We
implemented this "virtual data center" solution in Denver and found that
some customers prefer to locate their equipment in two separate data
centers in the same city to further enhance the reliability of their
critical network architecture. Combined with our FlowTrack(TM) asset
management module which tracks network and space capacity, we believe
that we will be able to anticipate our customers' needs and efficiently
add virtual data centers to multiple markets.
We believe this size of facility will allow us to establish first-mover
advantages in several new markets. We outsource a portion of the site
selection, design and build-out process of our additional DNXs to real estate
agents specializing in communications properties and to law firms able to
negotiate our leases based on a master template. We believe that outsourcing
these functions allows for even more rapid and efficient deployment of our
additional DNXs.
Site Selection
We target attractive markets that offer high concentrations of underserved
e-business customers and minimal competition. Due to the low customer turnover
rate in our industry, we feel it is important to establish a first-mover
advantage in our target markets and believe we can leverage our experience in
quickly constructing data centers, hiring and training employees and deploying
our proprietary operating system in order to achieve this objective. In
evaluating potential new markets, we generally concentrate on significant
metropolitan statistical areas in the United States outside the top ten. We
internally rank these markets in order of priority based on a number of
economic, competitive and demographic factors including presence and
concentration of venture capital-backed companies and number of Internet domain
name registrations. Additionally, we may consider expansion opportunities in
metropolitain statistical areas in which we already have a DNX, such as in
Denver, and we also expect to continue to explore opportunities for
international expansion.
We believe that our geographic diversity allows us to not only be closer to
our customers, but also provides our customers with greater reliability due to
our avoidance of the limited number of primary network access points, which are
becoming increasingly congested and where data packets are often lost in the
transfer process.
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Design and Build-out Process
We have launched five DNXs over a short period of time and have built a team
and set of processes to accelerate the design, construction, staffing and
marketing of future DNXs. Our internal deployment team consists of nine full-
time professionals who manage outside consultants and construction personnel
responsible for completing discrete elements of DNX construction. Based on
experience, use of standardized construction processes and our proprietary
design templates and systems architecture, we expect to activate a DNX within
five to six months of selecting a host city. The following chart illustrates
the timing involved in the deployment of a DNX:
[Bar chart]
Site Design/Build. The key elements of the DNX deployment process include
site selection, lease negotiation, design, construction and commissioning. To
accelerate deployment of our DNXs, our template is designed such that many of
these elements occur concurrently and may be outsourced where appropriate. We
employ multiple specialized real-estate firms to locate suitable properties in
target cities based on a specified set of criteria. We retain multiple outside
legal counsel specializing in real estate to negotiate leases based on a
standard lease template. We retain outside firms to design DNXs using our
proprietary blueprint that specifies each subsystem and component. Construction
firms are hired regionally to speed local regulatory compliance and selected
based on data center build experience. We have a standard configuration for our
network switching platform and network operations center architecture that is
installed shortly thereafter. Upon completion, each data center subsystem is
tested by an independent data center design firm and the network and service
architecture is tested by our internal engineering team.
Team Development. We hire a general manager approximately four to six months
in advance of expected DNX activation. During this time the general manager is
trained in our systems and processes and works in several DNXs at varying
stages of development. The general manager is primarily responsible for hiring
the initial DNX team and is supported by our Denver-based human resources
department. For instance, we generally hold an Inflow career fair approximately
8-12 weeks prior to expected activation date of a new DNX where upper
management, human resources, national sales and engineering personnel hold over
100 interviews. We hire up to five sales professionals and ten network
engineers and operations technicians before commissioning each DNX. Additional
team members are added as customers contract for services.
Marketing Program. Our marketing team develops prospect lists during the
construction period to support pre-sales activities and advertises in local
publications to promote awareness of our services. Special events are held for
prospective customers both before and after data center activation.
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Roll-out Schedule
We currently have 10 DNXs in various stages of completion and have selected
approximately 20 additional markets in which we are seeking appropriate DNX
locations. The following table summarizes the location, size and status of our
network of nine DNXs open or currently under development.
<TABLE>
<CAPTION>
Current
Gross Square Raised Floor Operational Lease Number of
DNX Feet(1) Space(2) Date(3) Expiration Customers(4)
<S> <C> <C> <C> <C> <C>
Denver 1 8,400 5,200 7/98 2/08 53
Minneapolis 15,900 8,300 10/99 8/09 9
Raleigh-Durham 14,400 7,500 11/99 9/09 11
Denver 2 9,900 7,400 1/00 1/10 9
San Diego 20,200 11,700 1/00 12/09 4
Austin 34,000 20,000 4/00 12/09 1
Atlanta 35,200 20,000 6/00 6/10 N/A
Irvine 35,100 20,000 7/00 1/10 N/A
Pittsburgh 24,000 17,000 8/00 3/10 N/A
Phoenix 39,100 20,000 9/00 9/10 N/A
- -------------------------------------------------------------------------------
</TABLE>
(1) Approximate gross square footage under lease, including raised floor,
administrative, sales, marketing, conference, dedicated customer, Network
Operations Center and storage space.
(2) Approximate raised floor square footage allocated to equipment colocation
including customer cabinets and our equipment.
(3) Actual or, in the case of DNXs not operational by March 15, 2000, the
expected date of operation. We generally expect to begin receiving revenue
within 60 days of a DNX's operational date.
(4) Number of customers under contract as of March 15, 2000.
Infrastructure Specifications
Each DNX includes the following features designed to offer maximum
performance, security and reliability:
. Uninterruptible Power Supply System. In order to provide uninterruptible
power supplies to our customers' equipment, we connect to multiple power
grids when available, feed power through uninterruptible power supplies,
and provide stand-by diesel generators. Connecting to multiple power
grids through separate power feeds ensures that no single-grid power loss
will cause us to lose our primary power source. In the event of a
temporary loss of power from the power grids, our uninterruptible power
supply systems have enough capacity to supply a minimum of 120 minutes of
power to a DNX. Our on-site diesel generator system is automatically
brought on line within seven seconds of a power failure and can supply
power to both AC and DC systems for a minimum of 24 hours before the on-
site fuel tanks must be refilled.
To further reduce potential interruptions, we use an "interlocking
horseshoe" design in laying our power and network cables so that they
never overlap in our DNXs. We believe this sub-floor routing of network
and power cabling minimizes the potential for data network interference
and expedites the fault location process. For security purposes, the
mechanical and power system feeds are on the perimeter of the raised floor
area and feed either AC or DC power cabling located under the raised
floor. No one may access power cables and customer power connections
without the assistance of one of our employees.
. Advanced Security System. Customer access to each DNX is limited to a
single reception area staffed by one of our employees who logs each
entrance into the DNX. Access is further restricted by a card-access
system located at the main entrance of the DNX and the entrance to the
raised-floor space. All
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areas of the DNX are under continuous surveillance in the network
operations center through a closed-circuit TV system. We maintain a
rolling library of surveillance camera video tapes for 30 days.
. Dual Fire Suppression System. We generally employ a fire suppression
system based on dry-pipe water supplies to prevent accidental leakage,
coupled with a VESDA early warning system and gas fire suppression
system. These systems are designed to avoid any water being introduced
into the raised floor area.
. High Capacity HVAC System. Our HVAC systems ensure that our DNXs operate
at a consistent temperature and humidity level. We assure our customers
that the temperature in our DNXs will average between 65 and 75 degrees
and that relative humidity will average between 45 and 55 percent at all
times.
. Other DNX Features. In addition to the features described above, each DNX
includes a self-contained local network operations center staffed 24x7 by
our trained technicians, dedicated test bench and office space for our
customers, and space for our local administrative, sales and marketing
functions.
We monitor all power, HVAC and fire-suppression systems on a 24x7 basis
using an automated application under the supervision of our local operations
staff. Component level failures are detected and trigger alarms at the local
network operations center, allowing our trained personnel to quickly respond
and ensure our systems are operational.
Sales and Marketing
We primarily market our services and solutions through our direct sales
force which is organized by geographic region and whose compensation is
largely commission-driven. This sales force will be supplemented by our
national sales team which is organized by customer segment. We are currently
establishing other distribution channels and expect to continue reviewing
possible arrangements with outside parties. However, we expect that
substantially all of our revenues through the end of 2000 will be generated by
direct sales.
Direct Sales. Our direct sales force currently consists of 42 full-time,
trained sales professionals responsible for developing new clients as well as
new opportunities with existing clients. All sales professionals complete a
comprehensive three-month training program. We have expanded our direct sales
force from one to 34 individuals in the past year. We intend to continue to
add to our direct sales force in parallel with our DNX build-out.
Each DNX is typically staffed with one sales manager, up to six sales
representatives and at least one sales engineer. Our sales engineers, most of
whom hold degrees in network engineering, assist our sales representatives in
the design and implementation of our customized offerings. Additionally, we
have two regional sales managers, each of whom is located in one of the DNXs
in their region and oversee the sales efforts of several local DNX sales
personnel.
Prior to opening a DNX, we focus on hiring and training salespeople and on
conducting market analysis. We typically have each DNX fully-staffed at least
30 days prior to activation in order to commence the sales cycle in advance of
opening the DNX. Our typical direct sales cycle is approximately three months
and includes the following efforts:
. Prospecting, qualifying and opportunity identification, especially for
top regionally-recognized e-businesses to serve as anchors for DNXs;
. Networking and cold-calling prospective customers and introducing them to
our local DNXs and personnel;
. Conferring with a prospective customer to select service terms and using
FlowTrack(TM) to generate real-time price quotes and cost analysis;
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. Consulting on final network design and determining specific services for
immediate or future implementation; and
. Signing a contract, typically one to three years in duration, for initial
services.
We believe the structure of our direct sales efforts allows us to easily
identify the needs of prospective and existing customers, devote significant
attention to customer satisfaction and quickly offer new services to existing
customers.
Indirect Sales Channel. We expect to complement our direct sales efforts
with a series of partnerships and alliances, which we call our lead agent
program. Our lead agents are expected to include systems integrators, internet
service providers, equipment vendors and resellers who have relationships with
our target customer base. We are currently in discussions with candidates from
each of these industries to become lead agents and expect to compensate our
lead agents on a non-recurring success fee basis. We believe lead agents will
function as an extension of our direct sales force and provide a significant
source of leads and referrals.
Marketing. To support our sales efforts and to actively establish and
promote our brand awareness, we plan to further expand our comprehensive
marketing programs. We currently employ nine people in a variety of marketing
activities, including preparing marketing research, service planning and
collateral marketing materials, managing press coverage and other public
relations, attending trade shows, seminars and conferences, hosting on-site
events and maintaining and updating our Web site and brochure materials.
Customers
We provide a combination of colocation, network connectivity and value-added
services to 87 customers, including eBags.com, Email Knowledge, Factual Data
Corp., High Speed Access Corp., MapQuest.com, MessageMedia Inc., Northpoint
Communications, Inc., SciQuest.com and Worldprints.com, each of which currently
generates recurring monthly revenues in excess of $7,500. Our customers are
typically small to medium-sized e-businesses that are growing rapidly and
require complex communication architectures and services. Our customers include
business-to-business, or B2B, application providers, network providers and
business-to-consumers, B2C, enterprises. We believe that the emerging B2B
market increases our market opportunity because these customers require more
complex network architectures and greater information technology staff
attention than network providers and B2C businesses. Our typical customer
requires continuous uptime for their applications, multiple types of data
circuits and has a limited information technology staff. Although our focus is
on small to medium-sized businesses, we provide services to many nationally
recognized entities as well. Currently, 59% of our customers are B2B and 23% of
our customers are B2C. Our customer base is also somewhat concentrated in that
for the year ending December 31, 1999, our top five customers accounted for
approximately 46% of our revenue, including Verio, a potential competitor,
which alone accounted for approximately 14% of our revenue during this period.
Our customer contracts are fairly standard and include provisions relating to
warranties, confidentiality obligations, indemnification, term and termination.
Customer Support
We believe the key to long-term success is providing best-of-class customer
service and support. We also believe that e-business companies will demand
increasing performance guarantees for their applications as a means of ensuring
better service to their own customers. We believe that our service level
agreements and customer support are among the best in our industry. Our
services are generally covered by service level agreements, which specify
exacting performance levels associated with availability and service repair
time. For example, we guarantee that:
. We will be ready to implement a customer's application within 30 days of
signing a contract;
. Power will always be on; and
. Purchasers of our InflowNet(TM) Internet access solution will have 100%
uptime.
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To ensure that we meet our service level agreements each of our sites is
managed by an extensively-trained and experienced general manager. Our general
managers go through up to six months of hands-on, comprehensive training before
they are assigned a site to manage. Typically, we expect a general manager to
oversee a dedicated staff of approximately 30 trained technical and operations
personnel who provide customer support 24x7. Staff members are empowered to
make on-the-spot decisions, enabling them to address our customers' concerns
immediately without referring the customer to another staff member.
Each DNX contains a stand-alone network operations center and the necessary
systems to install, test, monitor and repair customer network connections and
value-added services on-the-spot. Customers interact with a local account team
consisting of technical operations personnel, sales engineers and sales
representatives. All operations personnel receive multiple levels of training
to gain detailed knowledge of our DNX's physical, network and systems
infrastructure as well as the configuration of our value-added services. By
graduating from various internal and external training programs, operations
personnel attain different certifications and become technical experts which we
believe makes them highly qualified to provide excellent customer service.
We also have constructed a central network operations center, located at our
Denver, Colorado corporate headquarters, to provide advanced troubleshooting
support to each remote site. Currently, we employ 14 of our most experienced
network, information technology and software engineers for this additional
layer of support. Our central network operations center staff can also serve as
a backup for a DNX if necessary. Central operations personnel are primarily
responsible for designing and implementing technical training for the
individual site operations teams.
In addition, FlowTrack(TM) provides automated service delivery to the
customer. Specifically, FlowTrack(TM) allows us to track leads, develop service
proposals and quotes, initiate work orders for network connections and value-
added services, issue trouble tickets for failure conditions and generate clear
and concise bills. This automation allows for more efficient customer support
activities.
Competition
Our market is highly competitive and rapidly growing. We also believe that
competition will likely increase in the future. We expect significant
competition from several areas, including information technology and Internet
outsourcing firms; national and regional Internet service providers; and
global, regional and local communications companies. Currently, our solutions
compete with the services offered by many companies, including AboveNet
Communications, AT&T Corp., Digital Island, Exodus Communications, Equinix,
Frontier GlobalCenter, Globix, GTE Corporation, InterNAP, Level 3
Communications, MCI WorldCom, PSINet, Qwest, Sprint, Verio and the regional
Bell operating companies.
We believe that the principal competitive factors in our market are the
ability to locate the right expansion sites in new markets and achieve first-
mover advantages in most markets, upgrade our service offerings to meet the
changing needs of our customers, establish credibility and brand recognition in
our markets, and successfully hire qualified personnel in the face of
increasing competition for their services.
Although several larger companies have entered or will enter our market, we
believe we are positioned to compete favorably because:
. We intend to remain carrier-neutral, providing our customers with the
choices they desire, more reliable solutions, competitive pricing and
greater access to new technology;
. Our focus on multiple markets as opposed to concentrating on a few cities
gives us geographic proximity to our customers, increased reliability
through avoidance of network access point bottlenecks and, we believe,
first-mover advantages in many of these markets; and
. We focus on providing complex network connectivity solutions, not only
Internet connectivity, giving our customers the flexibility and solutions
we believe they need.
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We generally focus on underserved customers with complex application needs.
Despite our strategy, we may not be successful in differentiating ourselves or
achieving widespread market acceptance of our solutions. Our expansion plans
are aggressive and if we are unable to complete our DNXs in a timely manner,
other companies may enter those markets before us, thereby putting us at a
competitive disadvantage. We may not be
able to compete successfully against current and future competitors. Some of
our competitors and potential competitors have longer operating histories and
significantly greater financial marketing and other resources than we do. These
companies may also have more extensive customer bases and in some
circumstances, own their networks and thereby may be able to achieve lower
operating costs. Our competitors may be better able to compete in a price
competitive market, bundle their products and services in a more competitive
manner or form alliances or otherwise respond to changing technologies and
customer needs. Some competitors, such as incumbent local exchange carriers,
may also enjoy greater pricing flexibility or more attractive service
offerings, in part due to the colocation requirements under the Communications
Act.
Intellectual Property and Proprietary Rights
To protect our intellectual property, we rely on a combination of trademark
and copyright law, trade secret protections and confidentiality agreements and
other contractual arrangements with our employees, consultants and third
parties. For example, "Inflow" is our trademark and is registered in the United
States. We cannot be certain that the steps we have taken to protect our
intellectual property rights will be adequate or that third parties will not
infringe or misappropriate our proprietary rights. Moreover, effective
trademark, copyright and trade secret protection may not be available in every
country in which we may eventually operate to the same extent available in the
United States. We may be unable to detect the unauthorized use of our
intellectual property or take appropriate steps to enforce our intellectual
property rights. Defending our intellectual property rights could also result
in the expenditure of significant financial and managerial resources, which
could harm our financial results.
We enter into proprietary information and invention assignment agreements
with our employees and consultants and control access to and distribution of
our proprietary information. Despite our efforts to protect our proprietary
rights, unauthorized parties, including departing employees, business partners
and others, may attempt to copy or otherwise obtain and use our services and
technology. Monitoring unauthorized use of our technology is very difficult,
and we cannot be certain that the steps we have taken will prevent
misappropriation of our technology. In addition, the laws in foreign countries
may not protect our proprietary rights as fully as in the United States.
Third parties may in the future assert copyright, trademark, patent and
other intellectual property rights claims or initiate litigation against us or
our suppliers or customers with respect to existing or future services.
Although we believe that our proprietary rights do not infringe on the
intellectual property rights of others, other parties may assert claims against
us that we have misappropriated a trade secret or infringed a patent,
copyright, trademark or other proprietary right belonging to them. Any
infringement or related claims, even if not meritorious, could be costly and
time consuming to litigate, may distract management from other tasks of
operating the business and may result in the loss of significant rights and the
loss of our ability to operate our business.
Government Regulation
Regulation of Our Telecommunications Services. Some of our services are
considered subject to regulation by federal and state telecommunications
regulators. For example, the Federal Communications Commission, or FCC, and
many states regulate the provision of transmission services to third parties,
even on a "resale" basis--that is, even when we do not own the transmission
facilities used to provide those services. In addition, although some of the
services may not be regulated now, federal or state regulators may expand
current regulations to include additional services we offer. The nature and
extent to which our communications services are regulated affects the scope of
our services, our profitability and the degree to which other companies can
successfully compete with us.
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The FCC regulates the provision of interstate telecommunications services,
including interstate long distance services and physically intrastate services
that are used to originate and terminate interstate long distance
communications. The FCC also regulates many of the terms and conditions under
which incumbent local exchange carriers must permit competition by competitive
local exchange carriers. We are not an incumbent local exchange carrier, but
may be or become a competitive local exchange carrier in some states. In
addition, in many instances the FCC and the state public utilities commissions
share jurisdiction over facilities that are used to provide both interstate and
intrastate communications services.
Federal telecommunications regulation. The FCC has authority to regulate
interstate telecommunications services. The FCC has not definitively determined
the boundaries of the telecommunications service category, and therefore the
exact scope of services subject to the FCC's jurisdiction remains unclear.
Under current FCC requirements, we do not need either prior authorization or a
tariff to offer interstate access services. It is possible, however, that a
prior authorization or a tariffing requirement could be imposed in the future.
To the extent we provide telecommunciations services, we must:
. contribute to certain funds, including the Universal Service Fund, the
Telecommunications Relay Service Fund, and a fund intended to recover
the costs of administering the use of telephone numbers;
. provide telecommunications services at just, reasonable, and
nondiscriminatory rates;
. interconnect directly or indirectly with the facilities and equipment of
other telecommunications carriers;
. be subject to complaints in court or at the FCC for failure to comply
with the Communications Act or the FCC's rules;
. install network features, functions, or capabilities that comply with
guidelines and standards governing accessibility by individuals with
disabilities and interconnectivity with other networks;
. comply with certain network design requirements in order to assist law
enforcement personnel; and
. comply with statutory and regulatory requirements regarding unauthorized
changes in a customer's pre-subscribed carrier.
These requirements will increase our costs of doing business.
In addition, to the extent we are considered a "local exchange carrier"
(that is, to the extent we provide local telephone service or interstate access
services), we must comply with certain duties set out in the Communications
Act, including:
. not to prohibit or unreasonably restrict resale of our
telecommunications services;
. to provide number portability;
. to provide dialing parity;
. to afford access to poles, ducts, conduits, and right-of-way to
competing providers of telecommunications services; and
. to establish reciprocal compensation arrangements for the transport and
termination of telecommunications.
These requirements will increase our costs of doing business and may limit
the manner in which we provide some of our services.
The Communications Act and the FCC's rules impose additional requirements on
incumbent local exchange carriers, or ILECs. We are not considered an ILEC.
However, the requirements imposed on ILECs affect the ability of those entities
to compete and therefore may indirectly affect us. For example, the FCC has
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granted ILECs considerable pricing flexibility and is likely to further relax
regulation of the ILECs' rates in the near future. Consequently, the ILECs may
be able to compete aggressively on price against certain of our services. In
addition, the Communications Act and the FCC's rules require the ILECs to offer
colocation on an efficient, nondiscriminatory basis. Those requirements may
enhance the attractiveness of the ILECs' colocation services to our target
customers and therefore render the ILECs more potent competitors. The FCC's
rules recently were vacated in part by the D.C. Circuit, but the remaining
rules still are likely to have this effect. The FCC may also seek to reinstate
the vacated rules in a remand proceeding.
State telecommunications regulation. State public utilities commissions have
jurisdiction over the provision of intrastate communications services. Some of
our communications services are classified as intrastate and therefore
currently are subject to extensive state regulation. The nature of such
regulation varies from state to state, but in some states it may be more
extensive than the regulations imposed by the FCC.
We are seeking to expand the scope of our intrastate services in various
jurisdictions, a process which may require us to obtain approval to offer
service in those new states. There is no guarantee that we will be able to
obtain such approvals. In addition, intrastate regulatory requirements are
changing rapidly and will continue to change. The inability to obtain state
approvals to initiate or expand our services could have a material adverse
effect on our business and results of operations.
While we believe that the law regarding regulation of these and similar
types of services is unclear in certain jurisdictions in which we currently
operate or intend to operate, and we continue to evaluate our status with
counsel, it is likely that we have provided certain telecommunications services
without the requisite regulatory approval or certification in a limited number
of jurisdictions. We may also be required to obtain and to apply for similar
authorizations in other states in which we expect to operate in the future. Our
failure to have held any required authorizations and to have been registered or
certified previously could expose us to risks, including substantial fines,
third-party lawsuits and potential inability to continue our operations. See
"Risk Factors--Our failure to hold required authorizations and to be registered
with, or certified by, applicable regulatory authorities could harm our
business."
Regulation of the Internet. There is currently only a small body of laws and
regulations directly applicable to access to or commerce on the Internet.
However, due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted at the federal,
state and local levels with respect to the Internet, covering issues such as
user privacy, freedom of expression, pricing, characteristics and quality of
products and services, taxation, advertising, intellectual property rights,
information security and the convergence of traditional telecommunications
services with Internet communications. The adoption of any such laws or
regulations might decrease the growth of the Internet, which in turn could
decrease the demand for our services or increase the cost of doing business. In
addition, applicability to the Internet of existing laws governing issues such
as property ownership, copyrights and other intellectual property issues,
taxation, libel, obscenity and personal privacy is uncertain. See "Risk
Factors--If the government modifies or increases its regulation of the
Internet, the provision of our services could become more costly and the use of
the Internet may decline."
Employees
We had 223 full-time employees as of March 15, 2000, of which we had nine in
marketing, 42 in sales, 63 in operations, 21 in engineering, information
technology and product development, 16 in software development, seven in
business process automation, 10 in expansion and 55 in management and
administration. Our employees are not represented by any collective bargaining
organization and we consider our relations with our employees to be good.
Competition for qualified personnel in our industry is intense. We believe that
we will need to continue to attract, hire and retain qualified personnel to be
successful in the future.
45
<PAGE>
Facilities
Our principal executive offices are located in Denver, Colorado. In addition
to our headquarters, we have leases for our DNXs in the following cities:
Denver (two locations), Minneapolis, Durham, San Diego, Austin, Atlanta, Irvine
and Phoenix.
Legal Proceedings
We are not a party to any material legal proceedings.
46
<PAGE>
MANAGEMENT
Executive Officers and Directors
The following table provides information about our executive officers and
directors:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Arthur H. Zeile......... 36 President, Chief Executive Officer and Chairman of the Board of Directors
Joel C. Daly............ 31 Vice President, Chief Operating Officer, Secretary and Director
James W. McHose, III.... 36 Vice President, Chief Financial Officer and Treasurer
Dr. Yousif Asfour....... 36 Vice President and Chief Technical Officer
Bruce E. Cunningham..... 30 Vice President, Business Development
Robert J. Gedrose....... 40 Vice President, Sales
Nancy B. Printz......... 33 Vice President, General Counsel and Assistant Secretary
Donald F. Detampel, 44 Director
Jr.....................
L. Watts Hamrick, III... 40 Director
Stephen O. James........ 55 Director
Scott B. Perper......... 44 Director
G. Jackson Tankersley, 50 Director
Jr.....................
</TABLE>
Arthur H. Zeile co-founded Inflow and has served as our President, Chief
Executive Officer and director since our inception in September 1997 and the
Chairman of our board of directors since April 1999. From July 1994 to May
1997, he was Vice President of Sales and Marketing for LINK-VTC, a
videoconferencing services company. From 1992 to 1994, he was a Software
Program Manager for The Automation Group, an organization providing client-
server database applications. Mr. Zeile also served as an Executive Officer for
the U.S. Air Force Satellite Communications Program Office, supporting the 150-
man Milstar Satellite program. Mr. Zeile received his master's degree in public
policy from Harvard University and his bachelor of science degree in
astronautical engineering from the U.S. Air Force Academy.
Joel C. Daly co-founded Inflow and has served as our Vice President, Chief
Operating Officer, Secretary and director since our inception in September
1997. From 1993 to May 1997, he was Vice President of Operations for LINK-VTC.
From 1990 to 1993, he was Chief of Scheduling and Cost Estimator for the
Milstar Satellite program in the U.S. Air Force. Mr. Daly received his master's
degree in business administration from Loyola Marymount University and his
bachelor of science degree in management from the U.S. Air Force Academy.
James W. McHose, III has served as our Vice President, Chief Financial
Officer and Treasurer since September 1999, full-time since January 1, 2000.
From July 1996 to September 1999, he was Vice President of Finance for
FrontierVision Partners, LP, a cable television company. From 1987 to July
1996, he was a Senior Manager in the Information, Communications and
Entertainment practice of KPMG Peat Marwick, LLP, a certified public accounting
firm. Mr. McHose received his bachelor of science degree in accounting from
Southern Illinois University.
Dr. Yousif Asfour has served as our Vice President and Chief Technology
Officer since January 2000. From August 1999 to December 1999 he served as our
Director, Software Development. From January 1999 to August 1999, he was a
Systems Architect with Sapient. From 1996 to 1999, he was Director of Software
and Systems Development with Smart Route Systems. From 1994 to 1996, he was a
Senior Consultant with
47
<PAGE>
Symmetrix. Dr. Asfour received his Ph.D. in cognitive and neural systems from
Boston University and his master of science and bachelor of science degrees in
electrical engineering from the Northeastern University.
Bruce E. Cunningham has served as our Vice President, Business Development
since January 2000. From September 1996 to January 2000, he was an associate
with Brobeck, Phleger & Harrison LLP. Prior to that time, Mr. Cunningham
attended the University of Virginia School of Law, where he received his juris
doctor degree. Mr. Cunningham received his bachelor of arts degree in economics
from Trinity University.
Robert J. Gedrose has served as our Vice President, Sales since July 1998.
From July 1997 to July 1998, he was the Executive Vice President of
Commonwealth Telephone Enterprises, a competitive local exchange carrier. From
February 1994 to April 1997, he was a Vice President and General Manager for
MFS Communications, a competitive local exchange carrier. Mr. Gedrose received
his bachelor of science degree in economics from Williamette University.
Nancy B. Printz has served as our Vice President and General Counsel since
January 2000 and our Assistant Secretary since July 1999. From May 1999 to
December 1999, she served as our Chief Legal Officer. From September 1995 to
April 1999, she was an attorney with Steiner, Darling, Hutchinson & Wilson LLP
where she served as both an associate and as of counsel. From September 1992 to
August 1995, she was an attorney in the corporate department of Davis, Graham &
Stubbs. Ms. Printz received her bachelor of arts degree in political science
from Emory University and her juris doctor degree from Yale Law School.
Donald F. Detampel, Jr. has served on our board of directors since February
2000. From December 1998 to February 2000, Mr. Detampel served as President of
Global Center Inc., a wholly-owned subsidiary of Global Crossing, Ltd. From
March 1998 to November 1998, Mr. Detampel was President of Enhanced Services
for Frontier Corporation. From February 1996 to March 1998, Mr. Detampel served
as President of ConferTech International, and from April 1990 to February 1996,
he served as President of Schneider Communications. Mr. Detampel received his
bachelor of science degrees in mathematics and physics from St. Norbert
College.
L. Watts Hamrick, III has served on our board of directors since April 1999.
Since 1995, he has served as a Partner of First Union Capital Partners, Inc., a
subsidiary of First Union Corporation. Mr. Hamrick is a Senior Vice President
of First Union Corporation and First Union National Bank of North Carolina. Mr.
Hamrick received his bachelor of arts degree in accounting and his masters in
business administration from Duke University.
Stephen O. James has served as a consultant to us since December 1998 and on
our board of directors since March 1999. Since 1995, Mr. James has served as an
independent business consultant for numerous companies, including us. Mr. James
also serves on the board of directors of SCC Communications. He received his
bachelor of arts degree in economics from Denison University.
Scott B. Perper has served on our board of directors since April 1999. Since
February 1995, Mr. Perper has been a Managing Partner of First Union Capital
Partners, Inc., a subsidiary of First Union Corporation. Mr. Perper is a Senior
Vice President of First Union Corporation and First Union National Bank of
North Carolina. Mr. Perper received his bachelor of arts degree in government
and legal studies from Bowdoin College and his masters in business
administration from the Graduate School for Business Administration of Harvard
University.
G. Jackson Tankersley, Jr. has served on our board of directors since
November 1999. Since September 1998, he has served as Managing Member of
Meritage Investment Partners, LLC, the general partner and sponsor of various
private equity funds. From 1981 to October 1997, Mr. Tankersley was a General
Partner of the Centennial Funds. Mr. Tankersley received his bachelor of arts
degree in economics from Denison University and his masters in business
administration from Dartmouth College, Amos Tuck School of Business.
48
<PAGE>
Board Composition
Upon the closing of this offering our board will consist of seven directors.
In accordance with the terms of our amended certificate of incorporation, the
terms of office of the board of directors will be divided into the following
three classes, serving staggered three-year terms:
. Messrs. Hamrick and Tankersley will serve as our Class I directors, whose
term will expire at the annual meeting of stockholders to be held in 2001
(or a special meeting held in lieu of the annual meeting);
. Messrs. Perper and Daly will serve as our Class II directors, whose term
will expire at the annual meeting of stockholders to be held in 2002 (or
a special meeting held in lieu of the annual meeting); and
. Messrs. James, Detampel and Zeile will serve as our Class III directors,
whose term will expire at the annual meeting of stockholders to be held
in 2003 (or a special meeting held in lieu of the annual meeting).
As a result, only one class of directors will be elected at each annual
meeting of our stockholders, with the other classes continuing for the
remainder of their respective terms. This classification of our board of
directors may have the effect of delaying or preventing a change in control or
management.
All directors were nominated and elected as directors by the holders of our
common and preferred stock in accordance with provisions of our current
stockholders agreement. These provisions of our stockholders agreement will
terminate upon the completion of this offering. Each of the individuals will
remain as a director until their resignation or until their replacement. Please
see "Related-Party Transactions -- Stockholders' Agreement."
Board Committees
Our board of directors has an audit committee and a compensation committee.
The audit committee of our board of directors reviews and monitors our
internal accounting procedures and reviews the results and scope of the annual
audit and other services provided by our independent accountants. The audit
committee also consults with our management and our independent auditors prior
to the presentation of financial statements to stockholders and, as
appropriate, initiates inquiries into aspects of our financial affairs. In
addition, the audit committee is responsible for considering and recommending
the appointment of, and reviewing fee arrangements with, our independent
auditors. The current members of the audit committee are Stephen O. James and
L. Watts Hamrick, III, with one vacancy remaining on the committee.
The compensation committee of our board of directors reviews and makes
recommendations to the board regarding the compensation and benefits provided
to our key executive officers and directors, including stock compensation and
loans. In addition, the compensation committee reviews policies regarding
compensation arrangements and benefits for all of our employees. As part of the
foregoing, the compensation committee also administers our 2000 stock incentive
plan. The current members of the compensation committee are Arthur H. Zeile, G.
Jackson Tankersley, Jr. and Scott B. Perper. Mr. Zeile does not participate in
the determination of his own compensation.
Director Compensation
Our directors do not currently receive compensation for attendance at board
meetings or board committee meetings. However, our directors are reimbursed for
all reasonable out-of-pocket expenses incurred in connection with their
attendance at board and board committee meetings. Employee directors are
eligible to participate in our 1997 stock option/stock issuance plan and will
also be eligible to receive equity incentives, in the form of stock option
grants or direct stock issuances, under our 2000 stock incentive plan.
49
<PAGE>
Non-employee board members will receive option grants at periodic intervals
under the automatic option grant program of the 2000 stock incentive plan of
15,000 upon their initial appointment and 5,000 annually thereafter upon each
reelection. They will also be eligible to receive discretionary option grants
under the discretionary option grant program of such plan.
Pursuant to the 1997 stock option plan, in 1999 we granted, Mr. James was
granted options to purchase 81,799 shares and in January of 2000 we granted Mr.
James options to purchase 40,899 shares. The 81,799 options granted during 1999
have an exercise price of $0.27 and vest in equal monthly installments over 36
months. The 40,899 options granted in 2000 have an exercise price of $1.46 and
vest in equal monthly installments over 12 months.
In February of 2000, Mr. Detampel was granted options to purchase 40,899
shares of our common stock under the 1997 stock option plan at an exercise
price of $2.93. Those shares vest in equal monthly installments over 36 months.
Other than Mr. James and Mr. Detampel, none of our directors has been
granted any options to purchase shares of our common stock.
Compensation Committee Interlocks and Insider Participation
In April 1999, we formed our compensation committee, comprised of Arthur H.
Zeile, G. Jackson Tankersley, Jr. and Scott B. Perper. Mr. Zeile is our
President and Chief Executive Officer. Prior to such date, all compensation
decisions were made by our full board of directors. Following this offering,
the compensation committee will continue to make recommendations to the board
regarding all of our compensation decisions. For more information regarding
transactions entered into between us and the members of our compensation
committee. Please see the section entitled "Related-Party Transactions."
Executive Compensation
The following table sets forth the approximate cash compensation (including
cash bonuses) paid or awarded by us for the fiscal year ended December 31, 1999
to (i) our Chief Executive Officer and (ii) all of our executive officers whose
salary and bonus for fiscal year 1999 exceeded $100,000. These individuals are
collectively referred to as Named Executive Officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------- ------------
Securities
Underlying All Other
Name and Principal Position Salary ($) Bonus ($) Options Compensation
- --------------------------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Arthur H. Zeile, President
and Chief Executive
Officer.................... $ 44,272 $100,000 -- $300(1)
Joel C. Daly, Vice
President, Chief Operating
Officer and Secretary...... $ 44,274 $100,000 -- $300(1)
Robert J. Gedrose, Vice
President, Sales........... $111,373 $ 10,750 81,799 $700(1)
James W. McHose, III, Chief
Financial Officer
and Treasurer ............. $ 4,500 $242,110(2) 245,397 $135(1)
</TABLE>
- --------
(1) Represents our 401(k) match.
(2) Includes 40,000 shares of Series A preferred stock sold to Mr. McHose at
$3.50 per share on October 15, 1999, a discount of $6.02 per share from the
then fair market value of preferred stock.
50
<PAGE>
Option Grants in Fiscal Year Ended December 31, 1999
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Total Options Option value Price Appreciation
Shares Granted to Fair Market based on For Option Term
Underlying Employees Exercise or Value of Options midpoint of ($)(2)
Options in Fiscal Base Price on Date of Grant Expiration our estimated ---------------------
Name Granted (#)(1) Year (%) ($/sh)(1) ($/sh) Date range 5% 10%
---- -------------- ------------- ----------- ---------------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arthur H
Zeile.......... -- -- -- -- -- -- -- --
Joel C. Daly .. -- -- -- -- -- -- -- --
Robert J.
Gedrose........ 81,799 4% $0.27 $1.85 06/01/09 1,204,899 $1,976,263 $3,160,713
James W. McHose,
III............ 245,397 12% $0.27 $2.37 08/17/09 3,614,697 $5,928,791 $9,482,140
</TABLE>
- --------
(1) These options are incentive stock options that were granted at an exercise
price of $0.27 per share. These incentive stock options are immediately
exercisable and vest over a period of four years from their grant date at a
rate of 25% after one year of service and in equal monthly installments
over the next 36 months of service. All unvested exercised options are
subject to our right of repurchase at the option base price if the holder
terminates their service with us prior to vesting. The potential realizable
value is based on the term of the option at the time of grant, which is ten
years for each of the options set forth in this table. All amounts have
been calculated using the midpoint of our estimated range as the base value
and assumed annual rates of stock price appreciation of 5% and 10%.
(2) The 5% and 10% assumed annual rates of stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the company's estimate or projection of future common stock
prices.
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year End (#) at Fiscal Year End ($)(1)
---------------------------- ----------------------------
Name Exercisable(2) Unexercisable Exercisable(2) Unexercisable
- ---- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Arthur H. Zeile...... -- -- -- --
Joel C. Daly......... -- -- -- --
Robert J. Gedrose.... 245,397(3) -- $3,645,781 --
James W. McHose,
III................. 245,397 -- $3,614,697 --
</TABLE>
- --------
(1) In the table above, the value of unexercised in-the-money options is based
on the midpoint of our estimated range, minus the per share exercise price
multiplied by the number of shares.
(2) These options are immediately exercisable and vest over a period of four
years from their grant date at a rate of 25% after one year of service and
in equal monthly installments over the next 36 months of service. All
unvested exercised options are subject to our right of repurchase at the
option base price if the holder terminates their service with us prior to
vesting.
(3) Includes 163,598 options granted in 1998 at an exercise price of $.09 per
share.
Option Grants to Executive Officers and Directors in Fiscal Year 2000
<TABLE>
<CAPTION>
Number of
Shares
Underlying Exercise or Midpoint
Options Granted Base Price of Extimated Value of
Name (#) ($/sh) Range ($/sh) Options ($)(1)
- -------------- --------------- ----------- ------------ --------------
<S> <C> <C> <C> <C>
Bruce E. Cunningham 190,865 $1.46 $15.00 $2,584,312
Nancy B. Printz 27,266 $1.46 $15.00 $ 369,181
Donald F. Detampel, Jr. 40,899 $2.93 $15.00 $ 493,651
Stephen O. James 40,899 $1.46 $15.00 $ 553,772
</TABLE>
(1) In the table above, the value of options is based on the midpoint of our
estimated range, minus the per share exercise price multiplied by the
number of shares.
51
<PAGE>
2000 Stock Incentive Plan
Introduction
The 2000 stock incentive plan is the successor program to our 1997 stock
option/stock issuance plan. The 2000 stock incentive plan will be adopted by
the board of directors and approved by our stockholders prior to the date of
this offering. The 2000 stock incentive plan will be administered by our
compensation committee. All outstanding options under our 1997 stock
option/stock issuance Plan will be transferred to the 2000 stock incentive plan
upon the closing of this offering, and no further option grants will be made
under the predecessor plan. The transferred options will continue to be
governed by their existing terms. Except as otherwise noted, the transferred
options have substantially the same terms as those for grants to be made under
the 2000 stock incentive plan.
Outstanding options under the predecessor plan will be incorporated into the
2000 stock incentive plan upon the date of this offering, and no further option
grants will be made under that plan. The incorporated options will continue to
be governed by their existing terms, unless the compensation committee extends
one or more features of the 2000 stock incentive plan to those options.
However, except as otherwise noted below, the outstanding options under the
predecessor plans contain substantially the same terms and conditions
summarized below for the discretionary option grant program under the 2000
stock incentive plan.
Share Reserve
7,646,665 shares of common stock have been authorized for issuance under the
2000 stock incentive plan. This share reserve consists of the shares estimated
to remain available for issuance under our 1997 stock option/stock issuance
plan, and the shares subject to outstanding options thereunder, plus an
increase to be effected prior to the closing of this offering. The share
reserve will automatically increase on the first trading day in January of each
calendar year, beginning January 2001, by an amount equal to 3% of the total
number of shares of common stock outstanding on the last trading day in
December in the preceding calendar year, but in no event will this annual
increase exceed 1,500,000 shares. In addition, in no event may one participant
in the 2000 stock incentive plan receive option grants or direct stock
issuances for more than 950,000 shares in the aggregate per calendar year.
Programs
The 2000 stock incentive plan will be divided into five separate programs:
. the discretionary option grant program under which eligible individuals
employed by us may be granted options to purchase shares of common stock
at an exercise price determined by the plan administrator;
. the stock issuance program under which eligible individuals may be issued
shares of common stock directly, through the purchase of these shares at
a price determined by the plan administrator or as a bonus tied to the
performance of services;
. the salary investment option grant program which may, at the plan
administrator's discretion, be activated for one or more calendar years
and, if so activated, will allow executive officers and other highly
compensated employees the opportunity to use a portion of their base
salary to acquire special below market stock option grants;
. the automatic option grant program under which option grants will
automatically be made at periodic intervals to eligible non-employee
board members to purchase shares of common stock at an exercise price
equal to 100% of the fair market value of those shares on the grant date;
and
. the director fee option grant program under which our non-employee board
members may be given the opportunity to use a portion of any retainer fee
otherwise payable to them in cash for the year to acquire special below
market stock option grants.
52
<PAGE>
Plan Features
The 2000 stock incentive plan will include the following features:
. The exercise price for any options granted under the plan may be paid in
cash or with mature shares of our common stock valued at fair market
value on the exercise date. The option may also be exercised through a
same-day sale program without any cash outlay by the optionee.
. The discretionary option grant and stock issuance programs will be
administered by our compensation committee. This committee will determine
which eligible individuals are to receive option grants or stock
issuances, the time or times when such option grants or stock issuances
are to be made, the number of subject to each such grant or issuance, the
exercise or purchase price for each such grant or issuance (which may be
less than, equal to or greater than the fair market value of the shares),
the status of any granted option as either an incentive stock option or a
non-statutory stock option under the federal tax laws, the vesting
schedule to be in effect for the option grant or stock issuance and the
maximum term for which any granted option is to remain outstanding. The
committee will also select the executive officers and other highly
compensated employees who may participate in the salary investment option
grant program in the event that program is activated for one or more
calendar years. Neither the compensation committee nor the board will
exercise any administrative discretion with respect to option grants made
under the salary investment option grant program or under the automatic
option grant program or director fee option grant program for the non-
employee board members.
. The compensation committee will have the authority to cancel outstanding
options under the discretionary option grant program in return for the
grant of new options for the same or different number of option shares
with an exercise price per share based upon the fair market value of
common stock on the new grant date.
. Stock appreciation rights may be issued under the discretionary option
grant program. Such rights will provide the holders with the election to
surrender their outstanding options for an appreciation distribution from
us equal to the fair market value of the vested shares of common stock
subject to the surrendered option less the exercise price payable for
those shares. We may make the payment in cash or in shares of common
stock.
. The exercise price for the options may be paid in cash or in shares of
our common stock valued at fair market value on the exercise date. The
option may also be exercised through a same-day sale program without any
cash outlay by the optionee. In addition, the compensation committee may
allow a participant to pay the option exercise price or direct issue
price (and any associated withholding taxes incurred in connection with
the acquisition of shares) with a full-recourse, interest-bearing
promissory note.
Change in Control
The 2000 stock incentive plan will include change in control provisions that
may result in the accelerated vesting of outstanding option grants and stock
issuances:
. In the event that we are acquired by merger or asset sale or a board-
approved sale of more than 50% of our capital stock, each outstanding
option under the discretionary option grant program that is not assumed
or continued by the successor corporation will immediately become
exercisable for all the option shares, and all unvested shares will
immediately vest, except to the extent our repurchase rights with respect
to those shares are to be assigned to the successor corporation.
. The compensation committee may grant options and issue shares which will
accelerate (i) upon an acquisition even if the options are assumed and
repurchase rights assigned, (ii) in connection with a hostile change in
control (effected through a successful tender offer for more than 50% of
our outstanding voting stock or by proxy contest for the election of
board members) or (iii) upon a termination of the individual's service
following a change in control or hostile take-over.
The board will be able to amend or modify the 2000 stock incentive plan at
any time, subject to any required stockholder approval. The 2000 stock
incentive plan will terminate no later than March 31 , 2010.
53
<PAGE>
2000 Employee Stock Purchase Plan
The 2000 Employee stock purchase plan will be adopted by the board of
directors and approved by our stockholders prior to the date of this offering.
The plan will become effective immediately upon the execution of the
underwriting agreement for this offering. The plan is designed to allow our
eligible employees to purchase shares of our common stock, at semi-annual
intervals, through their periodic payroll deductions. A total of 750,000 shares
of common stock may be issued under the plan.
The plan will have a series of successive offering periods, each with a
maximum duration of 24 months. However, the initial offering period will begin
on the day the underwriting agreement is executed in connection with this
offering and will end on the last business day in April 2002. The next offering
period will begin on the first business day in May 2002, and subsequent
offering periods will be set by our compensation committee.
Individuals who are eligible employees on the start date of any offering
period may enter the plan on the start date or on any subsequent semi-annual
entry date. Individuals who become eligible employees after the start date of
the offering period may join the plan on any subsequent semi-annual entry date
within that period.
A participant may contribute up to 15% of his or her base salary through
payroll deductions and the accumulated payroll deductions will be applied to
the purchase of shares on the participant's behalf on each semiannual purchase
date (the last business day in April and October of each year). The purchase
price per share will be 85% of the lower of the fair market value of our common
stock on the participant's entry date into the offering period or the fair
market value on the semi-annual purchase date. The first purchase date will
occur on the last business day in October 2000. In no event, however, may any
participant purchase more than 1,000 shares, nor may all participants in the
aggregate purchase more than 187,500 shares on any one semi-annual purchase
date. Should the fair market value of the common stock on any semi-annual
purchase date be less than the fair market value on the first day of the
offering period, then the current offering period will automatically end and a
new offering period will begin, based on the lower fair market value.
The board will be able to amend or modify the plan at any time. The plan
will terminate no later than the last business day in April 2010.
401(k) Plan
We have an employee plan that qualifies as a deferred salary arrangement
under Section 401(k) of the Internal Revenue Code. The 401(k) plan allows our
employees to defer up to 15% of their pre-tax earnings, subject to the Internal
Revenue Services annual contribution limit. At our discretion, we may make
matching contributions to the 401(k) plan. As of December 31, 1999, we have
made $22,427 in matching contributions under the 401(k) plan.
Employment Agreements
We do not currently have any employment agreements with any of our
employees.
Limitation of Liability and Indemnification Matters
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. This limitation of liability does not
apply to liabilites arising under the federal securities laws. Our bylaws
provide that we shall indemnify each of our directors and officers against
expenses (including attorney's fees), judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with a n proceeding
arising by reason of the fact that such person is or was one of our directors
or officers or serving as director or officer of another corporation,
partnership, joint venture, trust, or other enterprise at our request. We have
also entered into agreements to indemnify directors and certain executive
officers. With respect to the indemnification of directors and officers for
liabilities arising under the Securities Act, the SEC has opined that this
indemnification is against public policy, as expressed in the Securities Act,
and is therefore unenforceable.
54
<PAGE>
RELATED-PARTY TRANSACTIONS
Sales of Common Stock
In September 1997, we issued and sold 2,726,643 shares of our common stock
to each of Arthur H. Zeile, our president, chief executive officer and Chairman
of our board of directors and a 5% stockholder, and Joel C. Daly, our chief
operating officer, director and a 5% stockholder, at a per-share purchase price
of $0.001.
In December 1998, we issued and sold 163,598 shares of our common stock to
Stephen O. James, one of our directors, at a per-share purchase price of
approximately $0.09. In connection with the sale, we loaned an aggregate of
$14,400 to Mr. James. The promissory note was secured by the shares and a stock
pledge agreement. In October 1999, we forgave the balance of the note in
payment for consulting services rendered by Mr. James to us.
Convertible Promissory Notes
Between September 1997 and January 1999, Mr. Daly loaned an aggregate of
$610,000 to us, at an interest rate of 8% per year. The loan by Mr. Daly was
paid in full by us when, in April 1999, Mr. Daly converted his promissory notes
into 187,381 shares of our Series A preferred stock.
Between September 1997 and February 1999, Mr. Zeile loaned an aggregate of
$610,000 to us, at an interest rate of 8% per year. The loan by Mr. Zeile was
paid in full by us when, in April 1999, Mr. Zeile converted his promissory
notes into 186,858 shares of our Series A preferred stock.
Sales of Preferred Stock
The Series A and Series B preferred stock have voting, liquidation, dividend
and redemption rights more favorable than those of our common stock. Upon the
closing of this offering, the outstanding shares of Series A and Series B
preferred stock will automatically convert into a total of 27,829,495 shares of
common stock.
Series A
In April 1999, we issued and sold 2,857,143 shares of our Series A preferred
stock to First Union Capital Partners, Inc., a 5% stockholder, at a per-share
purchase price of $3.50. Two of our directors, L. Watts Hamrick, III and Scott
B. Perper, are Partner and Managing Partner, respectively, of First Union
Capital Partners, Inc. Each share of Series A preferred stock will convert into
2.73 shares of common stock upon the closing of this offering.
In April 1999, we issued 187,381 shares of our Series A preferred stock to
Mr. Daly at a per-share price of $3.50. Mr. Daly converted his existing
promissory notes and related accrued interest aggregating $655,833 into 187,381
shares of Series A preferred stock.
In April 1999, we issued 186,858 shares of our Series A preferred stock to
Mr. Zeile at per-share price of $3.50. Mr. Zeile converted his existing
promissory notes and related accrued interest aggregating $654,003 into 186,858
shares of Series A preferred stock.
In October 1999, we issued 40,000 shares of our Series A preferred stock to
James W. McHose, III, our Vice President, Chief Financial Officer and
Treasurer, at below fair market value at a per-share price of $3.50, a discount
of $6.02 per share from the then fair market value of our preferred stock. In
connection with the sale, we loaned an aggregate of $87,500 to Mr. McHose at an
interest rate of 6%. The full-recourse promissory note, due on or before
October 15, 2002, was also secured by 25,000 shares through a stock pledge
agreement. Mr. McHose vests in all Series A preferred stock on October 15,
2002. We have the right to repurchase any
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unvested shares of Series A preferred stock from Mr. McHose at $3.50 per share
if he discontinues his employment with us before October 15, 2002.
Series B
In October 1999, we issued and sold 2,298,851 shares of our Series B
preferred stock to First Union Capital Partners, Inc., at a per-share price of
$8.70. Two of our directors, L. Watts Hamrick, III and Scott B. Perper, are
partners of First Union Capital Partners, Inc. Each share of Series B Preferred
stock will convert into 2.73 shares of common stock upon the closing of this
offering.
In October 1999, we issued and sold 2,298,851 shares of our Series B
preferred stock to Meritage Private Equity Fund, L.P., Meritage Private Equity
Parallel Fund, L.P. and Meritage Entrepreneurs Fund, L.P., collectively 5%
stockholders at a per-share price of $8.70. One of our directors, G. Jackson
Tankersley, Jr., is a managing member of the general partner of the Meritage
Funds.
In October 1999, we issued and sold 1,149,424 shares of our Series B
Preferred stock to J.P. Morgan Investment Corporation and Sixty Wall Street
SBIC Fund, collectively 5% stockholders of Inflow, at a per-share price of
$8.70.
Other Transactions with Directors
On February 3, 2000, Donald F. Detampel, Jr. was granted an option to
purchase 40,899 shares of our common stock at $2.93 per share. This option was
immediately exercised by Mr. Detampel. These shares are subject to our
repurchase right, which lapses at 1/36 per month.
On May 4, 1999, Mr. James was granted an option to purchase 81,799 shares of
our common stock at $0.27 per share. Mr. James exercised this option on
December 27, 1999 and these shares are subject to a repurchase right which
began lapsing at a rate of 1/36 per month in May 1999. On January 19, 2000, Mr.
James was granted an option to purchase 40,899 shares of our common stock at
$1.46 per share. Mr. James exercised this option on January 21, 2000. These
shares are subject to our repurchase right, which began lapsing at a rate of
1/12 per month in January 2000.
Other Related-Party Transactions
First Union Capital Partners, Inc., is participating as an underwriter in
this offering. We will pay all of the underwriters participating in this
offering commissions and fees for their services, not to exceed a total amount
of 7% of the proceeds of this offering.
Hammered Design, a company owned by Ivar Zeile, the brother of Mr. Zeile,
provides facility and design consulting services to us. We also purchase
certain office furnishings from Hammered Design. As of December 31, 1999,
aggregate payments to Hammered Design totaled approximately $296,000.
We believe that all of the transactions set forth above were made on terms
no less favorable to us than could have been otherwise obtained from
unaffiliated third parties, except for the sale of Series A preferred stock to
Mr. McHose. We believe this sale was necessary to attract Mr. McHose to work
with us. We do not currently have plans to adopt a policy that requires all
future transactions between us and our officers, directors and affiliates to be
on terms no less favorable than could be obtained from unaffiliated third
parties.
Investors' Rights Agreement
In connection with the sale of our Series B preferred stock, we entered into
an investors' rights agreement with Mr. Zeile, Mr. Daly, the Meritage funds and
First Union Capital Partners, Inc. This investors' rights agreement amends and
restates the investors' rights agreements that we entered into in connection
with the sale of our Series A preferred stock, and provides the Series A and B
stockholders with demand and piggyback
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registration rights. The holders of 30% or more of the registrable securities
are entitled to demand that we register their registrable securities under the
Securities Act on Form S-1 or any similar long-form registration statement. We
are not required to effect more than two registrations pursuant to these demand
registration rights. The holders of the registrable securities are entitled to
demand that we register their registrable securities under the Securities Act
on Form S-3 or any similar short-form registration statement then available to
us. In addition, the holders of registrable securities are entitled to require
us to include their registrable securities in future registration statements
that we may file. Please see "Description of Capital Stock -- Registration
Rights."
Stockholders' Agreement
Also in connection with the sale of our Series B preferred stock, we entered
into a stockholders' agreement with the parties to our investors' rights
agreement and Mr. James. This stockholders' agreement amends and restates the
stockholders' agreement that we entered into in connection with the sale of our
Series A preferred stock. The stockholders' agreement provides that the board
most consist of seven members designated as follows:
. the common stockholders have the right to designate two directors, each
of whom shall be an executive officer of Inflow;
. the holders of Series A preferred stock have the right to designate one
director;
. the holders of Series B preferred stock have the right to designate two
directors, of which one shall be designated by First Union Capital
Partners, Inc. and one shall be designated by Meritage Private Equity
Fund, L.P.; and
. two independent directors must be designated by the holders of the
common stock and approved by the holders of the Series A and Series B
preferred stock.
The common stockholders have designated Mr. Zeile and Mr. Daly as directors.
The holders of Series A preferred stock have designated L. Watts Hamrick, III
as director. The holders of Series B preferred stock have designated Scott B.
Perper as the representative of First Union Capital Partners, Inc. and G.
Jackson Tankersley, Jr. as the representative of Meritage Private Equity Fund,
L.P. The holders of the common stock, with the approval of the holders of the
Series A and Series B preferred stock, have designated Mr. James and Donald F.
Detampel, Jr. as directors.
In addition, the agreement restricts the sale or transfer of shares of stock
except in limited instances or in compliance with a co-sale procedure which
permits each other stockholder to participate in the proposed sale, based on
such stockholder's pro-rata stock holdings on an as-converted basis. The
agreement will terminate upon the completion of this offering and the board of
directors designation and co-sale provisions will no longer be applicable.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of March 15, 2000, as adjusted to
reflect the sale of 7,000,000 shares of common stock in this offering, by:
. each person, or group of affiliated persons, known by us to own
beneficially more than 5% of our outstanding common stock;
. each of our directors;
. each of our Named Executive Officers; and
. all of our directors and executive officers as a group.
The following table assumes the conversion of all of our preferred stock
outstanding as of March 15, 2000 into common stock, except for 1,433,203 shares
of the preferred stock held by First Union Capital Partners, Inc. which is
assumed to convert into 3,907,832 shares of non-voting common stock. See
"Description of Capital Stock."
Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting and investment power with respect to shares. To our
knowledge, except under applicable community property laws or as otherwise
indicated, the persons named in the table have sole voting and sole investment
control with respect to all shares beneficially owned. The applicable
percentage of ownership for each stockholder is based on 37,510,643 shares of
common stock, both voting and non-voting, outstanding as of March 15, 2000, and
44,510,643 shares outstanding after the completion of this offering, in each
case together with applicable options for that stockholder. Shares of common
stock issuable upon exercise of options granted on or before March 15, 2000 are
deemed outstanding for the purpose of computing the percentage ownership of the
person holding those options but are not deemed outstanding for computing the
percentage ownership of any other person. Options issued by us are immediately
exercisable and the shares of common stock issuable pursuant to exercise of
such options are subject to repurchase by us at the original exercise price in
the event of termination of that person's relationship with us. This repurchase
right lapses over time.
<TABLE>
<CAPTION>
Percentage of
shares
Beneficially
Number of Owned
Shares -----------------
Beneficially Prior to After
Beneficial Owner Owned Offering Offering
<S> <C> <C> <C>
First Union Capital Partners, Inc. (1)......... 11,042,991 29.44% 24.81%
Meritage Investment Partners, LLC (2).......... 6,268,138 16.71% 14.08%
Arthur H. Zeile (3)............................ 4,599,454 12.26% 10.33%
Joel C. Daly (4)............................... 4,600,880 12.27% 10.34%
Entities affiliated with J.P. Morgan Investment
Corporation (5)............................... 3,134,064 8.36% 7.04%
General Electric Capital Corporation (6)....... 1,567,037 4.18% 3.52%
Stolberg, Meehan & Scano II, L.P. (7).......... 1,567,037 4.18% 3.52%
Robert J. Gedrose (8).......................... 245,396 * *
James W. McHose, III (9)....................... 354,463 * *
L. Watts Hamrick, III (10)..................... 11,485,834 30.62% 25.80%
Scott B. Perper (11)........................... 11,499,894 30.66% 25.84%
G. Jackson Tankersley (12)..................... 6,268,144 16.71% 14.08%
Stephen O. James (13).......................... 265,847 * *
Donald F. Detampel, Jr. (14)................... 40,899 * *
All directors and executive officers as a group
(12 persons) (15)............................. 28,779,205 76.72% 64.65%
</TABLE>
- --------
* Less than 1% of the outstanding shares of our common stock, both voting and
non-voting.
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(1) The address of First Union Capital Partners, Inc. is 301 South College
Street, Charlotte, NC 28288-0732.
(2) Stock consists of 5,548,556 shares held directly by Meritage Private Equity
Fund, L.P., 616,785 shares held directly by Meritage Private Equity
Parallel Fund, L.P. and 102,797 shares held directly by Meritage
Entrepreneurs Fund, L.P. The address of the Meritage funds is 1600 Wynkoop
Street, Suite 300, Denver, CO 80202.
(3) Stock consists of 4,517,655 shares held by Mr. Zeile and 81,799 shares held
by the Zeile INFLOW Trust dated December 22, 1999. Mr. Zeile disclaims
beneficial ownership of the shares held by such trust. The address of Mr.
Zeile and the trust is 938 Bannock Street, Suite 300, Denver, CO 80204.
(4) Stock consists of 4,464,548 shares held by Mr. Daly and 136,332 shares held
by the Daly INFLOW Trust dated December 22, 1999. Mr. Daly disclaims
beneficial ownership of the shares held by such trust. The address of Mr.
Daly and the trust is 938 Bannock Street, Suite 300, Denver, CO 80204.
(5) Stock consists of 2,820,662 shares held directly by J.P. Morgan Investment
Corporation and 313,402 shares held directly by Sixty Wall Street SBIC
Fund, L.P. The address of J.P. Morgan Investment Corporation and Sixty Wall
Street SBIC Fund, L.P. is 101 California Street, 37th Floor, San Francisco,
CA 94111.
(6) The address of GE Capital Corporation is 120 Long Ridge Road, 3rd Floor,
Stamford, CT 06927.
(7) The address of Stolberg, Meehan & Scano II, L.P. is Republic Plaza, 370
17th Street, Suite 4240, Denver, CO 80202.
(8) 81,798 of the shares held by Mr. Gedrose are subject to a repurchase right.
This repurchase right lapses as to 25% of these shares on June 1, 2000 and
lapses as to 75% of these shares, at a rate of 1/36 of the 75%, per month,
beginning June 1, 2000. In addition, 163,598 of such shares are subject to
a repurchase right, which lapsed as to 25% to these shares on August 3,
1999, and which lapses as to 75% of these shares at a rate of 1/36 of the
75%, per month, beginning August 3, 1999. Mr. Gedrose's address is 938
Bannock Street, Suite 300, Denver, CO 80204.
(9) 68,166 of the shares held by Mr. McHose are subject to a repurchase right
which lapses as to these shares on October 15, 2002 if Mr. McHose is still
in our employment. Also includes 243,397 immediately exerciseable options
to purchase common stock. Upon exercise, the common stock underlying these
options will be subject to a repurchase right which will lapse as to 25% of
the underlying shares on August 17, 2000 and at a rate of 1/36 of the
remaining 75%, per month, thereafter. Mr. McHose's address is 938 Bannock
Street, Suite 300, Denver, CO 80204.
(10) Stock consists of 295,229 shares of common stock held by Mr. Hamrick,
147,614 shares of common stock held directly by Hamrick Family Investments
Limited I, and 11,042,991 shares held directly by First Union Capital
Partners, Inc. Mr. Hamrick is General Partner of Hamrick Family
Investments Limited I and a Partner of First Union Capital Partners, Inc.,
a subsidiary of First Union Corporation. He disclaims beneficial ownership
of shares owned by these two entities. Mr. Hamrick's address is 301 South
College Street, Charlotte, NC 28288-0732.
(11) Stock includes 456,903 shares of common stock held by Mr. Perper and
11,042,991 shares held directly by First Union Capital Partners, Inc. Mr.
Perper is a Managing Partner of First Union Capital Partners, Inc., a
subsidiary of First Union Corporation, and disclaims beneficial ownership
of its shares. Mr. Perper's address is 301 South College Street,
Charlotte, NC 28288-0732.
(12) Stock includes 5,495,908 shares held directly by Meritage Private Equity
Fund, L.P., 671,945 shares held directly by Meritage Private Equity
Parallel Fund, L.P. and 100,291 shares held directly by Meritage
Entrepreneurs Fund, L.P. Mr. Tankersley is a Managing Member of Meritage
Investment Partners, LLC, which is the sole General Partner of each of
these Meritage funds. Mr. Tankersley disclaims beneficial ownership of the
shares held by these Meritage funds. The address of each of Meritage
Investment Partners, LLC, the Meritage funds and Mr. Tankersley is 1600
Wynkoop Street, Suite 300, Denver, CO 80202.
(13) 81,799 of the shares held by Mr. James are subject to a repurchase right
which began lapsing at a rate of 1/36 per month in May 1999. In addition,
40,899 of such shares are subject to a repurchase right which began
lapsing at a rate of 1/12 per month in January 2000. Mr. James' address is
915 Spruce Street, Boulder, CO 80302.
(14) All of the shares held by Mr. Detampel are subject to a repurchase right
which began lapsing at a rate of 1/12 per month in January 2000. Mr.
Detampel's address is 6969 West 90th Ave, Westminster, CO 80021.
(15) See footnotes (3), (4) and (8) through (14) above. Includes 650,303 shares
subject to options exercisable within 60 days of March 15, 2000.
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DESCRIPTION OF CAPITAL STOCK
General
The following are general descriptions of the material terms of our common
stock, both voting and non-voting, and preferred stock and the relevant
provisions of our amended and restated certificate of incorporation and amended
and restated bylaws as will be in effect upon the closing of this offering.
Upon closing of this offering, our authorized capital stock will consist of
150,000,000 shares of common stock, par value $0.001 per share, 5,000,000
shares of non-voting common stock, par value $0.001 per share, and 15,000,000
shares of preferred stock, par value $0.001 per share.
Common Stock
Prior to the closing of this offering, our stock is held by 62 stockholders
of record. Upon the closing of this offering, and giving effect to the issuance
of 7,000,000 shares of common stock in this offering and the contemplated
amendment to our amended and restated certificate of incorporation as more
fully discussed below, there will be 44,510,643 shares of common stock
outstanding, including 3,907,832 shares of non-voting common stock outstanding.
Upon closing of this offering, holders of non-voting common stock do not
have any voting rights, except as required by applicable law. Holders of common
stock are entitled to one vote for each share held on all matters submitted to
a vote of stockholders and do not have cumulative voting rights. Accordingly,
holders of a majority of the shares of common stock entitled to vote in any
election of directors may elect all of the directors standing for election.
Holders of both common stock and non-voting common stock are entitled to
receive ratably those dividends, if any, as may be declared by the board of
directors out of funds legally available therefor, subject to any preferential
dividend rights of any outstanding preferred stock. Upon our liquidation,
dissolution or winding up, the holders of both common stock and non-voting
common stock are entitled to receive ratably our net assets available after the
payment of all debts and other liabilities and subject to the prior rights of
any outstanding preferred stock. Holders of the common stock and non-voting
common stock have no preemptive, subscription, redemption or conversion rights
except that each share of non-voting common stock is convertible, at any time,
at the option of the holder into one share of common stock, and generally will
convert into one share of common stock upon transfer of the non-voting common
stock from its original holder. The common stock is not convertible into non-
voting common stock. The rights, preferences and privileges of holders of
common stock and non-voting common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock which we may designate and issue in the future. Upon the closing of this
offering, there will be no shares of preferred stock outstanding.
Preferred Stock
Upon the closing of this offering, there will be no shares of preferred
stock outstanding. Upon the closing of this offering, the board of directors
will be authorized, without further stockholder approval, to issue from time to
time up to an aggregate of 15,000,000 shares of preferred stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption, including sinking fund provisions,
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designation of series. We have no present plans to
issue any shares of preferred stock. See "--Anti-Takeover Effects of Various
Provisions of Delaware Law and Our Certificate of Incorporation and Bylaws."
Conversion of Certain Shares of Stock
Prior to the closing of this offering, we will amend our amended and
restated certificate of incorporation to provide for the issuance of non-voting
common stock and allow for any holder of preferred stock to convert its
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shares into either common stock or non-voting common stock. We are undertaking
this change in our capital structure to accommodate a regulatory concern of one
of our principal stockholders, First Union Capital Partners, Inc. Upon the
closing of this offering, First Union Capital Partners, Inc. will convert all
of its shares of preferred stock into 7,135,159 shares of common stock and
3,907,832 shares of non-voting common stock. We do not expect that any of our
other preferred stockholders will elect to receive shares of non-voting common
stock upon the conversion of their preferred shares. We do not currently
anticipate further issuances of our non-voting common stock.
Anti-Takeover Effects of Various Provisions of Delaware Law and Our Certificate
of Incorporation and Bylaws
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to some exceptions, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in
attained that status with the approval of the board of directors or unless the
business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and other transactions resulting in
a financial benefit to the interested stockholder. Subject to various
exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to Inflow and, accordingly, may discourage attempts to acquire us.
In addition, various provisions of our amended and restated certificate of
incorporation and our amended and restated bylaws, which provisions will be in
effect upon the closing of the offering and are summarized in the following
paragraphs, may be deemed to have an anti-takeover effect and may delay, defer
or prevent a tender offer or takeover attempt that a stockholder might consider
in its best interest, including those attempts that might result in a premium
over the market price for the shares held by stockholders.
Board of Directors Vacancies. Our amended and restated certificate of
incorporation authorizes the board of directors to fill vacant directorships
and our amended and restated bylaws allow the board of directors to increase
the size of the board of directors. This may deter a stockholder from removing
incumbent directors and simultaneously gaining control of the board of
directors by filling the vacancies created by this removal with its own
nominees.
Stockholder Action; Special Meeting of Stockholders. Our amended and
restated certificate of incorporation provides that stockholders may not take
action by written consent, but only at duly called annual or special meetings
of stockholders. The bylaws further provide that special meetings of our
stockholders may be called only by the Chairman of the board of directorsor a
majority of the board of directors.
Advance Notice Requirements for Stockholder Proposals and Directors
Nominations. Our amended and restated bylaws provide that stockholders seeking
to bring business before an annual meeting of stockholders, or to nominate
candidates for election as directors at an annual meeting of stockholders, must
provide timely notice thereof in writing. To be timely, a stockholder's notice
must be delivered to or mailed and received at our principal executive offices,
not less than 120 days prior to the first anniversary of the date of our notice
of annual meeting provided with respect to the previous year's annual meeting
of stockholders.
Our amended and restated bylaws also specify certain requirements as to the
form and content of a stockholder's notice. These provisions may preclude
stockholders from bringing matters before an annual meeting of stockholders or
from making nominations for directors at an annual meeting of stockholders.
Authorized But Unissued Shares. The authorized but unissued shares of common
stock and preferred stock are available for future issuance without stockholder
approval, subject to various limitations imposed by The
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<PAGE>
Nasdaq National Market. These additional shares may be utilized for a variety
of corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued shares of common stock and preferred stock could make
more difficult or discourage an attempt to obtain control of us by means of a
proxy context, tender offer, merger or otherwise.
Classified Board of Directors. Our board of directors is composed of three
separate classifications. At each annual meeting of stockholders after the
initial classification, the successors to directors whose terms expire will be
elected to serve a term of three years. This classification of directors may
have the effect of delaying or preventing changes in our control. See
"Management--Board Composition."
The Delaware General Corporation Law provides generally that the affirmative
vote of a majority of the shares entitled to vote on any matter is required to
amend a corporation's certificate of incorporation or bylaws, unless a
corporation's certificate of incorporation or bylaws, as the case may be,
requires a greater percentage.
Registration Rights
Upon the closing of this offering, holders of approximately 27,720,429
shares of common stock (or securities convertible into common stock) will be
entitled to registration rights with respect to their shares. Of these shares,
8,343,527 shares of common stock (or securities convertible into common stock)
are entitled only to "piggy-back" registration rights. Holders of securities
with registration rights may require us to register all or part of their shares
at any time following 180 days after this offering. In addition, these holders
may also require us to include their shares in future registration statements
that we file and may require us to register their shares on Form S-3. Upon
registration, these shares will be freely tradable in the public market without
restriction.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Securities
Transfer & Trust Company, Denver, Colorado.
Listing
We have applied to have our shares of common stock approved for listing on
The Nasdaq National Market under the symbol "INFL."
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SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices of our common stock. In addition,
since no shares will be available for sale shortly after this offering because
of certain contractual and legal restrictions on resale described below, sales
of substantial amounts of common stock in the public market after these
restrictions lapse could harm the prevailing market price and our ability to
raise equity capital in the future.
Upon the closing of this offering, we will have outstanding an aggregate of
44,510,643 shares of our common stock, assuming no exercise of the
underwriters' over-allotment option and no exercise of outstanding options. Of
these shares, all shares sold in this offering will be freely tradable without
restriction or further registration under the Securities Act unless such shares
are purchased by "affiliates" as that term is defined in Rule 144 under the
Securities Act.
The remaining 37,510,643 shares outstanding are "restricted securities"
within the meaning of Rule 144. Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rule 144 or Rule 701 promulgated under the Securities Act. As a result of
the contractual restrictions described below and the provisions of Rule 144 and
Rule 701, the shares of common stock outstanding prior to this offering will be
available for sale in the public market 180 days following the closing of this
offering, in accordance with the volume limitations and other conditions of
Rule 144.
Our directors, officers and other stockholders holding, in the aggregate,
approximately 91.87% of our common stock signed lock-up agreements under which
they agreed not to transfer or dispose of, directly or indirectly, any shares
of our common stock or any securities convertible into or exercisable or
exchangeable for shares of our common stock for 180 days after the date of this
prospectus, without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation. After the expiration of the lock-up agreements, these
directors, officers and stockholders will be allowed to sell shares of our
common stock in accordance with Rule 144; provided further, holders of such
restricted shares who have not been officers or directors of us on or since the
date of this prospectus may offer, sell or otherwise dispose of 25% of their
shares, that are eligible for sale under Rule 144, on the earlier of 90 days
after the date of this offering or on the second trading day after the first
public release of our quarterly results if the last recorded sale price on the
Nasdaq National Market for 20 of the 30 trading days ending on such date is at
least twice the price per share in the initial public offering. These
stockholders may also offer, sell or otherwise dispose of an additional 25% of
their shares, that are eligible for sale under Rule 144, 135 days after the
date of this offering if the price of the share of common stock has achieved
the same target level. However, Donaldson, Lufkin & Jenrette, may in its sole
discretion, at any time without notice, release all or any portion of the
shares subject to lock-up agreements. Upon expiration of the lock-up agreement
180 days after the date of this prospectus, approximately 136,331 shares will
become eligible for sale pursuant to Rule 144(k), 32,968,880 shares will become
eligible for sale at various times under Rule 144 and 1,351,210 shares will
become eligible for sale under Rule 701 (except to the extent that any shares
were sold 90 or 135 days after the date of this prospectus as described above).
In addition, 3,054,222 shares will be eligible for sale at various times after
the date of this prospectus.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any three-
month period a number of shares that does not exceed the greater of 1% of the
number of shares of common stock then outstanding, which will equal
approximately 445,106 shares immediately after the offering, or the average
weekly trading volume of the common stock on The Nasdaq National Market during
the four calendar weeks preceding the filing of a notice on Form 144 with
respect to such sale. Sales under Rule 144 are also subject to various manner-
of-sale provisions, notice requirements and the availability of current public
information about us.
Under Rule 144(k), a person who is not one of our affiliates at any time
during the 90 days preceding a sale and who has beneficially owned the shares
proposed to be sold for at least two years, including the holding
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period of any prior owner other than an affiliate, is entitled to sell such
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchases shares from us in
connection with a compensatory stock plan or other written agreement is
eligible to resell such shares 90 days after the effective date of this
offering in reliance on Rule 144, but without compliance with certain
restrictions, including the holding period, contained in Rule 144.
As of March 15, 2000, we had 2,489,220 outstanding stock options with a
weighted average exercise price of $1.63. As soon as practicable following the
closing of this offering, we intend to file a registration statement under the
Securities Act covering 9,750,000 shares of common stock reserved for issuance
under our 2000 stock incentive plan and 2000 employee stock purchase plan.
Shares issued under these plans will be eligible for sale in the public market
from time to time, subject to vesting provisions, Rule 144 volume limitations
applicable to our affiliates and, in the case of some options, the expiration
of lock-up agreements.
64
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in an underwriting agreement
dated , 2000, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc.,
First Union Securities, Inc., and DLJdirect Inc. have severally agreed to
purchase the numbers of shares of common stock shown opposite their names
below:
<TABLE>
<CAPTION>
Number of
Underwriter Shares
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.............
Chase Securities Inc............................................
First Union Securities, Inc.....................................
DLJdirect Inc...................................................
------
Total.......................................................
======
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of legal matters by their counsel and to
customary conditions, including the effectiveness of the registration
statement, the continuing correctness of our representations, the listing of
our common stock on The Nasdaq National Market and no occurrence of an event
that would have a material adverse effect on us. The underwriters are obligated
to purchase and accept delivery of all the shares, other than those covered by
the over-allotment option described below, if they purchase any of our shares.
An electronic prospectus will be available on the Web site maintained by
DLJdirect Inc., an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation. The information on the DLJdirect Web site, other than this
prospectus in electronic format, is not part of this prospectus, is not related
to this offering and has not been approved or endorsed by us or the
underwriters, and should not be relied on by prospective investors.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to 1,050,000 additional shares at
the initial public offering price less the underwriting fees. The underwriters
may exercise their option to cover over-allotments of common stock made in
connection with this offering. To the extent that the underwriters exercise
their option, each underwriter will become obligated, subject to conditions, to
purchase a number of additional shares approximately proportionate to that
underwriter's initial purchase commitment.
The underwriters propose to initially offer some of our common stock
directly to the public at the initial public offering price shown on the cover
page of this prospectus and some of the common stock to selling group members
at the initial public offering price less a concession of $ per share.
The underwriters and selling group members may re-allow a concession not in
excess of $ per share on sales to other dealers. After the initial
offering of the common stock to the public, the representatives of the
underwriters may change the public offering price and such concessions. The
underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
The following table summarizes the underwriting fees we will pay:
<TABLE>
<CAPTION>
Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-Allotment Over-Allotment Over-Allotment Over-Allotment
<S> <C> <C> <C> <C>
Underwriting discounts
and commissions paid by
us..................... $ $ $ $
</TABLE>
We estimate that the total expenses of the offering payable by us, including
registration fees, legal and accounting fees and expenses, printers expenses,
transfer agent fees and director and officer insurance expenses but excluding
underwriting discounts and commissions, are $1,500,000.
65
<PAGE>
We have agreed to indemnify the underwriters against certain civil
liabilities, including liabilities under the Securities Act or to contribute to
payments that the underwriters may be required to make in respect of those
liabilities.
We, our officers and directors and certain stockholders have agreed that for
a period of 180 days from the date of this prospectus, we and they will not,
without the prior written consent of DLJ, do either of the following:
. offer, pledge, sell, contract to sell, sell any portion or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of our common stock or any securities
convertible into or exercisable or exchangeable for our common stock; or
. enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of our common
stock.
However, 25% of the shares of common stock subject to the restrictions
described above (other than shares owned by directors or officers) will be
released from these restrictions if the reported last sale price of the common
stock on the Nasdaq National Market is at least twice the initial public
offering price for 20 or the 30 consecutive trading days ending on the last
trading day of the 90-day period after the date of this prospectus. These
shares will be released on the later to occur of the 90-day period after the
date of this prospectus and the second trading day after the first public
release of our quarterly results. An additional 25% of the shares subject to
the restrictions described above will be released from these restrictions if
the reported last sale price of the common stock on the Nasdaq National Market
is at least twice the initial public offering price for 20 of the 30
consecutive trading days ending on the last trading day of the 135-day period
after the date of this prospectus.
At our request, the underwriters have reserved up to 7% of the common stock
offered by this prospectus for sale at the initial public offering price for
some of our employees, friends and other people and entities with whom we
maintain business relationships who have expressed an interest in purchasing
common stock in the offering. The number of shares available for sale to the
general public in the offering will be reduced to the extent these persons
purchase, orally or in writing, such reserved shares. Any reserved shares not
purchased or confirmed for purchase will be offered by the underwriters to the
general public on the same basis as the other shares offered by this
prospectus.
We have applied to have our shares of common stock approved for listing on
The Nasdaq National Market under the symbol "INFL." In order to meet the
requirements for listing the common stock on The Nasdaq National Market, the
underwriters have undertaken to sell lots of 100 or more shares to a minimum of
400 beneficial owners.
First Union Capital Partners, Inc., an affiliate of First Union Securities,
Inc., as the holder of a majority of our Series A preferred stock, has the
right to designate two directors in accordance with the provisions of our
current stockholders agreement. Messrs. Hamrick and Perper are First Union
Capital Partners, Inc.'s designees who are currently serving on the board of
directors, with terms expiring in 2001 and 2002, respectively. The provisions
of the stockholders agreement will terminate upon the completion of this
offering; however, these individuals will remain as directors until their
resignation or until their replacement.
Under Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, or NASD, we are considered an affiliate of First Union
Securities, Inc. This offering is being conducted in accordance with Rule 2720,
which provides that, among other things, when a NASD member participates in the
underwriting of an affiliate's equity securities, the price to the public can
be no higher than that recommended by a qualified independent underwriter
meeting certain standards. In accordance with this requirement, DLJ has assumed
the responsibilities of acting as qualified independent underwriter and will
recommend a maximum price to the public in compliance with the requirements of
Rule 2720. In connection with the offering, DLJ is performing due diligence
investigations and reviewing and participating in the preparation of this
prospectus and the
66
<PAGE>
registration statement of which this prospectus forms a part. As compensation
for the services of DLJ as qualified independent underwriter, we have agreed to
pay DLJ a fee of $5,000 in addition to the underwriting compensation DLJ will
otherwise receive.
Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the common stock included
in this offering in any jurisdiction where action for that purpose is required.
The shares included in this offering may not be offered or sold, directly or
indirectly, nor may this prospectus or any other offering material or
advertisement in connection with the offer and sale of any such shares be
distributed or published in any jurisdiction, except under circumstances that
will result in compliance with the applicable rules and regulations of such
jurisdiction. Persons who receive this prospectus are advised to inform
themselves about and to observe any restrictions relating to the offering of
the common stock and the distribution of this prospectus. This prospectus is
not an offer to sell or a solicitation of an offer to buy any shares of common
stock included in this offering in any jurisdiction where that would not be
permitted or legal.
Pricing of this Offering
Prior to this offering, there has been no public market for our common
stock. The initial public offering price offered by this prospectus will be
determined by negotiation between the representatives and us. The principal
factors to be considered in determining the public offering price include:
. the information in this prospectus or available to the underwriters;
. the history and the prospects for the industry in which we compete;
. the ability of our management;
. the prospects for our future earnings;
. the present state of our developments and our current financial
condition;
. the general condition of the securities markets at the time of this
offering; and
. the recent market prices of, and the demand for publicly traded common
stock of generally comparable companies.
Stabilization
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions, and penalty bids in compliance with Regulation
M under the Exchange Act.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed to cover
syndicate short positions.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a syndicate covering transaction to
cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would be in
the absence of these transactions. These transactions may be effected on The
Nasdaq National Market or otherwise and, if commenced, may be discontinued at
any time.
67
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Brobeck, Phleger & Harrison LLP, Broomfield, Colorado. As of March 15, 2000,
attorneys at Brobeck, Phleger & Harrison LLP beneficially owned a total of
56,479 shares of our common stock. Certain legal matters in connection with the
offering will be passed upon for the underwriters by Paul, Hastings, Janofsky &
Walker LLP, New York, New York.
EXPERTS
The financial statements at December 31, 1998 and 1999 and for the period
from September 26, 1997 (inception) through December 31, 1997 and for each of
the two years in the period ended December 31, 1999 included in this prospectus
have been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We filed with the Securities and Exchange Commission a registration
statement on Form S-1, including exhibits, schedules and amendments. This
prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration
statement. For further information about us and the shares of common stock to
be sold in the offering, please refer to the registration statement and the
exhibits and schedules.
You may read and copy all or any portion of the registration statement or
any other information we file at the Securities and Exchange Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C., 20549. You
can request copies of these documents upon payment of a duplicating fee, by
writing to the Securities and Exchange Commission. Please call the Securities
and Exchange Commission at 1-800-SEC-0330 for further information about the
public reference rooms. Our Securities and Exchange Commission filings,
including the registration statement, will also be available to you on the
Securities and Exchange Commission's Web site (http://www.sec.gov).
We intend to furnish our stockholders with annual reports containing audited
financial statements and to make available quarterly reports containing
unaudited financial information.
68
<PAGE>
INFLOW, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants.......................................... F-2
Balance Sheets............................................................. F-3
Statements of Operations................................................... F-4
Statements of Stockholders' Equity (Deficit)............................... F-5
Statements of Cash Flows................................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Inflow, Inc.
The stock split described in the last paragraph of Note 11 to the financial
statements has not been consummated at March 24, 2000. When it has been
consummated, we will be in a position to furnish the following report:
"In our opinion, the accompanying balance sheets and the related statements
of operations, stockholders' equity (deficit) and cash flows present fairly, in
all material respects, the financial position of Inflow, Inc. at December 31,
1998 and 1999, and the results of its operations and its cash flows for the
period from September 26, 1997 (inception) through December 31, 1997 and for
each of the two years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above."
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Broomfield, Colorado
February 4, 2000
F-2
<PAGE>
INFLOW, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
Pro Forma
Stockholders'
Equity
December 31, (Deficit)
---------------------- December 31,
1998 1999 1999
--------- ----------- -------------
(Unaudited)
(Note 1)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............. $ 23,605 $ 965,058
Short-term investments................. -- 56,387,515
Accounts receivable, net of allowance
of $0 and $56,000 at December 31,
1998 and 1999, respectively........... 23,644 581,168
Prepaid expenses and other, net........ 3,104 2,015,517
--------- -----------
Total current assets................. 50,353 59,949,258
Property and equipment, net............. 769,829 12,362,791
Restricted cash and deposits............ 11,960 570,243
--------- -----------
Total assets......................... $ 832,142 $72,882,292
========= ===========
LIABILITIES, MANDATORILY REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable....................... $ 22,892 $ 4,240,590
Accrued and other liabilities.......... 98,401 829,042
Deferred revenue....................... -- 164,227
Current portion of long-term debt...... 155,864 --
Convertible demand notes payable to
stockholders.......................... 1,000,000 --
--------- -----------
Total current liabilities............ 1,277,157 5,233,859
Deferred rent reimbursements............ 129,595 1,308,867
Long-term debt, net of current portion.. 298,740 --
--------- -----------
Total liabilities.................... 1,705,492 6,542,726
--------- -----------
Commitments and contingencies (Note 8,10
and 11)
Mandatorily redeemable convertible
preferred stock, at redemption value,
$.001 par value:
Series A mandatorily redeemable
convertible preferred stock;
3,310,000 shares authorized;
3,309,953 shares issued and
outstanding at December 31, 1999,
none authorized, issued and
outstanding pro forma (unaudited)..... -- 12,108,201 $ --
Series B mandatorily redeemable
convertible preferred stock;
7,000,000 shares authorized;
6,896,552 shares issued and
outstanding at December 31, 1999,
none authorized, issued and
outstanding pro forma (unaudited) .... -- 65,684,938 --
Stockholders' equity (deficit):
Common stock, voting, $.001 par value;
54,532,860 shares authorized;
8,343,527 and 8,452,593 shares issued
and outstanding at December 31, 1998
and 1999, respectively; 32,374,255
pro forma shares issued and
outstanding (unaudited)............... 8,343 8,452 32,374
Common stock, non-voting, $.001 par
value; 3,907,832 pro forma shares
issued and outstanding (unaudited).... -- -- 3,907
Additional paid-in capital............. 9,057 7,680,316 85,445,626
Deferred compensation.................. -- (8,905,223) (8,905,223)
Stock subscriptions receivable and
other................................. (14,400) (150,911) (150,911)
Accumulated deficit.................... (876,350) (10,086,207) (10,086,207)
--------- ----------- -----------
Total stockholders' equity
(deficit)........................... (873,350) (11,453,573) $66,339,566
--------- ----------- ===========
Total liabilities, mandatorily
redeemable convertible preferred
stock and stockholders' equity
(deficit)......................... $ 832,142 $72,882,292
========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
INFLOW, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period
September 26,
1997
(Inception) Year Ended
through December 31,
December 31, ------------------------
1997 1998 1999
------------- ---------- ------------
<S> <C> <C> <C>
Revenue................................ $ -- $ 45,032 $ 1,998,164
Costs of data network exchange
facilities:
Direct................................ -- 118,848 2,681,591
Indirect.............................. -- 173,846 866,254
---------- ---------- ------------
Gross profit (loss) from data network
exchange facilities................... -- (247,662) (1,549,681)
---------- ---------- ------------
Other operating expenses:
Sales and marketing................... 3,704 -- 653,186
General and administrative............ 31,660 298,985 1,937,254
Product development................... 36,829 170,263 706,008
Stock compensation.................... -- -- 575,483
---------- ---------- ------------
Total operating expenses............ 72,193 469,248 3,871,931
---------- ---------- ------------
Loss from operations................... (72,193) (716,910) (5,421,612)
---------- ---------- ------------
Other income (expense):
Interest expense...................... (11,941) (81,640) (61,858)
Interest income....................... 2,627 3,707 753,845
---------- ---------- ------------
Total other income (expense)........ (9,314) (77,933) 691,987
---------- ---------- ------------
Net loss............................... $ (81,507) $ (794,843) $ (4,729,625)
Accretion of convertible preferred
stock................................. -- -- (696,897)
Deemed dividend related to beneficial
conversion feature of Series B
preferred stock....................... -- -- (5,655,173)
---------- ---------- ------------
Net loss avaliable to common
stockholders.......................... $ (81,507) $ (794,843) $(11,081,695)
========== ========== ============
Net loss per common share (basic and
diluted).............................. $ (0.01) $ (0.10) $ (1.35)
========== ========== ============
Weighted average common shares (basic
and diluted).......................... 8,179,929 8,179,929 8,180,040
========== ========== ============
Pro forma net loss per common share
(basic and diluted)--unaudited........ $ (0.59)
============
Pro forma weighted average common
shares (basic and diluted)--
unaudited............................. 17,496,175
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
INFLOW, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Stock
Common Stock Additional Subscriptions
---------------- Paid-in Deferred Receivable Accumulated
Shares Amount Capital Compensation and Other Deficit Total
--------- ------ ---------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 26,
1997 (inception)....... -- $ -- $ -- $ -- $ -- $ -- $ --
Issuances of common
stock.................. 8,179,929 8,180 (5,180) -- -- -- 3,000
Net loss................ -- -- -- -- (81,507) (81,507)
--------- ------ ---------- ----------- --------- ------------ ------------
Balance at December 31,
1997................... 8,179,929 8,180 (5,180) -- -- (81,507) (78,507)
Sale of common stock.... 163,598 163 14,237 -- (14,400) -- --
Net loss................ -- -- -- -- -- (794,843) (794,843)
--------- ------ ---------- ----------- --------- ------------ ------------
Balance at December 31,
1998................... 8,343,527 8,343 9,057 -- (14,400) (876,350) (873,350)
Reclassification of
accumulated earnings
(deficit) upon
conversion to taxable
status................. -- -- (1,174,941) -- -- 1,174,941 --
Deferred compensation
from stock options and
sales of stock ........ -- -- 9,480,706 (9,480,706) -- -- --
Satisfaction of stock
subscription
receivable............. -- -- -- -- 14,400 -- 14,400
Amortization of deferred
compensation........... -- -- -- 575,483 -- -- 575,483
Accretion of preferred
stock.................. -- -- (696,897) -- -- -- (696,897)
Sale of preferred
stock.................. -- -- -- -- (87,500) -- (87,500)
Issuance of common stock
upon exercise of
options................ 81,799 82 22,418 -- -- -- 22,500
Sale of common stock.... 27,267 27 39,973 -- (40,000) -- --
Beneficial conversion
feature related to
issuance of Series B
preferred stock........ -- -- -- -- -- (5,655,173) (5,655,173)
Unrealized loss on
investments available
for sale............... -- -- -- -- (23,411) -- (23,411)
Net loss................ -- -- -- -- -- (4,729,625) (4,729,625)
--------- ------ ---------- ----------- --------- ------------ ------------
Balance at December 31,
1999................... 8,452,593 $8,452 $7,680,316 $(8,905,223) $(150,911) $(10,086,207) $(11,453,573)
========= ====== ========== =========== ========= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
INFLOW, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period
September 26,
1997
(Inception) Year Ended December
through 31,
December 31, -----------------------
1997 1998 1999
------------- --------- ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss................................ $(81,507) $(794,843) $ (4,729,625)
Adjustments to reconcile net loss to net
cash in operating activities:
Depreciation and amortization......... 349 67,827 412,858
Amortization of deferred
compensation......................... -- -- 575,483
Provision for doubtful accounts....... -- -- 56,000
Other................................. -- -- 14,400
Changes in:
Accounts receivable................. -- (23,644) (613,524)
Prepaid expenses and other, net..... -- (3,104) (1,869,563)
Deposits............................ -- (11,960) (201,133)
Accounts payable.................... 21,199 1,693 4,217,698
Accrued and other liabilities....... 16,091 211,905 789,464
Deferred revenue.................... -- -- 164,227
Deferred rent reimbursements........ -- -- 1,179,272
-------- --------- ------------
Net cash used in operating
activities....................... (43,868) (552,126) (4,443)
-------- --------- ------------
Cash Flows From Investing Activities:
Purchase of property and equipment...... (18,592) (819,413) (12,005,820)
Purchase of investments, net............ -- -- (56,410,926)
Restricted cash......................... -- -- (500,000)
-------- --------- ------------
Cash used in investing
activities....................... (18,592) (819,413) (68,916,746)
-------- --------- ------------
Cash Flows From Financing Activities:
Proceeds from issuance of preferred
stock, net of issuance costs........... -- -- 70,043,733
Proceeds from issuance of common stock.. 3,000 -- 22,500
Cash overdraft.......................... -- -- 31,013
Proceeds from long-term debt............ -- 467,593 200,000
Repayments of long-term debt............ -- (12,989) (654,604)
Proceeds from convertible notes
payable................................ 600,000 400,000 220,000
-------- --------- ------------
Net cash provided by financing
activities....................... 603,000 854,604 69,862,642
-------- --------- ------------
Net increase (decrease) in cash......... 540,540 (516,935) 941,453
Cash and cash equivalents, beginning of
period................................. -- 540,540 23,605
-------- --------- ------------
Cash and cash equivalents, end of
period.................................. $540,540 $ 23,605 $ 965,058
======== ========= ============
Supplemental Disclosure of Other Cash
and Non-cash Investing and Financing
Activities:
Interest paid........................... $ -- $ 22,949 $ 42,628
Series A preferred stock issued for a
stock subscription receivable.......... -- -- 87,500
Common stock issued for a stock
subscription receivable................ -- 14,400 40,000
Conversion of convertible notes payable
and accrued interest to Series A
preferred stock........................ -- -- 1,309,836
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS
1. The Company and Summary of Significant Accounting Policies
Organization
InFlow, Inc. (the "Company") provides customers with equipment co-location
and value-added services for mission-critical e-business and data
communications applications through its secure, carrier-neutral data network
exchange facilities ("DNXs"). The Company focuses on small and medium-sized
businesses in need of reliable and scalable outsource solutions in underserved
markets. The Company was incorporated in September 26, 1997 (inception) and
opened its first DNX in Denver in July 1998. As of December 31, 1999 the
Company operates three DNXs; one in Denver, one in Raleigh-Durham and one in
Minneapolis.
Revenue Recognition
Revenue consists of monthly fees for colocation, network connectivity,
systems management, and value-added services. Customer contracts for the lease
of cabinet space, network connectivity and value-added services are renewable
and range from one to three years in duration with payments due on a monthly
basis. The Company also derives revenue from installation services. Monthly
recurring service revenue is recorded in the month the services are rendered.
Fees related to installation services are recorded as deferred revenue and
recognized on a straight-line basis over the term of the customer service
contracts. The incremental direct costs incurred related to the origination of
customer contracts are capitalized and recognized on a straight-line basis over
the same term.
Direct costs of DNXs consist primarily of the incremental costs of
installation services, costs for local loop and Internet connectivity, net rent
expense, utilities and maintenance, operations personnel salaries and benefits,
and depreciation and amortization at the DNXs. Indirect costs consist primarily
of costs related to the sales, marketing and administrative personnel working
at the DNXs.
Cash and Cash Equivalents
Cash equivalents are highly liquid investments purchased with original
maturities of three months or less. All cash equivalents are carried at cost,
which approximates fair value. Restricted cash represents certificates of
deposit used to collateralize irrevocable letters of credit, which are held as
collateral for certain long-term office leases. There were no outstanding
irrevocable letters of credit as of December 31, 1998. As of December 31, 1999,
there was $142,850 of restricted cash included in prepaid expenses and other,
net and $357,150 of restricted cash included in restricted cash and other
noncurrent assets.
Investments
Investments are classified as available-for-sale as defined in Statement of
Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and accordingly are carried at fair
value. Gains or losses on the sale of investments are recognized on the
specific identification method. Unrealized gains or losses are treated as a
separate component of stockholders' equity (deficit) until the security that
the unrealized gain or loss was recorded is sold. At December 31, 1999, the
amortized cost basis, aggregate fair value and gross unrealized holding gains
and losses by major security type were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Aggregate Unrealized Unrealized
Security Type Cost Basis Fair Value Gains Losses
------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment grade bonds........ $18,487,170 $18,457,157 $ -- $30,013
Commercial paper.............. 34,931,041 34,943,498 12,457 --
Federal agencies.............. 2,992,715 2,986,860 -- 5,855
----------- ----------- ------- -------
Total investments............. $56,410,926 $56,387,515 $12,457 $35,868
=========== =========== ======= =======
</TABLE>
F-7
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Fair Value of Financial Instruments
The Company's financial instruments include cash, cash equivalents,
investments, restricted cash, accounts receivables, prepaid expenses and other
current assets, accounts payable, accrued liabilities and debt. The carrying
amounts of the Company's financial instruments approximate fair value.
Concentration of Credit Risk and Major Customers
The Company extends trade credit terms to its customers based upon ongoing
evaluations of its customers' financial condition and, generally, requires no
collateral from its customers. There was no revenue for the period from
September 26, 1997 (inception) through December 31, 1997. For the year ended
December 31, 1998, the Company had three significant customers representing
approximately 36%, 30%, and 16% of revenue. As of December 31, 1998, these
three customers represented approximately 19%, 26% and 23% of accounts
receivable. For the year ended December 31, 1999, the Company had five
customers that represented approximately 46% of revenue. Of these five
customers, one customer represented approximately 14% of revenue for the year
ended December 31, 1999. As of December 31, 1999, this customer represented
approximately 13% of gross accounts receivable. No other customer individually
represented more than 10% of revenue for the year ended December 31, 1999.
Property and Equipment
Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the respective assets,
generally three to seven years. Internally developed software costs are
expensed until the point of technological feasibility, after which time such
costs are capitalized and amortized on a straight-line basis over the estimated
useful lives of the assets, generally three years. Leasehold improvements are
amortized over the lessor of the estimated useful lives of the respective
assets or the lease term. Repair and maintenance costs are charged to expense
when incurred. Upon retirement or disposition of assets, related gains or
losses are recognized in operations.
Long-Lived Assets and Impairments
The Company periodically evaluates the carrying value of long-lived assets,
including, but not limited to, purchased and internally developed software,
property and equipment and other assets, when events and circumstances warrant
such a review. The carrying value of a long-lived asset is considered impaired
when the anticipated undiscounted cash flow from such asset is separately
identifiable and is less than its carrying value. In that event, a loss is
recognized to the extent that the carrying value exceeds the fair value of the
long-lived asset. Fair value is determined primarily using the anticipated cash
flows discounted at a rate commensurate with the risk involved.
Stock Options
SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"),
permits the use of either a fair value-based method or the method defined in
Accounting Principles Board Opinion 25, Accounting for Stock Issued to
Employees ("APB No. 25"), to account for stock-based compensation arrangements.
The Company has elected to determine the value of stock-based compensation
arrangements under the provisions of APB No. 25, and has included the pro forma
disclosures required under SFAS No. 123 in Note 5.
Income Taxes
The financial statements for the period from September 26, 1997 (inception)
through December 31, 1997 and the year ended December 31, 1998 do not include a
provision for income taxes, as the Company was an S Corporation. Under Internal
Revenue Service regulations, the income of the S Corporation and the income tax
F-8
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
liability is borne by the stockholders of the S Corporation. During 1999, the
Company became a taxable entity. For the period the Company was a taxable
entity, deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable earnings. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount more likely than not to
be realized. If the Company had been a taxable entity from inception through
December 31, 1998, the Company would not have recorded any tax expense or
benefit for any period because of the taxable losses incurred and the need for
a full valuation allowance against any available deferred tax assets.
Product Development
Product development costs primarily relate to the development of internally
developed software and the Company's network architecture that are not
capitalizable under Statement of Position 98-1 Accounting for the Costs of
Computer-Software Developed or Obtained for Internal Use. These costs are
expensed as incurred.
Advertising
The Company expenses advertising costs as incurred. Advertising expenses for
the period from September 26, 1997 (inception) through December 31, 1997 and
for the years ended December 31, 1998 and 1999, were approximately $1,856,
$26,464 and $99,692, respectively.
Unaudited Pro Forma Stockholders' Equity (Deficit)
The board of directors authorized management of the Company to file a
registration statement with the Securities and Exchange Commission ("SEC")
permitting the Company to sell shares of its voting common stock to the public.
If the Company's initial public offering is consummated under the terms
presently anticipated, all of the Series A and Series B mandatorily redeemable
convertible preferred stock (collectively referred to as "preferred stock")
will automatically convert into 23,921,663 shares of voting common stock and
3,907,832 shares of non-voting common stock (see note 11). Unaudited pro forma
stockholders' equity (deficit) as of December 31, 1999, as set forth in the
accompanying balance sheet, is adjusted for the anticipated conversion of
preferred stock.
Net Loss Per Share and Unaudited Pro Forma Net Loss Per Common Share
Net loss per common share is calculated in accordance with SFAS No. 128,
Earnings per Share ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98
("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic net income
(loss) per common share is computed by dividing the net income (loss) available
to common stockholders for the period by the weighted-average number of common
shares outstanding during the period. Diluted net income (loss) per common
share is computed by dividing the net income (loss) available to common
stockholders for the period by the weighted-average number of common and
potential shares outstanding during the period if their effect is dilutive.
Potential common shares consist of shares subject to repurchase by the Company,
incremental common shares issuable upon the exercise of stock options, common
shares issuable upon conversion of the preferred stock and convertible
promissory notes.
The Company has computed unaudited pro forma basic net loss per common share
in accordance with the methodology in SFAS No. 128. The Company's historical
capital structure is not indicative of its prospective structure due to the
automatic conversion of all shares of preferred stock into common stock
concurrent with the closing of the Company's anticipated IPO. Accordingly,
historical basic net loss per common share should not be used as an indicator
of future earnings per common share.
F-9
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Unaudited pro forma basic net loss per common share is computed using the
weighted-average number of common shares outstanding during the period. The
Company has assumed the conversion of all outstanding preferred stock issued
into voting and non-voting common stock as of the date issued on a weighted
average basis.
The following table sets forth the computation of the numerators and
denominators in the basic, diluted and pro forma net loss per common share
calculations for the periods indicated:
<TABLE>
<CAPTION>
Period
September 26,
1997
(Inception) Year Ended December
through 31,
December 31, -----------------------
1997 1998 1999
------------- --------- ------------
<S> <C> <C> <C>
Numerator:
Net loss....................... $ (81,507) $(794,843) $ (4,729,625)
Accretion of convertible
preferred stock............... -- -- (696,897)
Deemed dividend related to
beneficial conversion feature
of Series B preferred stock... -- -- (5,655,173)
--------- --------- ------------
Net loss available to common
stockholders.................... (81,507) (794,843) (11,081,695)
Effect of pro forma conversion of
securities:
Accretion of convertible
preferred stock............... -- -- 696,897
--------- --------- ------------
Pro forma net loss available to
common stockholders--unaudited.. $ (81,507) $(794,843) $(10,384,798)
========= ========= ============
Denominator:
Weighted average common shares
(basic and diluted)........... 8,179,929 8,179,929 8,180,040
Weighted average effect of pro
forma securities:
Series A convertible preferred
stock......................... -- -- 6,671,493
Series B convertible preferred
stock......................... -- -- 2,644,642
--------- --------- ------------
Pro forma weighted average common
shares (basic and diluted)--
unaudited....................... -- -- 17,496,175
========= ========= ============
</TABLE>
Potential dilutive securities totaling 163,598, 883,432 and 30,338,143 for
the period September 26, 1997 (inception) through December 31, 1997 and for
each of the years ended December 31, 1998 and 1999, respectively, were excluded
from historical basic and diluted loss per common share because of their anti-
dilutive effect.
Comprehensive Income
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, Reporting Comprehensive Income ("SFAS No. 130"). SFAS No. 130 establishes
standards for reporting comprehensive income and its components in financial
statements. Comprehensive income includes all changes in equity during a period
from non-owner sources. For the year ended December 31, 1999, total
comprehensive income (loss) was $4,753,036, which included a $23,411 unrealized
holding loss on investments.
F-10
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Recent Accounting Pronouncements
In December, 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition in Financial Statements." SAB 101 provides
specific guidance, among other things, as to the recognition of revenue
related to up-front non-refundable fees and services charges received in
connection with a contractual arrangement. The Company has applied the
provisions of SAB 101 in the year ended December 31, 1999. The adoption of SAB
101 did not have a material impact on the Company's financial condition or
results of operations. See Note 1, Revenue Recognition, for a discussion of
our accounting for fees from the contractual arrangements with our customers.
2. Balance Sheet Components
Certain balance sheet components are as follows:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1999
-------- -----------
<S> <C> <C>
Property and equipment
Construction-in-progress at DNXs......................... $ -- $ 3,342,744
Furniture and office equipment........................... -- 725,242
Leasehold improvements and building equipment............ 466,682 5,537,702
Network equipment........................................ 262,686 2,006,478
Internally developed software............................ 20,000 179,493
Computer equipment and software.......................... 88,637 1,052,166
-------- -----------
838,005 12,843,825
Less accumulated depreciation and amortization........... (68,176) (481,034)
-------- -----------
$769,829 $12,362,791
======== ===========
<CAPTION>
December 31,
---------------------
1998 1999
-------- -----------
<S> <C> <C>
Accrued liabilities
Salaries, wages and benefits............................. $ -- $ 351,017
Sales, use and franchise taxes........................... -- 205,735
Deferred rent reimbursements............................. 12,396 131,757
Other.................................................... 86,005 140,533
-------- -----------
$ 98,401 $ 829,042
======== ===========
</TABLE>
3. Notes Payable and Long-term Debt
The Company borrowed a total of $1,220,000 from its founding stockholders,
in the form of convertible demand promissory notes (the "Notes"). The Notes
bear interest equal to 8% per annum. The Notes, including accrued but unpaid
interest, were convertible, at the option of the founding stockholders, into
shares of Series A mandatorily redeemable convertible preferred stock (the
"Series A preferred stock"). Interest expense related
F-11
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
to these Notes was $11,941, $70,606 and $7,290 for the period from September
27, 1997 (inception) through December 31, 1997, for the year ended December 31,
1998 and for the year ended December 31, 1999, respectively. In April 1999, the
Notes and accrued interest were converted into shares of Series A preferred
stock (see Note 4).
During 1998, the Company entered into a loan and security agreement with a
bank, which was amended in March 1999. At December 31, 1998 and 1999, the
Company owed $454,604 and $0, respectively, under this agreement. Interest
accrued at 1.50% above the prime rate. The founding stockholders personally
guaranteed this long-term debt and the agreement expired during 1999.
4. Mandatorily Redeemable Convertible Preferred Stock
In April 1999 and June 1999, the Company issued a total of 2,895,714 shares
of $0.001 par value Series A preferred stock at $3.50 per share and received
proceeds, net of issuance costs, totaling $10,060,198. Concurrently,
outstanding convertible demand notes plus accrued interest of $1,309,836 were
converted into 374,239 shares of Series A preferred stock.
In September 1999, the Company agreed to sell shares of its $0.001 par value
Series B mandatorily redeemable preferred stock (the "Series B preferred
stock") at $8.70 per share. In October and November 1999, the Company closed
this round of financing and issued a total of 6,896,552 shares of Series B
preferred stock $0.001 par value at $8.70 per share and received proceeds, net
of issuance costs, totaling $59,931,035. The difference between the offering
price and the deemed fair value of the Series B preferred stock resulted in a
beneficial conversion feature in the amount of approximately $5,655,000 which
was calculated in accordance with Emerging Issues Task Force No. 98-5
Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios. The beneficial conversion feature is
reflected as a deemed dividend in the statement of operations for the year
ended December 31, 1999.
On October 15, 1999, 40,000 shares of Series A preferred stock were sold to
an employee at $3.50 per share in exchange for $52,500 and a full recourse note
of $87,500. The stock subscription receivable accrues interest at 6% per annum
and is due on or before October 15, 2002. The entire unpaid principal and
accrued interest is immediately due and payable upon certain accelerating
events, as defined in the note. The employee vests in all of the Series A
preferred stock on October 15, 2002. The Company has the right to repurchase
the unvested portion of the Series A preferred stock at the purchase price of
$3.50 at the time of the cessation of service. The Company estimated the fair
value of the Series A preferred stock to be $9.52 at the date of the sale. The
difference between the price paid and the estimated fair value of the shares
times the number of shares, or $240,800, was recorded as deferred compensation.
The amortization of this deferred compensation resulted in $87,028 of expense
during the year ended December 31, 1999. The remaining deferred compensation as
of December 31, 1999, will be amortized to compensation expense on a straight-
line basis over the remaining vesting period.
The holders of the preferred stock have the following rights and
preferences:
Voting Rights
The holders of the preferred stock and the common stock, voting together as
a single class, are entitled to vote upon any matter submitted to the
shareholders. The holders of the preferred stock are entitled to one vote for
each share of common stock that such holder would be entitled to receive if the
preferred stock were converted into common stock. The holders of common stock
have one vote per share of common stock.
F-12
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Dividends
The holders of the preferred stock are entitled to receive dividends prior
and in preference to any dividend on common stock, payable only when, and if
declared by the board of directors. No dividends have been declared to date.
Liquidation
In the event of any liquidation, dissolution or winding up of the Company,
the holders of the preferred stock are entitled to receive in exchange for and
in redemption of each share of preferred stock, prior and in preference to
common stock, an amount equal to the greater of (i) the sum of the original
issue price, as appropriately adjusted for subsequent stock dividends, stock
splits plus an amount per share determined by dividing $0.28 per annum,
compounded annually, measured from April 5, 1999 to the date of liquidation
multiplied by the number of outstanding shares of Series A preferred stock, by
the total number of outstanding shares of preferred stock or (ii) the amount
per share that would be distributed among the holders of the preferred stock
and common stock pro rata based on the number of shares of common stock held by
each holder assuming conversion of all preferred stock.
Redemption
Within 90 days following the receipt by the Company of a written redemption
demand from the preferred stockholders delivered at any time after November 1,
2006, the Company shall redeem all but not less than all the preferred stock,
and the holders of the preferred stock shall sell all but not less than all of
the preferred stock to the Company, for a per share purchase price equal to the
sum of (A) the sum of the original issue price, plus (B) an amount per share
determined by dividing $0.28 per annum, compounded annually, measured from
April 5, 1999 to the date of such redemption, multiplied by the number of
outstanding shares of Series A preferred stock, by the total number of
outstanding shares of preferred stock. As of March 15, 2000, the conversion
ratio is 1 preferred share for approximately 2.73 common shares (unaudited).
Conversion
The preferred stock is convertible, at the option of the holder, at any time
after the date of issuance and prior to the redemption date, into shares of
common stock as is determined by dividing the original issue price by the
conversion price in effect on the date the certificate is surrendered for
conversion. The conversion price is the original issue price as adjusted for
certain dilutive issuances, splits and combinations.
Automatic conversion occurs immediately upon the earlier of (i) the
consummation of a firm commitment underwritten public offering of common stock
registered under the Securities Act of 1933, at a public offering price of not
less than $9.53 per share (as adjusted to reflect subsequent stock dividends
and splits), resulting in gross proceeds to the Company of not less than
$50,000,000 and after which the common stock is either listed on a national
securities exchange or traded in the NASDAQ national market system or (ii) the
date specified by written consent or agreement of the required holders.
5. Benefit Plans
The Company maintains a stock option/stock issuance plan (the "Plan") which
provides for two separate equity programs. The board of directors has reserved
4,594,393 shares of common stock for issuance under the Plan.
F-13
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Stock Option Program
The Plan provides for the grant of incentive stock options to directors, key
employees and consultants to purchase common stock of the Company. The grants
may be structured in the form of option awards that vest over the optionee's
service period. The grants may also be unvested options that can be exercised,
but all of the acquired but unvested shares will be subject to repurchase at
the exercise price, at the option of the Company within 90 days of the
optionee's termination of employment. The options expire ten years after the
date of grant. These shares vest 25% after the initial 12 months of service
measured from the grant date. The balance of the shares vest in equal monthly
installments over the next 36 months of service.
The Company applies APB No. 25 in accounting for stock options and
recognized $8,991,606 in deferred compensation during the year ended December
31, 1999. During 1999, the amortization of this deferred compensation resulted
in $488,455 of compensation expense. The remaining deferred compensation of
$8,503,151 as of December 31, 1999 will be amortized to compensation expense
using an accelerated method as described in Financial Accounting Standards
Board Interpretation No. 28 over the remaining vesting period, as defined
above. Had compensation expense for the stock options been determined based on
the fair values at the grant dates for awards under the Plan consistent with
the method of accounting prescribed by SFAS No. 123, the effect on the
Company's pro forma net loss would have been immaterial.
The following summarizes stock option activity:
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
Number of Exercise Options Exercise
Shares Price Exercisable Price
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
Options outstanding at September
26, 1997 (inception)............ -- $ -- -- $ --
Granted at market.............. 163,598 $0.08
---------
Options outstanding at December
31, 1997........................ 163,598 $0.08 163,598 $ .08
Granted at market.............. 556,235 $0.08
---------
Options outstanding at December
31, 1998........................ 719,833 $0.08 719,833 $ .08
Granted below market........... 2,086,945 $0.72
Forfeited...................... (407,197) $0.20
Exercised...................... (81,799) $0.27
---------
Options outstanding at December
31, 1999........................ 2,317,782 $0.63 2,317,782 $0.63
=========
</TABLE>
Total stock options outstanding and exercisable under the Stock Option
Program as of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Weighted
Average Weighted
Remaining Average
Range of Number of Contractual Exercise
Exercise Prices Shares Life (Years) Price
--------------- --------- ----------- --------
<S> <C> <C> <C>
$0.08-0.27 1,395,223 9.17 $0.19
$0.45 79,890 9.79 0.45
$0.73 87,252 9.90 0.73
$1.46 755,416 10.00 1.46
</TABLE>
The weighted-average grant date fair value of options granted during 1998
and 1999 was $.01 and $2.17, respectively. The weighted-average remaining
contractual life of options outstanding at December 31, 1998 and 1999 was 9.25
years and 9.49 years, respectively.
F-14
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
In accordance with the guidance provided under SFAS 123, fair values are
based on minimum values. The fair value of each option grant was estimated on
the date of grant using a Black-Scholes type option-pricing model with the
following weighted average assumptions used for grants in the period from
September 26, 1997 (inception) through December 31, 1997 and the years ended
December 31, 1998 and 1999; dividend yield of zero; expected volatility of
zero; risk-free interest rates ranging from 4.22% to 6.30%; and an expected
term of four years. The risk-free interest rate used in the calculation is the
yield on the grant date of the U.S. Treasury Strip with a maturity equal to the
expected term of the option.
Stock Issuance Program
The Plan also allows the Company to directly issue common stock to eligible
persons, either through immediate purchase or as a bonus for services rendered
to the Company. Such shares may be fully vested when issued, may be subject to
a reverse vesting schedule, or may vest over the period of service or upon
attainment of specified performance objectives.
Pursuant to this program and during 1998, 163,598 shares of the Company's
common stock were sold to a director of the Company for approximately $0.09 per
share in exchange for a full recourse note. During 1999, the stock subscription
receivable and related accrued interest were satisfied through consulting
services rendered by the director. The total fair value of services offset
against the receivable was equal to the balance of the stock subscription
receivable.
Pursuant to this program and during 1999, 27,267 shares of the Company's
common stock were sold to a nonemployee consultant for approximately $1.46 per
share in exchange for a full recourse note. The stock subscription receivable
accrues interest at 6.5% per annum and is due on or before December 31, 2001,
unless certain accelerating events occur. The stock subscription receivable can
be satisfied by services rendered by the consultant. The consultant vests in
the common shares in a series of twenty-four equal monthly installments based
upon the consultant's completion of each successive month of service under the
consulting agreement, beginning on December 31, 1999. The Company has the right
to repurchase the unvested portion of the common shares at the purchase price
of approximately $1.46 at the time of the cessation of service under a
consulting agreement entered into with consultant. The Company estimated the
fair value of common stock to be approximately $10.57 per share at the date of
sale. The difference between the price paid and the estimated fair value of the
shares times the number of shares, or $248,300, was recorded as deferred
compensation. The deferred compensation will be amortized to compensation
expense using an accelerated method as described in Financial Accounting
Standards Board Interpretation No. 28 over the vesting period and will be
subject to variable plan accounting during the two-year reverse vesting period.
Employee Savings and Retirement Plan
In November 1999, the Company adopted an employee savings and retirement
plan (the "401(k) Plan") covering substantially all of the Company's employees.
Pursuant to the 401(k) Plan, eligible employees may elect to reduce their
current compensation by up to the statutory prescribed limit and have the
amount of such reduction contributed to the 401(k) Plan. The Company makes
matching contributions of 50% of participant contributions not to exceed 6% of
participant compensation. During 1999, the Company contributed $22,427.
7. Income Taxes
Prior to April 1999, the Company elected to be taxed as an S Corporation.
Accordingly, the Company's tax losses passed through to the shareholders. In
April 1999, the Company revoked its tax-free status and elected to become a
taxable corporation.
F-15
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The Company's net deferred tax assets at December 31, 1999 are as follows:
<TABLE>
<S> <C>
Allowance for bad debt....................................... $ 20,888
Accrued employee bonuses..................................... 83,378
Accrued sales and use tax.................................... 61,318
Depreciation................................................. 49,312
Net operating loss carryforwards............................. 1,193,945
-----------
Subtotal................................................. 1,408,841
Valuation allowance.......................................... (1,408,841)
-----------
Net deferred tax asset....................................... $ --
===========
</TABLE>
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company has concluded that a full valuation allowance should be
provided as of December 31, 1999.
The Company's effective tax rate differs from the federal income tax rate as
follows:
<TABLE>
<S> <C>
Statutory federal income tax rate.................................... 34%
State income taxes, net of federal benefit........................... 3
Change in valuation allowance........................................ (30)
Stock compensation expense........................................... (4)
Other................................................................ (3)
---
Total................................................................ 0%
===
</TABLE>
At December 31, 1999 the Company has approximately $2.9 million of net
operating loss carryforwards to offset future regular and alternative minimum
taxable income. Past or future changes in the Company's ownership may limit its
ability to utilize net operating losses to offset taxable income.
8. Commitments
The Company enters into non-cancelable operating lease agreements for its
corporate offices and DNXs. The terms of the lease agreements require base
rentals with various annual increases as well as various operating cost
increases.
Additionally, the Company received tenant improvement reimbursements of
$126,104 in 1998 and $1,084,542 in 1999. Such reimbursements are deferred and
recorded as an offset to rent expense over the term of the related leases.
Future annual minimum non-cancelable operating lease payments, net of
deferred rent as of December 31, 1999, are as follows:
<TABLE>
<S> <C>
2000.......................................................... $ 1,828,386
2001.......................................................... 2,309,735
2002.......................................................... 2,339,295
2003.......................................................... 2,378,319
2004.......................................................... 2,427,152
Thereafter.................................................... 12,197,441
-----------
$23,480,328
===========
</TABLE>
F-16
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Rent expense, net of deferred rent amortization for the period from
September 26, 1997 (inception) through December 31, 1997 and for the years
ended December 31, 1998 and 1999 was $0, $82,793 and $604,886, respectively.
Certain telecommunications services that the Company offers, and intends to
offer in the future, including private line connectivity, are, or may be,
subject to regulation and certification requirements at the state level. To
date, the Company has not registered as a public utility in any state or been
certified to provide any form of regulated telecommunications services within
any jurisdiction. While the Company believes that the law regarding regulation
of these and similar types of services is unclear in certain jurisdictions in
which the Company currently operates or intends to operate, and the Company
continues to evaluate the status with outside counsel, it is likely that we
have provided certain of our telecommunications services without the requisite
regulatory approval or certification in a limited number of jurisdictions. The
Company intends to obtain any such authorizations or approvals that may be
necessary. The Company believes that it will also be required to obtain and to
apply for similar authorizations in other states in which the Company expects
to operate in the future.
The Company cannot predict, with accuracy, the outcome of these events,
however, the Company believes that based on the information currently
available, the outcome of these events would not have a material effect on the
Company's financial position or results of operations. In the event of an
adverse outcome, the ultimate potential loss could have a material, adverse
effect on the Company's financial position, reported results of operations, or
cash flows.
9. Related Parties
During 1999, an entity owned by an immediate family member of the Chief
Executive Officer of the Company provided consulting services and sold office
furnishings to the Company for an aggregate of approximately $296,000 to the
Company. As of December 31, 1999, the Company owed this related party
approximately $66,500.
10. Subsequent Events
In January 2000, the Company signed an irrevocable standby letter of credit
in the amount of $500,000. The Company utilizes letters of credit to
collateralize security deposits on certain long-term office leases.
From January 1, 2000 through February 4, 2000, the Company granted 868,708
stock options to certain employees under the Plan with exercise prices below
the deemed fair market value of the Company's common stock at the date of
grant. The Company expects to record deferred compensation related to these
grants of approximately $9,165,000 for the difference between the exercise
price of the stock options and the deemed fair market value of the Company's
common stock at the date of grant. This deferred compensation will be amortized
to expense over the vesting period of the options, generally four years, using
an accelerated method as described in Financial Accounting Standards Board
Interpretation No. 28.
From January 1, 2000 through February 4, 2000, the Company entered into
operating leases for DNXs. The future minimum lease payments under these
agreements total approximately $13,700,000 over the next ten years.
F-17
<PAGE>
INFLOW, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
11. Subsequent Events (unaudited)
Subsequent to February 4, 2000, the Company granted 564,278 stock options to
certain employees under the Plan with exercise prices below the deemed fair
market value of the Company's common stock at the date of the grant. The
Company expects to record deferred compensation related to these grants of
approximately $6,809,000 for the difference between the exercise price of the
stock options and the deemed fair market value of the Company's common stock at
the date of grant. This deferred compensation will be amortized to expense over
the vesting period of the options, generally four years, using an accelerated
method as described in Financial Accounting Standards Board Interpretation No.
28.
Subsequent to February 4, 2000, the Company entered into additional
operating leases for DNXs. The future minimum lease payments under these
agreements total approximately $10,400,000 over the next ten years.
Subsequent to February 4, 2000, the Company increased one of their
irrevocable standby letters of credit to $1,000,000 from $300,000. The Company
utilizes letters of credit to collateralize security deposits on certain long-
term office leases.
The Company intends to effect an approximate 2.73 to 1 split of its common
stock. All references in the financial statements to common shares, common
share prices, and per share amounts have been adjusted retroactively for all
periods presented to reflect this stock split.
F-18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 2000
7,000,000 Shares of Common Stock
----------------------
PROSPECTUS
----------------------
Donaldson, Lufkin & Jenrette
Chase H&Q
First Union Securities, Inc.
DLJdirect Inc.
- --------------------------------------------------------------------------------
Until , 2000 (25 days after the date of this prospectus), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to
the dealer's obligation to deliver a prospectus when acting as an underwriter
and with respect to unsold allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth an estimate of the costs and expenses, other
than the underwriting discounts and commissions, payable by the Registrant in
connection with the issuance and distribution of the common stock being
registered.
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 34,004
NASD fee...................................................... 13,380
NASDAQ listing fee............................................ 5,000
Director and officers insurance expenses...................... 100,000
Legal fees and expenses....................................... 500,000
Accounting fees and expenses.................................. 300,000
Printing expenses............................................. 400,000
Blue sky fees and expenses.................................... 5,000
Transfer Agent and Registrar fees and expenses................ 10,000
Miscellaneous................................................. 132,616
----------
Total..................................................... $1,500,000
==========
</TABLE>
Item 14. Indemnification of Directors and Officers
The registrant's certificate of incorporation in effect as of the date
hereof, and the Registrant's amended and restated certificate of incorporation
to be in effect upon the closing of this offering (collectively, the
"Certificate") provide that, except to the extent prohibited by the Delaware
General Corporation Law, as amended (the "DGCL"), the Registrant's directors
shall not be personally liable to the Registrant or its stockholders for
monetary damages for any breach of fiduciary duty as directors of the
Registrant. Under the DGCL, the directors have a fiduciary duty to the
registrant which is not eliminated by this provision of the Certificate and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available. In addition, each director will
continue to be subject to liability under the DGCL for breach of the director's
duty of loyalty to the Registrant, for acts or omissions which are found by a
court of competent jurisdiction to be not in good faith or involving
intentional misconduct, for knowing violations of law, for actions leading to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are prohibited by DGCL. This
provision also does not affect the directors' responsibilities under any other
laws, such as the Federal securities laws or state or Federal environmental
laws. The Registrant intends to obtain liability insurance for its officers and
directors prior to the closing of this offering.
Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this
provision shall not eliminate or limit the liability of a 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) arising under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. The DGCL provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Certificate eliminates the personal liability of directors to the fullest
extent permitted by Section 102(b)(7) of the DGCL and provides that the
Registrant shall fully indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative or investigative)
by reason of the fact that such person is or was a director or officer of the
Registrant, or is or was serving at the request of the registrant as a director
or officer of another
II-1
<PAGE>
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Certificate. The Registrant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
Item 15. Recent Sales of Unregistered Securities
The Registrant has sold and issued the following securities since September
26, 1997 (inception):
Common Stock. In September 1997, the Registrant issued (i) 2,726,643 shares
of its common stock, $0.001 par value per share, to Arthur H. Zeile, its co-
founder, in exchange for $1,000 of cash and (ii) 2,726,643 shares of its common
stock, $0.001 par value per share, to Joel C. Daly, its co-founder, in exchange
for $1,000 of cash and (iii) 2,726,643 shares of its common stock, $0.001 par
value per share, to Matt O'Connor, its co-founder, in exchange for $1,000 of
cash. The above securities were offered and sold by the Registrant in reliance
upon the exemption from registration pursuant to Section 4(2) of the Securities
Act.
In December 1998, the Registrant issued 163,598 shares of its common stock,
$0.001 par value per share, to Stephen O. James, in exchange for his execution
and delivery of a Note Secured by Stock Pledge Agreement in the amount of
$14,400. The above securities were offered and sold by the Registrant in
reliance upon the exemptions from registration pursuant to Section 4(2) of the
Securities Act and Rule 701 promulgated thereunder.
On December 31, 1999, the Registrant issued 27,266 shares of its common
stock, $0.001 par value per share, to an individual for consulting services
rendered to the Registrant, in the amount of $40,000. The above securities were
offered and sold by the Registrant in reliance upon the exemption from
registration pursuant to Section 4(2) of the Securities Act and Rule 701
promulgated thereunder.
Preferred Stock. In a series of closings from April 5, 1999 through October
15, 1999, the Registrant issued an aggregate of 3,309,953 shares of its Series
A convertible preferred stock, $0.001 par value per share, to certain investors
in consideration for the payment of approximately $10,000,000. The above
securities were offered and sold by the Registrant in reliance upon the
exemptions from registration pursuant to Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
In a series of closings from October 28, 1999 through November 30, 1999, the
Registrant issued an aggregate of 6,896,552 shares of its Series B convertible
preferred stock, $0.001 par value per share, to certain investors in
consideration for the payment of approximately $60,000,000. The above
securities were offered and sold by the Registrant in reliance upon the
exemptions from registration pursuant to Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
II-2
<PAGE>
Options. The Registrant from time to time has granted stock options to
employees and directors in reliance upon exemption from registration pursuant
to either (i) Section 4(2) of the Securities Act or (ii) Rule 701 promulgated
under the Securities Act.
<TABLE>
<CAPTION>
Number of
Shares
Outstanding
Number of as of
Shares March 15, Exercise
Granted 2000 Prices
--------- ----------- --------
<S> <C> <C> <C>
September 26, 1997 to December 22, 1997.. -- -- --
December 23, 1997 through May 3, 1999.... 790,726 40,899 $0.08
May 4, 1999 through October 18, 1999..... 1,093,492 431,358 $0.27
October 19, 1999 through November 15,
1999.................................... 80,163 38,445 $0.45
November 16, 1999 through December 14,
1999.................................... 87,252 77,163 $0.73
December 15, 1999 through February 2,
2000.................................... 1,418,945 1,177,841 $1.46
February 3, 2000 - March 12, 2000........ 757,734 703,746 $2.93
March 13, 2000 - March 15, 2000.......... 19,768 19,768 $4.40
</TABLE>
As of December 31, 1999, 81,799 shares of common stock have been issued
upon the exercise of options.
The common stock amounts and per share purchase and exercise prices in the
above discussion have been adjusted to reflect an approximate 2.73-for-1 stock
split to be effectuated on or before completion of the offering.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1** Form of underwriting agreement.
3.1* Amended and restated certificate of incorporation.
3.2** Amendment to amended and restated certificate of incorporation.
3.3** Form of amended and restated certificate of incorporation to be
in effect upon the closing of this offering.
3.4* Bylaws.
3.5** Form of amended and restated bylaws to be in effect upon the
closing of this offering.
4.1** Specimen common stock certificate.
4.2 Please see Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 for provisions of
the certificate of incorporation and bylaws of the Registrant
defining the rights of holders of common stock of the
Registrant.
5.1** Opinion of Brobeck, Phleger & Harrison LLP.
10.1* Series A preferred stock Purchase Agreement by and among InFlow,
Inc. and the investors listed on Schedule A thereto, dated April
5, 1999.
10.2* Series A preferred stock Purchase Agreement by and among InFlow,
Inc. and the investors listed on Schedule A thereto, dated April
19, 1999.
10.3* Stock Purchase Agreement, by and between InFlow, Inc. and James
W. McHose, III, dated as of October 15, 1999.
10.4* Series B preferred stock Purchase Agreement by and among InFlow,
Inc. and Meritage Private Equity Fund, L.P., Meritage Private
Equity Parallel Fund, L.P. and Meritage Entrepreneurs Fund,
L.P., dated October 27, 1999.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.5* Series B preferred stock Purchase Agreement by and among InFlow,
Inc. and First Union Capital Partners, Inc., dated October 28,
1999.
10.6* Series B preferred stock Purchase Agreement by and among InFlow,
Inc. and J.P. Morgan Investment Corporation, Sixty Wall Street
SBIC Fund, L.P., General Electric Capital Corporation and
Stolberg, Meehan and Scano II, L.P., dated November 30, 1999.
10.7* Second Amended and Restated Stockholders' Agreement, by and
among InFlow, Inc., Art Zeile, Joel Daly and Stephen O. James
and the holders of the Series A and Series B preferred stock of
InFlow, Inc. listed on the signature pages thereto, dated as of
November 30, 1999.
10.8* Second Amended and Restated Investors' Rights Agreement, by and
among InFlow, Inc. and the investors listed on the signature
pages thereto, dated as of November 31, 1999.
10.9* Form of Data Center Services Agreement.
10.10+ InFlow, Inc. Data Center Services Agreement, by and between
InFlow, Inc. and VERIO Rocky Mountain, Inc. dated August 31,
1998.
10.11 Lease Agreement, between JER Denver, LLC and InFlow, Inc.
(Denver 1).
10.12 Bannock Center (938 Bannock Building) Office Building Lease
Agreement, between 938 Bannock, LLC and InFlow, Inc. (Denver 2).
10.13 Bannock Center (900 Bannock Building) Office Building Lease
Agreement, between 938 Bannock, LLC and InFlow, Inc. (Denver
NOC).
10.14 Lease Agreement between Timeshare Systems, Inc. and InFlow, Inc.
(Minneapolis), dated June 9, 1999.
10.15 Lease Agreement between Miami North, LLC and InFlow, Inc.
(Raleigh-Durham).
10.16 San Diego Tech Center Office Building Lease between San Diego
Tech Center, LLC and InFlow, Inc. (San Diego).
10.17 Lease Agreement between 1052 West Peachtree, LLC, and InFlow,
Inc. (Atlanta).
10.18 Triple Net Lease between AGB Norwood Park, L.P., and InFlow,
Inc. (Austin).
10.19 Sublease between Associates Information Services, Inc., and
InFlow, Inc. (Irvine).
10.20 Lease between Sterling Network Exchange, LLC, and Inflow, Inc.,
dated February 14, 2000 (Phoneix).
10.21* 1997 Stock Option/Stock Incentive Plan.
10.22 Form of 2000 Stock Incentive Plan.
10.23 2000 Employee Stock Purchase Plan.
21.1* Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2** Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1).
24.1* Powers of Attorney.
27.1* Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment has been requested for the redacted portions of this
exhibit.
II-4
<PAGE>
(b) Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or the notes thereto.
Item 17. Undertakings
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question 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
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 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 of 1933, 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 amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Denver, State of Colorado, on this 27th day of March, 2000.
INFLOW, INC.
By: /s/ Arthur H. Zeile ____________
Name:Arthur H. Zeile
Title: President, Chief Executive
Officer
and Chairman of the Board of
Directors
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 indicated below:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President, Chief Executive March 27, 2000
____________________________________ Officer and Chairman of the
Arthur H. Zeile Board of Directors
(Principal Executive
Officer)
* Vice President, Chief March 27, 2000
____________________________________ Financial Officer and
James W. McHose, III Treasurer (Principal
Financial and Accounting
Officer)
* Vice President, Chief March 27, 2000
____________________________________ Operating Officer,
Joel C. Daly Secretary and Director
* Director March 27, 2000
____________________________________
Stephen O. James
* Director March 27, 2000
____________________________________
Scott B. Perper
* Director March 27, 2000
____________________________________
L. Watts Hamrick, III
* Director March 27, 2000
____________________________________
G. Jackson Tankersley, Jr.
* Director March 27, 2000
____________________________________
Donald F. Detampel, Jr.
/s/ James W. McHose, III As Attorney-in-Fact March 27, 2000
________________________________
James W. McHose, III.
*By:
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
1.1** Form of underwriting agreement.
3.1* Amended and restated certificate of incorporation.
3.2** Amendment to amended and restated certificate of
incorporation.
3.3** Form of amended and restated certificate of incorporation to
be in effect upon the closing of this offering.
3.4* Bylaws.
3.5** Form of amended and restated bylaws to be in effect upon the
closing of this offering.
4.1** Specimen common stock certificate.
4.2 Please see Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 for provisions
of the certificate of incorporation and bylaws of the
Registrant defining the rights of holders of common stock of
the Registrant.
5.1** Opinion of Brobeck, Phleger & Harrison LLP.
10.1* Series A preferred stock Purchase Agreement by and among
InFlow, Inc. and the investors listed on Schedule A thereto,
dated April 5, 1999.
10.2* Series A preferred stock Purchase Agreement by and among
InFlow, Inc. and the investors listed on Schedule A thereto,
dated April 19, 1999.
10.3* Stock Purchase Agreement, by and between InFlow, Inc. and
James W. McHose, III, dated as of October 15, 1999.
10.4* Series B preferred stock Purchase Agreement by and among
InFlow, Inc. and Meritage Private Equity Fund, L.P., Meritage
Private Equity Parallel Fund, L.P. and Meritage Entrepreneurs
Fund, L.P., dated October 27, 1999.
10.5* Series B preferred stock Purchase Agreement by and among
InFlow, Inc. and First Union Capital Partners, Inc., dated
October 28, 1999.
10.6* Series B preferred stock Purchase Agreement by and among
InFlow, Inc. and J.P. Morgan Investment Corporation, Sixty
Wall Street SBIC Fund, L.P., General Electric Capital
Corporation and Stolberg, Meehan and Scano II, L.P., dated
November 30, 1999.
10.7* Second Amended and Restated Stockholders' Agreement by and
among InFlow, Inc., Art Zeile, Joel Daly and Stephen O. James
and the holders of the Series A and Series B preferred stock
of InFlow, Inc. listed on the signature pages thereto, dated
as of November 30, 1999.
10.8* Second Amended and Restated Investors' Rights Agreement by and
among InFlow, Inc. and the investors listed on the signature
pages thereto, dated as of November 31, 1999.
10.9* Form of Data Center Services Agreement.
10.10+ InFlow, Inc. Data Center Services Agreement by and between
InFlow, Inc. and VERIO Rocky Mountain, Inc., dated August 31,
1998.
10.11 Lease Agreement, between JER Denver, LLC and InFlow, Inc.
(Denver 1).
10.12 Bannock Center (938 Bannock Building) Office Building Lease
Agreement, between 938 Bannock, LLC and InFlow, Inc. (Denver
2).
10.13 Bannock Center (900 Bannock Building) Office Building Lease
Agreement, between 938 Bannock, LLC and InFlow, Inc. (Denver
NOC).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
10.14 Lease Agreement between Timeshare Systems, Inc. and InFlow,
Inc. (Minneapolis), dated June 9, 1999.
10.15 Lease Agreement between Miami North, LLC and InFlow, Inc.
(Raleigh-Durham).
10.16 San Diego Tech Center Office Building Lease between San Diego
Tech Center, LLC and InFlow, Inc. (San Diego).
10.17 Lease Agreement between 1052 West Peachtree, LLC, and InFlow,
Inc. (Atlanta).
10.18 Triple Net Lease between AGB Norwood Park, L.P., and InFlow,
Inc. (Austin).
10.19 Sublease between Associates Information Services, Inc., and
InFlow, Inc. (Irvine).
10.20 Lease between Sterling Network Exchange, LLC, and Inflow,
Inc., dated February 14, 2000 (Phoenix).
10.21* 1997 Stock Option/Stock Incentive Plan.
10.22 Form of 2000 Stock Incentive Plan.
10.23 2000 Employee Stock Purchase Plan.
21.1* Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2** Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5.1).
24.1* Powers of Attorney
27.1* Financial Data Schedule.
</TABLE>
- --------
* Filed previously
** To be filed by amendment.
+ Confidential treatment has been requested for the redacted portions of
this exhibit.
<PAGE>
Exhibit 10.10
INFLOW, INC.
DATA CENTER SERVICES AGREEMENT
This Data Center Services Agreement ("Agreement") is made and entered on
this 31st day of August 1998 ("Effective Date") by and between Inflow, Inc.
("INFLOW"), a Delaware corporation with a principal place of business at 1860
Lincoln Street #305, Denver, CO 80295 and VERIO Rocky Mountain, Inc.
("Customer"), a Colorado corporation with a principal place of business at 8005
S. Chester Street, Suite 200, Englewood, CO 80112
WHEREAS, INFLOW provides co-location services in the telecommunications
market and desires to provide Customer with facilities in which to connect their
equipment to telecommunication networks; and
WHEREAS, Customer desires to receive such services;
NOW, THEREFORE, the parties hereto agree as follows:
1. SERVICES.
Subject to the terms and conditions of this Agreement, during the term of
this Agreement, INFLOW will provide to Customer the Data Center Services
described in Exhibit A hereto. As part of the Data Center Services, INFLOW shall
perform services that support the overall operation of the Data Centers,
including janitorial services, environmental systems maintenance and power plant
maintenance at no additional charge to Customer.
2. FEES AND BILLING
a. Fees. Customer will pay INFLOW all Fees listed in Exhibit A for the
Data Center Services provided.
b. Billing Commencement. Billing for Data Center Services, other than
Setup Fees indicated in Exhibit A, shall commence on the date the Customer
Equipment (i.e., Customer's computer hardware and other tangible equipment, as
identified in Exhibit B hereto) is placed in INFLOW's data center and is deemed
by Customer to be operational. In the event that Customer orders additional Data
Center Services, billing for such services shall commence on the date INFLOW
first provides such additional Data Center Services to Customer or as otherwise
agreed to by Customer and INFLOW.
c. Billing and Payment Terms. Customer will be billed monthly in arrears
for Data Center Services, and payment of such fees will be due within thirty
(30) days of receipt by Customer of each INFLOW invoice. All payments will be
made in U.S. dollars. Late payments of any amounts owing hereunder will accrue
interest at a rate of one and one-half percent (1 1/2%) per month, or the
highest rate allowed by applicable law, whichever is lower.
3. CUSTOMER'S OBLIGATIONS
a. Compliance with Law and Rules and Regulations. Customer will comply
at all times with all applicable laws and regulations and INFLOW's general rules
and regulations relating to its provision of Data Center Services, as provided
by INFLOW to Customer and updated by INFLOW from time to time ("Rules and
Regulations"). Customer acknowledges that INFLOW exercises no control whatsoever
over the content of information passing through its sites containing the
Customer Area and equipment and facilities used by INFLOW to provide Data Center
Services (" Data Centers"), and that it is the sole responsibility of Customer
to ensure that the information it transmits and receives complies with all
applicable laws and regulations.
1
<PAGE>
b. Customer's Costs. Customer agrees that it will be solely responsible,
and at INFLOW's request will reimburse INFLOW, for all costs and expenses (other
than those included as part of the Data Center Services and except as otherwise
expressly provided herein) that it incurs at Customer's written request in
connection with this Agreement.
c. Access and Security. Unless expressly authorized pursuant to the prior
written consent of INFLOW, Customer's access to the Data Centers will be limited
solely to the individuals identified and authorized by Customer to have access
to the Data Centers and the Customer Area in accordance with this Agreement, as
identified in a list to be maintained by INFLOW for this purpose. While in an
INFLOW Data Center, Customer's employees and representatives shall comply at all
times with INFLOW's security and safety procedures, including without
limitation, sign-in, identification and escort requirements. INFLOW may refuse
entry to, or require the departure of, any person who is disorderly or who has
failed to comply with INFLOW's procedures and requirements after being notified
of them.
d. No Competitive Services. [Intentionally Deleted]
e. Interconnection. Unless expressly authorized pursuant to the prior
written consent of INFLOW, Customer shall not interconnect its equipment with
equipment or services of other entities within an INFLOW data center apart from
interconnection of Customer's equipment to the network services of a LEC or IXC
within the data center premises. If Customer should interconnect its equipment
with the equipment or services to any entity within an INFLOW data center
without obtaining the written consent of INFLOW, Customer shall be in breach of
this Agreement and INFLOW may immediately terminate this Agreement and require
Customer to promptly remove its equipment.
f. Damage Prevention. Customers employees and representatives shall
refrain from using any facilities, equipment, tools, materials, apparatus, or
methods that, in INFLOW's sole reasonable judgment, might cause damage to
INFLOW's Data Centers or otherwise interfere with INFLOW operations. INFLOW
reserves the right to take any reasonable action to prevent harm to the
services, personnel or property of INFLOW (and its affiliates, vendors, and
Customers).
g. Safeguarding of Tools. Customers may bring small tools and portable
test equipment into an INFLOW Data Center. Customer shall be responsible for the
care and safeguarding of all such tools and test equipment. Apart from the
Customer Equipment and equipment which is necessary to repair or replace the
licensed equipment, Customer may not bring any other equipment, material, or
apparatus into an INFLOW Data Center without INFLOW's prior written consent,
which consent shall not unreasonably be withheld. In particular, and without
limiting the foregoing, Customer may not bring into INFLOW's Data Center any of
the following: wet cell batteries, explosives, flammable liquids or gases,
alcohol, controlled substances, weapons, cameras, and similar equipment and
materials.
h. Inspection. INFLOW and its designees, who must be employees of
INFLOW, contractors of INFLOW or property management personnel bound to observe
appropriate confidentiality and security obligations to protect Customer's
confidential information and Customer's proprietary rights in Customer's
Equipment, may inspect or observe Customer's Equipment at any time for the sole
purpose of ensuring Customer's compliance with the terms of this Agreement,
provided that no such inspection or observation shall interfere with the normal
operation of the Customer Equipment in accordance with this Agreement. If the
Customer equipment is in a security enclosure, Customer shall furnish INFLOW
with the appropriate keys or information needed to enter the enclosure. INFLOW
will use its best effort to notify Customer prior to entering the enclosure.
2
<PAGE>
4. INSURANCE
a. Minimum Levels. Customer will keep in full force and effect during
the term of this Agreement: (i) comprehensive general liability insurance in an
amount not less than one million dollars ($1,000,000) per occurrence for bodily
injury and property damage; (ii) employer's liability insurance in an amount not
less than five hundred thousand dollars ($500,000) per occurrence; (iii)
workers' compensation insurance in an amount not less than that required by
applicable law; and (iv) all risk casualty insurance covering Customer's
Equipment in the amount of their full replacement value. Customer also agrees
that it will, and will be solely responsible for ensuring that its agents
(including contractors and subcontractors) maintain, other insurance at levels
no less than those required by applicable law and customary in Customer's and
its agents' industries.
During the term of this agreement, INFLOW shall maintain public liability
insurance covering the INFLOW premises in the building and insuring against all
hazards and risks customarily insured against by persons operating data centers.
b. Certificates of Insurance. Prior to installation of any Customer
Equipment in the Customer Area, Customer will furnish INFLOW with certificates
of insurance which evidence the minimum levels of insurance set forth above.
Customer shall provide INFLOW at least thirty (30) days advance written notice
of any termination, cancellation, or material change in coverage.
c. Self-insurance Option. With INFLOW's prior written consent, which
shall not be unreasonably withheld, Customer may elect to self-insure in lieu of
obtaining any of the insurance required by this section. If Customer self-
insures, Customer shall release, indemnify, defend and hold INFLOW (and INFLOW's
affiliates and personnel) harmless against all losses, costs (including
reasonable attorney's fees), damages, and liabilities resulting from claims
(including without limitation claims alleging negligence or breach of contract
by INFLOW or INFLOW's affiliates or personnel) that would have been within the
scope of such insurance had Customer not elected to self-insure.
5. CONFIDENTIAL INFORMATION
a. Confidential Information. Each party acknowledges that it will have
access to certain confidential information of the other party concerning the
other party's business, plans, customers, technology, and products, including
the terms and conditions of this Agreement ("Confidential Information").
Confidential Information will include, but not be limited to, each party's
proprietary software and customer information. Each party agrees that it will
not use in any way, for its own account or the account of any third party,
except as expressly permitted by the Agreement, nor disclose to any third party
(except as required by law or to that party's attorneys, accountants and other
advisors as reasonably necessary), any of the other party's Confidential
Information and will take reasonable precautions to protect the confidentiality
of such information.
b. Exceptions. Information will not be deemed Confidential Information
hereunder if such information: (i) is rightfully known to the receiving party
prior to receipt from the disclosing party directly or indirectly from a source
other than one having an obligation of confidentiality to the disclosing party
as evidenced by documents in the receiving party's possession prior to the
disclosure of the Confidential Information; (ii) becomes known (independently of
disclosure by the disclosing party) to the receiving party directly or
indirectly form a source other than one having an obligation of confidentiality
to the disclosing party; (iii) becomes publicly known or otherwise ceases to be
secret or confidential, except through a breach of this Agreement by the
receiving party; or (iv) is independently developed by the receiving party as
evidenced by documents in the receiving party's possession prior to the
disclosure of the Confidential Information.
3
<PAGE>
6. REPRESENTATIONS AND WARRANTIES
a. Warranties by Customer
i. Customer Equipment. Customer represents and warrants that it
owns or has the legal right and authority, and will continue to own or maintain
the legal right and authority during the term of this Agreement, to place and
use the Customer Equipment as contemplated by this Agreement.
ii. Customer's Business. Customer represents and warrants that
Customer's services, products, materials, data, information and Customer
Equipment used by Customer in connection with this Agreement as well as
Customer's and its permitted customers' and users' use of the Data Center
Services (collectively, "Customer's Business") do not as of the Installation
Date, and will not during the term of this Agreement knowingly be operated in
any manner that would violate any applicable law or regulation.
iii. Rules and Regulations. Customer has read the Rules and
Regulations as at the date of this Agreement and represents and warrants that
Customer and Customer's Business are currently in full compliance with the Rules
and Regulations, and will remain so at all times during the term of this
Agreement.
iv. Breach of Warranties. In the event of any breach, or reasonably
anticipated breach, of any of the foregoing warranties, in addition to any other
remedies available at law or in equity, INFLOW will have the right immediately,
in INFLOW's sole discretion, to suspend any related Data Center Services if
deemed reasonably necessary by INFLOW to prevent any harm to INFLOW and its
business.
b. Warranties and Disclaimers by INFLOW
i. Service Level Agreement. INFLOW's warranty for providing data
center services to Customer is identified in Exhibit C. THIS WARRANTY DOES NOT
APPLY TO ANY DATA CENTER SERVICES THAT EXPRESSLY EXCLUDE THIS WARRANTY. THIS
SECTION STATES CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR ANY FAILURE BY INFLOW TO
PROVIDE DATA CENTER SERVICES.
ii. No Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET OUT IN
SUBSECTION (i) IMMEDIATELY ABOVE, THE DATA CENTER SERVICES ARE PROVIDED ON AN
"AS IS" BASIS, AND CUSTOMER'S USE OF THE DATA CENTER SERVICES IS AT ITS OWN
RISK. INFLOW DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY AND ALL OTHER EXPRESS
AND/OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT AND TITLE,
AND ANY WARRANTIES ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE.
INFLOW DOES NOT WARRANT THAT THE DATA CENTER SERVICES WILL BE UNINTERRUPTED,
ERROR-FREE, OR COMPLETELY SECURE.
iii. Disclosure of Actions Caused by and/or Under the Control of
Third Party. INFLOW'S NETWORK SERVICES BEYOND ITS DATA CENTER PREMISES ARE
PROVIDED OR CONTROLLED BY THIRD PARTIES. AT TIMES, ACTIONS OR INACTIONS CAUSED
BY THESE THIRD PARTIES CAN PRODUCE SITUATIONS IN WHICH INFLOW'S CUSTOMERS'
CONNECTIONS TO TELECOMMUNICATION NETWORKS (OR PORTIONS THEREOF) MAY BE IMPAIRED
OR DISRUPTED. ALTHOUGH INFLOW WILL USE COMMERCIALLY REASONABLE EFFORTS TO TAKE
ACTIONS IT DEEMS APPROPRIATE TO REMEDY AND AVOID SUCH EVENTS, INFLOW CANNOT
GUARANTEE THAT THEY WILL NOT OCCUR. ACCORDINGLY, INFLOW DISCLAIMS ANY AND ALL
LIABILITY RESULTING FROM OR RELATED TO SUCH EVENTS.
4
<PAGE>
7. LIMITATIONS OF LIABILITY
a. Personal Injury. EACH REPRESENTATIVE AND ANY OTHER PERSONS VISITING
INFLOW'S DATA CENTERS DOES SO AT ITS OWN RISK AND INFLOW ASSUMES NO LIABILITY
WHATSOEVER FOR ANY HARM TO SUCH PERSONS RESULTING FROM ANY CAUSE OTHER THAN
INFLOW'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT RESULTING IN PERSONAL INJURY TO
SUCH PERSONS DURING SUCH A VISIT.
b. Damage to Customer Equipment or Business. INFLOW ASSUMES NO LIABILITY
FOR ANY DAMAGE TO, OR LOSS RELATING TO, CUSTOMER'S BUSINESS RESULTING FROM ANY
CAUSE WHATSOEVER APART FROM INFLOW'S GROSS NEGLIGENCE OR WILLFUL ACTS. CERTAIN
CUSTOMER EQUIPMENT, INCLUDING BUT NOT LIMITED TO CUSTOMER EQUIPMENT, MAY BE
DIRECTLY ACCESSIBLE BY OTHER CUSTOMERS. INFLOW ASSUMES NO LIABILITY FOR ANY
DAMAGE TO, OR LOSS OF, ANY CUSTOMER EQUIPMENT RESULTING FROM ANY CAUSE OTHER
THAN INFLOW'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. TO THE EXTENT INFLOW IS
LIABLE FOR ANY DAMAGE TO, OR LOSS OF, THE CUSTOMER EQUIPMENT FOR ANY REASON,
SUCH LIABILITY WILL BE LIMITED SOLELY TO THE REPLACEMENT VALUE OF THE CUSTOMER
EQUIPMENT.
c. Exclusions. APART FROM A CLAIM ARISING UNDER SECTION 5 HEREOF IN NO
EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY, ANY REPRESENTATIVE OF THE
OTHER PARTY, OR ANY THIRD PARTY FOR ANY, INCIDENTAL, PUNITIVE, INDIRECT OR
CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF REVENUE, LOST PROFITS, LOSS OF DATA, OR
INTERRUPTION OF LOSS OF USE OF SERVICE EVEN IF ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),
STRICT LIABILITY OR OTHERWISE.
d. Maximum Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, EACH PARTY'S MAXIMUM AGGREGATE LIABILITY TO THE OTHER PARTY RELATED
TO OR IN CONNECTION WITH THIS AGREEMENT WILL BE LIMITED TO THE TOTAL AMOUNT PAID
BY CUSTOMER TO INFLOW HEREUNDER FOR THE PRIOR TWELVE (12) MONTH PERIOD.
e. Basis of the Bargain; Failure of Essential Purpose. Customer
acknowledges that INFLOW has set its prices and entered into this Agreement in
reliance upon the limitations of liability and the disclaimers of warranties and
damages set forth herein, and that the same form an essential basis of the
bargain between the parties. The parties agree that the limitations and
exclusions of liability and disclaimers specified in this Agreement will survive
and apply even if found to have failed of their essential purpose.
8. INDEMNIFICATION.
a. INFLOW's Indemnification of Customer. INFLOW will indemnify, defend
and hold Customer harmless from and against any and all costs, liabilities,
losses, and expenses (including, but not limited to, reasonable attorneys' fees)
(collectively, "Losses") resulting from any claim, suit, action, or proceeding
(each, an "Action") brought against Customer alleging (i) the infringement of
any third party registered U.S. copyright or issued U.S. patent resulting from
the provision of Data Center Services pursuant to this Agreement (but excluding
any infringement contributorily caused by Customer's Business or Customer
Equipment) and (ii) personal injury to Customer's Representative from INFLOW's
gross negligence or willful misconduct.
b. Customer's Indemnification of INFLOW
5
<PAGE>
Customer will indemnify, defend and hold INFLOW, its affiliates and
customers harmless from and against any and all Losses resulting from or arising
out of any Action brought by or against INFLOW, its affiliates or customers
alleging: (i) with respect to the Customer's Business; (A) infringement or
misappropriation of any intellectual property rights; (B) defamation, libel,
slander, obscenity, pornography, or violation of the rights of privacy or
publicity; or (C) spamming, or any other offensive, harassing or illegal conduct
or violation of the Rules and Regulations; (ii) any damage or destruction to the
Customer Area, the Data Centers or the equipment of INFLOW or any other customer
by Customer or Customer's Representative(s) or Customer's designees; or (iii)
any other damage arising from the Customer Equipment or Customer's Business
apart from damage caused by the negligence of INFLOW.
c. Notice. Each party will provide the other party prompt written notice
of the existence of any such event of which and when it becomes aware, and an
opportunity to participate in the defense thereof.
9. TERM AND TERMINATION
a. The term of this Agreement shall commence on the Effective Date and
continue for an initial term of one (1) year from the Effective Date. At the
expiration of this initial term, this Agreement shall automatically renew for
successive terms of one (1) year subject to Customer's acceptance of INFLOWs
then current Fees, unless notice of non-renewal is sent by either party no less
than ninety (90) days before expiration of the term. INFLOW shall not increase
its fees by more than 7% from one term to the next.
b. INFLOW may terminate this Agreement upon written notice: (i) for any
material breach of this Agreement, which Customer fails to cure within thirty
(30) days following written notice by INFLOW of such breach; or (ii) upon
Customer's insolvency or liquidation as a result of which Customer ceases to do
business for a continuous period of at least three (3) months. Customer may
terminate this Agreement upon written notice: (i) for any material breach of
this Agreement which INFLOW fails to cure within thirty (30) days following
written notice by Customer of such breach; or (ii) upon INFLOW's insolvency or
liquidation as a, result of which INFLOW ceases to do business for a continuous
period of at least three (3) months.
10. OTHER PROVISIONS
a. Non-Assignment. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns.
Notwithstanding the above, this Agreement may not be assigned in whole or in
part by a party, without the written consent of the other party, which shall
not be unreasonably withheld, provided however that either party may assign this
Agreement without prior consent to any subsidiary, parent, affiliated company ,
or pursuant to any reorganization or merger of its business, or pursuant to any
sale or transfer of all or substantially all of its assets. Any assignment in
violation of this paragraph shall be null and void.
b. Independent Contractors. The parties shall have the status of
independent contractors, and nothing in this Agreement shall be deemed to place
the parties in the relationship of employer-employee, principal-agent, or
partners or in a joint venture.
c. Non-Waiver. Failure of either party to enforce any of its rights
hereunder shall not be deemed to constitute a waiver of its future enforcement
of such rights or any other rights.
d. Severability. If any provision of this Agreement is held to be
invalid, illegal, or unenforceable under present or future laws, such item shall
be struck from the Agreement; however, such invalidity or enforceability shall
not affect the remaining provisions or conditions of this Agreement. The
parties shall remain legally bound by the remaining terms of this Agreement, and
shall strive to reform the Agreement in a manner consistent with the original
intent of the parties.
6
<PAGE>
e. Force Majeure. Either party shall be excused from any delay or
failure in performance hereunder caused by reason of any occurrence or
contingency beyond its reasonable control, including but not limited to, acts of
God, earthquake, labor disputes and strikes, riots, war or other unanticipated
occurrences or problems, and governmental requirements. The obligations and
rights of the party so excused shall be extended on a day-to-day basis for the
period of time equal to that of the underlying cause of the delay.
f. Arbitration. Any dispute or claim arising out of or in connection
with this Agreement or the performance, breach or termination thereof, shall be
finally settled by binding arbitration in Colorado under the Rules of
Arbitration of the American Arbitration Association by an arbitrator appointed
in accordance with those rules. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof
Notwithstanding the foregoing, either party may apply to any court of competent
jurisdiction for equitable relief without breach of this arbitration provision.
g. Integration. This Agreement and the Exhibits attached hereto, all of
which are incorporated into this Agreement by reference, expresses the complete
and final understanding of the parties with respect to the subject matter
hereof, and supersedes all prior communications between the parties, whether
written or oral with respect to the subject matter hereof. No modification of
this Agreement shall be binding upon the parties hereto, unless evidenced by a
writing duly signed by authorized representatives of the respective parties
hereto.
h. Notices. Any required notices hereunder shall be given in writing by
certified mail or overnight express delivery service (such as DHL) at the
address of each party below, or to such other address as either party may from
time to time substitute by written notice. Notice shall be deemed served when
delivered or, if delivery is not accomplished by reason or some fault of the
addressee, when tendered.
If to INFLOW: If to Customer:
Art Zeile Doug Schneider
INFLOW Inc. VERIO Colorado
1860 Lincoln Street, Suite 305 8005 S. Chester Street, Suite 200
Denver, CO 80295 Englewood, CO 80112
AGREED AND ACCEPTED:
INFLOW, INC. VERIO Colorado
By: /s/ Arthur H. Zeile By: /s/ Doug Schneider
------------------------- -----------------------------
(Authorized Signature) (Authorized Signature)
Name: Arthur H. Zeile Name: Doug Schneider
----------------------- ----------------------------
Title: President Title: President
---------------------- --------------------------
7
<PAGE>
EXHIBIT A
---------
SERVICES PROVIDED AND FEE SCHEDULE
Services & Fees
INFLOW grants Customer a license to install its equipment in INFLOW's Data
Center. Customer may use the space only for the purposes of installing,
maintaining and operating its equipment. Customer has not been granted any real
property interests in INFLOW's premises. INFLOW will provide the following
services:
1. Installation Services
a. Cabinet Installation. In conjunction with Customer's
representatives INFLOW shall install equipment in Customer-supplied
cabinets and connect equipment to building ground, electrical power
circuits and telephony cabling in support of Customer's use of Data
Center Services. Equipment shall not place a load upon the floor of
INFLOW's data center which exceeds 100 pounds per square foot.
b. Network Installation. [Intentionally Deleted]
2. Colocation Services
a. Cabinet Space. INFLOW shall provide a conditioned environment
including adequate UPS and generator-protected electricity, air
conditioning and humidification for seven (7) Customer cabinets to be
installed in locations that are numbered T7, U7, V7, W7, X7, Y7, Z7
according to INFLOW's numbering scheme for the Data Center no later
than 15 September 1998 at INFLOW's Denver data center.
b. Right of First Refusal. Customer shall have a right of first
refusal for additional cabinet locations as follows. Initially,
Customer shall have a right of first refusal for the five (5) cabinet
locations that are numbered 07, P7, Q7, R7, S7 according, to INFLOW's
numbering scheme for the Data Center. Customer's right of first
refusal for each individual cabinet location shall be for a term of
eighteen (18) months. If INFLOW desires to make available to another
customer a cabinet location subject to Customer's right of first
refusal, INFLOW shall notify Customer of such desire in writing. If
Customer chooses to exercise its right of first refusal for such
cabinet location, Customer shall give written notice to INFLOW within
ten (10) business days after Customer's receipt of INFLOW's notice.
Customer shall immediately thereafter become obligated for full
payment for such cabinet location, at the same price as Customer then
pays for its other cabinet locations under this Agreement. If
Customer does not notify INFLOW within the time period required
above, then Customer's right of first refusal for such cabinet
location will terminate and INFLOW shall have no further obligation
whatsoever to Customer with respect thereto. Upon Customer's exercise
of its right of first refusal for any cabinet location, if and only
if an additional cabinet location remains available in the Data
Center for offer to new customers, then an additional cabinet
location shall become subject to Customer's right of first refusal
under the terms set forth above, so that Customer shall continue to
have a right of first refusal on the same total number of cabinets as
existed prior to such exercise. Customer shall identify the
additional available cabinet location by notice to INFLOW given no
later than ten days after such exercise. If Customer fails to
identify an additional cabinet location as required above, INFLOW
shall have the right to identify such additional cabinet location for
Customer and will provide notice of the same to Customer.
8
<PAGE>
c. Amperage. INFLOW shall provide one 20 amp (UPS and generator-
protected) AC or DC electrical circuit for each Customer cabinet.
d. LEC Access. Local Exchange Carrier (LEC) service shall not be
provided by INFLOW. The On-Time Provisioning, Network Availability,
and Network Time to Restore portions of the Service Level Agreement
found in Exhibit C do not apply to this Data Center Services
Agreement.
e. IXC Access. InterExchange Carrier (IXC) service shall not be
provided by INFLOW. The On-Time Provisioning, Network Availability,
and Network Time to Restore portions of the Service Level Agreement
found in Exhibit C do not apply to this Data Center Services
Agreement.
f. Technical Support. Based upon Customer's written instructions,
INFLOW shall provide first level maintenance of Customer equipment
including: monitoring for faults, replacement of faulty plug in type
cards using spares provided by Customer, power-cycling of equipment,
and fault isolation, logging and Customer notification based on pre-
defined plans.
3. Fees
Fees for Data Center Services provided to Customer are identified below:
Service Fee
(1a) Cabinet Installation *
(1b) Network Installation *
(2a) Cabinet Space *
(2b) Right of First Refusal *
(2b) Amperage *
(2c) LEC Access *
(2d) IXC Access *
(2e) Technical Support *
4. Additional Conditions
INFLOW shall not provide data center services to Rocky Mountain Internet, its
parent or subsidiary organizations, for the period extending to 1 May 1999
without the written consent of Customer.
* CONFIDENTIAL TREATMENT REQUESTED FOR THESE PROVISIONS.
9
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EXHIBIT B
---------
CUSTOMER EQUIPMENT
1. US Robotics Sportsters Modem (Quantity 2)
2. Cisco 2511 Router (Quantity = 2)
3. Ascend MAX
4. Cabletron FN 100 Ethernet Switch
5. Cisco 7507
6. Compaq Proliant 85OR
7. Video Switch
8. Dell Monitor and Keyboard
9. APC Power Switch
10. Bay Switch 303
11. Dell Optiplex Server
12. Sun Ultra 1 (Quantity 3)
13. Sun Sparc 5 (Quantity = 2)
14. DLT 4700 Tape Drive
15. ICG Feeder Patch Panel
16. MFS Feeder Patch Panel
17. US West Feeder Patch Panel
18. Cisco 3810 DSL
19. Bay 350T
20. Livingston Post Master (Quantity 4)
21. Hendry 8 port 48vdc Fuse Panel
22. Kentrox T 1 Chassis (Quantity= 3)
23. Cisco 7513
10
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EXHIBIT C
---------
SERVICE LEVEL AGREEMENT
INFLOW's Service Level Agreement defines the performance criteria to which
INFLOW will be held accountable, reporting methods and compensation in the event
that performance levels are not met. Performance levels have been established
for On-Time provisioning, network availability, power availability, and network
time to restore.
On-Time Provisioning
- --------------------
(Intentionally Deleted]
Network Availability
- --------------------
[Intentionally Deleted]
Power Availability
- ------------------
Performance Criteria: Power shall be continuously available 100% of the time to
Customer's cabinet interface each month provided however that INFLOW shall be
allowed a maximum of five (5) minutes of power system maintenance per month.
INFLOW maintenance activities are not intended to disrupt power service. This
service level does not apply to Customer owned/provided equipment in a Cabinet.
Reporting Methods: INFLOW shall provide the Customer a report the start time,
stop time and duration of power outages within 15 calendar days of the end of
each month. The power availability rate shall be calculated based on dividing
the total amount of time without power outages by the total amount of time in
the month.
Compensation: In the event that INFLOW fails to meet the power availability
service level, INFLOW shall credit Customer's bill in the amount equal to 100%
of one month's power usage charge for the cabinet(s) involved.
Network Time to Restore
- -----------------------
(Intentionally Deleted]
11
<PAGE>
Exhibit 10.11
BASIC LEASE INFORMATION
-----------------------
The following Basic Lease Information is hereby incorporated into and made
a part of the Lease between Landlord and Tenant to which it is attached. Each
reference in the Lease to any of the Basic Lease Information shall mean the
respective information set forth below, and such information shall be deemed
incorporated as a part of the terms provided under the particular Lease Section
pertaining to such information. In the event of any conflict between any Basic
Lease Information and the Lease, the former shall control.
1. Building: 1860 Lincoln Street, Denver, Colorado
2. Landlord: JER DENVER, LLC, a Delaware limited liability company
3. Landlord's Address for Giving of Notices and Payment of Rent:
Frederick Ross Company
Attention: Real Estate Management Group
P0 Box 13797
Denver, CO 80201
With a Copy of All Notices to:
J.B. Robert Companies
350 South Grand Avenue, 46th Floor
Los Angeles, California 90071
Attn: Barry Pinsky
4. Tenant:
Inflow, Inc., a Delaware corporation
2910 Island Drive
Boulder, Colorado 80301
Attn: Art Zeile
5. Premises: The floor area on the 3rd floor of the Building consisting of
approximately 8,407 rentable square feet as outlined on the floor plan of the
Building attached hereto as EXHIBIT B. (See Section 1.2; Exhibit B)
6. Parking Allowance: 3 spaces in the Building parking garage. (See
Addendum)
7. Use of Premises: For the following type of business: General office use
and computer/telecommunications equipment room (Section 2)
8. Lease Document issuance and Reference Date: February 25, 1998
9. [Intentionally Deleted]
10. [Intentionally Deleted]
11. Commencement Date: See Addendum.
12. Expiration Date: The day prior to the 10th anniversary of the actual
Commencement Date.
<PAGE>
13. Base Rent:
Months Monthly Base Rent Amount
------ ------------------------
Months 1-2 00.00
Months 3-36 $ 11,909.92
Months 37-72 $ 12,260.21
Months 73-120 $ 12,960.79
The months referred to above are the full calendar months after any
first partial month of the Lease Term. The monthly Base Rent rate for
any such partial month shall be the same as the rate specified for the
first full calendar month when Base Rent is payable. Tenant has
deposited $11,909.92 to be applied against the first installment of
Base Rent due hereunder. (Section 1.4)
14. Tenant's Percentage of Operating Expenses: 2.6% based on a Premises of
8407 rentable square feet and a total Building rentable area of 324,645 square
feet. (Section 5.2)
15. Base for Adjustments to Operating Expenses: The Base Year Expenses for
1998, as set forth in Section 5.10 hereof.
16. Security Deposit: 11,909.92. (Section 6)
17. Broker: Liberty Partners, Inc.
18. Environmental Report: Asbestos Abatement Report for Southern Pacific
Lines, 1860 Lincoln Street, Denver, CO 80901, prepared by Versar, Inc., Project
No. 8134-005, dated November 1994. (Section 32.1)
LANDLORD TENANT
- -------- ------
JER DENVER, LLC, a Delaware limited Inflow, Inc., a Delaware corporation
liability company
By: J. E. Robert Companies, its
designated asset manager
By:
--------------------------
Title:
By: -----------------------
--------------------------- Date:
Title: ------------------------
------------------------
Date:
-------------------------
-2-
<PAGE>
LEASE AGREEMENT
--------------------
TERMS AND CONDITIONS
--------------------
SECTION 1. DEMISE AND RENT:
- --------- ---------------
1.1 Demise: Landlord hereby leases to Tenant, and Tenant hereby leases
------
from Landlord, upon and subject to the terms, covenants, provisions and
conditions of this Lease Agreement (herein called the "Lease"), the premises
described in Section 1.2 in the building (herein called "Building") located on
the Land described on EXHIBIT A attached hereto and incorporated herein. Tenant
and its agents, employees, licensees and invitees shall also have the
nonexclusive right, together with others designated by Landlord. to use the
common areas in the Building and the Land, which shall include, without
limitation, sidewalks, common entrances, lobby, elevators, hallways, stairways,
bathrooms (including bathrooms on the third floor), loading dock, and other
similar public areas and access ways. Landlord may change the common areas and
establish reasonable regulations for the use thereof so long as such changes and
regulations do not materially interfere with Tenant's access to or use of the
Premises.
1.2 Premises: The Premises (herein called "Premises") leased to Tenant
--------
are described in the Basic Lease Information, and are outlined on the floor
plan(s) for the Building attached hereto as EXHIBIT B and incorporated herein
by this reference.
1.3 Commencement and Expiration Dates: The term of this Lease (herein
---------------------------------
called "Lease Term") shall be for the period specified in the Basic Lease
Information (or until sooner terminated as herein provided).
1.4 Rent: The rent shall be and consist of a Base Rent (herein called
----
"Base Rent") and Additional Rent (herein called "Additional Rent"). For purposes
of this Lease, Base Rent and Additional Rent are referred to collectively as
"Rent." Base Rent shall be the amount indicated in the Basic Lease Information.
Base Rent shall be payable in equal monthly installments in advance on the first
day of each and every calendar month during the Lease Term (except to the extent
otherwise specifically provided elsewhere in this Lease and except that Tenant
shall pay, upon the execution and delivery of this Lease by Tenant, the sum
indicated in the Basic Lease Information, to be applied against the first
installment(s) of Base Rent becoming due under this Lease). Additional Rent
shall consist of all other sums of money as shall become due from and payable by
Tenant to Landlord under this Lease. All Rent shall be paid in lawful money of
the United States of America to Landlord at its office or such other place, as
Landlord shall designate by notice to Tenant. Tenant shall pay the Base Rent and
Additional Rent promptly when due without notice or demand and without any
abatement, deduction or offset for any reason whatsoever, except as expressly
provided in this Lease. If the Commencement Date occurs on a day other than the
first day of a calendar month, the Base Rent for that partial calendar month
shall be prorated on a daily basis. If the Basic Lease Information provides for
the abatement of Base Rent for any specified periods of time during the Lease
Term ("Rent Free Period(s)"), none of the Base Rent specified in this Lease as
payable during the Lease Term shall be allocable to any such Rent Free
Period(s). In the event of any default by Tenant which is not timely cured after
notice from Landlord. Landlord shall have the right to collect Rent for the
Premises from Tenant for all Rent Free Period(s) at the same Base Rent in effect
immediately after any such Rent Free Period(s).
1.5 Late Charge: Tenant recognizes that late payment of any Rent from
-----------
Tenant to Landlord will result in administrative expense to Landlord, the extent
of which additional expense is extremely difficult and economically impractical
to ascertain. Tenant therefore agrees that if Rent from Tenant to Landlord
remains unpaid five (5) business days after said amount is due, the amount of
such unpaid Rent or other payments shall be increased by a late charge to be
paid to Landlord by Tenant in an amount equal to five percent (5%) of the amount
of the delinquent Rent or other payment. Tenant agrees that such amount is a
reasonable estimate of the loss and expense to be suffered by Landlord as a
result of such late payment by Tenant and may be charged by Landlord to defray
such loss and expense. The provisions of this Section in no way relieve Tenant
of the obligation to pay Rent or other payments on or before the date on which
they are due, nor do the terms of this Section in any way affect Landlord's
remedies pursuant to Section 21 of this Lease in the event Rent is past due.
1.6 Confidentiality: Tenant shall keep the Rent and other terms of this
---------------
Lease confidential from other current and prospective occupants of the Building
and any other buildings owned by Landlord except to the extent disclosure is
reasonably necessary in the conduct of Tenant's business or required by law.
SECTION 2. USE:
- --------- ---
Tenant shall use and occupy the Premises during the Lease Term for the use
specified in the Basic Lease Information and for no other purpose without the
written consent of Landlord, which consent shall not be
-1-
<PAGE>
unreasonably withheld. If any governmental license or permit, other than a
Certificate of Occupancy, shall be required for the proper and lawful conduct of
Tenant's business in the Premises or any part thereof. Tenant, at its expense,
shall duly procure and thereafter maintain such license or permit and submit the
same to Landlord for inspection. Tenant shall at all times comply with the terms
and conditions of each such license or permit. Tenant shall not do or permit
anything to be done in or about the Premises which will obstruct or unreasonably
interfere with the rights of other tenants or occupants of the Building or
injure or constitute an unreasonable annoyance (provided that Landlord
specifically acknowledges that the installation and use of electricity,
supplemental HVAC and other equipment as specifically permitted under this Lease
will not be deemed not to violate the foregoing restriction), nor use or allow
the Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause or maintain or permit any nuisance in, on, or
about the Premises. Tenant shall not commit or allow the commission of any waste
in, on, or about the Premises. Tenant shall not use the Premises or permit
anything to be done in or about the Premises which will in any way conflict with
any law, statute, ordinance, or governmental rule or regulation now in force or
which may hereafter be enacted or promulgated. Unless Tenant pays the increased
cost thereof, Tenant shall not do or permit anything to be done on or about the
Premises or bring or keep anything therein which will in any way increase the
rate of any insurance upon the Building in which the Premises are situated or
any of its contents or cause a cancellation of said insurance or otherwise
affect said insurance in any manner (provided that Landlord specifically
acknowledges that Tenant's Improvements permitted herein and the conversion of
the Premises sprinkler system to a dry-pipe actuation system as permitted herein
will not violate the foregoing restriction). Tenant shall, at its sole cost and
expense, promptly comply with all Legal Requirements and with the requirements
of any board of fire underwriters or other similar body now or hereafter
constituted relating to or affecting the condition, use, or occupancy of the
Premises, excluding structural changes and requirements affecting mechanical
systems not related to or affected by: (i) alterations or improvements made by
or for Tenant or (ii) Tenant's acts. The judgment of any court of competent
jurisdiction or the admission of Tenant in an action against Tenant, whether
Landlord be a party thereto or not, that Tenant has so violated any such Legal
Requirements shall be conclusive of such violation as between Landlord and
Tenant. Tenant shall use its best efforts to prevent any violation of applicable
Legal Requirements by its partners, directors, officers, agents and employees.
SECTION 3. TENANT'S ACCEPTANCE AND MAINTENANCE OF PREMISES:
- --------- -----------------------------------------------
Subject to the performance by Landlord of its obligations in EXHIBIT C, by
taking possession of the Premises, Tenant accepts the Premises as being in the
condition in which Landlord is obligated to deliver them and otherwise in good
order, condition and repair. Landlord's obligations to maintain the Building are
as set forth in Section 14.1 hereof. Tenant shall, at all times during the Lease
Term at Tenant's sole cost and expense, keep the following items in good order,
condition and repair: to the extent within the Premises, (i) floor coverings,
(ii) wall coverings, (iii) paint, (iv) casework, (v) ceiling tiles, (vi) all of
Tenant's Property (as defined in Section 13.2 herein) and (vii) any and all
Non-Building-Standard Tenant Improvements. Landlord shall have no obligation to
alter, remove, improve, repair, decorate, or paint the Premises or any part
thereof except as specified in EXHIBIT C attached hereto and made a part hereof.
No representations respecting the condition of the Premises or the Building have
been made by Landlord to Tenant, except as herein set forth.
SECTION 4. OPERATING EXPENSES AND TAXES:
- --------- ----------------------------
4.1 Operating Expenses: For the purposes of this Lease, the term
------------------
"Operating Expenses" shall mean all expenses paid or incurred by Landlord (or on
Landlord's behalf) as reasonably determined by Landlord to be necessary or
appropriate for the efficient operation, maintenance and repair of the Land
and/or Building, including the common areas of the Building, including without
limitation: (i) salaries, wages, medical, surgical, union and general welfare
benefits (including, without limitation, group life insurance) and pension
payments of employees of Landlord engaged in the repair, operation and
maintenance of the Land and/or Building; (ii) payroll taxes, workers
compensation insurance, uniforms and related expenses for employees; (iii) the
cost of all charges for gas, steam, electricity, heat, ventilation, air-
conditioning, water and other utilities furnished to the Building, together with
any taxes on such utilities; (iv) the cost of painting of public areas; (v) the
cost of all charges of insurance, including but not limited to all risk property
insurance with rent loss coverage, liability and fidelity insurance, with regard
to the Land and/or Building and the maintenance and/or operation thereof; (vi)
the cost or rental of all supplies, including without limitation, cleaning
supplies, light bulbs, tubes and ballasts, materials and equipment, and sales
and other taxes thereon; (vii) the cost of hand tools and other movable
equipment used in the repair, maintenance or operation of the Building amortized
over the useful life of such hand tools and movable equipment (as reasonably
estimated by Landlord); (viii) the cost of all charges for window and other
cleaning and janitorial and security services; (ix) charges of independent
contractors performing repairs or services to the Land and/or Building; (x) non-
capital repairs; (xi) remodeling of the public and common areas of the Building
including, without limitation, repainting, replacement and repair of
furnishings, fixtures, accessories, carpeting or other floor covering, wall and
window
-2-
<PAGE>
coverings in the public and common areas, the cost of which shall be amortized
(with interest at the rate of nine percent (9%) on the unamortized balance) over
the useful life of the improvements as reasonably estimated by Landlord; (xii)
alterations and improvements to the Building made by reason of Legal
Requirements or the requirements of insurance bodies; (xiii) management fees
paid to a third party, or, if no managing agent is employed by Landlord,
Landlord shall be entitled to charge a management fee which is not in excess of
four percent (4%) of gross revenue, and such fee shall be included in the
Operating Expenses; (xiv) the cost of any capital improvements or repairs to the
Building and/or of any machinery or equipment installed in the Building
amortized (with interest at the rate of nine percent (9%) on the unamortized
balance) over the useful life of the improvement, machinery and or equipment as
reasonably estimated by Landlord, which is made or becomes operational, as the
case may be, after the completion of the construction of the Building and which
have a reasonable probability of reducing the expenses which otherwise would be
included in Operating Expenses; (xv) reasonable legal, accounting and other
professional fees incurred in connection with operation, maintenance and
management of the Land and/or Building; (xvi) the cost of providing elevator
service; (xvii) the cost of landscape and parking area maintenance and repair;
(xviii) the common area charges to which the Building is subject, if any; (xix)
Taxes as defined in Section 4.3; and (xx) all other charges properly allocable
to the operation, repair and maintenance of the Building in accordance with
generally accepted accounting principles. Accounting for Operating Expenses,
including the matters set forth in Sections 4 and 5 of this Lease, shall be in
accordance with generally accepted accounting principles consistently applied.
4.2 Exclusions From Operating Expenses: Notwithstanding anything to the
----------------------------------
contrary in Section 4.1. Operating Expenses shall not include: (i) depreciation,
amortization or other similar non-cash items; (ii) interest on and amortization
of debts and other payments and charges for borrowed money (except as otherwise
expressly permitted under Section 4.1); (iii) leasehold improvements made for
tenants of the Building; (iv) leasing commissions, attorneys' fees, costs and
disbursements and other expenses (including advertising) incurred in connection
with leasing renovating, or improving space for tenants or other occupants or
prospective tenants or occupants of the Building, or in connection with any
eviction or other legal action involving any tenant or occupant of the Building;
(v) refinancing costs; (vi) the cost of any work or services performed for any
occupants of any leased space in the Building (including Tenant), whether at the
expense of Landlord or such occupants, to the extent that such work or services
is in excess of the work or services which Landlord, at its expense, is required
to furnish to Tenant under this Lease; (vii) the cost of any electricity
furnished to the Premises or any other leased space in the Building in excess of
the electricity to be provided by Landlord under this Lease; (viii) damages
recoverable by any occupant due to violation by Landlord of any of the terms and
conditions of this Lease or any other lease relating to the Building or any
other contract or obligation; (ix) repairs or other items to the extent Landlord
is reimbursed by insurance proceeds or third parties; (x) capital repairs and
replacements or other capital improvements (except that capital repairs,
replacements or other improvements shall be permitted as provided above in
Section 4.1 if they do not relate to a general renovation of the Building or to
cause the Land and or Building to comply with Legal Requirements (including,
without limitation, the A.D.A., any environmental laws, building or fire codes)
existing on the date of this Lease; (xi) any types of utility services
(including, without limitation, water, gas, electricity, sewer and telephone)
that at any time during the Lease Term are separately metered or contracted for
and paid for by Tenant directly, to the extent serving any portions of the
Building except the Common Area,(xii) costs of environmental remediation,
whether or not the need for such remediation is disclosed in the Environmental
Report; (xiii) any ground lease rental; (xiv) costs for sculpture, paintings, or
other objects of art; (xv) the cost of any service performed by an affiliate of
Landlord or the manager of the Building to the extent such cost is in excess of
the cost that would be paid to an unaffiliated, third-party provider of a
similar service; (xvi) expenses in connection with services or other benefits
which are not offered to Tenant, or for which Tenant is charged directly but
which are provided to another tenant or occupant of the Building, or for which
Landlord is reimbursed by another occupant or tenant; (xvii) costs incurred for
repair of latent defects in the Building; (xviii) Costs incurred due to the
violation or alleged violation by the Building of any Legal Requirements which
are in effect on the date of this Lease (including, without limitation, the
A.D.A.) or the violation or alleged violation by Landlord of any Legal
Requirements whether or not in effect on the date of this Lease; (xix) costs
incurred in connection with construction or improvement, in order to comply with
local building codes in effect on the date of this Lease or otherwise, of any
portion of the Building except the Common Area; and (xx) costs arising from the
negligence or fault of other tenants or occupants, Landlord or its agents, or
any vendors, contractors, or providers of materials or services hired or engaged
by Landlord or its agents.
4.3 Taxes: The term "Taxes" shall include (i) all real property taxes and
-----
assessments and personal property taxes, charges, rates, duties and assessments
rated, levied or imposed by any governmental authority with respect to the Land,
the Building and any improvements, fixtures and equipment located therein or
thereon, and with respect to all other property of Landlord, real or personal,
located in or on the Land or the Building and used in connection with the
operation of the Building; (ii) any tax in lieu of a real property tax; (iii)
any tax or excise levied or assessed by any governmental authority on the
rentals payable under this Lease or rentals accruing from the use
-3-
<PAGE>
of the Land or the Building, provided that this shall not include federal or
state, corporate or personal income taxes and (iv) any tax or excise imposed or
assessed against Landlord which is measured or based in whole or in part on the
capital employed by Landlord to improve the Land and construct the Building. If
Landlord receives a refund of Taxes then Landlord shall credit such refund, net
of any professional fees and costs incurred by Landlord to obtain the same,
against the Taxes for the Operating Year to which the refund is applicable or
the current Operating Year, at Landlord's option. The amount of the Taxes for
the Base Year shall reflect any refund resulting from any appeal, protest, or
other action by Landlord contesting the amount claimed by the governmental
authorities and any statements by Landlord as to the amount of Base Year Taxes
shall be tentative until any such contest is completed.
SECTION 5. PAYMENT OF OPERATING EXPENSES:
- --------- -----------------------------
5.1 Operating Year: As used in this Section 5, the term "Operating Year"
--------------
shall mean each calendar year of the Lease Term and in the event this Lease
begins or ends on any date other than the first day of the calendar year, the
calculations, costs and payments referred to herein shall be prorated as
provided in Section 31.11.
5.2 Tenant's Pro Rata Share: Throughout the entire Lease Term, Tenant
-----------------------
shall pay, as Additional Rent, its pro rata share of the increase in Operating
Expenses of the Building, if any, over the Operating Expenses for the Base Year.
Tenant's pro rata share of the increase in Operating Expenses of the Building
for each Operating Year shall be calculated as follows: the Operating Expenses
for each Operating Year less the Operating Expenses for the Base Year shall be
multiplied by Tenant's Percentage (as specified in the Basic Lease Information,
and as adjusted as provided herein). If in any Operating Year Tenant occupies
the Premises for less than the full Operating Year, then the product from the
foregoing multiplication shall be multiplied by the percentage of the Operating
Year in which Tenant occupied the Premises. "Tenant's Percentage" shall mean a
percentage, the numerator of which is the number of rentable square feet of the
leased Premises and the denominator of which is the total number of rentable
square feet of the Building, whether or not such space is actually rented. The
Tenant's Percentage (as specified in the Basic Lease Information, and adjusted
as provided herein) shall be changed from time to time to reflect any change in
the total rentable square footage in the Building. All calculations of rentable
area shall be on the basis as originally used to determine the rentable area
shown in the Basic Lease Information so long as the basis for measuring the
Premises and the Building are the same and, if not at any time, shall be
adjusted appropriately. During the periods when the Building is not fully
occupied, Landlord shall reasonably adjust Operating Expenses to reflect the
costs that would normally have been incurred had the Building been fully
occupied for the entire period and the Building had been fully assessed for
property tax purposes. Such adjustment shall not apply to fixed costs and
Landlord shall provided Tenant with a detailed accounting of any such
adjustment. If such adjustment results in Landlord receiving as Operating
Expenses more than Landlord's actual Operating Expenses for any given year,
Landlord shall be obligated to return such excess to tenants in the Building,
ratably, in accordance with Section 5.4. The Building shall be considered fully
occupied when occupancy reaches ninety percent (90%). If during any Operating
Year the tenant of any space in the Building performs work or services therein
pursuant to a written agreement between Landlord and such tenant in lieu of
having Landlord perform the same and the cost thereof would have been included
in Landlord's Operating Expenses, then in any such event(s), at Landlord's
option, the Operating Expenses for such Operating Year shall be adjusted to
reflect the Operating Expenses that would have been incurred if Landlord had
performed such work or services, as the case may be. In the event Operating
Expenses are decreased as a result of extraordinary changes then the Base Year
Operating Expenses shall be correspondingly reduced. An extraordinary change
shall mean changes unrelated to the normal inflation and deflation of the cost
of goods and services making up the Operating Expenses, such as a change in the
rentable area contained in the Building resulting from condemnation, casualty,
demolition, alteration or construction of the additional improvements. Any
decrease in Taxes shall be considered an extraordinary change if due to any
statewide property tax limitation or reduction legislation. If the total
rentable area of the Building changes, Landlord shall reasonably determine a
revised Tenant's Percentage reflecting the change.
5.3 Written Statement of Estimate: Prior to the commencement of each
-----------------------------
Operating Year during the Lease Term, Landlord shall furnish Tenant with a
written statement setting forth Tenant's pro rata share of the estimated
increase in Operating Expenses and Taxes for the next Operating Year. Tenant
shall pay to Landlord as Additional Rent commencing on January 1 of the
Operating Year, and thereafter on the first day of each calendar month, an
amount equal to one-twelfth of the amount of Tenant's pro rata share as shown in
Landlord's written statement. In the event Landlord delivers the written
statement late, Tenant shall continue to pay to Landlord an amount equal to
one-twelfth of Tenant's pro rata share of the estimated Operating Expenses for
the immediately preceding Operating Year until Landlord does furnish the written
statement, at which time Tenant shall pay the amount of any excess of Tenant's
pro rata share for the expired portion of the current Operating Year over
Tenant's actual payments during such time and any excess payments by Tenant
shall be credited to the next due payment of Rent from Tenant. The late delivery
of any written statement by Landlord shall not constitute a waiver of Tenant's
obligation to pay its pro rata share of Operating Expenses nor subject Landlord
to any liability, but if not timely
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<PAGE>
delivered. Landlord shall use best efforts to deliver such written statements of
estimated increase in Operating Expenses as soon as possible.
5.4 Final Written Statement: Within 120 days after the close of each
-----------------------
Operating Year during the Lease Term, Landlord shall deliver to Tenant a written
statement (the "Operating Statement") setting forth Tenant's actual pro rata
share of the increase in Operating Expenses for the preceding Operating Year. In
the event Tenant's pro rata share of the actual increase in Operating Expenses
is in excess of Tenant's pro rata estimated increase in Operating Expenses,
Tenant shall pay the amount of such excess to Landlord as Additional Rent within
thirty (30) days after receipt of such statement by Tenant. In the event
Tenant's pro rata share of the actual increase in Operating Expenses is less
than Tenant's pro rata share of the estimated increase in Operating Expenses
actually paid by Tenant then the amount of the excess overpayment shall be paid
by Landlord to Tenant within thirty (30) days following the date of such
statement or Landlord may elect to apply the overpayment to Tenant's next Rent
payment, reimbursing only the excess over such next payment, if any. The late
delivery of any written statement by Landlord shall not constitute a waiver of
Tenant's obligation to pay its pro rata share of Operating Expenses, but if not
timely delivered, Landlord shall use best reasonable efforts to deliver such
written statements as soon as possible.
5.5 Tenant Examination: The Operating Statement referred to herein need
------------------
not be audited but shall be prepared in accordance with generally accepted
accounting principles consistently applied, on a cash basis, and shall contain
sufficient detail to enable Tenant to verify the calculation of its pro rata
share. In addition, Tenant, upon at least five (5) days advance written notice
to Landlord and during business hours, may examine any invoices, receipts,
canceled checks, vouchers or other instruments used to support the figures shown
on the Operating Statement, provided however, that, if no error is found, Tenant
shall only be entitled to such an examination once in each Operating Year. The
person conducting the examination on behalf of Tenant shall be a qualified,
disinterested third party and shall enter into a confidentiality agreement
reasonably satisfactory to Landlord. In the event the examination fails to
discover a valid overcharge in excess of 5% of the Operating Expense payments
during the Operating Year covered by the examination, Tenant shall reimburse
Landlord for the out-of-pocket costs reasonably incurred by Landlord due to the
examination. In the event the examination discovers a valid overcharge un excess
of 5% of the Operating Expense payments during the Operating Year covered by the
examination. Landlord shall reimburse Tenant for the out-of-pocket costs
reasonably incurred by Tenant due to the examination.
5.6 Disputes: Each such Operating Statement given by Landlord pursuant to
--------
this Section shall be conclusive and binding upon Tenant unless within sixty
(60) days after the receipt of such Operating Statement Tenant shall notify
Landlord that it disputes the correctness of the Operating Statement, specifying
the particular respects in which the Operating Statement is claimed to be
incorrect. If such disputes shall not have been settled by agreement, either
party, within sixty (60) days after receipt of such Statement, may pursue its
available legal remedies, but Tenant hereby agrees that a dispute over the
Operating Statement or any good faith error by Landlord in interpreting or
applying Section 4 or in calculating the amounts in the Operating Statement
shall not be a breach of this Lease by Landlord, and even if any legal
proceeding over the Operating Statement is resolved against Landlord this Lease
shall remain in full force and effect and Landlord shall not be liable for any
consequential damages, and pending the determination of such dispute, Tenant,
within ten (10) days of receipt of such Operating Statement, shall pay
Additional Rent in accordance with the Operating Statement, without prejudice to
Tenant's position. If the dispute shall be determined in Tenant's favor,
Landlord shall forthwith pay to Tenant the amount of Tenant's overpayment of
rents resulting from compliance with the Operating Statement, together with
interest at the Prime Plus Two Rate, as defined below, from the date of
overpayment to the date reimbursed. The "Prime Plus Two Rate" shall be a per
annum rate which is two percentage points greater than the prime rate most
recently published in the Wall Street Journal prior to the date on which the
payment is made.
5.7 Payment: If an Operating Year ends after the expiration or
-------
termination of this Lease, any excess Additional Rent in respect thereof payable
under this Section shall be paid by Tenant within ten (10) days of its receipt
of the Operating Statement for such Operating Year.
5.8 No Reduction in Amount of Base Rent: Nothing in the Lease shall be
-----------------------------------
construed to mean the Base Rent amount specified in the Basic Lease Information
shall be reduced due to any decrease in Operating Expenses, it being intended
that the amount of the Base Rent remain fixed as specified in the Basic Lease
Information throughout the Lease Term.
5.9 Additional Operating Expense Provisions: No addition or additional
---------------------------------------
expense category shall be added in subsequent years without appropriate
adjustment to the Base Year. Management fees, as designated in the definition of
Operating Expenses, shall be reasonable and customary fees for management of the
Building as stated
-5-
<PAGE>
by BOMA. If any lease entered into by Landlord with any tenant in the Building
is on a so called "net" basis, or provides for a separate basis of computation
for Operating Expenses, then, to the extent Landlord's accountants determine
that an adjustment should be made in making the computations herein. Landlord's
accountant shall be permitted to modify the computation of Operating Expenses
for a particular Lease Year or the Base Year in order to eliminate or otherwise
modify any such expenses which are paid for in all or part by such tenant. In
making the computations, Landlord's accountant shall also be permitted to make
such adjustments and modifications in calculating Operating Expenses as shall be
reasonably necessary to achieve the intentions of the parties.
5.10 Base Year Operating Expenses: 1999 Operating Expenses. The Operating
-----------------------------------------------------
Expenses for the Base Year shall be the Operating Expenses for 1998, provided
that, notwithstanding anything to the contrary in this Lease, if the actual
Operating Expenses for 1998 are less than the Floor Number, as defined below,
then the Operating Expenses for the Base Year shall be deemed to be the Floor
Number for purposes of this Lease. The "Floor Number" shall mean $5.50
multiplied by the total number of rentable square feet of the Building (as
stated in the Basic Lease Information).
5.11 Survival. The provisions of this Section 5 shall survive the
--------
expiration or earlier termination of this Lease.
SECTION 6. SECURITY DEPOSIT:
- --------- ----------------
6.1 Security Deposit: Upon the execution of this Lease by Tenant, Tenant
----------------
shall pay to Landlord the sum indicated in the Basic Lease Information as
security for the full and faithful performance and observance by Tenant of
Tenant's covenants and obligations under this Lease and Tenant shall not be
entitled to interest thereon (the "Security Deposit"). Failure to promptly pay
such Security Deposit shall be considered a default under this Lease. Landlord
may commingle this Security Deposit. If Tenant defaults in the full and prompt
payment and performance of any of Tenant's covenants and obligations under this
Lease, including, but not limited to, the payment of Base Rent and Additional
Rent, Landlord may use, apply or retain the whole or any part of the Security
Deposit so deposited to the extent required for the payment of any Base Rent and
Additional Rent or any other sums as to which Tenant is in default or for any
such sums 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
reletting of the Premises, whether such damages or deficiency accrue before or
after summary proceedings or other re-entry by Landlord.
6.2 Disposition of Security Deposit: If Landlord shall so use, apply or
-------------------------------
retain the whole or any part of the Security Deposit, Tenant shall upon demand
immediately deposit with Landlord a sum equal to the amount so used, applied or
retained, as security as aforesaid. If Tenant shall fully and faithfully comply
with all of Tenant's covenants and obligations under this Lease, the security or
any balance thereof shall be returned or paid over to Tenant after the date on
which this Lease shall expire or sooner end or terminate. In the event of any
sale of Landlord's interest in the Building or any leasing of the Building,
whether or not in connection with a sale or leasing of the Land, Landlord shall
have the right to transfer the security to the vendee or lessee and upon written
assumption by such vendee or lessee of Landlord's obligations under this Lease,
including without limitation the obligation to return the Security Deposit to
Tenant, Landlord shall thereupon be released by Tenant from all liability for
the return or payment thereof; and Tenant shall look solely to the new landlord
for the return or payment of the same; and the provisions hereof shall apply to
every transfer or assignment made of the same to a new landlord. Except in
connection with a permitted assignment or subletting of this Lease, Tenant shall
not assign or encumber or attempt to assign or encumber the monies deposited
herein as security and neither Landlord nor its successors or assigns shall be
bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
SECTION 7. SUBORDINATION, NOTICE TO SUPERIOR MORTGAGEES:
- --------- --------------------------------------------
7.1 Subordination: Landlord represents and warrants that there are no
-------------
ground leases or mortgages affecting the Land or the Building as of the date of
this Lease. Any lease to which this Lease is, at the time referred to, subject
and subordinate is herein called "Superior Lease" and the lessor of a Superior
Lease or its successor in interest, at the time referred to, is herein called
"Superior Lessor," and any mortgage to which this Lease is, at the time referred
to, subject and subordinate is herein called "Superior Mortgage" and the holder
of a Superior Mortgage, or its successor in interest, at the time referred to,
is herein called "Superior Mortgagee." This Lease, and all rights of Tenant
hereunder, are and shall be subject and subordinate to any ground leases
covering the Land and/or the Building hereafter existing, and to all mortgages
which may hereafter affect the Land and/or the Building and/or any of such
leases, whether or not such mortgages shall also cover other lands and/or
buildings and/or leases, to each and every advance made or hereafter to be made
under such mortgages, and to all renewals, modifications, replacements and
extensions of such leases and such mortgages. This Section shall be
self-operative, and no further
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<PAGE>
instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall promptly execute, acknowledge or deliver any
instrument that Landlord, any Superior Lessor or any Superior Mortgagee may
reasonably request to evidence such subordination.
7.2 Notice: If any act or omission of Landlord would give Tenant the
------
right, immediately or after lapse of a period of time, to cancel or terminate
this Lease, or to claim a partial or total eviction. Tenant shall not exercise
such right: (i) until it has given written notice of such act or omission to
Landlord and each Superior Mortgagee and each Superior Lessor whose name and
address shall previously have been furnished to Tenant: and (ii) until a
reasonable period of time for such parties to cure the condition has passed.
7.3 Attornment; Nondisturbance: For the purposes of this Section, the
--------------------------
term "Successor Landlord" shall mean the Superior Lessor or Superior Mortgagee
if the same succeeds to the rights of Landlord under this Lease, whether through
possession or foreclosure action or delivery of a new lease or deed, or any
third party that succeeds to the rights of Landlord under this Lease by virtue
of having purchased the Land and the Building at a foreclosure sale. The
Successor Landlord shall accept Tenant's attornment, assume Landlord's
obligations under the Lease, and shall not disturb Tenant's quiet possession of
the Premises. Tenant shall attorn to and recognize such Successor Landlord as
Tenant's Landlord under this Lease and shall promptly execute and deliver any
instrument that such Successor Landlord may reasonably request to evidence such
attornment. Upon such attornment this Lease shall continue in full force and
effect as a direct lease between the Successor Landlord and Tenant upon all of
the terms, conditions and covenants as are set forth in this Lease except that
the Successor Landlord shall not: (i) be liable for any previous act or omission
of Landlord under this Lease except that Tenant may terminate the Lease if the
Successor Landlord fails to cure any continuing breach of this Lease caused by
Landlord's prior acts or omissions within a reasonable period of time; (ii) be
subject to any offset, deficiency or defense which theretofore shall have
accrued to Tenant against Landlord; (iii) be bound by any previous modification
of this Lease or by any previous prepayment of more than one (1) month's Base
Rent, unless such modification or prepayment shall have been expressly approved
in writing by the Superior Lessor or the Superior Mortgagee whose name and
address shall previously have been furnished to Tenant and through or by reason
of which the Successor Landlord shall have succeeded to the right of Landlord
under this Lease; (iv) be liable for restoration of improvements following any
casualty not required to be insured under this Lease or for the costs of any
restoration in excess of the proceeds recovered under any insurance required to
be carried under this Lease; or (v) be liable for any lien, right, power or
interest, if any, which may have arisen or intervened in the period between the
recording of any Superior Mortgage and the execution of this Lease or any lien
or judgment which may arise at any time under the terms of this Lease.
SECTION 8. QUIET ENJOYMENT:
- --------- ---------------
So long as Tenant pays all of the Base Rent and Additional Rent and
performs all of Tenant's other obligations hereunder, Tenant shall peaceably and
quietly have, hold and enjoy the Premises without hindrance, ejection or
molestation by Landlord or any person lawfully claiming through or under
Landlord, subject nevertheless, to the provisions of this Lease and to any
Superior Lease and/or Superior Mortgage. This covenant shall be construed as a
covenant running with the Land, and is not, nor shall it be construed as, a
personal covenant of Landlord, except to the extent of Landlord's interest in
this Lease and only so long as such interest shall continue, and thereafter this
covenant shall be binding only upon subsequent successors in interest of
Landlord's interest in this Lease, to the extent of their respective interests,
as and when they shall acquire the same, and so long as they shall retain such
interest.
SECTION 9. ASSIGNMENT AND SUBLETTING:
- ---------- -------------------------
9.1 Generally: "Restricted Transfer" shall mean any sale, assignment,
---------
subletting, encumbrance or other transfer by operation of law or otherwise of
this Lease or any interest herein, or the Premises or any portion thereof,
without the prior written consent of Landlord, or the placing of any lien on
Tenant's interest in the Premises by operation of law. Any change in effective
control of Tenant (other than a change in ownership of Tenant following a public
offering of stock in Tenant) shall be deemed a Restricted Transfer.
Notwithstanding the foregoing. "Restricted Transfer" shall not include any of
the following: (i) any subletting, assignment, license or other grant of
interest in any portion of the Premises to a customer of Tenant in the course of
Tenant's business (Landlord specifically acknowledges that Tenant's business
consists of providing space for telecommunications, computer, and other
electronic equipment to third party customers and agrees that such use of space,
under any type of lease, license or agreement, is not restricted under this
Section); or (ii) any' transfer to a subsidiary, affiliate or related company to
Tenant; or (iii) any change in effective control of Tenant so long as Art Zeile
and Joel Daly continue to have a material economic interest and a management
position in Tenant. Tenant shall give notice to Landlord promptly after the
occurrence of any transfer described in (ii) or (iii) above. Tenant shall not
make or permit any Restricted Transfer without Landlord's prior written consent,
which Landlord shall not unreasonably
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<PAGE>
withhold. Any transfer hereunder by Tenant shall not result in Tenant being
released or discharged from any liability under this Lease unless Landlord
specifically agrees to such release or discharge. Any sale, assignment,
encumbrance, subletting, occupation, lien or other transfer of this Lease which
does not comply' with the provisions of this Section 9 shall be void. Any
listing on Building directories or other signage using a name other than
Tenant's in conjunction with the Premises will not be deemed, nor will it
substitute for, Landlord's consent, as required by this Lease, to any sublease,
assignment or other occupancy of the Premises.
9.1.1 Tenant shall, by written notice, advise Landlord of its desire from
and after a stated date (which shall not be less than thirty (30) days nor more
than ninety' (90) days after the date of Tenant's notice), to make a Restricted
Transfer; and such notice by Tenant shall state the name and address of the
proposed transferee, and Tenant shall deliver to Landlord a true and complete
copy of the proposed transfer instrument with said notice. Within ten (10) days
after Landlord's receipt of such notice, Landlord shall notify Tenant whether or
not it consents to such Restricted Transfer, and if not, shall provide
explanation of the reasonable grounds for withholding such consent.
9.2 Conditions of Landlord's Consent: As a condition to Landlord's prior
--------------------------------
written consent as provided for in this Section 9, (a) Tenant shall pay Landlord
its reasonable legal fees and out-of-pocket costs incurred due to the Restricted
Transfer; (b) the transferee(s) shall agree in writing to comply with and be
bound by all of the terms, covenants, conditions, provisions and agreements of
this Lease, and (c) Tenant shall deliver to Landlord, promptly after execution,
an executed copy of each transfer instrument and an agreement of said compliance
by each transferee. Landlord may require as a condition of granting consent to a
Restricted Transfer that Tenant shall pay' to Landlord all profits from such
Restricted Transfer determined by deducting from the total consideration paid
directly or indirectly to or for the benefit of Tenant or its designee for the
transferred interest, the reasonable costs of the transfer incurred by Tenant
and subtracting the remaining rent obligation of Tenant at such time under this
Lease. For purposes of determining all profits from the transfer, substance
shall control over form such that Landlord may ignore any attempt by Tenant to
inflate the purchase price of any other assets transferred in an attempt to
conceal the profit on the transfer of Tenant's interest in this Lease. Sums
payable hereunder shall be paid to Landlord as and when paid by the transferee
to Tenant.
SECTION 10. INSURANCE:
- ---------- ---------
10.1 Waiver of Right of Recovery: Neither party, nor its officers,
---------------------------
directors, employees, agents or invitees, nor, in case of Tenant, its
subtenants, shall be liable to the other party or to any insurance company (by
way of subrogation or otherwise) insuring the other party for any loss or damage
to any building, structure or other tangible property normally covered under an
all risk policy of property insurance or under workers' compensation insurance
even though such loss or damage might have been occasioned by the negligence of
such party, its agents or employees, or for loss of business revenue or extra
expense arising out of or related to the use of occupancy of the Premises. Each
party, on obtaining the property damage insurance required by this Lease shall
notify the insurance carrier of the foregoing waivers contained in this Lease
and use all efforts to obtain an appropriate waiver of subrogation provision in
the policies.
10.2 Public Liability Insurance: Tenant, at its expense, shall maintain at
--------------------------
all times during the Lease Term, public liability insurance in respect of the
Premises and the conduct or operation of business therein, with Landlord, its
asset manager and property manager, if any, and any Superior Lessor or
Superior Mortgagee whose name and address shall previously have been furnished
to Tenant, as additional insureds, with One Million and No/l00 Dollars
($1,000,000.00) minimum combined single limit coverage, or its equivalent. All
such insurance shall insure the performance by Tenant of the indemnity agreement
as to liability for injury to, illness of, or death of persons and damage to
property set forth in Section 17. Tenant shall deliver to Landlord and any
additional insured ACCORD Form 25-S certificates of insurance issued by the
insurance company or its authorized agent, at least ten (10) days before the
Commencement Date. Tenant shall procure and pay for renewals of such insurance
from time to time before the expiration thereof, and Tenant shall deliver to
Landlord and any additional insured such renewal certificate at least thirty
(30) days before the expiration of any existing policy.
10.3 Landlord's Property Insurance: Landlord shall maintain property
-----------------------------
insurance for the shell and core of the Building and Building-Standard Tenant
Improvements within the Premises for the full replacement cost thereof, to the
extent available at commercially reasonable rates on such terms and conditions,
including insurance for loss of Rent, as Landlord reasonably deems appropriate,
from time to time.
10.4 Tenant's Property Insurance: Tenant shall maintain throughout the
---------------------------
Lease Term an all risk policy of property insurance for the full replacement
cost of Tenant property and betterments in the Premises, including
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Tenant Finish in excess of the Building-Standard Tenant Improvements in the
Premises, to the extent available at commercially reasonable rates.
10.5 Acceptable Insurance Companies: All insurance policies required to be
------------------------------
carried by Tenant hereunder shall be issued by responsible insurance companies
authorized to issue insurance in the State of Colorado rated B VII or higher by
Best's Insurance Rating Service.
10.6 Increase in Coverage: Landlord may from time to time, but not more
--------------------
frequently than once every three (3) years, require that the amount of public
liability insurance to be maintained by Tenant under Section 10.2 be increased
so that the amount thereof adequately protects Landlord's interest based on
amounts of coverage required of comparable tenants in comparable buildings.
SECTION 11. RULES AND REGULATIONS:
- ---------- ---------------------
Tenant shall faithfully observe and comply with the rules and regulations
printed on or annexed to this Lease as EXHIBIT E and all reasonable
modifications thereof and additions thereto from time to time established by
Landlord by written notice to Tenant, except to the extent any of the same
conflict with the terms and provisions of this Lease. Landlord shall not be
responsible for the nonperformance by any other tenant or occupant of the
Building of any said rules and regulations but Landlord shall use reasonable
efforts to remedy any violation of the rules and regulations applicable to any
other Building occupant upon Tenant's request.
SECTION 12. ALTERATIONS:
- ----------- ----------
12.1 Requirements: Tenant shall not make or suffer to be made any
------------
alterations, additions, or improvements in, on, or to the Premises or any part
thereof which would require a building permit without the prior written consent
of Landlord, which shall not be unreasonably withheld, conditioned or delayed.
In the event Landlord consents to the making of any such alterations, additions,
or improvements by Tenant, the same shall be made by Tenant, at Tenant's sole
cost and expense, in accordance with plans and specifications approved by
Landlord, and any contractor or person selected by Tenant to make the same must
first be approved in writing by Landlord. If Tenant elects to have any
alterations, additions or improvements made by Landlord for Tenant's account,
Tenant shall reimburse Landlord for the cost thereof within twenty (20) days
after receipt of a statement, setting forth the actual cost of such alterations,
additions or improvements. Tenant shall reimburse Landlord for Landlord's
reasonable out-of-pocket costs (including reasonable fees of Landlord's
architectural and engineering consultants) for review of such alterations,
additions or improvements. After the expiration or sooner termination of the
Lease Term and upon demand by Landlord, Tenant shall remove any or all
alterations, additions, or improvements made by or for the account of Tenant,
designated by Landlord to be removed, and Tenant shall repair and restore the
Premises to their original condition, subject to ordinary wear and tear. Such
removal, repair and restoration work shall be done promptly and with all due
diligence at Tenant's sole cost and expense. The provisions of this Section 12
shall not apply to the initial Tenant Improvements described in EXHIBIT C to
this Lease, or to any installation or removal of equipment in the Premises for
third party clients in the course of Tenant's business (however, Section 13.1
and Section 13.2 shall remain applicable).
12.2 Indemnification of Landlord: Tenant, at its expense, and with
---------------------------
diligence and dispatch, shall procure the cancellation or discharge of all
notices of violation arising from or otherwise connected with alterations, or
any other work, labor, services or materials done for or supplied to Tenant, or
any other person claiming by, through or under Tenant, which shall be issued by
any public authority having or asserting jurisdiction. Tenant shall defend,
indemnify and save harmless Landlord and any Superior Lessor or Superior
Mortgagee from and against any and all mechanic's and other liens and
encumbrances filed in connection with alterations, or any other work, labor,
services or materials done for or supplied to Tenant, or any person claiming by,
through or under Tenant, including, without limitation, security interests in
any materials, fixtures or articles so installed in and constituting part of the
Premises and against all costs, expenses and liabilities incurred in connection
with any such lien or encumbrance or any action or proceeding brought thereon.
Tenant, at its expense, shall procure the satisfaction or discharge of record of
all such liens and encumbrances within fifteen (15) days after the filing
thereof. Nothing herein contained shall prevent Tenant from contesting, in good
faith and at its own expense, any notice of violation, or lien provided Tenant
posts for the protection of Landlord security reasonably acceptable to
Landlord.
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SECTION 13. LANDLORD'S AND TENANTS PROPERTY:
- ---------- -------------------------------
13.1 Landlord's Property: All fixtures, carpeting, equipment,
-------------------
improvements and appurtenances attached to or built into the Premises at the
commencement of or during the Lease Term, whether or not by or at the expense of
Tenant, shall be and remain a part of the Premises, shall be deemed the
property of Landlord and shall not be removed by Tenant, except as provided in
Section 13.2; provided, that at Landlord's written request. Tenant shall, at its
sole expense and upon termination of the Lease, remove those items designated by
Landlord, including any or all fixtures, equipment, improvements, appurtenances
and other personal property, which are not deemed herein the property of
Landlord. Tenant's covenant to remove property designated by Landlord shall
survive the termination of this Lease.
13.2 Tenant's Property: All business and trade fixtures, machinery and
-----------------
equipment, communications equipment and office equipment which are installed in
the Premises by or for the account of Tenant, including all of Tenant's
Improvements made pursuant to EXHIBIT C of this Lease, whether or not attached
to the Building, and all furniture, furnishings (excluding window coverings),
all other articles of movable personal property owned by Tenant and located in
the Premises, all property of third-party customers of Tenant, whether or not
attached to the Building, and any other items designated on the Addendum (herein
collectively called "Tenant's Property") shall be and remain the property of
Tenant (or such third-party customer of Tenant) and may be removed by Tenant at
any time during the Lease Term and upon the expiration or sooner termination of
this Lease; provided, that if any of Tenant's Property is removed, Tenant shall
repair or pay the cost of repairing any damage to the Premises or to the
Building resulting from the installation and/or removal thereof. In no event
shall Landlord claim any interest in any property of any third-party customer of
Tenant. Tenant shall remove all of Tenant's Property (excluding demising walls,
carpeting and similar items) upon the expiration or sooner termination of this
lease unless Landlord agrees otherwise.
13.3 Abandonment: Any items of Tenant's Property may be deemed, at the
-----------
option of Landlord, to have been abandoned if left in the Premises after the
abandonment deadline, and in such case such items may be retained by Landlord,
without accountability, in such manner as Landlord shall determine at Tenant's
expense. The abandonment deadline means the earlier of the expiration of the
Lease Term, or fifteen (15) days following an earlier termination date, or five
(5) business days following entry of an order of possession for restoration of
the Premises to Landlord.
SECTION 14. SERVICES AND UTILITIES:
- ---------- ----------------------
14.1 Building Maintenance: Landlord shall maintain the Building,
--------------------
including public and common areas of the Building, such as the lobbies, stairs,
elevators, corridors and rest rooms, the windows in the Building, the
mechanical, plumbing and electrical equipment serving the Building, and the
structure itself, in good order and condition, consistent at least with a Class
B office building, except for damage occasioned by the act of Tenant, which
damage shall be repaired by Landlord at Tenant's expense.
14.2 Utilities: Subject to the provisions elsewhere herein contained and
---------
to the rules and regulations of the Building, Landlord agrees to furnish to the
Premises (i) heat and air-conditioning required in Landlord's reasonable
judgment for the comfortable use and occupation of the Premises, consistent with
other office buildings in downtown Denver, during Normal Building Hours, as
defined in the Rules and Regulations attached as EXHIBIT E, which hours may be
adjusted by Landlord but shall be consistent with comparable downtown Denver
office buildings and shall not be reduced, (ii) continuous water, ventilation
and electricity service at least consistent with a Class B office building,
(iii) with respect to the portion of the Premises used for office purposes only,
janitorial services after 6:00 P.M. on weekdays exclusive of legal holidays in
the manner that such services are, in Landlord's reasonable judgment,
customarily furnished in comparable office buildings in the immediate market
area, and (iv) continuous elevator service which shall mean service by
unattended automatic elevators. Landlord agrees to maintain backup electricity
and HVAC systems currently present in the Building and to use its best efforts
to operate such backup systems upon failure of the primary systems. Landlord
shall provide additional heating or air-conditioning other than during Normal
Business Hours at Tenant's request, and Tenant shall pay to Landlord a
reasonable charge for such services at Landlord's cost therefor, as reasonably
determined by Landlord. Tenant agrees to keep and cause to be kept closed all
window coverings when necessary because of the sun's position, and Tenant also
agrees at all times to cooperate fully with Landlord and to abide by all the
regulations and requirements which Landlord may reasonably prescribe for the
proper functioning and protection of the heating, ventilating, and air-
conditioning system. Wherever heat-generating machines, excess lighting or
equipment are used in the Premises which affect 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 the cost of installation and the cost of operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord.
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<PAGE>
Any sums payable under Section 14 shall be considered Additional Rent and may be
added to any installment of Base Rent thereafter becoming due, and Landlord
shall have the same remedies for a default in payment of such sum as for a
default in the payment of Base Rent.
14.3 Excess Usage: If Tenant uses excessive amounts of non-metered
------------
utilities or services of any kind because of operation outside of Normal
Building Hours, high demands from office machinery and equipment, nonstandard
lighting, or any other cause. Landlord may impose a reasonable charge for
supplying such extra utilities services, which charge shall be payable monthly
by Tenant in conjunction with Rent payments. Landlord may install in the
Premises a special meter to measure the amount of water, electric current or
other resource consumed for any such other use. In case of dispute over any
extra charge under this Section 14.3, Landlord shall designate a qualified
independent engineer whose decision shall be conclusive on both parties. The
party not prevailing in such dispute shall pay the cost of such engineer's
determination. The foregoing provisions of this Section 14.3 do not apply to
electricity usage or air conditioning, which shall be governed by the provisions
of the Addendum. In no event shall Landlord be permitted to withhold utility
services due to a disagreement over the appropriate charge under this Section
14.3 or any other provision of this Lease.
14.4 Disclaimer: Landlord shall not be in default hereunder or be liable
----------
for any damages directly or indirectly resulting from, or by reason of (i) the
installation, use or interruption of use of any equipment in connection with the
furnishing of the foregoing utilities and services or the failure to furnish or
delay in furnishing any such utilities or services when caused by acts of God or
the elements, labor disturbances of any character, any other accidents or other
conditions beyond the reasonable control of Landlord or (ii) the limitation,
curtailment, rationing or restriction by any governmental entity on use of water
or electricity, gas or any other form of energy or any other service or utility
whatsoever serving the Premises or the Building to the extent not caused by the
failure to pay any amount due to, or the violation of any agreement, rules,
regulations of, the provider of such service or utility or the violation of
Legal Requirements. Furthermore, Landlord shall be entitled to cooperate
voluntarily in a reasonable manner with the efforts of national, state or local
governmental agencies or utilities suppliers in reducing energy or other
resource consumption. Rent shall be abated in accordance with the terms of
Section 18 due to the occurrence of any of the foregoing conditions which are
covered by Landlord's insurance.
14.5 Use of Common Areas and Facilities: All common facilities and areas
----------------------------------
furnished by Landlord in or near the Building, including parking areas, lighting
facilities, pedestrian sidewalks and ramps, landscaped areas, exterior
stairways, rest rooms and other areas and improvements provided by Landlord for
the general use, in common, of tenants, their officers, agents, employees and
customers shall at all times be subject to the exclusive control and management
of Landlord. Without limiting the scope of such discretion, Landlord shall have
the full right and authority to employ all personnel and to establish, modify
and enforce reasonable rules and regulations necessary for the proper operation
and maintenance of common areas and facilities. Landlord shall have the right to
close all or any portion of the common areas or facilities to such extent as, in
the opinion of Landlord's legal counsel, may be legally sufficient to prevent a
dedication thereof or the accrual of any rights to any person (other than
Tenant) or the public therein; and to do and perform such other acts in and to
said areas and improvements as Landlord shall reasonably determine to be
advisable. All common areas and facilities not within the Premises; which Tenant
may be permitted to use and occupy, are to be used and occupied under a
revocable license, and if the amount of such areas be diminished, Landlord shall
not be subject to any liability nor shall Tenant be entitled to any compensation
or diminution or abatement of Rent, nor shall such diminution of such areas be
deemed constructive or actual eviction. The provisions of this Section 14.5
shall not be construed to limit any rights to common areas which are
specifically granted to Tenant in the Addendum or elsewhere in this Lease.
14.6 Parking Facilities: There shall be no parking provided for Tenant,
------------------
either for its own use or for the use of its invitees, unless specifically set
forth in any Addendum to this Lease.
14.7 Signage: Landlord shall initially provide Tenant, at no additional
-------
charge, Building standard signage, which shall include, without limitation,
signage in the lobby and at the third floor elevators. Any change in Building
standard signage requested by Tenant, due to a name change or otherwise, shall
be made by Landlord at Tenant's expense.
14.8 Mailbox: When available for the Building, Landlord shall furnish to
-------
Tenant, for Tenant's exclusive use during the Lease Term, without additional
charge, a locked mailbox in the Building.
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SECTION 15. ACCESS AND NAME:
- ----------- ---------------
Subject to the provisions of the Addendum regarding the security of
Tenant's equipment room. Landlord reserves, and shall at all times have, the
right to re-enter the Premises upon reasonable notice to Tenant (except in an
emergency) to inspect the same, to supply janitor service and any other service
to be provided by Landlord to Tenant, to show the Premises to prospective
purchasers and mortgagees and during the last six (6) months of the Lease Term,
prospective tenants, to post notices of nonresponsibility, and to alter, improve
or repair the Premises and any portion of the Building of which the Premises are
a part, without abatement of Rent. For such purpose, Landlord may erect, use and
maintain scaffolding, pipes, conduits and other necessary structures in and
through the Premises where reasonably required by the character of the work to
be performed, provided that entrance to the Premises shall not be blocked
thereby, and further provided that the business of Tenant shall not be
interfered with unreasonably. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Premises and any other loss occasioned by
Landlord's conduct pursuant to this Section. For each of the purposes stated in
this Section, Landlord shall at all times have and retain a key with which to
unlock all of the doors in, upon and about the Premises, excluding Tenant's
vaults and safes or special security areas (designated at any time by Tenant in
writing to Landlord). Landlord shall have the right to use any and all means
which Landlord may deem reasonably necessary or proper to open all doors in an
emergency, in order to obtain entry to any portion of the Premises, and any
entry to any portion of the Premises obtained by Landlord by any such means, or
otherwise shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or an eviction,
actual or constructive, of Tenant from all or part of the Premises. Landlord
shall also have the right at any time, without the same constituting an actual
or constructive eviction and without incurring any liability to Tenant, to
change the arrangement and/or location of entrances, lobbies, parking
facilities, passageways, doors and doorways, corridors, elevators, stairs,
toilets or other public parts of the Building and to change the name, number or
designation by which the Building is commonly known.
SECTION 16. NOTICE OF OCCURRENCES:
- ----------- ---------------------
Tenant shall, to the extent Tenant becomes aware of the same, give prompt
notice to Landlord of: (i) any occurrence in or about the Premises for which
Landlord might be liable; (ii) any fire or other casualty in the Premises; (iii)
any damage to or defect in the Premises including the fixtures, equipment and
appurtenances thereof for the repair of which Landlord might be responsible; and
(iv) damage to or defect in any part or appurtenances of the Building's
sanitary, electrical, heating, ventilating, air-conditioning, elevator or other
systems located in or passing through the Premises or any part thereof.
SECTION 17. NONLIABILITY AND INDEMNIFICATION:
- ----------- ---------------------------------
17.1 Waiver: Landlord shall not be liable for any loss or damage to person
------
or property sustained by Tenant, or other persons, which may be caused by theft,
or by any act or neglect of any tenant of the Building or by any other person in
or about the Building. Neither Landlord nor any partner, director, officer,
agent, servant or employee of Landlord shall be liable to Tenant for any loss,
injury or damage to Tenant or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss except to the extent
caused by or resulting from the intentional torts of Landlord, it being the
intent of the parties that Tenant look to its own insurance policy for coverage
of any such item resulting from an accident even if caused by the negligence of
Landlord. Further, neither Landlord nor any partner, director, officer, agent,
servant or employee of Landlord shall be liable: (i) for any such damage caused
by other tenants or persons in, upon or about the Building, or caused by
operations in construction of any private, public or quasi-public work: or (ii)
in any event for consequential damages, including lost profits, of Tenant or any
person claiming through or under Tenant.
17.2 Indemnification: Tenant shall indemnify and hold harmless Landlord and
---------------
all Superior Lessors and/or Superior Mortgagees and its and their respective
partners, directors, officers, agents and employees from and against any and all
third party claims for bodily injury and/or property damage arising from or in
connection with any accident, injury or damage whatever (even if caused by
Landlord's negligence or breach of this Lease) occurring in, at or upon the
Premises; together with all costs, expenses and liabilities incurred or in
connection with each such claim or action or proceeding brought thereon,
including, without limitation, all attorneys' fees and expenses at trial and
upon appeal. Landlord shall indemnify and hold harmless Tenant and its
directors, officers, agents and employees from and against any and all third
party claims for bodily injury and/or property damage arising from or in
connection with any accident, injury or damage whatever (even if caused by
Tenant's negligence or breach of this Lease) occurring in, at or upon the common
areas of the Land and the Building; together with all costs, expenses and
liabilities incurred or in connection with each such claim or action or
proceeding brought thereon, including, without limitation, all attorneys' fees
and expenses at trial and upon appeal. The foregoing
-12-
<PAGE>
indemnity obligations of the parties shall be limited to the amount of liability
insurance coverage required of Tenant under Section 10 of this Lease.
17.3 Duty to Defend: In case any action or proceeding is brought against
--------------
Landlord and/or any Superior Lessor and/or Superior Mortgagee and/or its or
their partners, directors, officers, agents and/or employees and such claim is a
claim from which Tenant is obligated to indemnify Landlord pursuant to Section
17.2. Tenant, upon notice from Landlord or such Superior Lessor or Superior
Mortgagee, shall resist and defend such action or proceeding (by counsel
reasonably satisfactory to Landlord). In case any action or proceeding is
brought against Tenant and/or its directors, officers, agents and/or employees
and such claim is a claim from which Landlord is obligated to indemnify Tenant
pursuant to Section 17.2. Landlord, upon notice from Tenant, shall resist and
defend such action or proceeding (by counsel reasonably satisfactory to Tenant).
17.4 Survival. The obligations of Landlord and Tenant under this Section 17
--------
shall survive the expiration or sooner termination of the Lease Term.
SECTION 18. DAMAGE OR DESTRUCTION:
- ----------- ---------------------
18.1 Casualty: If the Premises or the Building are damaged by fire or other
--------
casualty, Landlord shall forthwith repair the same unless this Lease is
terminated as permitted herein. If the Building or the Premises is damaged by
fire or other casualty so that the Premises are rendered unsuitable for the
conduct of Tenant's business, then Tenant shall have the right to terminate this
Lease, upon written notice to Landlord, if such damage cannot be or is not
repaired within sixty (60) days after the damage occurs. Within twenty (20) days
from the date of any damage, Landlord shall notify Tenant if the Building is
damaged in excess of twenty-five percent (25%) of the Building's precasualty
value, as reasonably determined by Landlord (damage in excess of such amount
being referred to as "Major Damage" and damage equal to or less than such amount
being referred to as "Minor Damage"). If Major Damage occurs, Landlord may elect
to terminate the Lease. If Minor Damage occurs then Landlord shall repair such
damage and rebuild that portion of the Building or the Premises damaged, but not
including Tenant Finish in excess of Building-Standard Tenant Finish (which
Tenant shall be obligated to repair at its own expense) or any of Tenant's
Property. In the event of Major Damage. if Landlord gives its written notice to
Tenant electing to rebuild or in the event of Minor Damage, this Lease shall
remain in full force and effect provided the repairs are completed within one
hundred eighty (180) days after the date the damage occurred, except the Rent
shall be reasonably abated during the period of repair based on that portion of
the Premises not reasonably usable by Tenant. If in the event of Major Damage,
Landlord elects by written notice to Tenant not to rebuild, then this Lease
shall automatically terminate as of the effective date of such notice, the Rent
shall be reduced by a proportionate amount based upon the extent to which said
damage interfered with the business carried on by Tenant in the Premises, and
Tenant shall pay such reduced Rent up to the date of termination. Landlord
agrees to refund to Tenant any Rent previously paid for any period of time
subsequent to such date of termination. Landlord shall not be required to repair
any damage by fire or other cause to Tenant's Property, including without
limitation, all Tenant Finish in excess of Building-Standard Tenant Finish.
18.2 Condemnation: If more than twenty-five percent (25%) of the Land
------------
and/or Building shall be taken or appropriated under the power of eminent domain
or conveyed in lieu thereof, Landlord shall have the right to terminate this
Lease. If any taking renders the Premises unsuitable for the conduct of Tenant's
business then Tenant shall have the right to terminate this Lease, upon written
notice to Landlord. If this Lease is terminated, Landlord shall receive (and
Tenant shall assign to Landlord upon demand from Landlord) any and all income,
rent, award or any interest thereon which may be paid or owed in connection with
the exercise of such power of eminent domain or conveyance in lieu thereof, and
Tenant shall have no claim against the agency exercising such power or receiving
such conveyance, for any part of such sum paid by virtue of such proceedings,
whether or not attributable to the value of the unexpired Lease Term except for
the unamortized value of Tenant Improvements paid for by Tenant and Tenant's
Property and relocation benefits, if any. If a part of the Land and/or Building
shall be so taken or appropriated or conveyed and Landlord and Tenant each shall
elect not to terminate this Lease, Landlord shall nonetheless receive (and
Tenant shall assign to Landlord upon demand from Landlord) any and all income,
rent, award or any interest thereon paid or owed in connection with such taking,
appropriation or conveyance except for the unamortized value of Tenant
Improvements paid for by Tenant and Tenant's Property and relocation benefits,
if any: and if the Premises or other Tenant Improvements have been damaged as a
consequence of such partial taking or appropriation or conveyance, Landlord
shall restore the Premises and such other Tenant Improvements and this Lease
shall remain in full force and effect except that Tenant shall be entitled to an
appropriate reduction in Rent while such restoration is being made by Landlord.
Such proportionate reduction shall be based upon the extent to which the
restoration being made by Landlord shall interfere with the business carried on
by Tenant in the Premises. Landlord shall not be required to repair or restore
any injury or damage to the property of Tenant.
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SECTION 19. SURRENDER AND HOLDING OVER:
- ----------- --------------------------
19.1 General: On the last day of the Lease Term, or upon re-entry by
-------
Landlord upon the Premises, Tenant shall quit and surrender the Premises to
Landlord "broom-clean" and in good order, condition and repair, except for
ordinary wear and tear in accordance with the provisions of Section 13 of this
Lease.
19.2 Surrender: No agreement relating to the surrender of the Premises by
---------
Tenant shall be valid unless in writing and signed by Landlord.
19.3 Holding Over with Consent/Tenancy Month-to-Month: If after the
------------------------------------------------
termination or expiration of this Lease, Tenant remains in possession of the
Premises without a written agreement as to such holding-over and continues to
pay Rent and Landlord accepts such Rent, such possession is a tenancy from
month-to-month, subject to all provisions hereof but at a monthly rent
equivalent to 150% of the monthly Rent paid by Tenant immediately prior to such
expiration or termination. Rent shall continue to be payable in advance on the
first day of each calendar month. Such tenancy may be terminated by either party
upon 10 days' notice prior to the end of any monthly period. Nothing contained
herein obligates Landlord to accept Rent tendered after the expiration of the
Lease Term or relieves Tenant from its liability for failure to immediately quit
and surrender the Premises at the expiration or other termination of this Lease.
19.4 Holding Over Without Consent: If Tenant shall retain possession of the
----------------------------
Premises or any part thereof without Landlord's consent following the expiration
or sooner termination of this Lease for any reason, then Tenant shall pay to
Landlord for each day of such retention 150% of the amount of the daily Rent for
the last period prior to the date of such expiration or termination, subject to
adjustment as provided in Section 4. Tenant shall also indemnify and hold
Landlord harmless from any loss or liability resulting from delay by Tenant in
surrendering the Premises, including, without limitation, any claims made by any
succeeding tenant founded on such delay. Alternatively, if Landlord gives notice
to Tenant of Landlord's election thereof, such holding over shall constitute
renewal of this Lease for a period from month to month. Acceptance of Rent by
Landlord following expiration or termination shall not constitute a renewal of
this Lease, and nothing contained in this Section shall waive Landlord's right
of re-entry or any other right. Unless Landlord exercises the option hereby
given to it. Tenant shall be only a Tenant at sufferance, whether or not
Landlord accepts any Rent from Tenant while Tenant is holding over without
Landlord's written consent.
SECTION 20. EVENTS OF DEFAULT:
- ----------- -----------------
20.1 Events of Default: The occurrence of any one or more of the
-----------------
following events of default shall constitute a breach of this Lease by Tenant:
20.1.1 If Tenant shall default in the payment of the Security Deposit,
Base Rent or Additional Rent, and such default shall continue for five (5) days
after Tenant shall have received from Landlord a notice specifying the same;
however, Tenant is not entitled to more than two notices of delinquent payments
during any calendar year, and if thereafter during such calendar year any Rent
is not paid when due, an event of default shall automatically occur; or
20.1.2 If Tenant shall, whether by action or inaction, be in default
of any of its obligations under this Lease (other than a default in the payment
of Base Rent or Additional Rent) and such default shall continue and not be
remedied within fifteen (15) days after Landlord shall have given to Tenant a
notice specifying the same, or, in the case of a default which cannot with due
diligence be cured within such time period and the continuance of which for the
period required for cure will not subject Landlord or any Superior Lessor to
prosecution for a crime or termination of any Superior Lease or foreclosure of
any Superior Mortgage, if Tenant shall not, (i) within such time period advise
Landlord of Tenant's intention to take all steps necessary to remedy such
default: (ii) duly commence within such time period, and thereafter diligently
prosecute to completion all steps necessary to remedy the default; and (iii)
complete such remedy within a reasonable time after the date of said notice of
Landlord; or
20.1.3 If any event shall occur or any contingency shall arise whereby
this Lease or the estate hereby granted or the unexpired balance of the term
hereof would, by operation of law or otherwise, devolve upon or pass to any
person, firm or corporation other than Tenant, except as expressly permitted by
Section 9; or
20.1.4 If Tenant shall vacate or abandon the Premises, provided that
Tenant's failure to use the office portion of the Premises shall not be deemed
vacation or abandonment so long as Tenant continues to use the equipment room;
or
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<PAGE>
20.1.5 If Tenant or any guarantor of Tenant's obligations shall make a
general assignment for the benefit of creditors, or shall be unable to pay its
debts as they become due, or shall file a petition in bankruptcy, or shall be
adjudicated as bankrupt or insolvent, or shall file a petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, or
shall file an answer admitting or shall fail timely to contest the material
allegations of a petition filed against it in any such proceeding, or shall seek
or consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of Tenant or any material part of its properties: or
20.1.6 If within ninety (90) days after the commencement of any
proceeding against Tenant seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have been dismissed
or if, within ninety (90) days after the appointment without the consent or
acquiescence of Tenant of any trustee, receiver or liquidator of Tenant or of
any material part of its properties, such appointment shall not have been
vacated; or
20.1.7 If this Lease or any estate of Tenant hereunder shall be levied
upon under any attachment or execution and such attachment or execution is not
vacated within thirty (30) days; or
20.1.8 Tenant fails to take possession of the Premises on the
Commencement Date.
SECTION 21. REMEDIES UPON DEFAULT:
- ----------- ---------------------
21.1 Remedies: Upon the occurrence of an event of default constituting
--------
a breach of this Lease under Section 20. Landlord may exercise any one or more
of the remedies set forth in this Section 21 or in Section 24, or any other
remedy available under applicable law or contained in this Lease.
21.1.1 Landlord or Landlord's agents and employees may immediately or
at any time thereafter re-enter the Premises, or any part thereof, either by
summary eviction proceedings or by any suitable action or proceeding at law, or
by force or otherwise, without being liable to indictment, prosecution or
damages therefor, and may repossess the same, and may remove any person
therefrom, to the end that Landlord may have, hold and enjoy the Premises.
21.1.2 Should Landlord re-enter and take possession pursuant to legal
proceedings or any notice provided by applicable law, Landlord may, from time to
time, without terminating this Lease, elect to relet the whole or any part of
the Premises from time to time, either in the name of Landlord or otherwise, to
such tenants, for such terms ending before, on or after the expiration date of
the Lease Term, at such rentals and upon such other conditions (including
concessions, tenant improvements, and free rent periods) as Landlord may
determine to be appropriate. Landlord at its option may make such physical
changes to the Premises as Landlord considers advisable or necessary in
connection with any such reletting or proposed reletting, without relieving
Tenant of any liability under this Lease or otherwise affecting Tenant's
liability. If there is other unleased space in the Building, Landlord may lease
such other space without prejudice to its remedies against Tenant. Landlord
shall not in any way be responsible or liable for failure to relet the Premises
or any part thereof or for any failure to collect any rent due upon such
reletting. No such re-entry or repossession or notice from Landlord shall be
construed as an election by Landlord to terminate this Lease unless specific
notice of such intention is given Tenant. Landlord reserves the right following
any re-entry and/or reletting to exercise its right to terminate this Lease by
giving Tenant notice, in which event this Lease will terminate as specified in
the notice.
21.1.3 If Landlord takes possession of the Premises without
terminating this Lease. Tenant shall pay Landlord (i) the Rent which would be
payable if repossession had not occurred, less (ii) the net proceeds, if any, of
any reletting of the Premises after deducting all of Landlord's expenses
incurred in connection with such reletting, including all repossession costs,
brokerage commissions, attorneys' fees, expenses of employees, alteration, and
repair costs (collectively "Reletting Expenses"). If in connection with any
reletting, the new lease term extends beyond the Lease Term or the premises
covered thereby include other premises not part of the Premises, a fair
apportionment of the rent received from such reletting and the Reletting
Expenses, will be made in determining the net proceeds received from the
reletting. In determining such net proceeds, rent concessions will also be
apportioned over the term of the new lease. Tenant shall pay such amounts to
Landlord monthly on the days on which the Rent would have been payable if
possession had not been retaken, and Landlord is entitled to receive the same
from Tenant on each such day: or
21.1.4 Give Tenant notice of termination of this Lease on the date
specified and, on such date, Tenant's right to possession of the Premises shall
cease and the Lease will terminate except as to Tenant's liability as hereafter
provided as if the expiration of the term fixed in such notice were the end of
the Lease Term. If this Lease
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terminates pursuant to this Section 21.4. Tenant remains liable to Landlord for
damages in an amount equal to the Rent which would have been owing by Tenant for
the balance of the Lease Term had this Lease not terminated, less the net
proceeds, if any, of reletting of the Premises by Landlord subsequent to
termination after deducting Reletting Expenses. Landlord may collect such
damages from Tenant monthly on the days on which the Rent would have been
payable if this Lease had not terminated and Landlord shall be entitled to
receive the same from Tenant on each such day. Alternatively, if this Lease is
terminated, Landlord at its option may recover forthwith against Tenant as
damages for loss of the bargain and not as a penalty an amount equal to the
worth at the time of termination of the excess, if any, of the Rent reserved in
this Lease for the balance of the Lease Term over the then Reasonable Rental
Value of the Premises for the same period plus all Reletting Expenses.
"Reasonable Rental Value" is the amount of rent Landlord can obtain for the
remaining balance of the Lease Term.
21.1.5 Whether or not Landlord retakes possession or relets the
Premises, Landlord shall have the right to recover unpaid rent and all damages
caused by the default as well as all costs and expenses incurred in connection
with the enforcement of this Lease, including reasonable attorney fees and court
costs. Damages shall include, without limitation: (i) all rentals lost; (ii) all
legal expenses and other related costs incurred by Landlord following Tenant's
default; (iii) all costs incurred by Landlord in restoring the Premises to good
order and condition, or in remodeling, renovating or otherwise preparing the
Premises for reletting: and (iv) all costs incurred by Landlord in reletting the
Premises, including, without limitation, any brokerage commissions and the value
of Landlord's time.
21.1.6 To the extent permitted under Colorado law, Landlord may sue
periodically for damages as they accrue without barring a later action for
further damages. Landlord may in one action recover accrued damages plus damages
attributable to the remaining Lease Term equal to the difference between the
rent reserved in this Lease (including an estimated amount of Additional Rent as
determined by Landlord) for the balance of the Lease Term after the time of
award, and the fair rental value of the Premises for the same period, discounted
to the time of award at the rate of nine percent (9%) per annum. If Landlord has
relet the Premises for the period which otherwise would have constituted the
unexpired portion of the Lease Term or any part, the amount of rent reserved
upon such reletting shall be deemed, prima facie, to be the fair and reasonable
rental value for the part or the whole of the Premises so relet during the term
of the reletting.
21.1.7 To seize and dispose of Tenant's Property (as that term is
defined in Section 13.2) in any manner permitted by law.
21.2 Cumulative Remedies: The remedies provided for in this Lease are
-------------------
cumulative and are not intended to be exclusive of any other remedies to which
Landlord may lawfully be entitled at any time, and Landlord may invoke any
remedy allowed at law or in equity, including an action for specific
performance, as if specific remedies were not provided for herein. In the event
of a breach or threatened breach by Tenant of any of its obligations under this
Lease, Landlord shall also have the right to obtain an injunction and any other
appropriate equitable relief.
21.3 Termination: Even though Tenant has breached this Lease, the
-----------
Lease shall continue in effect for so long as Landlord does not terminate
Tenant's possession of the Premises or Tenant does not abandon the Premises.
Even after Tenant is no longer in possession of the Premises following a breach
by Tenant, Tenant shall have continuing contractual liability under the Lease,
and Landlord may enforce its rights and remedies under this Lease in the event
of a breach, including the right to recover its damages for loss of Rent for the
remainder of the Lease Term after Tenant is dispossessed of the Premises. Acts
of maintenance or preservation or efforts to relet the Premises or the
appointment of a receiver upon initiative of Landlord to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's
contractual liability under the Lease unless written release of liability is
given by Landlord to Tenant.
21.4 Interest on Damages: In addition to any other remedies Landlord
-------------------
may have under this Lease, and without reducing or adversely affecting any of
Landlord's rights and remedies under this Section 21, if any Base Rent.
Additional Rent or damages payable hereunder by Tenant to Landlord are not paid
within five (5) days after demand therefor, the same shall bear interest at
the Prime Plus Two Rate or the maximum rate permitted by law, whichever is less,
calculated monthly from the due date thereof until paid, and the amount of such
interest shall be included as Additional Rent.
21.5 Waiver of Jury Trial: Tenant and Landlord waive any right to a
--------------------
trial by jury and suits arising out of or concerning the provisions of this
Lease.
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SECTION 22. SERVICES IN THE EVENT OF DEFAULT:
- ----------- ---------------------------------
Landlord acknowledges that Tenant's business involves the furnishing of
uninterruptible telecommunications facilities and services to third parties. In
no event shall Landlord have the right to suspend or terminate HVAC or
electricity services by reason of an event of default or otherwise exercise
self-help remedies that would interfere with the conduct of Tenant's business.
Nothing in the preceding sentence shall diminish Tenant's obligation to
surrender, or Landlord's right pursuant to Colorado's forcible entry and
detainer statute to recover possession of, the Premises upon Tenant's default
under this Lease, or to exercise the other remedies provided in this Lease.
SECTION 23. NO WAIVERS OF PERFORMANCE:
- ----------- --------------------------
The failure of either party to insist in any one or more instances upon the
strict performance of any one or more of the obligations of this Lease, or to
exercise any election herein contained, shall not be construed as a waiver or
relinquishment for the future of the performance of such one or more obligations
or any other obligations of this Lease or of the right to exercise such
election, but the same shall continue and remain in full force and effect with
respect to any subsequent breach, act or omission. The receipt by Landlord of
Rent with knowledge of a breach by Tenant of any obligation of this Lease shall
not be deemed a waiver of such breach.
SECTION 24. CURING TENANTS DEFAULTS:
- ----------- ------------------------
All covenants and agreements to be performed by Tenant under any of the
terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of Rent except as expressly provided otherwise
herein. If Tenant shall fail to pay any sum of money, other than Rent, required
to be paid by it hereunder or shall fail to perform any other act on its part to
be performed hereunder, and such failure shall continue for the periods referred
to in Section 20 hereof after notice thereof by Landlord, Landlord may make any
such payment or perform any such act on Tenant's part to be made or performed as
in this Lease provided but shall not be obligated so to do. Any such payment or
performance shall not be a waiver or release of Tenant's obligations. All sums
so paid by Landlord and all necessary incidental costs together with interest
thereon at the rate specified in Section 21.4 from the date of such payment by
Landlord shall be payable as Additional Rent to Landlord on demand, and Tenant
covenants to pay any such sums, and Landlord shall have, in addition to any
other right or remedy of Landlord, the same rights and remedies in the event of
the nonpayment thereof by Tenant as in the case of default by Tenant in the
payment of the Rent.
SECTION 25. BROKER:
- ----------- -------
Tenant covenants, warrants and represents that no broker except as provided
in the Basic Lease Information (the "Broker") was instrumental in bringing about
or consummating this Lease and that Tenant had no conversations or negotiations
with any broker except the Broker concerning the leasing of the Premises. Tenant
agrees to indemnify and hold harmless Landlord against and from any claims for
any brokerage commissions and all costs, expenses and liabilities in connection
therewith, including, without limitation, attorney fees and expenses, arising
out of any conversations or negotiations had by Tenant with any broker other
than the Broker. Landlord shall pay any brokerage commissions due the Broker as
per a separate agreement between Landlord and the Broker.
SECTION 26. NOTICES:
- ----------- --------
Any notice, statement, demand, consent, approval or other communication
required or permitted to be given, rendered or made by either party to the
other, pursuant to this Lease or pursuant to any Legal Requirement, shall be in
writing (whether or not so stated elsewhere in this Lease). Notices shall be
deemed to have been properly given, rendered or made: if delivered in person to
Landlord or Tenant and receipt is acknowledged: or, if sent postage prepaid by
registered or certified mail, return receipt requested. effective forty-eight
(48) hours after posted in a United States post office station or letter box in
the continental United States, addressed to the other party at the address
designated by the party (except that after the Commencement Date, Tenant's
address. unless Tenant shall give notice to the contrary, shall be the
Premises). Either party may, by notice as aforesaid, designate a different
address or addresses for notices, statements, demands, consents, approvals or
other communications intended for it.
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SECTION 27. ESTOPPEL CERTIFICATES:
- ----------- ---------------------
Each party agrees, at any time and from time to time, as requested by the
other party with not less than ten (l0) days' prior notice to execute and
deliver to the other a statement certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications that the same is in
full force and effect as modified and stating the modifications), certifying the
dates to which the Base Rent and Additional Rent have been paid. stating whether
or not, to the best knowledge of the signer, the other party is in default in
performance of any of its obligations under this Lease, and, if so, specifying
each such default of which the signer shall have knowledge, and stating whether
or not, to the best knowledge of the signer, any event has occurred which with
the giving of notice or passage of time, or both, would constitute such a
default, and, if so, specifying each such event, it being intended that any such
statement delivered pursuant hereto shall be deemed a representation and
warranty to be relied upon by the party requesting the certificate and by others
with whom such party may be dealing, regardless of independent investigation. If
either party fails to respond within fifteen (15) days of receipt by the party
of a written request for such a statement, the party shall be deemed to have
given such statement and shall be deemed to have admitted the accuracy of any
information contained in the request for such statement and that the Lease is
unmodified and in full force and effect, that there are no uncured defaults in
the other party's performance, and that not more than one (1) month's Rent has
been paid in advance.
SECTION 28. MEMORANDUM OF LEASE:
- ----------- -------------------
Tenant shall not record this Lease. Upon ten (10) days' prior written
notice from Landlord. Tenant shall execute, acknowledge and deliver to Landlord
a memorandum of lease in respect of this Lease sufficient for recording. Such
memorandum shall not be deemed to change or otherwise affect any of the
obligations or provisions of this Lease.
SECTION 29. RELOCATION OF PREMISES:
- ----------- ----------------------
In the event Landlord requires the Premises for use in conjunction with
another suite or other reasons connected with the Building leasing program.
Landlord shall have the right, after first giving sixty (60) days' written
notice to Tenant to move Tenant to another space of similar size within the
Building or within another building within the Project (as such term is defined
below in this Section). Tenant's failure to cooperate in such a relocation shall
constitute a material breach of this Lease giving Landlord the right to
terminate Tenant's possession of the Premises pursuant to Section 21, and to
recover the amounts stated in Section 19.4 for holding over without Landlord's
consent. Such move shall be at the sole cost and expense of Landlord, including
but not limited to all costs and expenses related to improving the space with
leasehold improvements equal to those then in the Premises, moving the
furniture, office equipment and other contents of the Premises to the new space,
reinstating telecommunications equipment, printing of new stationery, business
cards and other printed matter bearing the address of Tenant and such other
expenses as Tenant may incur, it being the intention of the parties that Tenant
incur no cost or expense or decrease in services as a result of the move. After
such move, all terms and conditions of this Lease shall remain in full force and
effect, save and excepting that the Premises shall be the new space. The term
"Project" as used in this Section shall mean the larger multi-building
development, if any, of which the Building is a part. Tenant acknowledges that
the new premises may be located in a building within the Project owned by
Landlord or one of Landlord's affiliates.
SECTION 30. ADJUSTMENT OF COMMENCEMENT AND EXPIRATION DATES:
- ----------- -----------------------------------------------
30.1 Commencement Date: The Lease Term shall commence on a date (herein the
-----------------
"Commencement Date") which shall be the date specified in the Basic Lease
Information.
30.2 Tenant Obligations: [Intentionally Deleted]
------------------
30.3 Tenant Termination Rights: In the event the Premises are not ready for
-------------------------
Tenant's occupancy by June 1, 1998 and Landlord is responsible for such delay by
failing to fulfill its obligations under this Lease, then Tenant may terminate
this Lease by written notice to Landlord. If such termination occurs, this Lease
shall be deemed null and void and all rights and obligations of the parties
shall terminate and the parties shall be relieved from all further obligations
hereunder (including all obligations of any officers or directors of Tenant
pursuant to any leasehold guarantees). Termination under this Section 30.3 shall
be Tenant's sole remedy and Tenant shall have no other rights or claims
hereunder at law or in equity except that Landlord shall return to Tenant
promptly after any termination any Rent or other amounts deposited previously
with Landlord.
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30.4 Expiration Date: The Lease Term shall expire on the Expiration Date
---------------
specified in the Basic Lease Information.
30.5 Early Occupancy: If Landlord has given Tenant permission to enter into
---------------
the possession of the Premises prior to the Commencement Date, such possession
or occupancy shall be deemed to be upon all the terms, covenants, conditions and
provisions of this Lease, except the payment of Base Rent and the Additional
Rent.
SECTION 31. MISCELLANEOUS:
- ----------- -------------
31.1 Merger: All understandings and agreements heretofore had between the
------
parties are merged into and superseded by this Lease, including, without
limitation, the Indemnity Agreement executed by Tenant. This Lease alone fully
and completely expresses the agreement of the parties and is entered into after
full investigation, neither party relying upon any statement or representation
not embodied in this Lease.
31.2 Modifications: No agreement shall be effective to change, modify,
-------------
waive, release, discharge, terminate or effect an abandonment of this Lease, in
whole or in part, unless such agreement is in writing, refers expressly to this
Lease and is signed by the party against whom enforcement is sought. If Tenant
shall at any time, in writing, request Landlord to sublet the Premises for
Tenant's account. Landlord or its agent is authorized to receive the keys for
such purposes without releasing Tenant from any of its obligations under this
Lease, and Tenant hereby releases Landlord of any liability for loss or damage
to any of Tenant's Property in connection with such subletting.
31.3 Successors and Assigns: Except as otherwise expressly provided in
----------------------
this Lease, the obligations of this Lease shall bind and benefit the successors
and assigns of the parties hereto with the same effect as if mentioned in each
instance where a party is named or referred to; provided, however, that: (i) no
violation of the provisions of Section 9 shall operate to vest any rights in any
successor or assignee of Tenant: and (ii) the provisions of this Section shall
not be construed as modifying the provisions of Sections 9 or 20.
31.4 Nonrecourse Lease: Tenant shall look only to Landlord's estate and
-----------------
property in the Land and the Building (or the proceeds thereof) for the
satisfaction of Tenant's remedies for the collection of a judgment (or other
judicial process) requiring the payment of money by Landlord in the event of any
default by Landlord hereunder, and no other property or assets of Landlord or
its partners or principals, disclosed or undisclosed, shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord and
Tenant hereunder or Tenant's use or occupancy of the Premises.
31.5 Force Majeure: The obligations of Tenant hereunder shall be in no way
-------------
affected, impaired or excused, nor shall Landlord have any liability whatsoever
to Tenant, because:
31.5.1 Landlord is unable to fulfill, or is delayed in fulfilling, any
of its obligations under this Lease by reason of strike, other labor trouble,
governmental pre-emption of priorities or other controls in connection with a
national or other public emergency or shortages of fuel, supplies or labor
resulting therefrom, or any other cause, whether similar or dissimilar, beyond
Landlord's reasonable control: or
31.5.2 of any failure or defect in the supply, quantity or character
of electricity, water or other utilities furnished to the Premises, by reason of
any requirement, act or omission of the public utility or others serving the
Building with electric energy, steam, oil, gas or water, or for any other reason
whether similar or dissimilar, beyond Landlord's reasonable control.
31.6 Definitions: For the purpose of this Lease, the following terms have
-----------
the meanings indicated:
31.6.1 The term "mortgage" shall include a mortgage and/or deed of
trust, and the term "holder of a mortgage" or "mortgagee" or words of similar
import shall include a mortgagee of a mortgage or a beneficiary of a deed of
trust.
31.6.2 The term "Legal Requirements" shall mean laws and ordinances of
any or all of the federal, state, city, town, county, borough and village
governments and rules, regulations, orders and directives of any and all
departments, subdivisions, bureaus, agencies or offices thereof, and of any
other governmental, public or quasi-public authorities having jurisdiction over
the Building and/or the Premises, and the direction of any public officer
pursuant to law, except as otherwise expressly limited, whether now or hereafter
in force.
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31.6.3 The term "requirements of insurance bodies" and words of
similar import shall mean rules, regulations, orders and other requirements of
the Colorado Surveying and Rating Bureau and/or any other similar body
performing the same or similar functions and having jurisdiction or cognizance
over the Building and/or the Premises, whether now or hereafter in force.
31.6.4 The term "Tenant" shall mean the Tenant herein named or any
assignee or other successor in interest (immediate or remote) of the Tenant
herein named, which at the time in question is the owner of the Tenant's estate
and interest granted by this Lease; but the foregoing provisions of this
subsection shall not be construed to permit any assignment of this Lease or to
relieve the Tenant herein named or any assignee or other successor in interest
(whether immediate or remote) of the Tenant herein named from the full and
prompt payment, performance and observance of the covenants, obligations and
conditions to be paid, performed and observed by Tenant under this Lease.
31.6.5 The term "Land" shall mean the real property lot or parcel upon
which the Building is located, including, without limitation, parking areas,
landscaped areas, walkways, driveways, sidewalks and curbs.
31.6.6 The term "Landlord" shall mean only the owner at the time in
question of the Land and the Building or of a lease of the Land and the
Building, so that in the event of any transfer or transfers of title to the Land
and the Building or of Landlord's interest in a lease of the Land and the
Building, the transferror shall be and hereby is relieved and freed of all
obligations of Landlord under this Lease accruing after such transfer, and it
shall be deemed without further agreement that such transferee has assumed and
agreed to perform and observe all obligations of Landlord herein during the
period it is the holder of Landlord's interest under this Lease.
31.6.7 The term "herein," "hereof" and "hereunder," and words of
similar import, shall be construed to refer to this Lease as a whole, and not to
any particular Section, unless expressly so stated.
31.6.8 The term "and/or" when applied to two or more matters or things
shall be construed to apply to any one or more or all thereof as the
circumstances warrant at the time in question.
31.6.9 The term "person" shall mean natural person or persons, a
partnership, a corporation and any other form of business or legal association
or entity.
31.7 Effect of Expiration: Upon the expiration or other termination of this
--------------------
Lease, neither party shall have any further obligation or liability to the other
except as otherwise expressly provided in this Lease and except for such
obligations as by their nature or under the circumstances can only be, or by the
provisions of this Lease, may be, performed after such expiration or other
termination; and, in any event, unless otherwise expressly provided in this
Lease, any liability for a payment or a reimbursement (including, without
limitation. Additional Rent, herein) which shall have accrued to or with respect
to any period ending at the time of expiration or other termination of this
Lease shall survive the expiration or other termination of this Lease.
31.8 Modifications for Superior Mortgagee: If any Superior Mortgagee shall
------------------------------------
require any modification(s) of this Lease, Tenant upon ten (10) days' prior
written notice of Landlord's request, shall execute and deliver to Landlord such
instruments effecting such modification(s) as Landlord shall require, provided
that such modification(s) do not adversely affect in any material respect any of
Tenant's rights under this Lease.
31.9 Excavation: [Intentionally Deleted]
----------
31.10 Union Contracts: Tenant agrees that the exercise of its construction
---------------
rights pursuant to the provision of Section 12 or of any other provisions of
this Lease or the Exhibits hereto shall not be done in a manner which would
violate Landlord's union contracts affecting the Land and/or Building with
respect to construction workers, nor create any lawful work stoppage, picketing,
labor disruption or dispute or any interference with the business of Landlord or
any tenant or occupant of the Building with respect to such construction.
Landlord warrants and represents that it is not now subject to, and covenants
that it shall not enter into. any agreement that would require Tenant, without
Tenant's prior written consent, to use contractors for telecommunications
services subject to a collective bargaining agreement or who are members of a
union.
31.11 Prorations: Any apportionments or prorations of Base Rent or
----------
Additional Rent to be made under this Lease shall be computed on the basis of a
three hundred sixty (360) day year, with twelve (12) months of thirty (30) days
each.
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<PAGE>
31.12 Governing Law: Construction: Regardless of the place of execution or
---------------------------
performance, this Lease shall be governed by and construed in accordance with
the laws of the State of Colorado. If any provision of this Lease or the
application thereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Lease and the
application of that provision to other persons or circumstances shall not be
affected but rather shall be enforced to the extent permitted by law. The table
of contents, captions, heading and titles in this Lease are solely for
convenience or reference and shall not affect its interpretation. Each covenant.
agreement, obligation or other provision of this Lease on Tenant's part to be
performed, shall be deemed and construed as a separate and independent covenant
of Tenant, not dependent on any other provision of this Lease. All terms and
words used in this Lease, regardless of the number or gender in which they are
used, shall be deemed to include any other number and any other gender as the
context may require. Time is of the essence of this Lease and all of its
provisions.
31.13 Light Air and View: Any diminution or shutting off of light, air or
------------------
view by any structure which may be erected on lands adjacent to or near the
Building shall in no way affect this Lease or impose any liability on Landlord.
31.14 Tenant Representations: If Tenant is a corporation, each person
----------------------
executing this Lease on behalf of Tenant does hereby covenant and warrant that:
31.4.14. 1 Tenant is duly incorporated and validly existing under the
laws of its state of incorporation, and, if such corporation is existing under
the laws of a jurisdiction other than Colorado, qualified to transact business
in Colorado:
31.14.2 Tenant has full corporate right and authority to enter into
this Lease and to perform all Tenant's obligations hereunder: and
31.14.3 Each person (and both of the persons if more than, one signs)
signing this Lease on behalf of the corporation is duly and validly authorized
to do so.
31.15 Defined Terms: Words capitalized other than as the first word of a
-------------
sentence are defined terms and have the meaning, throughout this Lease, given to
them when they are first used with an initial capital or when used in quotation
marks.
31.16 Counterparts. This Lease may be executed in one or more counterparts
------------
by separate signature, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, binding on all
parties hereto, even though all parties are not signatories to the original or
to the same counterpart. Any counterpart of this Lease that has attached to it
separate signature pages, which together contain the signatures of all parties,
shall for all purposes be deemed a fully executed instrument, and in making
proof of this Lease, it shall not be necessary to produce or account for more
than one such counterpart.
31.17 Costs and Attorney Fees:
-----------------------
31.17.1 No Suit or Action Filed. If this Lease is placed in the hands
-----------------------
of an attorney due to an uncured default in the payment or performance of any of
its terms, the defaulting party shall pay, immediately upon demand, all of the
other party's costs and expenses associated with enforcing the Lease, including
reasonable attorney fees and collection costs even though no suit or action is
filed thereon, and any other fees or expenses incurred by the nondefaulting
party.
31.17.2 Arbitration or Mediation: Trial and Appeal, If any
------------------------
arbitration, mediation, or other proceeding is brought in lieu of litigation, or
if legal action is instituted to enforce or interpret any of the terms of this
Lease or if legal action is instituted in a Bankruptcy Court for a United States
District Court to enforce or interpret any of the terms of this Lease, to seek
relief from an automatic stay, to obtain adequate protection, or to otherwise
assert the interest of Landlord in a bankruptcy proceeding, the party not
prevailing shall pay the prevailing party's costs and disbursements, the fees
and expenses of expert witnesses in determining reasonable attorney fees, and
such sums as the court may determine to be reasonable for the prevailing party's
attorney fees connected with the trial and any appeal and by petition for review
thereof
31.17.3 Definitions. For purposes of this Lease. the term attorney
-----------
fees includes all charges of the prevailing party's attorneys and their staff
(including, without limitation, legal assistants, paralegals, word processing.
and other support personnel) and any postpetition fees in a bankruptcy court.
For purposes of this Lease, the term fees and expenses includes but is not
limited to long-distance telephone charges; expenses of
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facsimile transmission: expenses for postage (including costs of registered or
certified mail and return receipts), express mail, or parcel delivery; mileage
and all deposition charges, including but not limited to court reporters
charges, appearance fees, and all costs of transcription; costs incurred in
searching records.
31.18 Effect of Failure to Consent: The parties acknowledge that the
----------------------------
obligation of good faith and fair dealing generally applies to this Lease
requiring each party to act reasonably except to the extent explicitly and
specifically provided otherwise in this Lease. If either party unreasonably
withholds or conditions a requested consent or demands payment of an
unreasonable sum, but corrects such unreasonable action within ten (10) days
after notice from the other parry which identifies such unreasonable action and
requests correction thereof, then the other party shall not be entitled to any
damages resulting from such corrected unreasonable action.
SECTION 32. ENVIRONMENTAL:
- ----------- -------------
32.1 Described in Paragraph 18 of the Basic Lease Information is a report
(the "Environmental Report") prepared by a consultant reporting on Hazardous
Substances (if any) at the Premises and/or the Land and the Building. Tenant has
reviewed the Environmental Report and accepts the Premises subject to any items
noted in the Environmental Report. Landlord represents and warrants that to its
knowledge there is no violation at the Premises. the Building or the Land
relating to Hazardous Substances other than as stated in the Environmental
Report.
32.2 Tenant shall: generate and store Hazardous Substances at the Premises
only in amounts as are incident to and necessary for the normal operation of
Tenant as permitted by this Lease; comply with all obligations imposed by
applicable Legal Requirements regarding such generation and storage of Hazardous
Substances; prohibit any generation, storage, or disposal of Hazardous
Substances at the Premises except as permitted above; promptly deliver to
Landlord complete copies of all notices received by Tenant from any governmental
authority with respect to the generation, storage or disposal by Tenant of
Hazardous Substances; promptly notify Landlord of any spills or accidents
involving a Hazardous Substance; and permit reasonable entry to the Premises by
Landlord for verification of Tenant's compliance with these provisions. Tenant
shall install and maintain a self-contained system for collecting, retaining and
disposing of Hazardous Substances and shall not allow any Hazardous Substances
to enter subsurface soils or to be discharged in to any sanitary or storm sewer
system. Tenant agrees to utilize only transporters approved by the Environmental
Protection Agency and State of Colorado to deliver to and remove Hazardous
Substances from the Premises. Tenant shall indemnify and defend Landlord (with
legal counsel reasonably acceptable to Landlord) from and against any costs,
fees or expenses (including, without limitation, clean-up expenses, third party
claims and environmental impairment expenses, and reasonable attorneys' fees and
expenses) incurred by Landlord in connection with Tenant's generation, storage
or disposal of Hazardous Substances. This indemnification by Tenant shall
survive the termination or expiration of this Lease.
32.3 To the extent any update or any inspection by Landlord prior to
Tenant's delivery of the Premises to Landlord shows that Tenant has generated,
stored or disposed of Hazardous Substances contrary to the provisions of this
Lease. Tenant shall immediately, at its sole expense, commence and pursue to
completion a remediation program as to such Hazardous Substances and shall, to
Landlord's reasonable satisfaction, bring the Premises into an environmental
condition equal or better than the condition existing prior to Tenant's
occupancy of the Premises. If Tenant fails to comply with the provisions of this
Section prior to the expiration or earlier termination of the Lease Term, or
prior to Tenant's vacating the Premises, then Landlord, in addition to
Landlord's right to utilize all or any portion of any security deposit to
satisfy Tenant's obligations hereunder, shall have the option of either
considering this Lease as having ended or treating Tenant as a holdover Tenant
in possession of the Premises, in which event, in addition to complying with all
requirements of this Section and the Lease. Tenant shall pay monthly to Landlord
double the Base Rent and other amounts payable under the Lease which Tenant
would otherwise pay under this Lease until such time as Tenant fulfills its
obligations under this Section, and during such holdover period all of the terms
of this Lease and Tenant's obligations hereunder shall remain in full force and
effect.
32.4 "Hazardous Substances" shall mean any chemical substance (i) the
presence of which requires investigation or remediation under any federal, state
or local statute, regulation, ordinance, order, action, policy or common law;
(ii) which is or becomes defined as a "hazardous waste", or "hazardous
substance", or "regulated sub stance" under any federal, state or local statute.
regulation or ordinance or amendments thereto including, without limitation, the
Comprehensive Environmental Response. Compensation and Liability Act and/or the
Resource Conservation and Recovery Act; (iii) which is toxic, explosive,
corrosive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency' or instrumentality of the federal or state government or any political
subdivision thereof; (iv) the presence of which poses or threatens to pose a
hazard to the health or safety of persons on or about the Land or the Building;
(v) the presence of which on adjacent properties could constitute a trespass;
(vi) which contains gasoline, diesel fuel or
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other petroleum hydrocarbons; or (vii) which contains polychlorinated biphenyls
(PCBs), or asbestos or urea formaldehyde foam insulation.
SECTION 33. ADDENDUM:
- ----------- --------
The Addendum referred to herein and attached hereto is incorporated herein
by reference.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
Agreement as of the day and year first above written.
LANDLORD TENANT
- -------- ------
JER DENVER, LLC, a Delaware limited INFLOW, INC., a Delaware corporation
liability company
By: J.E. Robert Companies, its
designated asset manager
By: /s/ Joel C. Daly
-------------------------------
Title: Vice President of Inflows
----------------------------
By: /s/ [ILLEGIBLE] Date: 2/24/98
------------------------ -----------------------------
Title: Vice President
---------------------
Date: 2/25/98
----------------------
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<PAGE>
EXHIBIT A
---------
LEASE AGREEMENT
---------------
Legal Description for Land
--------------------------
Lots 1 to 9, inclusive, Block 31, H.C. BROWN'S ADDITION TO DENVER, COLORADO,
City and County of Denver, State of Colorado.
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<PAGE>
EXHIBIT B
---------
LEASE AGREEMENT
---------------
Floor Plan for the Building
---------------------------
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<PAGE>
[GRAPHIC]
[GRAPHIC]
EXHIBIT "B"
ONE CORPORATE CENTER
LEVEL 3
<PAGE>
EXHIBIT C
---------
LEASE AGREEMENT
---------------
Work Agreement
--------------
SECTiON 1. TENANT IMPROVEMENTS PROVIDED BY LANDLORD. Landlord agrees to provide
- ---------- ----------------------------------------
the following Building-Standard Tenant Improvements in the Premises and
allowance for Tenant Improvements at Landlord's sole cost and expense;
1.1 Tenant shall receive the Premises in its "as is" condition, with an
allowance for Tenant Improvements on an as needed basis, as set forth below.
1.2 Landlord shall, at its expense and apart from the Tenant Improvements
allowance, pay for the construction by Tenant of the common area corridor for
the third floor of the Building.
SECTION 2. ADDITIONAL TENANT IMPROVEMENTS PROVIDED BY LANDLORD.
- ---------- ---------------------------------------------------
Landlord agrees to provide the following Non-Building-Standard Tenant
Improvements in the Premises at Landlord's sole cost and expense: None
SECTION 3. ADDITIONAL TENANT IMPROVEMENTS AT TENANTS EXPENSE.
- ---------- -------------------------------------------------
Landlord agrees to provide the following Non-Building-Standard Tenant
Improvements in the Premises at Tenant's sole cost and expense: None
SECTION 4. TENANT IMPROVEMENT ALLOWANCES PROVIDED BY LANDLORD.
- ---------- --------------------------------------------------
4.1 Allowances: Landlord agrees to provide the following dollar allowances
----------
for Tenant Improvements in the Premises:
Tenant shall receive an allowance for Tenant Improvements, on an as needed
basis, of up to S 15.00 per rentable square foot. Included in those costs to be
funded by such allowance shall be all costs incurred as a result of
architectural, engineering, design, construction management, permitting,
demolition and construction in connection with Tenant's Improvements in the
Premises. Additionally, Tenant may pay for improvements to the Base Building
from the Tenant Improvement Allowance to the extent approved in the plans and
specifications described in the CDP, as defined below, including, without
limitation, for (i) addition of normal (non-UPS-protected) power distribution to
the third floor from the original building bus rider; and (ii) upon vacation of
the second floor by the current tenant, disconnection and removal of the power
feeders from the UPS subdistribution panels to the panelboards on the second
floor. Additionally, Landlord shall provide up to $.20 per rentable square foot
for costs incurred as a result of architectural services, including space
planning, which may paid from the Tenant Improvement Allowance.
SECTION 5. DESIGN OF TENANT IMPROVEMENTS.
- ---------- -----------------------------
5.1 CDP Preparation: Tenant's office planner in cooperation with
---------------
Landlord's office planner shall prepare a construction document package (the
"CDP") with respect to those Tenant Improvements to be made by Tenant in the
Premises or the Building and the common area corridor for the third floor, as
follows. The CDP shall be based upon the schematic space plan attached as
Exhibit D and the construction information provided by Tenant.
5.1.1 On or before February 20, 1998, Landlord shall give notice to
Tenant of any reasonable request for construction information with respect to
the CDP.
5.1.2 On or before February 24, 1998, Tenant shall provide Landlord's
office planner with all of the construction information reasonably requested in
accordance with Section 5.1.1 and any other information Tenant deems necessary
to assist Landlord in evaluating of the CDP.
5.1.3 On or before the earlier of February 27, 1998 or the date which
is three (3) business days after the date Tenant provides the construction
information pursuant to Section 5.1.2. Landlord shall approve or disapprove the
proposed CDP. If Landlord disapproves the CDP such disapproval shall include an
explanation of specific reasons
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<PAGE>
for such disapproval. If Landlord fails to approve or disapprove the CDP within
the time period provided above, Landlord shall be deemed to have approved the
CDP.
5.1.4 If Landlord disapproves the CDP by the time period specified in
Section 5.1.3. then Landlord and Tenant shall endeavor to agree on the CDP. If
Landlord and Tenant cannot agree to the CDP by March 4, 1998. then either party
shall have the option to terminate this Lease.
5.2 CDP Approval: The CDP must be approved by Tenant and Landlord in
------------
writing before proceeding to obtain building permits and commence construction.
5.3 Rentable Area Definition. The amount of rentable area shall be 108%
------------------------
of the usable area located on a single-tenant floor and 115% of the usable area
located on a multi-tenant floor. Usable area on multi-tenant floors shall be
computed by measuring to the finished surface of the office-side of corridors
and other permanent walls, to the center of partitions that separate the
Premises from adjoining office suites, and to the inside finished surfaces of
the dominant portion of the permanent outer building walls. The usable area of a
multi-tenant floor shall be equal to the sum of all usable areas on that floor.
Usable area on single-tenant floors shall be computed by measuring to the inside
finished surfaces of the dominant portion of the permanent outer building walls,
excluding any major vertical penetrations of the floor such as elevators. No
deductions shall be made for columns and projections necessary to the Building
when calculating the usable area on any floor of the Building. The precise
amount of the rentable area in the Premises indicated in the approved CDP shall
be controlling in the event of any variance from the approximate rentable area
specified in the Basic Lease Information. Base Rent, Tenant's Percentage, the
number of parking spaces, if any, available to Tenant and any similar item based
upon the size of the Premises shall be adjusted to reflect the precise rentable
area in the Premises determined by the approved CDP. If Landlord gives Tenant
notice of an adjustment in the size of the Premises by means of the CDP or
otherwise and adjustment of any other terms of the Lease based upon the changed
size of the Premises, it shall be deemed a request for an estoppel statement
from Tenant confirming the adjustments pursuant to Section 27. Unless Tenant
gives notice to Landlord of an objection to the adjustments within fifteen (15)
days of Landlord's notice, it shall be final and binding on Tenant as an
amendment of this Lease.
5.4 Tenant Responsibilities: Tenant shall be responsible for delays and
-----------------------
additional costs, including without limitation design fees, caused by: (i) any
changes made by Tenant to the approved CDP: or (ii) delays in delivery of non-
building-standard materials requiring long lead times.
SECTION 6. CONSTRUCTION.
- --------- -------------
Approval of the CDP shall constitute written authorization to complete the
Premises and make alterations to the Building in accordance with the CDP. Tenant
may in such authorization delete items to reduce its cost. Tenant shall be
responsible for any costs due to any resulting delay in completion of the
Premises. Tenant's contractor shall complete the Tenant Improvements in
accordance with Tenant's approved CDP. Tenant's contractor shall be allowed to
use approximately 1000 square feet of space on the third floor, outside of the
Premises, as a material staging area for construction of the Tenant Improvements
set forth in the CDP, provided that upon completion of such construction.
Tenant's contractor shall repair any damage to such area from the activities of
Tenant's contractor.
SECTION 7. FIELD CHANGE ORDERS.
- ---------- -------------------
If Tenant shall request any change in the approved CDP. Tenant shall
request such change in writing to Landlord, and such request shall be
accompanied by all information necessary to review plans and specifications for
such change. Tenant shall cause its office planner to prepare such plans and
specifications and a proposed field change order ("FCO") as soon as reasonably
possible thereafter. Tenant shall not proceed with any work which would be
affected by a proposed FCO until approved by Landlord. Landlord shall not
unreasonably withhold, condition or delay its approval of any proposed FCO.
Landlord shall approve or deny any proposed FCO within two (2) business days
after receipt from Tenant of the information required above. Tenant shall be
responsible for any and all delays in construction and occupancy caused by
Tenant's FCO requests. The proposed FCO shall set forth the estimated cost of
the changes. The proposed FCO shall be effective only when signed by both
Landlord and Tenant.
SECTION 8. IMPROVEMENTS CONSTRUCTED BY TENANT.
- ---------- -----------------------------------
If any work is to be performed in connection with Tenant Improvements on
the Premises by Tenant or Tenant's contractor:
8.1 Landlord's Approval: Such work shall not proceed until Landlord's
-------------------
written approval of each of the following items: (a) Tenant's contractor: (b)
public liability and property damage insurance carried by Tenant or its
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<PAGE>
contractor: and (c) schematic plans and specifications for such work. The
detailed construction plans and specifications shall be prepared by Tenant based
upon the schematic plans and specifications and submitted to Landlord's office
planner. All such work shall be done in strict conformity with such final plans
and specifications subject to field change orders prepared and approved in the
manner specified in Section 7 above. As-built plans shall be prepared by Tenant
at Tenant's expense after the work is fully completed and a copy delivered to
Landlord for its use. Approval of the CDP shall constitute all necessary
approvals pursuant to this Section 8.1 with respect to the Tenant Improvements
described in the CDP.
8.2 Permits: All work shall be done in conformity with a valid building
-------
permit (obtained at Tenant's expense) when required, a copy of which shall be
furnished to Landlord before such work is commenced, and in any case, all such
work shall be performed in accordance with all applicable governmental
regulations at Tenant's sole expense. Notwithstanding any failure by Landlord to
object to any such work, Landlord shall have no responsibility for Tenant's
failure to meet all applicable regulations.
8.3 Coordination: All work by Tenant or Tenant's contractor shall be
------------
scheduled in coordination with Landlord and Tenant shall keep Landlord apprised
of the progress thereof. Tenant or Tenant's contractor shall arrange for
necessary utility, hoisting and elevator service with Landlord's contractor and
shall pay such reasonable charges for such services as may be charged by
Landlord's contractor. Tenant and Tenant's contractor shall cooperate with
Landlord in Landlord's reasonable oversight and inspection of Tenant's
Improvements.
8.4 Manner of Entry: Tenant's entry to the Premises for any purpose,
---------------
including without limitation, inspection or performance of Tenant construction
by Tenant's agents, prior to the Lease Commencement Date as specified in the
Basic Lease Information shall be at such times as are approved by Landlord and
subject to all the terms and conditions of the lease except the payment of Rent.
Tenant's entry shall mean entry by Tenant, its officers, contractors, licensees,
agents, servants, employees, guests, invitees, or visitors.
8.5 Faulty Work: Tenant shall promptly reimburse Landlord upon demand for
-----------
any extra expense incurred by Landlord by reason of faulty work done by Tenant
or its contractors or by' reason of any delays caused by such work, or by reason
of inadequate cleanup.
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<PAGE>
EXHIBIT D
---------
LEASE AGREEMENT
---------------
Schematic Space Plan for the Premises
-------------------------------------
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<PAGE>
[DIAGRAM]
EXHIBIT "D"
ONE CORPORATE CENTER
LEVEL 3
<PAGE>
EXHIBIT E
---------
LEASE AGREEMENT
---------------
Rules and Regulations
---------------------
1. The rights of each tenant in the entrances, corridors and elevators
servicing the Building are limited to ingress to and egress from such tenant's
Premises for the tenant and its employees, licensees and invitees, and no tenant
shall use, or permit the use of, the entrances, corridors or elevators for any
other purpose. No tenant shall invite to the tenant's Premises, or permit the
visit of, persons in such numbers or under such conditions as to unreasonably
interfere with the use and enjoyment of any of the plazas, entrances, corridors,
elevators and other facilities of the Building by any other tenants. No tenant
shall encumber or obstruct, or permit the encumbrance or obstruction of any of
the sidewalks, plazas, entrances, corridors, elevators, fire exits or stairways
of the Building. Landlord reserves the right to control and operate the public
portions of the Building and the public facilities as well as facilities
furnished for the common use of the tenants, in such manner as it in its
reasonable judgment deems best for the benefit of the tenants generally.
2. "Normal Building Hours" shall mean the time from 7:00 A.M. to 6:00
P.M. on weekdays, and 8:00 A.M. to 1:00 P.M. on Saturdays, exclusive of legal
holidays, as the same may be reasonably adjusted by Landlord. Admission to the
Building in certain areas and during hours other than Normal Business Hours may
be restricted by Landlord by means of access devices such as keys, entry cards,
combination codes and the like. Landlord may require all persons admitted to or
leaving the Building outside of Normal Business Hours to provide appropriate
identification, use a designated access device and to comply with all other
Building requirements. Tenant shall be responsible for all persons to whom it
issues an access device or discloses an access code and shall be liable to
Landlord for all acts or omissions of such persons. Any person whose presence in
the Building at any time shall, in the reasonable judgment of Landlord, be
prejudicial to the safety character or reputation of the Building or of its
tenants may be denied access to the Building or may be ejected therefrom. During
any invasion, riot, public excitement or other commotion, Landlord may prevent
all access to the Building by closing the doors or otherwise for the safety of
the tenants and protection of property in the Building. Each tenant shall pay
Landlord a refundable deposit in an amount reasonably determined by Landlord
from time to time for each access device issued to a tenant.
3. Smoking is prohibited at all times in all areas of the Building,
including, but not limited to, offices, restrooms, corridors, stairwells,
lobbies and elevators.
4. No tenant shall obtain or accept for use in its Premises ice, food,
beverages, cleaning or other similar services from any persons reasonably
prohibited in writing from furnishing such services. Such services shall be
furnished only at such hours, and under such reasonable regulations, as may be
fixed by Landlord from time to time.
5. The cost of repairing any damage to the public portions of the
Building the common areas or the public facilities or to any facilities used in
common with other tenants, caused by a tenant or its employees, agents,
contractors, licensees or invitees, shall be paid by such tenant.
6. No awnings or other projections shall be attached to the outside
walls of the Building. No curtains, blinds, shades or screens, if any, which are
different from the standards adopted by Landlord for the Building shall be
attached to or hung in or used in connection with any exterior window or door of
the Premises of any tenant without the prior written consent of Landlord. All
tenants with Premises visible from one of the lobbies, or any other public
portion of the Building, shall furnish and maintain the Premises in a first-
class manner, utilizing furnishings and other decorations commensurate in
quality and style with the furnishings and decor in the public portions of the
Building.
7. No lettering, sign, advertisement, notice or object shall be
displayed in or on the exterior windows or doors, or on the outside of any
tenant's Premises, or at any point inside any tenant's Premises where the same
might be visible outside of such Premises, without the prior written consent of
Landlord which consent may be withheld in Landlord's sole and unfettered
discretion. In the event of the violation of the foregoing by any tenant,
Landlord may remove the same without any liability, and may charge the expense
incurred in such removal to the tenant violating this rule. Interior signs,
elevator cab designations, and lettering on doors, if and when approved by
Landlord, shall be inscribed, painted or affixed for each tenant by Landlord at
the expense of such tenant, and shall be of a size, color and style acceptable
to Landlord.
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<PAGE>
8. The windows that reflect or admit light and air into the halls,
passageways or other public places in the Building shall not be covered or
obstructed by any tenant, nor shall any bottles, parcels or other articles be
placed on the window sills.
9. No showcases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in the halls, corridors or
vestibules.
10. No bicycles, vehicles, animals, fish or birds of any kind shall be
brought into or kept in or about the Premises of any tenant or the Building
except in areas designated by Landlord.
11. No noise, including, but not limited to, music or the playing of
musical instruments, recordings, radio or television, which, in the judgment of
Landlord, might disturb other tenants in the Building, shall be made or
permitted by any tenant. Nothing shall be done or permitted in the Premises of
any tenant which would impair or interfere with the use or enjoyment by any
other tenant of any other space in the Building.
12. No tenant, nor any tenant's contractors, employees, agents, visitors
or licensees, shall at any time bring into or keep upon the Premises or the
Building any hazardous, inflammable, combustible, explosive or otherwise
dangerous fluid, chemical or substance, except any fluids or substances used in
the ordinary course of Tenant's business as part of a use permitted under the
Lease. Landlord shall be notified of any threatened or actual violation of
environmental laws or other Legal Requirements as soon as possible after any
tenant becomes aware of the situation.
13. Additional locks or bolts of any kind which shall not be operable by
the Grand Master Key for the Building shall not be placed upon any of the doors
or windows by any tenant, nor shall any changes be made in locks or mechanisms
thereof which shall make such locks inoperable by said Grand Master Key.
Additional keys for a tenant's Premises and restrooms shall be procured only
from Landlord who may make a reasonable charge therefor Each tenant shall, upon
the termination of its tenancy, turn over to Landlord all keys of stores,
offices and toilet rooms, either furnished to, or otherwise procured by, such
tenant, and in the event of the loss of any keys furnished by Landlord, such
tenant shall pay to Landlord the cost thereof,
14. All removals, or the carrying in or out of any safes, freight,
furniture, packages, boxes, crates or any other object or matter of any
description must take place during such hours and in such elevators, and in such
manner as Landlord or its agent may determine from time to time. The persons
employed to move furnishings, fixtures and equipment in and out of the Building
shall be reasonably acceptable to Landlord and, if so required by law, shall
hold a Master Rigger's or comparable license. Landlord shall have the right to
require an additional security deposit from Tenant as a condition of approving a
particular moving company for such purposes. Tenant must make arrangements in
advance with Landlord for moving large quantities of furniture and equipment
into or out of the Building. All labor and engineering costs incurred by
Landlord in connection with any moving specified in this rule, including a
reasonable charge for overhead and profit, shall be paid by Tenant to Landlord,
on demand.
15. Landlord reserves the right to inspect all objects and matter to be
brought into the Building and to exclude from the Building all objects and
matter which violate any of these Rules and Regulations or the Lease of which
this Exhibit is a part. Landlord may require any person leaving the Building
with any package or other object or matter to submit a pass listing such package
or object or matter from the tenant from whose Premises the package or object or
matter is being removed, but the establishment and enlargement of such
requirement shall not impose any responsibility on Landlord for the protection
of any tenant against the removal of property from the Premises of such tenant.
Landlord shall in no way be liable to any tenant for damages or loss arising
from the admission, exclusion or ejection of any person to or from the Premises
or the Building under the provisions of this Rule or of Rule 2 hereof.
16. No tenant shall occupy or permit any portion of its Premises to be
occupied as an office for secretarial or word processing services to third
parties without the prior written consent of Landlord which consent may be
withheld in the sole and unfettered discretion of Landlord. No tenant shall use
its Premises or any part thereof to be used, for manufacturing or the sale at
retail or auction of merchandise, goods or property of any kind or for the
possession, storage, manufacture, or sale of liquor, narcotics, dope, tobacco in
any form, or as a barber, beauty or manicure shop, or as a school.
17. Landlord shall have the right to prohibit any advertising or
identifying sign by any tenant which, in good faith, Landlord believes will
impair the reputation of the Building or its desirability aa building for
others, and upon written notice from Landlord, such tenant shall refrain from
and discontinue such advertising or identifying sign.
18. Landlord shall have the right to prescribe the weight and position of
safes and other objects of excessive weight, and no safe or other object whose
weight exceeds the lawful load for the area upon which it would
<PAGE>
stand shall be brought into or kept upon any tenant's Premises. If, in the
reasonable judgment of Landlord, it is necessary to distribute the concentrated
weight of any heavy object, the work involved in such distribution shall be done
at the expense of the tenant and in such manner as Landlord shall determine.
19. No machinery or mechanical equipment other than ordinary portable
business machines may be installed or operated in any tenant's Premises without
Landlord's prior written consent which consent shall not be unreasonably
withheld, conditioned or delayed, and in no case (even where the same are of a
type so excepted or as so consented to by Landlord) shall any machines or
mechanical equipment be so placed or operated as to disturb other tenants, but
machines and mechanical equipment which may be permitted to be installed and
used in tenant's Premises shall be so equipped, installed and maintained by such
tenant as to prevent any disturbing noise, vibration or electrical or other
interference from being transmitted from such Premises to any other area of the
Building.
20. Landlord, its contractors, and their respective employees, shall have
the right to use, without charge therefor, all light, power and water in the
Premises of any tenant while cleaning or making repairs or alterations in the
Premises of such tenant.
21. No Premises of any tenant shall be used for lodging or sleeping or
for any immoral or illegal purpose.
22. The requirements of tenants will be attended to only upon application
at the office of the Building. Employees of Landlord shall not perform any work
or do anything outside of their regular duties, unless under special
instructions from Landlord.
23. Canvassing, soliciting and peddling in the Building are prohibited
and each tenant shall cooperate to prevent the same.
24. No tenant shall cause or permit any unusual or objectionable odors to
emanate from its Premises which would annoy other tenants or create a public or
private nuisance. No cooking shall be done in the Premises of any tenant except
as is expressly permitted in such tenant's Lease, except that Tenant may use
microwave ovens for noncommercial microwave cooking of food to be consumed on
the premises by the tenant's personnel.
25. Nothing shall be done or permitted in any tenant's Premises, and
nothing shall be brought into or kept in any tenant's Premises, which would
impair or interfere with any of the Buildings services or the proper and
economic heating, cleaning or other servicing of the Building or the Premises,
or the use or enjoyment by any other tenant of any other Premises, nor shall
there be installed by any tenant any ventilating, air-conditioning, electrical
or other equipment of any kind which, in the reasonable judgment of Landlord,
might cause any such impairment or interference.
26. No acids, vapors or other materials shall be discharged or permitted
to be discharged into the waste lines, vents or flues of the Building which may
damage them. The water and wash closets and other plumbing fixtures in or
serving any tenant's Premises shall not be used for any purpose other than the
purposes for which they were designed or constructed, and no sweepings, rubbish,
rags, acids or other foreign substances shall be deposited therein. All damages
resulting from any misuse of the fixtures shall be borne by the tenants who, or
whose servants, employees, agents, visitors or licensees shall have caused the
same.
27. All entrance doors in each tenant's Premises shall be left locked and
all windows shall be left closed by the tenant when the tenant's Premises are
not in use. Entrance doors shall not be propped open at any time. Each tenant,
before closing and leaving its Premises at any time, shall turn out all lights.
28. Hand trucks not equipped with rubber tires and side guards shall not
be used within the Building.
29. The coverings for all windows in each tenant's Premises above the
ground floor shall be lowered and closed as reasonably required because of the
position of the sun, during the operation of the Building's air-conditioning
system to cool or ventilate the tenant's Premises.
30. Landlord reserves the right to rescind, alter or waive any rule or
regulation at any time prescribed for the Building when, in its reasonable
judgment, it deems it necessary, desirable or proper for its best interest and
for the best interests of the tenants generally, and no alteration or waiver of
any rule or regulation in favor of one tenant shall operate as an alteration or
waiver in favor of any other tenant. Landlord shall not be responsible to any
tenant for the nonobservance or violation by any other tenant of any of the
rules and regulations at any time prescribed for the Building.
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<PAGE>
11. INTERPRETATION
--------------
This Guaranty shall be interpreted under and enforced in accordance with the
laws of the State of Colorado.
12. INSOLVENCY OF TENANT
--------------------
If, as and when Tenant becomes insolvent (defined below), Guarantor shall
be deemed to have absolutely waived and released any claim or other right which
Guarantor may now or hereafter acquire against Tenant that arises from the
existence, payment, performance or enforcement of the obligations of Guarantor
under this Guaranty, including (without limitation) any right of subrogation,
reimbursement, setoff, exoneration, contribution or indemnification, regardless
of whether such claim arises in equity or under contract, statute or common law
(such rights and claims are hereinafter collectively referred to as "Claims");
provided that such waiver shall be effective for only so long as any obligations
of Tenant to Landlord under the Lease remain unpaid. Such waiver and release of
Claims shall be effective as of the date that Tenant becomes insolvent and shall
remain in force and effect throughout the period of Tenant's insolvency. As used
herein, the term "insolvent" shall have the meaning ascribed to it in the
Federal Bankruptcy Code, as amended from time to time (as amended, the "Code"),
and shall include any presumption of insolvency mandated by the Code that is not
overcome.
13. LIMITATION ON RECOURSE
----------------------
Notwithstanding any other provision of this Guaranty to the contrary, the
right of recovery against the undersigned under this Guaranty is limited to the
sum of Two Hundred Sixty-Two Thousand Eighteen Dollars and 24/100 ($262,018.24),
provided that such sum shall be reduced by the amount of each payment of Base
Rent (as defined in the Lease) received by Landlord from or on behalf of Tenant.
This Guaranty shall automatically expire without further writing or action on
the earlier of (i) the date which is twenty-two months after the first
installment of Base Rent becomes due under the Lease, except to the extent
Landlord has theretofore commenced proceedings against Guarantor hereunder, or
(ii) the date upon which Landlord has received a total of $262,018.24 in Base
Rent under the Lease. Upon expiration of this Guaranty, Landlord shall return
the original hereof to the undersigned.
IN WITNESS WHEREOF, the Guarantor duly signed this Guaranty for Lease
Agreement effective on the date and year stated above.
Dated: 2/24/98 /s/ Arthur H. Zeile
-------------- ----------------------------
Arthur H. Zeile
Dated: 2/24/98 /s/ Joel C. Daly
-------------- ----------------------------
Joel C. Daly
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<PAGE>
EXHIBIT G
---------
LEASE AGREEMENT
---------------
Addendum
--------
This Addendum is to that certain Lease Agreement (the "Lease") by and
between JER DENVER, LLC, a Delaware limited liability company ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), with respect to approximately
8,407 rentable square feet of space (the "Premises") in the Building. In the
event of any conflict between the terms and provisions of the Lease and the
terms and provisions of this Addendum, the terms and provisions of this Addendum
shall control.
1. Commencement Date. The Commencement Date of the Lease shall be
-----------------
fourteen (14) days after the Occupancy Date. The "Occupancy Date" shall mean the
earlier of(a) the date on which Tenant receives final approval for occupancy of
the Premises, after completion of the Tenant Improvements, from the City and
County of Denver, or (b) May 15, 1998. Tenant shall have the right to occupy the
Premises from and after the Occupancy Date without any obligation to pay Rent to
Landlord until the Commencement Date. but otherwise subject to all the terms and
provisions of this Lease.
2. Interim Space. From and after February 1, 1998, until the Occupancy
-------------
Date, Landlord shall provide interim office space for Tenant in the Building,
sufficient for up to 6 employees. Tenant may use the interim space, without
payment of Rent, as office space, but subject to the other terms and conditions
of this Lease, and in compliance with all rules and regulations for the
Building. Tenant shall maintain during the period of occupancy of the interim
space general liability insurance as required under this Lease. If for any
reason, Tenant fails to take possession of the Premises on the Occupancy Date,
Tenant shall vacate the interim space on not less than two (2) business days'
notice. Tenant agrees to pay all attorneys' fees incurred by Landlord should
Tenant fail to perform with respect to the interim space as set forth in this
paragraph or observe its agreements as set forth in this paragraph.
3. Parking. Tenant shall be permitted, upon payment by Tenant for such
-------
parking at the rate provided below, to park 3 standard-size passenger
automobiles in the parking garage of the Building in three reserved parking
spaces to be designated by Landlord from time to time. The charge for Tenant's
parking shall be $90 per space per month for the first year of this Lease.
Thereafter, the charge for Tenant's parking for each subsequent year shall be as
reasonably determined in advance by Landlord, provided that such charge shall
not exceed the market rate for comparable parking in downtown Denver or the rate
charged other tenants in the Building. If Landlord acquires an interest in
additional parking spaces in the vicinity of the Building, Tenant shall have the
right to use a percentage of such additional spaces equal to Tenant's Percentage
(as defined in the Basic Lease Information or otherwise increased pursuant to
this Lease), rounded to the nearest whole number of parking spaces, upon payment
by Tenant for such parking at the market rate therefor, Landlord shall promptly
notify Tenant of any such acquisition of additional parking. Tenant shall pay
for parking in advance on the first day of each calendar month concurrently with
the monthly installment of Rent then due under this Lease. Amounts payable and
not paid shall be collectible as Additional Rent under this Lease.
4. ADA Compliance. Landlord shall cause the common areas of the Building
--------------
and the Land to comply with the requirements of the Americans with Disabilities
Act (the "ADA") as it exists on the date of this Lease, including, without
limitation, with respect to individual handicap restrooms located on each floor,
visual and audio alarms, and elevator call directors. Landlord agrees that
Landlord shall be responsible for the cost of all remodeling, reconstruction and
improvements to the common areas of the Building and the Land which are mandated
by the ADA. None of the costs associated with any such remodeling,
reconstruction, improvements or other compliance shall be passed through to
Tenant in any manner as an Operating Expense or in any other increase allowable
under this Lease in the amount payable to Landlord by Tenant. Tenant agrees that
causing compliance with the ADA for matters within the Premises shall be
Tenant's sole responsibility at Tenant's sole cost.
5. Tenant's Security. Tenant shall be permitted to create a special
-----------------
security area within the Premises to encompass Tenants equipment room. Landlord
will cooperate with Tenant in maintaining the security for such area. Tenant
shall be permitted to install security for such area with non-building-standard
locks and other access controls which restrict access to Tenant and its
customers, provided that Landlord shall be provided with keys or other entry
mechanisms which may be used in accordance with the terms of this Lease.
Landlord shall not enter such area or permit any janitorial, maintenance, repair
or other service to such area except as approved and supervised by Tenant.
Landlord or its agents shall enter such area only after at least twenty-four
(24) hours notice to Tenant and when accompanied by Tenant, except when failure
to comply with the foregoing will cause imminent danger to the Premises or
other portions
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<PAGE>
of the Building or any person. Any entry by Landlord will be conducted with
reasonable caution under the circumstances to prevent damage to or interference
with any of the equipment in the area.
6. Electricity. Landlord agrees that it shall, subject to the other
-----------
provisions in this Lease, at its expense, provide a total of at least 225 KVA.
or such greater amount as is currently available to the third floor of the
Building of uninterruptible power supply ("UPS") and generator-protected power
to the Premises during the Lease Term. Landlord shall, at its expense, provide
maintenance of the UPS and generator equipment to manufacturer recommended
specifications and provide copies of maintenance reports to Tenant upon Tenant's
request. Tenant shall have the right to install monitoring devices at the UPS
and generator equipment, and to inspect the same and related equipment from time
to time, in order to assure that they are functioning properly. Landlord shall
not charge Additional Rent to Tenant for the foregoing services except to the
extent generally included in Operating Expenses for all tenants of the Building
If at any time Landlord fails to maintain such equipment as provided in this
paragraph, Tenant, upon twenty-four (24) hours' prior notice to Landlord
(unless immediate action is necessary to assure uninterrupted performance of
such equipment. in which case no notice shall be required) may perform such
maintenance, and Landlord, within ten (10) days after receipt of an invoice from
Tenant therefor, shall reimburse Tenant the cost of such maintenance.
Notwithstanding any contrary provision of Section 14.2 or any other
provision of this Lease, Tenant shall pay for all electricity used in the
Premises (including, but not limited to, all electricity used in connection with
the operation of HVAC equipment installed by Tenant in the Premises) directly to
the governmental agency or utility company supplying the electricity and Tenant
shall make all arrangements for obtaining such electricity, including, but not
limited to, the installation of a separate meter to measure electricity used in
the Premises. Landlord, at its expense, shall cooperate with Tenant to arrange
for the separate metering of the Premises.
7. HVAC. Tenant, at Tenant's expense, shall have the right to install,
----
maintain, repair and replace from time to time two cooling lines at Tenant's
sole expense, not to exceed 6 inches in diameter, through the Building core to
support air conditioning systems installed by Tenant in the Premises.
Additionally, Tenant, at Tenant's expense, shall have the right to install,
maintain, repair and replace from time to time condensers/chiller systems in the
loading dock area or on the roof of the Building in connection with Tenant's
separate air conditioning systems, provided that Tenant shall also be required
to build a barrier to surround any such systems in the loading dock and provided
further that the footprint necessary for such systems and barrier shall not
exceed 132 inches wide by 200 inches long without Landlord's written consent.
Immediately upon construction of any condenser/chiller systems in the loading
dock area or on the roof of the Building, the amount of usable square feet
necessary therefor shall become part of the Premises and Tenants Percentage and
Base Rent shall be increased to reflect such additional area. Plans and
specifications for the installation of such lines and systems shall be subject
to Landlord's prior approval, which approval shall not be unreasonably withheld,
delayed or conditioned. Landlord shall run Building chillers other than during
Normal Business Hours at Tenant's request. Each month Tenant shall provide a
schedule of hours outside Normal Business Hours that the chiller system shall be
run to support its business operations. Landlord and Tenant shall mutually agree
on the reasonable hourly' charge for such chiller service, which charge shall
not be more than $65 per hour in 1998 (which cap shall be increased in any year
after 1998 by the percentage increase in the CPI for that year from the CPI for
1998). "CPI" shall mean the Consumer Price Index for All Urban Consumers (1982-
1984=100) specified for "All Items" as it relates to the Denver, Colorado
metropolitan area, as published by the United States Department of Labor, Bureau
of Labor Statistics. In case of any dispute over such reasonable hourly charge
Landlord shall designate a qualified independent engineer whose decision as to
an appropriate hourly charge shall be conclusive on both parties, provided that
such charge shall not exceed the maximum amount specified above. If any other
tenant in the Building requests HVAC services outside Normal Business Hours,
then the hourly charge therefor shall be equitably shared by such other tenant
or tenants. In no event shall Landlord be permitted to withhold HVAC services or
other services due to a disagreement over the appropriate charge. Landlord shall
reasonably cooperate with Tenant with respect to HVAC requirements in Tenant's
equipment room; all expenses for HVAC controls in the equipment room shall be
solely Tenant's (except for Building-Standard HVAC).
8. Fire System. Tenant shall have the right to convert the present
-----------
sprinkler system in the Premises to a dry-pipe actuation system. The conversion
of the sprinkler system shall be in conformance with all Legal Requirements and
shall be at Tenant's sole expense.
9. Access. During the Lease Term, Tenant shall have 24 hours per day, 7
------
days per week, 52 weeks per year, access to the Premises, the power and
telephone closets on the 3rd floor, the elevator and parking area, freight
elevators and loading dock area without the requirement of prior notice, except
that Tenant shall comply with Landlord's reasonable notice requirements with
respect to the loading dock area and freight elevators. In addition, Tenant
shall have access to the Building security system at no charge using the numeric
entry security system currently in the Building (no access cards are necessary
for the security.)
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<PAGE>
10. Roof Rights. During the Lease Term, Tenant shall have the right to
-----------
install, maintain, repair and replace from time to time satellite dishes,
microwave dishes, cellular transmit/receive antennae and other
telecommunications equipment and HVAC condenser equipment on the roof of the
Building at no additional charge. The total area to be used by Tenant for such
purposes shall not exceed 400 square feet. The plans and specifications for such
equipment shall be subject to Landlord's approval, which shall not be
unreasonably withheld, delayed or conditioned. At the expiration or sooner
termination of the Lease Term, unless otherwise agreed by Landlord, Tenant shall
remove such equipment and repair any damage to the Building caused by such
removal. Tenant shall be responsible for all expenses associated with the
installation, maintenance, repair and removal of such equipment, and shall
indemnify Landlord from and against any liabilities incurred therefrom.
Installation of Tenant's equipment shall be in accordance with all applicable
covenants and Legal Requirements and shall also specifically be subject to
Landlord's reasonable approval with respect to Building roof weight limit
restrictions and maintenance of the master label certification with respect to
lightning protection. Any penetrations of the roof in connection with
installation of Tenant's equipment shall be performed by Landlord's designated
roofing contractor, at Tenant's expense.
11. Nondisturbance. Supplementing Section 7, with respect to any
--------------
Superior Mortgage or Superior Lease, Landlord shall use its best efforts to
secure and deliver to Tenant a nondisturbance agreement from and executed by the
Superior Mortgagee or Superior Lessee for the benefit of Tenant. Such agreement
shall be in a form reasonably acceptable to Tenant. If notwithstanding
Landlord's best efforts, such a nondisturbance agreement cannot be obtained, it
shall not be a default or breach by Landlord under this Lease.
12. Signage. Tenant shall have the right to use its standard graphics on
-------
the entrance to the Premises and Landlord hereby consents thereto.
13. Landlord Consents. Tenant shall have the right to install, maintain,
-----------------
repair and replace computer, telecommunication, and other equipment in the
equipment room of the Premises, so long as the average load of such equipment
does not exceed 30 pounds per square foot, and so long as the load of any
individual item does not exceed 110 pounds per square foot. Landlord hereby
acknowledges that such weights are not excessive loads for the structure and
hereby consents thereto. Tenant shall have the right to install fixed telephony
and HVAC systems in the Premises, and Landlord hereby consents thereto. Tenant
shall have the right to move computer, telecommunication, and other equipment in
and out of the Premises from time to time in the course of its business, and
Landlord hereby consents thereto.
14. Option to Extend. As additional consideration for the covenants of
----------------
Tenant under this Lease Landlord grants to Tenant an option (the "Option") to
extend the Lease Term for one additional term of five (5) years (the "Option
Term"). The Option shall be under the terms and conditions of the Lease, except
that Base Rent for the Option Term shall be Market Rent, as defined below. The
Option shall be granted on the following terms and conditions:
a. Written notice of Tenant's interest in exercising the Option
shall be given to Landlord not earlier than fifteen (15) months and not later
than nine (9) months prior to the expiration of the initial Lease Term
("Tenant's Notice"). Not later than thirty (30) days after receiving Tenant's
Notice, Landlord shall give to Tenant notice ("Landlord's Notice") of Landlord's
reasonable calculation of Market Rent. "Market Rent" shall mean the fair market
base rent that a third party in an arm's length, bona fide negotiation would pay
for the Premises without taking into account the value of the Tenant
Improvements or any other improvements to the Premises or Building made by
Tenant.
b. To exercise the Option. Tenant shall deliver written notice of
its election to extend the Lease Term for the Option Term on or prior to the
date which is thirty (30) days after Tenant receives Landlord's Notice.
Otherwise, the Option shall terminate and the Lease shall expire in accordance
with its terms at the end of the initial Lease Term.
c. If Tenant elects to extend the Lease Term but disagrees with
Landlord's calculation of Market Rent. Tenant shall give notice of such
disagreement concurrently with Tenant's notice of election to extend the Lease
Term. If the parties have not agreed to Market Rent prior to commencement of the
Option Term. Tenant shall nevertheless pay to Landlord the amount of Market Rent
set forth in Landlord's Notice until and unless a court of competent
jurisdiction, or other dispute resolution forum agreed to by Landlord and
Tenant. makes a different determination of Market Rent. If such adjudication
determines an overpayment by Tenant. Landlord shall promptly pay to Tenant the
amount of Tenant's overpayment together with interest at the Prime Plus Two Rate
from the date of overpayment to the date reimbursed.
d. As a condition of Tenant's right to exercise the Option granted
hereunder; (i) there shall be no uncured default by Tenant under the Lease at
the time of exercise of the Option or at the time of the commencement of the
Option Term; (ii) Tenant shall not have been sent more than ten (10) letters
notifying Tenant of non-compliance
-38-
<PAGE>
with the terms and conditions of the Lease during Tenant's tenancy; and (iii)
Tenant shall not have subleased more than 25% of the Premises or assigned its
interest under the Lease at the time of exercise of the Option or at the time of
the commencement of the Option Term, provided that any subletting or assignment
which is not a Restricted Transfer under the Lease shall not be deemed a
sublease or assignment for purposes of this paragraph.
e. After exercise of the Option above described, there shall be no
further rights on the part of Tenant to extend the Lease Term.
f. The Option shall apply to all space under the Lease at the time
the Option Term is due to commence and Tenant may not elect to extend the Lease
Term as to only' a portion of such space.
15. RIGHT OF REFUSAL. Landlord hereby grants to Tenant a right of refusal
----------------
to lease other space on the third floor of the Building (the "RR Space") subject
to and on the following terms and conditions:
a. Landlord shall notify Tenant in writing 30 days (or such lesser
period if Landlord is unable to give 30 days notice, but never less than 10 days
notice) prior to the expiration of an existing lease term or terms for all or
any portion of the RR Space. Such notice shall specify the terms and conditions
under which Landlord shall offer such space to prospective lessees. Tenant
shall, within 5 business days after receipt of Landlord's notice, notify
Landlord in writing of its desire to lease such space for the balance of
Tenant's Lease Term. If Tenant does not notify Landlord within said 5-day
period, Landlord shall be free to lease such space to anyone whom it desires,
upon the same terms and conditions as set forth in Landlord's notice to Tenant
regarding the availability of such space, and Tenant shall have no further
rights with respect to such space: provided, however, that if Landlord proposes
to lease the RR Space on terms more favorable to any third party or Landlord
fails to lease the RR Space within a 180-day period, the RR Space shall again be
offered to Tenant as set forth herein. Tenant shall also have a right of first
refusal to lease any currently unoccupied RR Space if Tenant notifies Landlord
in writing of its desire to lease such space prior to Landlord's entering into a
letter of intent or a lease with a third party for such space, provided that
Landlord shall only be required to notify Tenant 72 hours prior to entering into
a letter of intent or a lease for such currently unoccupied RR space.
b. The right of refusal hereunder shall apply to all of the RR
Space offered by Landlord to Tenant at. any particular time and may not be
exercised as to only a portion thereof.
c. Such space shall be offered to Tenant upon the terms and
conditions and at a rental rate comparable to those on which Landlord would
lease the space, if it became available for leasing as of the time Tenant's
occupancy thereof would commence (recognizing that Landlord may ignore "market"
rate for comparable space if such rate is so low that Landlord would elect to
leave the space vacant). Such terms and conditions may include, among other
things, escalations, passthroughs and other matters then included in Landlord's
standard lease form for the Building which it uses for the leasing of space to
third parties.
d. If Tenant exercises it right of refusal with respect to the
portion of the RR Space offered by Landlord. Tenant will accept such space in
its "as is" condition on the date of possession without any remodeling or fixup
work being performed by Landlord except as would otherwise be provided by
Landlord under comparable terms.
e. The right of refusal herein granted shall continue only so long
as there is no uncured default under the Lease by Tenant and only so long as
there are at least two years remaining in the Lease Term. However, if at any
time a right of refusal would otherwise be available to Tenant, and there shall
be less than two years remaining in the Lease Term. Tenant may, if an option to
extend the Lease Term under paragraph 14 above is available, exercise such
Option and extend the Lease Term beyond the two-year period required herein as a
condition to its right of refusal.
16. Riser Space/Easements. Subject to Landlord's approval, which shall
---------------------
not be unreasonably withheld. Tenant may, during the Lease Term, use riser space
in the Building for cables between the basement or other portions of the
Building and the Premises. Upon the request of Tenant, Landlord shall use
reasonable efforts to provide to Tenant easements or rights of way for the
installation, maintenance, repair and replacement of two telecommunications
cables from the Premises to exit the Building and to the boundary of the Land,
and Tenant shall have the right, during the Lease Term, to use such easements
for such purpose. Such easements or rights of way, and the use thereof, shall be
at no charge to Tenant.
17. Landlord's Remedies. Notwithstanding anything to the contrary in
-------------------
Section 21 or elsewhere. (i) in no event shall Landlord have a lien on any of
Tenant's Property or the property of any of Tenant's customers; (ii) in no
event shall Landlord be entitled to withhold utility services under this Lease
as a remedy for Tenant's default: and (iii) in no event shall Landlord be
entitled to enter the Premises and remove or interfere with Tenant's property or
the property of Tenant's customers without judicial process.
-39
<PAGE>
18. Tenant's Property. In addition to and without limiting the items
-----------------
referenced in the foregoing Lease. Tenant's Property shall include the following
the following items located either in the Premises or, if installed by Tenant as
permitted under this Lease, elsewhere in the Building or the Land; standalone
HVAC units, drycooler units and associated controls equipment, rectifiers and
uninterruptable power supplies. Tenant shall be permitted, at its option, to
leave any of the following items in the Premises, the Building or the Land upon
the termination of this Lease: provided, however, that if Tenant exercises such
option as to any of the following items, such items shall become the property of
Landlord upon the termination of this Lease; HVAC piping, electrical conductors,
telecommunications cables.
19. Landlord's Representations and Warranties. Landlord represents and
-----------------------------------------
warrants to Tenant that (i) to the best of Landlord's knowledge, Landlord has
good and marketable fee title to the Building, including without limitation the
Premises; (ii) Landlord obtained an ALTA Owner's Policy of Title Insurance upon
Landlord's acquisition of the Building which insured Landlord's fee title to the
Land (subject to the exceptions listed in such policy) in the amount of the
arms-length purchase price therefor; (iii) the Building and the Premises, as of
the date hereof, are not subject to any ground lease, mortgage, or deed of
trust; (iv) Landlord has the full power and authority to enter into this Lease
without the consent or approval of any third party; (v) the party executing this
Lease on behalf of Landlord has full power and authority to enter into this
Lease on behalf of Landlord and to bind Landlord to the terms of this Lease; and
(vi) and no other party has any right to use or occupy the Premises pursuant to
any other lease.
LANDLORD TENANT
- -------- ------
JER DENVER, LLC, a Delaware INFLOW, INC., a Delaware corporation
limited liability company
By: J. E. Robert Companies, its
designated asset manager
By: By: /s/ Joel C. Daly
---------------------------- ----------------------------
Title: 8/25/98 Title: Vice President
------------------------- -------------------------
Date: Vice President Date: 2/24/98
-------------------------- --------------------------
-40-
<PAGE>
LEASE AGREEMENT
INDEX
BASIC LEASE INFORMATION .................................................... 1
SECTION 1. DEMISE AND RENT ............................................ 1
- ---------- ---------------
1.1 Demise ................................................ 1
------
1.2 Premises .............................................. 1
--------
1.3 Commencement and Expiration Dates ..................... 1
---------------------------------
1.4 Rent .................................................. 1
----
1.5 Late Charge ........................................... 1
-----------
1.6 Confidentiality ....................................... 1
---------------
SECTION 2. USE ........................................................ 1
- ---------- ---
SECTION 3. TENANTS ACCEPTANCE AND MAINTENANCE OF PREMISES ............. 2
- ---------- ----------------------------------------------
SECTION 4. OPERATING EXPENSES AND TAXES ............................... 2
- ---------- ----------------------------
4.1 Operating Expenses .................................... 2
------------------
4.2 Exclusions From Operating Expenses .................... 3
----------------------------------
4.3 Taxes ................................................. 3
-----
SECTION 5. PAYMENT OF OPERATING EXPENSES .............................. 4
- ---------- -----------------------------
5.1 Operating Year ........................................ 4
--------------
5.2 Tenant's Pro Rata Share ............................... 4
-----------------------
5.3 Written Statement of Estimate ......................... 4
-----------------------------
5.4 Final Written Statement ............................... 5
-----------------------
5.5 Tenant Examination .................................... 5
------------------
5.6 Disputes .............................................. 5
--------
5.7 Payment ............................................... 5
-------
5.8 No Reduction in Amount of Base Rent ................... 5
-----------------------------------
SECTION 6. SECURITY ................................................... 6
- ---------- --------
6.1 Security Deposit ...................................... 6
----------------
6.2 Disposition of Security Deposit ....................... 6
-------------------------------
SECTION 7. SUBORDINATION, NOTICE TO SUPERIOR MORTGAGEES ............... 6
- ---------- -------------------------------------------
7.1 Subordination ......................................... 6
-------------
7.2 Notice ................................................ 7
------
7.3 Attornment; Nondisturbance ............................. 7
-------------------------
SECTION 8. OUIET ENJOYMENT ............................................ 7
- ---------- ---------------
SECTION 9. ASSIGNMENT AND SUBLETTING .................................. 7
- ---------- -------------------------
9.1 Generally ............................................. 7
---------
9.2 Conditions of Landlord's Consent ...................... 8
--------------------------------
SECTION 10. INSURANCE .................................................. 8
- ---------- ---------
10.1 Waiver of Right of Recovery .......................... 8
---------------------------
10.2 Public Liability Insurance ........................... 8
--------------------------
10.3 Landlord's Property Insurance ........................ 8
----------------------------
10.5 Acceptable Insurance Companies ....................... 9
------------------------------
10.6 Increase in Coverage ................................. 9
--------------------
SECTION 11. RULES AND REGULATIONS ...................................... 9
- ----------- --------------------
SECTION 12. ALTERATIONS ................................................ 9
- ----------- -----------
12.1 Requirements ......................................... 9
------------
-i-
<PAGE>
12.2 Indemnification of Landlord .......................... 9
---------------------------
SECTiON 13. LANDLORD'S AND TENANTS PROPERTY ............................ 10
- ----------- -------------------------------
13.1 Landlord's Property .................................. 10
-------------------
13.2 Tenant's Property .................................... 10
-----------------
13.3 Abandonment .......................................... 10
-----------
SECTION 14. SERVICES AND UTILITIES ..................................... 10
- ----------- ----------------------
14.1 Building Maintenance ................................. 10
--------------------
14.2 Utilities ............................................ 10
---------
14.3 Excess Usage ......................................... 11
------------
14.4 Disclaimer ........................................... 1l
----------
14.5 Use of Common Areas and Facilities ................... 11
----------------------------------
14.6 Parking Facilities ................................... 11
------------------
14.7 Signage .............................................. 11
-----
14.8 Mailbox .............................................. 11
-------
SECTION 15. ACCESS AND NAME ............................................ 12
- ----------- ---------------
SECTION 16. NOTICE OF OCCURRENCES ...................................... 12
- ----------- ---------------------
SECTION 17. NONLIABILITY AND INDEMNIFICATION ........................... 12
- ----------- --------------------------------
17.1 Waiver ............................................... 12
------
17.2 Indemnification ...................................... 12
---------------
17.3 Duty to Defend ....................................... 13
--------------
SECTION 18. DAMAGE OR DESTRUCTION ...................................... 13
- ----------- ---------------------
18.1 Casualty ............................................. 13
--------
18.2 Condemnation ......................................... 13
------------
SECTiON 19. SURRENDER AND HOLDING OVER ................................. 14
- ----------- --------------------------
19.1 General .............................................. 14
-------
19.2 Surrender ............................................ 14
---------
19.3 Holding Over with Consent/Tenancy Month-to-Month ..... 14
------------------------------------------------
19.4 Holding Over Without Consent ......................... 14
----------------------------
SECTION 20. EVENTS OF DEFAULT .......................................... 14
- ----------- -----------------
20.1 Events of Default .................................... 14
-----------------
SECTION 21. REMEDIES UPON DEFAULT ...................................... 15
- ----------- ---------------------
21.1 Remedies ............................................. 15
--------
21.2 Cumulative Remedies .................................. 16
-------------------
21.3 Termination .......................................... 16
-----------
21.4 Interest on Damages .................................. 16
-------------------
21.5 Waiver of Jury Trial ................................. 16
--------------------
SECTION 22. SERVICES IN THE EVENT OF DEFAULT ........................... 17
- ----------- --------------------------------
SECTION 23. NO WAIVERS OF PERFORMANCE .................................. 17
- ----------- -------------------------
SECTION 24. CURING TENANTS DEFAULTS .................................... 17
- ----------- -----------------------
SECTION 25. BROKER ..................................................... 17
- ----------- ------
SECTION 26. NOTICES .................................................... 17
- ----------- -------
SECTION 27. ESTOPPEL CERTIFICATES ...................................... 18
- ----------- ---------------------
SECTION 28. MEMORANDUM OF LEASE ........................................ 18
- ----------- ------------------
SECTION 29. RELOCATION OF PREMISES ..................................... 18
- ----------- ----------------------
-ii-
<PAGE>
SECTION 30. ADJUSTMENT OF COMMENCEMENT AND EXPIRATION DATES ............ 18
- ----------- -----------------------------------------------
30.1 Commencement Date .................................... 18
-----------------
30.2 Tenant Obligations ................................... 18
------------------
30.3 Tenant Termination Rights ............................ 18
-------------------------
30.4 Expiration Date ...................................... 19
---------------
30.5 Early Occupancy ...................................... 19
---------------
SECTION 31. MISCELLANEOUS .............................................. 19
- ----------- -------------
31.1 Merger .............................................. l9
------
31.2 Modifications ....................................... 19
-------------
31.3 Successors and Assigns .............................. 19
----------------------
31.4 Nonrecourse Lease ................................... 19
-----------------
31.5 Force Majeure ....................................... 19
-------------
31.6 Definitions ......................................... 19
-----------
31.7 Effect of Expiration ................................ 20
--------------------
31.8 Modifications for Superior Mortgagee ................ 20
------------------------------------
31.9 Excavation .......................................... 20
----------
31.10 Union Contracts ..................................... 20
--------------
31.11 Prorations .......................................... 20
----------
31.12 Governing Law; Construction ......................... 21
---------------------------
31.13 Light Air and View .................................. 21
------------------
31.14 Tenant Representations .............................. 21
----------------------
31.15 Defined Terms ....................................... 21
------------
31.16 Counterparts ........................................ 21
------------
31.17 Costs and Attorney Fees ............................. 21
-----------------------
31.18 Effect of Failure to Consent ........................ 22
----------------------------
SECTION 32. ENVIRONMENTAL: ............................................. 22
- ----------- --------------
SECTION 33. ADDENDUM: .................................................. 23
- ----------- --------
EXHIBIT A Legal Description for Land
EXHIBIT B Floor Plan for the Building
EXHIBIT C Work Agreement
EXHIBIT D Schematic Space Plan for the Premises
EXHIBIT E Rules and Regulations
EXHIBIT F Guaranty
EXHIBIT Addendum
-iii-
<PAGE>
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT ("Amendment") is entered into as of
August 1, 1998, by and between JER DENVER, LLC, a Delaware limited liability
company ("Landlord") and INFLOW, INC., a Delaware corporation ("Tenant").
RECITALS
. On or about February 25, 1998, Landlord and Tenant entered into a lease
agreement (the "Lease") pertaining to approximately 8,407 square feet of space
located at 1860 Lincoln Street (the "Building"), Denver, Colorado (the
"Premises").
. Tenant desires to add an additional 99 square feet of space to the
Premises.
. Landlord and Tenant now desire to amend the Lease and the prior amendment
in the manner and form hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, Landlord and Tenant
agree as follows:
1. Effective August 1, 1998, the description of the Premises is amended to
include approximately 99 square feet of additional space (the "Additional
Space") in the Building as depicted on Exhibit A attached hereto and made a part
hereof (and hereafter all reference to the Premises shall include such
Additional Space).
2. Tenant's right to occupy and obligation to pay rent on the Additional
Space shall commence August 1, 1998 and shall terminate with the Lease Term.
3. Possession of the Additional Space shall be delivered, and shall be and
hereby is accepted in its "as is" condition as of the date of possession. Tenant
hereby acknowledges that it has been afforded full opportunity to make whatever
inspections of the Additional Space it desires before entering into this
Amendment.
4. Commencing August 1, 1998, Tenant shall pay to Landlord, in advance, on
the first day of each month during the term of the Lease Base Rent for the
Additional Space at the same per-square-foot rate effective during the Lease for
the original Premises (including step-ups).
5. The Additional Space shall be considered part of the Premises as though
originally a part thereof and shall be subject to all the terms and conditions
of the Lease.
6. If there is any conflict between the terms and provisions of this
Amendment and the terms and provisions of the Lease, the terms and provisions of
this Amendment shall govern. Except
<PAGE>
as herein specifically set forth, all other provisions of the Lease shall remain
in full force and effect and be binding upon the parties in accordance with
their terms.
EXECUTED by the parties as of the day and year first above written.
LANDLORD TENANT
- -------- ------
JER DENVER, LLC, a Delaware limited INFLOW, INC., a Delaware corporation
liability company
By: J. E. Robert Companies, its By: /s/ Signature
designated asset manager -------------------------------
Title: President
----------------------------
By: /s/ Signature
---------------------------
Title: Vice President
------------------------
-2-
<PAGE>
Exhibit A
[GRAPHIC]
[GRAPHIC] ONE CORPORATE CENTER/ LEVEL 3
1860 LINCOLN STREET
DENVER, COLORADO
<PAGE>
SECOND AMENDMENT TO LEASE AGREEMENT
-----------------------------------
THIS SECOND AMENDMENT TO LEASE AGREEMENT, dated as of April 27, 1999, is
entered into by and between JER DENVER, LLC, a Delaware limited liability
company ("Landlord") and INFLOW, INC., a Delaware corporation ("Tenant").
Recitals:
--------
A. Landlord and Tenant entered into a Lease Agreement, dated February
25, 1998, as amended by Amendment to Lease Agreement, dated August 1, 1998
(collectively, the "Lease") pertaining to approximately 8,506 square feet of
space located on the 3rd floor (the "Existing Premises") at 1860 Lincoln
Street, Denver, Colorado (the "Building"). Capitalized terms not otherwise
defined herein have the same meaning as in the Lease.
B. Landlord and Tenant desire to amend the Lease in the manner and form
hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, Landlord and Tenant
hereby agree as follows:
1. The description of the Premises is amended by the addition of the
approximately 2,702 rentable square feet of additional space located on the 2nd
floor depicted on the diagram of the 2nd floor of the Building (the "Temporary
Additional Space"), attached hereto as Exhibit A and made a part hereof by
reference, until the Temporary Additional Space Termination Date on the
following basis:
A. Tenant's right to occupy the Temporary Additional Space and its
obligation to pay Base Rent attributable to the Temporary Additional Space
commences on April 27, 1999 (the "Temporary Additional Space Commencement Date")
and will continue on a month-to-month basis until the Temporary Additional Space
Termination Date as defined herein.
B. Commencing on the Temporary Additional Space Commencement Date and
until the Temporary Additional Space Termination Date, Tenant will be obligated
to pay Tenant's pro rata share of Operating Expenses and Taxes for such period
with respect to the Temporary Additional Space in accordance with Section 5 of
the Lease.
C. As of the Temporary Additional Space Commencement Date and until the
Temporary Additional Space Termination Date, any reference to Premises in the
Lease includes the Temporary Additional Space as a part of the Premises and
Tenant's occupancy thereof is subject to all terms of the Lease except as
otherwise specifically herein provided.
2. Commencing on the Temporary Additional Space Commencement Date and
until the Temporary Additional Space Termination Date, Tenant will pay Base Rent
for the Temporary Additional Space in accordance with the Lease at the same per-
square-foot rate effective during the Lease for the Existing Premises (including
step-ups). Base Rent for the Temporary Additional Space is in addition to Base
Rent payable by Tenant for the Existing Premises. If Landlord is delayed in
delivering the Temporary Additional Space to Tenant due to the failure of a
current occupant to vacate, the postponement of Tenant's obligation to pay rent
for the Temporary Additional Space is in till settlement of all claims which
Tenant may otherwise have by reason of such delay. Base Rent for the Temporary
Additional Space for any partial month will be prorated based upon the actual
number of days in the month that Tenant's obligation to pay rent for the
Temporary AdditionaL Space was in effect.
<PAGE>
3. Landlord has no obligation to improve the Temporary Additional Space
and Tenant accepts the Temporary Additional Space in its "as is" condition. Any
improvements desired by Tenant shall be at Tenant's cost and expense and subject
to the terms and provisions of the Lease.
4. Notwithstanding anything to the contrary in Section 6 of the Addendum
attached as Exhibit 0 to the Lease, Landlord shall furnish electricity to the
Temporary Additional Space in accordance with Section 14.2 of the Lease.
5. Either party may terminate the month-to-month occupancy of the
Temporary Additional Space upon not less than 30 days' prior written notice to
the other (the "Termination Notice"). The Termination Notice will set forth the
date upon which the termination is to take effect which will be not less than 30
days from the date of the Termination Notice and will be the last day of a
calendar month ("Temporary Additional Space Termination Date"). Notwithstanding
the foregoing, the lease of the Temporary Additional Space, if not previously
terminated, will terminate upon, and the Temporary Additional Space Termination
Date will be, the date of the expiration or earlier termination of the Lease. As
of the Temporary Additional Space Termination Date, the Temporary Additional
Space will no longer by part of the Premises and Landlord and Tenant shall be
relieved of any further obligations with respect to the Temporary Additional
Space; provided, however, such termination shall not affect Tenant's liability
for rental and other obligations accruing prior to the Temporary Additional
Space Termination Dale, including, without limitation, its obligations to
redeliver possession of the Temporary Additional Space to Landlord on or before
the Temporary Additional Space Termination Date in the manner and condition set
forth in the Lease. Termination with respect to the Temporary Additional Space
will not terminate or alter in any way Tenant's rights to the Existing Premises
or any of Tenant's other rights.
6. If there is any conflict between the terms and provisions of this
Amendment and the terms and provisions of the Lease, the terms and provisions of
this Amendment shall govern. Except as herein specifically set forth, all other
provisions of the Lease shall remain in full force and effect and effective and
be binding upon the parties in accordance with their terms. As used herein and
in the Lease, the "Lease" shall mean the Lease as defined above as amended and
supplemented by the terms and provisions of this Amendment. This Amendment may
be executed in counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. A signed
Facsimile transmittal of this Amendment shall be considered as an original
executed document.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written and is effective upon delivery of a fully executed
copy to Tenant.
INFLOW, INC., a Delaware corporation JER DENVER, LLC, a Delaware limited
liability company
By: /s/ Arthur H. Zeile By: J.E. Robert Companies, its
--------------------------------- designated asset manager
Print Name: Arthur H. Zeile
-------------------------
Print Title: CEO, President
------------------------
ATTEST: By:
--------------------------------
By: /s/ Joel Daly Name:
--------------------------------- ------------------------------
Print Name: Joel Daly Title:
------------------------- -----------------------------
Print Title: Secretary
------------------------ "Landlord"
"Tenant"
3
<PAGE>
GUARANTOR'S CONSENT
By signature below, Guarantor acknowledges and approves the modifications
of the Lease as set forth herein and agrees that their obligations under the
Guaranty are in full force and effect as to the Lease as amended pursuant to
this Amendment.
/s/ Arthur H. Zeile
------------------------------
Arthur H. Zeile, an individual
Date: 4/27/99
-------------------------
/s/ Joel C. Daly
------------------------------
Joel C. Daly, an individual
Date: 4/27/99
-------------------------
"Guarantor"
4
<PAGE>
EXHIBIT A
(See attached)
5
<PAGE>
[GRAPHIC]
[GRAPHIC] ONE CORPORATE CENTER/ LEVEL 2
1860 LINCOLN STREET
DENVER, COLORADO
<PAGE>
THIRD AMENDMENT TO LEASE AGREEMENT
----------------------------------
THIS THIRD AMENDMENT TO LEASE AGREEMENT, dated as of June 1, 1999, is
entered into by and between JER DENVER, LLC, a Delaware limited liability
company ("Landlord") and INFLOW, INC., a Delaware corporation ("Tenant").
Recitals:
--------
A. Landlord and Tenant entered into a Lease Agreement, dated February
25, 1998, as amended by Amendment to Lease Agreement, dated August 1, 1998, and
Second Amendment to Lease Agreement, dated April 27, 1999 (collectively, the
"Lease") pertaining to certain Premises described therein (the "Premises") at
1860 Lincoln Street, Denver, Colorado (the "Building"). Capitalized terms not
otherwise defined herein have the same meaning as in the Lease.
B. Landlord and Tenant desire to amend the Lease in the manner and form
hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, Landlord and Tenant
hereby agree as follows:
ARTICLE I - ROOF SPACE
----------------------
1.1 Roof Space. Tenant shall have the ability to place cooling towers and
----------
pumps and associated equipment ("Tenant's Cooling Equipment") on the roof of the
Building to provide additional cooling to Tenant's equipment room, provided that
the footprint for Tenant's Cooling Equipment shall not exceed 650 sq. ft. The
available space for Tenant's Cooling Equipment shall be referred to as the "Roof
Space," and shall be located as depicted on Exhibit A attached hereto and made a
---------
part hereof. Tenant's installation and operation of Tenant's Cooling Equipment
on the roof of the Building shall be at Tenant's sole risk and Landlord assumes
no responsibility to secure or otherwise monitor access to said Roof Space.
Tenant agrees to insure said Roof Space and Tenant's Cooling Equipment as
required under Section 10 of the Lease.
A. Tenant's right to occupy the Roof Space will commence on the date of
Landlord's final approval of the complete plans therefor, as hereinafter
provided ("Roof Commencement Date"), and Tenant's obligation to pay Rent for the
Roof Space shall commence on the date which is 30 days after such approval date;
both shall terminate with the term of the Lease (including any renewal options
thereof). Tenant shall pay Rent for the Roof Space as follows:
Tenant shall pay Base Rent at the same per-square-foot rate effective
during the Lease for the original Premises (including step-ups), and
Tenant's Pro Rata Share of Operating Expenses shall be increased
accordingly.
B. Effective on the Roof Commencement Date, the Roof Space shall be
considered part of the Premises subject to all the terms and conditions of the
Lease, including, without limitation, Section 14 of the Addendum.
1.2 Completion. Tenant Cooling Equipment shall be installed on the Roof
----------
Space and any modifications to any other portions of the Building or its systems
to accommodate the same, if approved by Landlord, (collectively "Work") shall be
made by Tenant in accordance with complete plans approved by Landlord and
Tenant, as hereinafter provided. All such Work shall be deemed an alteration and
shall be conducted in accordance with Section 12 of the Lease, governing
Tenant's installation of alterations,
<PAGE>
including, but not limited to, the Landlord's reasonable approval of the same.
Notwithstanding any provision of the Lease to the contrary, if Landlord so
directs in writing, Tenant shall be required to remove all such alterations and
equipment and restore the Roof Space, the Building or its systems to its
original condition, as provided in Section 12.1 of the Lease, when Tenant
vacates the Premises. The indemnification provisions of Section 12.2 shall also
apply. Tenant hereby acknowledges that Tenant shall engage Superior Roofing to
conduct any activities which entail roof penetrations or sealants, and no other
contractor shall be allowed to perform such work. After commencing any Work,
Tenant shall cause its contractor to proceed with due diligence to complete the
alterations in a good and workmanlike manner and in compliance with all
applicable laws, rules, and regulations, and substantially in accordance with
the approved plans (which plans will be required to comply with the existing
roof warranty requirements). To expedite the installation of the Work,
Landlord's mechanical engineer shall act as a consultant during the planning
process to accommodate the authorization of expedited approval of the plans.
Tenant shall include Landlord's mechanical engineer in all stages of the
planning process. Tenant shall have the right to provide three (3) days prior
written notice to Landlord's on-site building manager, of the target delivery
date for the completion of the plans and shall simultaneously deliver a copy of
the approved plans to Landlord, Landlord's building engineer and the Landlord's
third party mechanical engineering firm. Provided Landlord has received said
prior written notice of the delivery of said plans, Landlord will use reasonable
efforts to approve or disapprove said plans within one (1) business day of the
receipt by Landlord, Landlord's building engineer and said engineering firm.
1.3 Submeter. As part of the foregoing Work, Tenant shall install, at
--------
Tenant's sole cost and expense, a separate electrical submeter to monitor
Tenant's electrical usage in the Roof Space, Tenant shall be solely responsible
for payment to Landlord of all electrical bills resulting from the electrical
usage in the Roof Space and the maintenance of the electrical submeter thereof.
1.4 Plan Approval. Subject to Landlord's prior written approval, in its
-------------
reasonable discretion (which may be in the form of approval of the complete
plans if Tenant includes the following items on the plans), Landlord hereby
acknowledges Tenant's requests for the following items to be included in the
Work, as follows:
A. Tenant shall have the ability to locate Tenant's Cooling Equipment
on the existing roof support frame previously used for a cooling tower but now
vacant, next to the existing Building cooling tower as shown on attached
Exhibit A.
- ---------
B. Tenant may be permitted to use the existing, abandoned hot water
piping paths presently located in the piping closet to run new piping and
electrical conduits to the roof.
C. Subject to Subpart G below, Tenant may be permitted to install
additional breakers on the Building's generator protected power to support
Tenant's Cooling Equipment.
D. Tenant may be permitted to make reasonable modifications to the
Building to run electrical conduits to support the Tenant's Cooling Equipment
electrical system.
E. Tenant may be permitted to install drains and make reasonable
modifications to the Building's sewer piping in order to discard wastewater
associated with Tenant's Cooling Equipment into the Building's sewage system.
F. Tenant may be permitted to use a crane, a helicopter, or other
reasonable means to install Tenant's Cooling Equipment in the Roof Space.
2
<PAGE>
G. Notwithstanding anything entered in the lease to the contrary, only
if Landlord approves, in its discretion (which Landlord approval will be
expressly conditioned upon receiving the consent of U.S. West, Inc., the
Building's primary tenant), Tenant may load permitting, draw generator protected
power for Tenant's Cooling Equipment from the Building electrical facilities
located on the 14th or 3rd floor. If Landlord does not so approve or cannot
obtain the consent of U.S. West, Inc., then subject to compliance with all
building code requirements and other applicable laws, Tenant may both (i) obtain
non-generator protected power from the Building electrical system, subject to
the requirements of Section 1.3 above and (ii) elect to install, as part of its
Cooling Equipment, a 50 KVA diesel/natural gas powered generator on the Roof
Space so as to provide a generator protected power supply for Tenant's Cooling
Equipment ("Generator"). The installation of the Generator will be subject to
inclusion in the complete plans submitted for Landlord's review and approval, as
hereinabove provided.
1.5 Lease Modifications. The provisions of Article I of this Amendment are
-------------------
in full satisfaction of the second, third and fourth sentences of Section 7 of
the Addendum and therefore the second, third and four sentences of Section 7 of
the Addendum to the Lease are hereby deemed deleted in their entirety and are
hereby null and void. The balance of Section 7 shall remain in full for force
and effect pertaining to the terms and conditions under which Landlord will
provide after business hours HVAC services to the Premises. In addition, given
Tenant's utilization of 650 square feet of the Building's roof for Tenant's
Cooling Equipment, Section 10 of the Addendum to the Lease is hereby amended by
deleting "400" and substituting therefor "50" and the term "HVAC condenser
equipment" is hereby deleted from the first sentence of said Section 10. The
balance of the terms and conditions of Section 10 shall remain in full force and
effect. Further, the first sentence of Section 6 of the Addendum is hereby
modified by the deletion of the words, "or such greater amount as is currently
available to the third floor of the Building." Finally, the second paragraph of
Addendum 6 is hereby modified to recognize that Tenant has not installed a
separate electrical meter for the Premises, but rather a submeter for the
Premises has been (or will be) installed, at Tenant's sole cost and expense, for
the Premises and Tenant shall be solely responsible for the payment to Landlord
of all electrical usage in the Premises and the maintenance of the electrical
submeter thereof.
ARTICLE II - SECOND FLOOR SPACE
-------------------------------
2.1 Second Floor Space. On the earlier of (a) September 1, 1999 or (b) the
------------------
date of Tenant's final Draw Request, as provided in the Work Letter attached
hereto as Exhibit C (the "Second Floor Commencement Date"), the description of
---------
the Premises shall also be amended to include approximately 5,619 square feet of
additional space on the second floor of the Building, as depicted on Exhibit B
---------
attached hereto and made a part hereof (the "Second Floor Space") and hereafter
all references to the Premises shall include such Second Floor Space.
A. Tenant's right to occupy and obligation to pay Base Rent and
Tenant's Pro Rata Share of Operating Expenses on the Second Floor Space shall
commence on the Second Floor Commencement Date and shall terminate with the
Lease Term.
B. Commencing on the Second Floor Commencement Date, Tenant shall pay
to Landlord, in advance, on the first day of each month during the term of the
Lease, Base Rent for the Second Floor Space at the same per-square-foot rate
effective during the Lease for the Premises (including step-ups), as follows:
3
<PAGE>
Period Second Floor Monthly Base Rent
------ ------------------------------
Month 1 - April 30, 2001 $7,960.25
May 1, 2001- May 31, 2001 $8,088.64
June 1, 2001-April 30, 2004 $8,194.38
May 1, 2004- May 31, 2004 $8,451.16
June 1, 2004-April 30, 2008 $8,662.63
May 1, 2008- May 14, 2008 $3,912.15
C. Commencing on the Second Floor Commencement Date, Tenant's Pro Rata
Share shall be increased to reflect an additional 1.7% for the Second Floor
Space; provided, however, the Base Year for the Second Floor Space shall be
calendar year 1999.
D. From and after the Second Floor Commencement Date, the Second Floor
Space shall be considered part of the Premises and shall be subject to all the
terms and conditions of the Lease, including without limitation, Section 14 of
the Addendum.
2.2 Tenant Improvements. Landlord will make available to Tenant a tenant
-------------------
finish allowance for the Second Floor Space in accordance with the Work Letter
attached hereto as Exhibit C. Landlord has no obligation for the completion or
---------
remodeling of the Second Floor Space and Tenant accepts the Second Floor Space
in its "as is" condition. Any alterations and improvements to the Second Floor
Space by Tenant are subject to Landlord's prior written consent pursuant to the
Work Letter and will be at Tenant's expense.
2.3 Parking. In consideration of the addition of the Second Floor Space,
-------
Landlord shall make available to Tenant two (2) additional parking space in the
Building parking garage at a rate of $100.00 per month per space, in accordance
with the terms and conditions of Section 3 of the Addendum to the Lease.
ARTICLE III - ADDITIONAL TERMS
------------------------------
3.1 Risers. No later than the Second Floor Commencement Date, Landlord
------
shall provide, at Landlord's sole cost and expense, three (3) additional four
(4) inch risers between the second and third floor of the Building.
3.2 HVAC. Landlord agrees to lower the air supply temperature for the
----
Premises, exclusive of the Temporary Additional Space and the Roof Space, to the
minimum set point (approximately 55 degrees fahrenheit) during the months of
June, July and August, or until installation of the cooling towers and pumps is
completed in the Roof Space (in accordance with the terms' hereof), whichever
shall occur first, as well as maximizing the speed of the floor fans that supply
the Premises until such date. Landlord also agrees to abate Tenant's excess HVAC
usage charges (in accordance with Section 7 of the Addendum to the Lease) for
the period of March 1, 1999 through April 30, 1999 up to a maximum total
abatement amount of $5,000.00 for such period. For the period of May 1, 1999
through June 30, 1999, Landlord agrees to totally abate Tenant's excess HVAC
usage charges.
3.3 Termination. As additional consideration for the covenants of Landlord
-----------
hereunder, Landlord shall have the option to terminate the Lease as to the
Second Floor Space only (the "Option to Terminate") at any time after May 31,
2004 and prior to August 31, 2005, upon ninety (90) days' prior written notice
(the "Notice") to Tenant on the following terms and conditions:
4
<PAGE>
A. The date of termination (the "Termination Date") shall be the date
specified in the Notice, which Termination Date shall be a date which is at
least ninety (90) days after the date of the Notice.
B. At least sixty (60) days prior to the Termination Date, Landlord
shall pay to Tenant a termination fee in the amount of $4.00 per rentable square
foot of the Second Floor Space, or $22,476.00. From and after the Termination
Date, the Second Floor Space will no longer be part of the Premises under the
Lease, Tenant will owe no Base Rent or other Rent with respect thereto
(exclusive of any outstanding and unpaid Base Rent or other Rent), Tenant's Pro
Rata Share will be reduced accordingly, and Tenant will have no other
obligations with respect to the Second Floor Space.
ARTICLE IV - MISCELLANEOUS
--------------------------
4.1 Brokers. Tenant hereby represents and warrants to Landlord that it has
-------
not engaged any broker in connection with the negotiation and/or execution of
this Amendment except Liberty-Greenfield, LLP ("Tenant's Broker"). Tenant has no
knowledge of any other broker's involvement in this transaction except Frederick
Ross Company ("Ross") which has acted as Landlord's leasing agent. Ross agrees
to pay Tenant's Broker a commission pursuant to a separate written agreement.
Tenant will indemnify Landlord and Ross against any claim or expense (including,
without limitation, attorneys' fees) paid or incurred by Landlord or Ross as a
result of any claim for commissions or fees by any broker, finder, or agent,
other than Tenant's Broker, whether or not meritorious, employed by Tenant or
claiming by, through or under Tenant. Tenant acknowledges that Landlord is not
liable for any representations by Ross or Tenant's Broker regarding the
Premises, Building, or this Amendment.
4.2 Conflict. If there is any conflict between the terms and provisions of
--------
this Amendment and the terms and provisions of the Lease, the terms and
provisions of this Amendment shall govern. Except as herein specifically set
forth, all other provisions of the Lease shall remain in full force and effect
and effective and be binding upon the parties in accordance with their terms.
4.3 Counterparts. This Amendment may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. A signed facsimile transmittal of this Amendment
shall be considered as an original executed document.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written and is effective upon delivery of a fully executed
copy of Tenant.
INFLOW, INC., a Delaware corporation JER DENVER, LLC, a Delaware limited
liability company
By: /s/ Arthur H. Zeile
---------------------------------
Print Name: Arthur H. Zeile
-------------------------
Print Title: CEO, President
------------------------
ATTEST: By: /s/ Barbara Bowman
-------------------------------
Name: Barbara Bowman
-----------------------------
Title: Vice President
----------------------------
By: /s/ Joel C. Daly
--------------------------------- "Landlord"
Print Name: Joel C. Daly
-------------------------
Print Title: COO, VP
------------------------
"Tenant"
6
<PAGE>
GUARANTOR'S CONSENT
By signature below, Guarantor acknowledges and approves the modifiations
of the Lease as set forth herein and agrees that their obligations under the
Guaranty are in full force and effect as to the Lease as amended pursuant to
this Amendment.
/s/ Arthur H. Zeile
------------------------------
Arthur H. Zeile, an individual
Date: 6/11/99
-------------------------
/s/ Joel C. Daly
------------------------------
Joel C. Daly, an individual
Date: 6/14/99
-------------------------
"Guarantor"
7
<PAGE>
EXHIBIT A
Roof Space
[See Attached]
8
<PAGE>
[DIAGRAM]
<PAGE>
EXHIBIT B
Second Floor Space
[See Attached]
9
<PAGE>
[GRAPHIC]
[GRAPHIC] ONE CORPORATE CENTER/ LEVEL 2
1860 LINCOLN STREET
DENVER, COLORADO
<PAGE>
EXHIBIT C
WORK LETTER
SECTION 1. TENANT IMPROVEMENT PROVIDED BY LANDLORD. Landlord agrees to provide
- --------- ---------------------------------------
the following Building-Standard Tenant Improvements in the Second Floor Space
and allowance for Tenant Improvements at Landlord's sole cost and expense:
1.1 Tenant shall receive the Second Floor Space in its "as is" condition,
with an allowance for Tenant Improvements on an as needed basis, as set forth
below.
SECTION 2. ADDITIONAL TENANT IMPROVEMENTS PROVIDED BY LANDLORD.
- --------- ---------------------------------------------------
Landlord agrees to provide the following Non-Building Standard Tenant
Improvements in the Second Floor Space at Landlord's sole cost and expense: None
SECTION 3. ADDITIONAL TENANT IMPROVEMENTS AT TENANT'S EXPENSE.
- --------- --------------------------------------------------
Landlord agrees to provide the following Non-Building Standard Tenant
Improvements in the Second Floor Space at Tenant's sole cost and expense: None
SECTION 4. TENANT IMPROVEMENT ALLOWANCES PROVIDED BY LANDLORD.
- --------- --------------------------------------------------
4.1 Allowances: Landlord agrees to provide the following dollar
allowances for Tenant Improvements in or with respect to or otherwise servicing
the Second Floor Space:
Tenant shall receive an allowance for Tenant Improvements, on an as
needed basis, of up to $15.00 per rentable square foot. Included in those costs
to be funded by such allowance shall be all costs incurred as a result of
architectural, engineering, design, construction management, permitting,
demolition and construction in connection with Tenant's Improvements in the
Second Floor Space or with respect to or otherwise servicing the Second Floor
Space. No more frequently than once every thirty (30) days following the date
hereof, Tenant may request in writing a draw, payable by check to Tenant against
the allowance, which request shall include (a) backup receipts or invoices for
the applicable draw, (b) a written statement from Tenant's architect or
contractor that the Tenant Improvements described on any such receipts and
invoices has been completed in accordance with the drawings, and (c) all
required AIA forms, supporting conditional lien waivers and releases executed by
the contractor (collectively the "Draw Request"). Within twenty-one (21) days
following Landlord's receipt and approval of the Draw Request, Landlord shall
pay the amount of such draw, less ten percent (10%). Upon completion of the work
Tenant may submit to Landlord a final Draw Request for the balance of the
allowance which shall include (a) record "As-built" drawings, as provided under
Section 8.1 below, (b) a detailed breakdown of Tenant's final construction
costs, together with receipted invoices showing payment thereof, (c) all final
lien releases, (d) certified, written statement from Tenant's architect or
contractor that all work has been completed in accordance with the approved CDP
and (e) copies of all final reports and permits as provided under Section 8.2
below. Upon Landlord's receipt and approval of the final Draw Request, Landlord
shall pay any remaining sums within ten (10) business days thereof.
SECTION 5. DESIGN OF TENANT IMPROVEMENTS.
- --------- -----------------------------
5.1 CDP Preparation: Tenant's office planner in cooperation with
---------------
Landlord's office planner shall prepare a construction document package (the
"CDP") with respect to those Tenant Improvements
10
<PAGE>
to be made by Tenant in the Second Floor Space, as follows. The CDP shall be
based upon the schematic space plan attached as Exhibit D and the construction
information provided by Tenant.
5.1.1 Landlord shall give notice to Tenant of any reasonable request
for construction information with respect to the CDP.
5.1.2 Tenant shall provide Landlord's office planner with all of the
construction information reasonably requested in accordance with Section 5.1.1
and any other information Tenant deems necessary to assist Landlord in
evaluating of the CDP.
5.1.3 On or before the date which is three (3) business days after the
date Tenant provides the construction information pursuant to Section 5.1.2,
Landlord shall approve or disapprove the proposed CDP. If Landlord disapproves
the CDP, such disapproval shall include an explanation of specific reasons for
such disapproval. If Landlord fails to approve or disapprove the CDP within the
time period provided above, Landlord shall be deemed to have approved the CDP.
5.1.4 If Landlord disapproves the CDP by the time period specified in
Section 5.1.3 then Landlord and Tenant shall endeavor to agree on the CDP. If
Landlord and Tenant cannot agree to the CDP by August 31, 1999, then either
party shall have the option to terminate the Lease with respect to the Second
Floor Space only, in which case the Lease will remain in full force and effect,
but the Second Floor Space will no longer be part of the Premises, Tenant will
owe no Base Rent or other Rent with respect thereto, Tenant's Pro Rata Share
will be reduced accordingly, and neither Landlord nor Tenant will have any
further obligations under the Lease with respect to the Second Floor Space. Such
right to terminate may only be exercised prior to the date on which both parties
agree to the CDP.
5.2 CDP Approval: The CDP must be approved by Tenant and Landlord in
------------
writing before proceeding to obtain building permits and commence construction.
5.3 Tenant Responsibilities: Tenant shall be responsible for delays and
additional costs, including without limitation design fees, caused by: (i) any
changes made by Tenant to the approved CDP; or (ii) delays in delivery of non-
building-standard materials requiring long lead times.
SECTION 6. CONSTRUCTION.
- --------- ------------
Approval of the CDP shall constitute written authorization to complete the
Second Floor Space in accordance with the CDP. Tenant may in such authorization
delete items to reduce its cost. Tenant shall be responsible for any costs due
to any resulting delay in completion of the Second Floor Space. Tenant's
contractor shall complete the Tenant Improvements in accordance with Tenant's
approved CDP.
SECTION 7. FIELD CHANGE ORDERS.
- --------- -------------------
If Tenant shall request any change in the approved CDP, Tenant shall
request such change in writing to Landlord, and such request shall be
accompanied by all information necessary to review plans and specifications for
such change. Tenant shall cause its office planner to prepare such plans and
specifications and a proposed field change order ("FCO") as soon as reasonably
possible thereafter. Tenant shall not proceed with any work which would be
affected by a proposed FCO until approved by Landlord. Landlord shall not
unreasonably withhold, condition or delay its approval of any proposed FCO.
Landlord shall approve or deny any proposed FCO within two (2) business days
after receipt from Tenant of the information required above. Tenant shall be
responsible for any and all delays in construction and occupancy caused by
Tenant's FCO requests. The proposed FCO shall set forth the
11
<PAGE>
estimated cost of the changes. The proposed FCO shall be effective only when
signed by both Landlord and Tenant.
SECTION 8. IMPROVEMENTS CONSTRUCTED BY TENANT.
- --------- ------------------------ -- ------
If any work is to be performed in connection with Tenant Improvements on the
Second Floor Space by Tenant or Tenant's contractor:
8.1 Landlord's Approval: Such work shall not proceed until Landlord's
-------------------
written approval of each of the following items: (a) Tenant's contractor; (b)
public liability and property damage insurance carried by Tenant or its
contractor; and (c) schematic plans and specifications for such work. The
detailed construction plans and specifications shall be prepared by Tenant based
upon the schematic plans and specifications and submitted to Landlord's office
planner. All such work shall be done in strict conformity with such final plans
and specifications subject to field change orders prepared and approved in the
manner specified in Section 7 above. As-built plans shall be prepared by Tenant
at Tenant's expense after the work is fully completed and a copy delivered to
Landlord for its use. Approval of the CDP shall constitute all necessary
approvals pursuant to this Section 8.1 with respect to the Tenant Improvements
described in the CDP.
8.2 Permits: All work shall be done in conformity with a valid building
-------
permit (obtained at Tenant's expense) when required, a copy of which shall be
furnished to Landlord before such work is commenced, and in any case, all such
work shall be performed in accordance with all applicable governmental
regulations at Tenant's sole expense. Further, upon substantial completion
thereof, Tenant shall provide to Landlord a copy of the Report of Final
Inspection required with respect to the Second Floor Space, together with all
licenses, certificates, permits issued in connection with the installation of
all work by Tenant and its contractors. Notwithstanding any failure by Landlord
to object to any such work, Landlord shall have no responsibility for Tenant's
failure to meet all applicable regulations.
8.3 Coordination: All work by Tenant or Tenant's contractor shall be
------------
scheduled in coordination with Landlord and Tenant shall keep Landlord apprised
of the progress thereof. Tenant or Tenant's contractor shall arrange for
necessary utility, hosting and elevator service with Landlord's contractor and
shall pay such reasonable charges for such services as may be charged by
Landlord's contractor. Tenant and Tenant's contractor shall cooperate with
Landlord in Landlord's reasonable oversight and inspection of Tenant's
Improvements.
8.4 Manner of Entry: Tenant's entry to the Second Floor Space for any
---------------
purpose, including without limitation, inspection or performance of Tenant
construction by Tenant's agents, prior to the Second Floor Commencement Date
shall be at such times as are approved by Landlord and subject to all the terms
and conditions of the Lease except the payment of Rent. Tenant's entry shall
mean entry by Tenant, its officers, contractors, licensees, agents, servants,
employees, guests, invitees, or visitors.
8.5 Faulty Work: Tenant shall promptly reimburse Landlord upon demand for
-----------
any extra expense incurred by Landlord by reason of faulty work done by Tenant
or its contractors or by reasons of any delays caused by such work, or by reason
of inadequate cleanup.
12
<PAGE>
FOURTH AMENDMENT TO LEASE AGREEMENT
-----------------------------------
THIS FOURTH AMENDMENT TO LEASE AGREEMENT, dated as of August 13, 1999, is
entered into by and between JER DENVER, LLC, a Delaware limited liability
company ("Landlord") and INFLOW, INC., a Delaware corporation ("Tenant").
Recitals:
--------
A. Landlord and Tenant entered into a Lease Agreement, dated
February 25, 1998, as amended by Amendment to Lease Agreement, dated August 1,
1998, as amended by Second Amendment to Lease Agreement, dated April 27, 1999,
and Third Amendment to Lease Agreement, dated June, 1999 (collectively, the
"Lease") pertaining to certain Premises described therein (the "Existing
Premises") at 1860 Lincoln Street, Denver, Colorado (the "Building").
Capitalized terms not otherwise defined herein have the same meaning as in the
Lease.
B. Landlord and Tenant desire to amend the Lease in the manner and form
hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, Landlord and Tenant
hereby agree as follows:
1. The description of the Premises is amended by the addition of the
approximately 3,082 rentable square feet of additional space located on the 2nd
floor depicted on the diagram of the 2nd floor of the Building (the "Additional
Temporary Space"), attached hereto as Exhibit A and made a part hereof by
reference, until the Additional Temporary Space Termination Date on the
following basis:
A. Tenant's right to occupy the Additional Temporary Space and its
obligation to pay Base Rent attributable to the Additional Temporary Space
commences on August 16, 1999 (the "Additional Temporary Space Commencement
Date") and will continue on a month-to-month basis until the Additional
Temporary Space Termination Date as defined herein.
B. Commencing on the Additional Temporary Space Commencement Date and
until the Additional Temporary Space Termination Date, Tenant will be obligated
to pay Tenant's pro rata share of Operating Expenses and Taxes for such period
with respect to the Additional Temporary Space in accordance with Section 5 of
the Lease.
C. As of the Additional Temporary Space Commencement Date and until the
Additional Temporary Space Termination Date, any reference to Premises in the
Lease includes the Additional Temporary Space as a part of the Premises and
Tenant's occupancy thereof is subject to all terms of the Lease except as
otherwise specifically herein provided.
2. Commencing on the Additional Temporary Space Commencement Date and
until the Additional Temporary Space Termination Date, Tenant will pay Base Rent
for the Additional Temporary Space in accordance with the Lease at the same per-
square-foot rate effective during the Lease for the Existing Premises (including
step-ups). Base Rent for the Additional Temporary Space is in addition to Base
Rent payable by Tenant for the Existing Premises. If Landlord is delayed in
delivering the Additional Temporary Space to Tenant due to the failure of a
current occupant to vacate, the postponement of Tenant's obligation to pay rent
for the Additional Temporary Space is in full settlement of all claims which
Tenant may otherwise have by reason of such delay. Base Rent for the Additional
Temporary Space for
<PAGE>
any partial month will be prorated based upon the actual number of days in the
month that Tenant's obligation to pay rent for the Additional Temporary Space
was in effect.
3. Landlord has no obligation to improve the Additional Temporary Space and
Tenant accepts the Additional Temporary Space in its "as is" condition. Any
improvements desired by Tenant shall be at Tenant's cost and expense and subject
to the terms and provisions of the Lease.
4. Notwithstanding anything to the contrary in Section 6 of the Addendum
attached as Exhibit G to the Lease, Landlord shall furnish electricity to the
Additional Temporary Space in accordance with Section 14.2 of the Lease.
5. Either party may terminate the month-to-month occupancy of the
Additional Temporary Space upon not less than 30 days' prior written notice to
the other (the "Termination Notice"). The Termination Notice will set forth the
date upon which the termination is to take effect which will be not less than 30
days from the date of the Termination Notice and will be the last day of a
calendar month ("Additional Temporary Space Termination Date"). Notwithstanding
the foregoing, the lease of the Additional Temporary Space, if not previously
terminated, will terminate upon, and the Additional Temporary Space Termination
Date will be, the date of the expiration or earlier termination of the Lease. As
of the Additional Temporary Space Termination Date, die Additional Temporary
Space will no longer be part of the Premises and Landlord and Tenant shall be
relieved of any further obligations with respect to the Additional Temporary
Space; provided, however, such termination shall not affect Tenant's liability
for rental and other obligations accruing prior to the Additional Temporary
Space Termination Date, including, without limitation, its obligations to
redeliver possession of the Additional Temporary Space to Landlord on or before
the Additional Temporary Space Termination Date in the manner and condition set
forth in the Lease. Termination with respect to the Additional Temporary Space
will not terminate or alter in any way Tenant's rights to the Existing Premises
or any of Tenant's other rights.
6. If there is any conflict between the terms and provisions of this
Amendment and the terms and provisions of the Lease, the terms and provisions of
this Amendment shall govern. Except as herein specifically set forth, all other
provisions of the Lease shall remain in full force and effect and effective and
be binding upon the parties in accordance with their terms. As used herein and
in the Lease, the "Lease" shall mean the Lease as defined above as amended and
supplemented by the terms and provisions of this Amendment. This Amendment way
be executed in counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. A signed
facsimile transmittal of this Amendment shall be considered as an original
executed document.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written and is effective upon delivery of a fully executed
copy to Tenant.
INFLOW, INC., a Delaware corporation JER DENVER, LLC, a Delaware limited
liability company
By: /s/ Arthur H. Zeile By: J.E. Robert Companies, its
--------------------------------- designated asset manager
Print Name: Arthur H. Zeile
-------------------------
Print Title: President, CEO
------------------------
ATTEST: By: /s/ Barbara Bowman
------------------------------
Name: Barbara Bowman
----------------------------
Title: Vice President
---------------------------
By: /s/ Joel C. Daly
--------------------------------- "Landlord"
Print Name: Joel C. Daly
-------------------------
Print Title: VP, COO
------------------------
"Tenant"
3
<PAGE>
GUARANTOR'S CONSENT
By signature below, Guarantor acknowledges and approves the modifications
of the Lease as set forth herein and agrees that their obligations under the
Guaranty are in full force and effect as to the Lease as amended pursuant to
this Amendment.
/s/ Arthur H. Zeile
------------------------------------
Arthur H. Zeile, an individual
Date: 13 August 1999
-------------------------------
/s/ Joel C. Daly
------------------------------------
Joel C. Daly, an individual
Date: 13 August 1999
-------------------------------
"Guarantor"
4
<PAGE>
[GRAPHIC]
[GRAPHIC] US WEST WIRELESS/ LEVEL 2
1860 LINCOLN STREET
DENVER, COLORADO
<PAGE>
EXHIBIT A
(See attached)
5
<PAGE>
Exhibit 10.12
BANNOCK CENTER
(938 BANNOCK BUILDING)
OFFICE BUILDING
LEASE
AGREEMENT
between
938 Bannock, LLC
Landlord
and
INFLOW, INC.
Tenant
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. REFERENCE DATA
ARTICLE 2. LEASED PREMISES AND TERM
Section 2.1. Leased Premises
Section 2.2. Term
Section 2.3. Completion of Leased Premises
Section 2.4. Commencement and Expiration Date Agreement
Section 2.5. Tenants Entry Upon Premises Before Commencement Date
Section 2.6. Occupancy of Leased Premises
Section 2.7. After Hours Access
ARTICLE 3. RENT AND SECURITY DEPOSIT
Section 3.1. Fixed Rent and First Monthly Rent Payment
Section 3.2. Additional Rent and Rent Defined
Section 3.3. Past Due Rent and Additional Rent
Section 3.4. Security Deposit
ARTICLE 4. TENANTS SHARE OF OPERATING COSTS
Section 4.1. Definitions
Section 4.2. Adjustment in Operating Costs
Section 4.3. Tenant's Share of the Increase in the Operating Costs
Section 4.4. Reduction in the Event of Casualty or Taking by Eminent Domain
ARTICLE 5. CONDUCT OF BUSINESS BY TENANT
Section 5.1. Use of Leased Premises
Section 5.2. Compliance with Laws and Requirements of Public Authorities
Section 5.3. Rules and Regulations
Section 5.4. Permitted Weight Loads
Section 5.5. Signage
ARTICLE 6. COMMON AREA
Section 6.1. Control of Common Area
Section 6.2. Parking
ARTICLE 7. REPAIRS, ALTERATIONS AND MECHANICS' LIENS
Section 7.1. Repairs
Section 7.2. Alterations
Section 7.3. Mechanics' Liens
ARTICLE 8. UTILITIES AND BUILDING SERVICES
Section 8.1. Utilities and Services Provided
Section 8.2. Interruption of Services
Section 8.3. Energy Conservation and Security Policies
ARTICLE 9. TENANTS PROPERTY TAX AND OTHER TAXES
ARTICLE 10. INSURANCE AND INDEMNITY
Section 10.1. Tenant's Insurance
Section 10.2. Indemnity and Non-Liability
Section 10.3. WaIver of Subrogation
ARTICLE 11. DAMAGE BY CASUALTY
Section 11.1. Notice
Section 11.2. RestoratIon of Improvements
Section 11.3. Damage During Last Year of Lease Term
ARTICLE 12. RIGHTS RESERVED TO LANDLORD
Section 12.1. Access to Leased Premises
Section 12.2. Relocation of Leased Premises
Section 12.3. Additional Rights
ARTICLE 13. EMINENT DOMAIN
Section 13.1. Taking of Leased Premises
Section 13.2. Partial Taking of Building
Section 13.3. Surrender
Section 13.4. Rent Adjustment for Partial Taking of Leased Premises
Section 13.5. Awards
ARTICLE 14. ASSIGNMENT AND SUBLETTING
Section 14.1. Consent Required
ARTICLE 15. BANKRUPTCY
Section 15.1. Prior to Commencement Date
Section 15.2. During the Term of this Lease
Section 15.3. Measure of Damages
Section 15.4. Adequate Assurance of Future Performance
ARTICLE 16. TENANTS DEFAULT
Section 16.1. Events of Default
Section 16.2. Termination or Re-Entry
Section 16.3. Damages
<PAGE>
TABLE OF CONTENTS (continued)
ARTICLE 17. SURRENDER
Section 17.1. Possession
Section 17.2. Trade Fixtures,-Personal Property and Improvements
Section 17.3. Merger
Section 17.4. Payments After Termination
ARTICLE 18. HOLDING OVER
ARTICLE 19. NO WAIVER; REMEDIES CUMULATIVE
Section 19.1. No Waiver
Section 19.2. Remedies Cumulative
ARTICLE 20. ESTOPPEL CERTIFICATE, SUBORDINATION ATTORNMENT
Section 20.1. Estoppel Certificate
Section 20.2. Subordination
Section 20.3. Attornment
Section 20.4. Mortgages
ARTICLE 21. QUIET ENJOYMENT
ARTICLE 22. NOTICES
ARTICLE 23. MISCELLANEOUS PROVISIONS
Section 23.1. Governing Law
Section 23.2. Construction
Section 23.3. Security Services
Section 23.4. Parties Bound
Section 23.5. No Representations by Landlord
Section 23.6. Brokers
Section 23.7. Severability
Section 23.8. Force Majeure
Section 23.9. Definition of Landlord
Section 23.10. No Option
Section 23.11. Exculpatory Clause
Section 23.12. Attorneys' Fees
Section 23.13. No Recording
EXHIBITS
EXHIBIT A (Plan Showing Leased Premises)
EXHIBIT B (Work Letter)
EXHIBIT C (Supplemental Agreement)
EXHIBIT D (Rules and Regulations)
EXHIBIT E [Intentionally Omitted]
EXHIBIT F (Form Letter of Credit)
EXHIBIT G (Depiction of Parking Areas)
<PAGE>
LEASE
This Lease is made between Landlord and Tenant named in Article 1 as of the
date set forth in Article 1. Landlord and Tenant, in consideration of the
covenants contained in this Lease, agree as follows:
ARTICLE 1. REFERENCE DATA
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the information stated for that subject in this
Article 1:
DATE OF LEASE: September 8, 1999
LANDLORD: 938 Bannock, LLC
PROPERTY MANAGER: Venture Group Real Estate Management, Inc.
LANDLORD'S AND PROPERTY MANAGER'S ADDRESS:
<TABLE>
<S> <C> <C>
c/o Venture Group Real Estate copy to: Mr. Bruce Berger
Management, Inc. Bruce Berger Realty
5299 DTC Boulevard, Suite 240 960 Cherokee Street
Englewood, CO 80111 Denver, CO 80204
303/572-1188
TENANT: INFLOW, INC., a Delaware corporation
TENANTS ADDRESS:
(For Notice) (For Billing)
Prior to Commencement Date:
1860 Lincoln, Suite 305
Denver, CO 80294
attn: Legal Department
After Commencement Date:
INFLOW, INC. INFLOW, INC.
938 Bannock Street 938 Bannock Street
Denver, CO 80204 Denver, CO 80204
Attn: Legal Department Attn: Accounting Department
</TABLE>
PREMISES or LEASED PREMISES: Approximately 17,555 square feet of space on the
third floor and second level of the Building as depicted on Exhibit A attached
hereto.
TENANTS USE OF THE LEASED PREMISES: General Office and Network Operations Center
BUiLDING: 938 Bannock Building
BUILDING ADDRESS: 938 Bannock Street
Denver, CO 80204
SCHEDULED COMPLETION DATE FOR LANDLORD'S WORK: October 15, 1999
SCHEDULED COMMENCEMENT DATE: December 15, 1999.
SCHEDULED EXPIRATION DATE: December 31, 2006.
TERM: Seven Years.
RENTABLE SQUARE FEET OF LEASED PREMISES APPROXIMATELY 17,555 SQ. FT.
RENTABLE SQUARE FEET OF BUILDING: APPROXIMATELY 36,795 SQ. FT.
FIXED RENT: Monthly Fixed Rent Annual Fixed Rent
Lease Years 1 - 5 $23,026.31 $276,315.70
Lease Years 6 - 7 $25,220.68 $302,648.20
"Lease Year' shall mean each twelve (12) month period beginning with the
Commencement Date, or any anniversary thereof, and ending on the preceding day
one (1) year later; provided, however, that if the Commencement Date is a date
other than the first day of a calendar month, the first Lease Year shall include
the days from the Commencement Date to the first day of the following calendar
month, and each subsequent Lease Year shall commence on the anniversary of the
first day of such calendar month.
LANDLORD'S OPERATING COST LIMITATION: Operating Costs for the Building for
Calendar Year 2000, which includes property taxes payable in the year 2001 for
the year 2000.
(Tenant's Pro Rata Share of any Increase in Operating Costs over Landlord's
Operating Cost Limitation: 47.72%)
FIRST YEAR FOR TENANT'S PAYING OPERATING COST ESCALATION:
Year Beginning January 1, 2001.
TENANT FINISH COST: See Work Letter
TENANT FINISH TO BE PAID BY LANDLORD: See Work Letter
OVERAGE AMOUNT TO BE PAID BY TENANT: See Work Letter
1
<PAGE>
SECURITY DEPOSIT: $300,000 Letter of Credit pursuant to Section 3.4 of the main
text of the Lease and the Rider. in addition to the foregoing, prior to
expiration of the Letter of Credit, Tenant shall provide a cash Security Deposit
equal to Twenty Five Thousand Eight Hundred Forty Five and 63/1 00 Dollars
($25,845.63).
GUARANTOR: N/A
NUMBER OF PARKING SPACES: 53 surface parking spaces
BROKER: Venture Group Real Estate, L.L.C. for Landlord; Liberty-Greenfield, LLLP
for Tenant
SPECIAL PROVISIONS: See Attached Rider
The exhibits listed below in this Section are incorporated in this Lease by
reference and are to be construed as part of this Lease:
(a) Exhibit A, Plan Showing Leased Premises.
(b) Exhibit B, Work Letter.
(c) Exhibit C, Supplemental Agreement.
(d) Exhibit D, Rules and Regulations.
(e) Exhibit E, Intentionally Deleted
(f) Exhibit F, Form Letter of Credit
(g) Exhibit G, Depiction of Parking Areas
(h) Rider
ARTICLE 2. LEASED PREMISES AND TERM
Section 2.1. Leased Premises. Landlord hereby leases to Tenant, and Tenant
---------------
hereby leases from Landlord, the premises described below, upon and subject to
the covenants, agreements, terms, conditions, limitations, exceptions and
reservations of this Lease. Landlord and Tenant covenant and agree as a material
part of the consideration for this Lease to keep and perform all of the
covenants, agreements, terms and conditions by each of them to be kept and
performed under this Lease, and this Lease is made upon the condition of such
performance.
The premises leased to Tenant under this Lease are the portion of the
Building indicated on the plan attached to this Lease as Exhibit A (the "Leased
---------
Premises"). The Leased Premises may be referred to as the suite and floor
indicated in Article 1. For purposes of this Lease, the parties agree that the
rentable square feet of the Leased Premises is as stipulated in Article 1.
Section 2.2. Term. The term of this Lease (the "Term") shall be as
----
indicated in Article 1. The Term and Tenant's obligation to pay Rent (as defined
in Section 3.2) shall commence on the earlier of (a) sixty (60) days following
substantial completion of Landlord's Work as designated by Landlord by notice to
Tenant In writing, accompanied by a certificate of substantial completion issued
by Landlord's architect or by Landlord, as provided in Section 2.3, or (b) the
date on which Tenant or anyone claiming by, under or through Tenant shall first
occupy for business any portion of the Leased Premises for any purpose other
than as provided in Section 2.5 (such earlier date being the "Commencement
Date"). If for any reason the Leased Premises are not substantially completed
and available for occupancy by the Scheduled Commencement Date indicated in
Article 1, Landlord shall not be liable for any claims, damages, or liabilities
in connection with or by reason of the delay, nor shall the same make this Lease
void or voidable. In such event, the Term shall commence on the actual
Commencement Date, and the expiration date of the Term (the "Expiration Date")
shall be adjusted to fall on the last day of the calendar month at the end of
the Term.
If the Term shall not have commenced pursuant to this Section 2.2 within
120 days after the Scheduled Commencement Date, then at Tenant's option as
indicated by Tenant's written notice received by Landlord no later than five (5)
business days thereafter, this Lease and all rights, duties and obligations of
the parties shall terminate effective one day after the date of such notice. If
Tenant fails to timely deliver such notice of termination, this Lease shall
remain in full force and effect. Upon such termination, the Letter of Credit
shall be immediately returned to Tenant. However, if the actual Commencement
Date occurs prior to Tenant's giving of such notice, this Lease shall remain in
full force and effect.
Section 2.3. Completion of Leased Premises. For the purposes of Section
-----------------------------
2.2, the Leased Premises shall be conclusively deemed available for Tenant to
commence Tenant's Work (as defined in the Work Letter) when Landlord's architect
certifies in writing that the work required to be performed by Landlord, if any
("Landlord's Work"), as described in Exhibit B to this Lease (the "Work Letter")
has been substantially completed. (If no architect has been engaged in
completing Landlord's Work, a certificate from Landlord will serve to confirm
substantial completion of Landlord's Work.) Landlord's Work, if any, shall be
deemed substantially completed notwithstanding that minor or non-material
details of construction, mechanical adjustment or decoration that do not
materially interfere with Tenant's ability to perform the Tenant Work (so-called
"punch list items") remain to be performed, or that portions of Landlord's Work
are incomplete because such work cannot be done until Tenant's Work is
completed. Landlord agrees to perform or complete the punch list items within 30
business days after mutual execution of the punch list by Tenant and Landlord.
In the event Landlord is delayed in completing Landlord's Work by any delay,
interference or hindrance of such work by Tenant, Tenant's contractors or any of
their employees or agents, or by any changes in such work requested by Tenant
and agreed to by Landlord or by Tenant's failure to timely and properly perform
any of its obligations imposed pursuant to Exhibit B, the Leased Premises shall
---------
be conclusively deemed substantially completed and available for occupancy on
the date on which the same would have occurred in the absence of such delay. To
the best of Landlord's knowledge all asbestos-containing material ("ACM")
required to be removed from the Building have been removed from the Building and
Landlord has provided to Tenant a copy of its consultants sign off letter
confirming the same. If during Tenant's construction of Tenant's Work pursuant
to the Work Letter, Tenant discovers and identifies ACM through standard testing
and point testing, Tenant will give Landlord written notice within 48 hours
after Tenant's discovery thereof. If such ACM is required to be removed from the
Leased Premises pursuant to applicable laws, rules or regulations, Landlord will
use reasonable efforts to remove such ACM from the Leased Premises (the "ACM
Removal"). Tenant will in no event disturb such ACM or take any action that
would result in a release of ACM or result in the ACM becoming airborne or
friable. If possible, Tenant will proceed with Tenant's Work, but will not
interfere with Landlord's ACM Removal. If the ACM Removal from the Leased
Premises by Landlord is the direct result of unavoidable delay in the completion
of Tenant's Work, then the Commencement Date will be extended one day for each
day of delay in Tenant's Work that is a direct result of the ACM Removal.
Notwithstanding the foregoing, Landlord shall have no obligation to remove any
floor tile existing in the Leased Premises or the Building as of the date of
this Lease which floor tile may contain ACM.
Section 2.4. Commencement and Expiration Date Agreement. In order to
------------------------------------------
confirm the exact Commencement Date and the actual Expiration Date of the Term,
promptly after the Commencement Date, the parties shall execute a supplemental
agreement in the form which is labeled and attached as, and when executed will
become Exhibit C to this Lease, setting forth the actual Commencement Date and
---------
Expiration Date as determined under this Article 2. Landlord's failure to
request the execution of such supplemental agreement shall in no way affect
Tenant's obligation to perform under this Lease. Tenant's failure to execute and
deliver such supplemental agreement within 10 days following notice of
Landlord's request shall constitute an acceptance of the Leased Premises and
Tenant's agreement that the statements contained in the supplemental agreement
furnished by Landlord are true and correct.
Section 2.5. Tenant's Entry Upon Leased Premises Before Commencement Date.
------------------------------------------------------------
On the condition that Tenant complies at all times with the provisions and
requirements of this Lease (other than the obligation to pay Fixed Rent and,
except as provided with respect to electrical service in this Section below, the
obligation to pay Additional Rent, all as defined in Article 3), Tenant may
enter upon the Leased Premises prior to the Commencement Date to install trade
fixtures and furnishings and to ready the Leased Premises for the conduct of
Tenant's business, subject however, to the following conditions: (a) Tenant
shall not interfere with Landlord's Work in any way
2
<PAGE>
or manner; (b) if any of Tenant's Work and Landlord's Work will be performed at
the same time, Tenant must utilize (for Tenant's Work) the contractor selected
by Landlord to perform Landlord's Work to undertake such installations and other
preparatory work; and (c) Tenant shall undertake such installations and other
preparatory work only with workmen with such labor organization affiliation or
lack of affiliation as Landlord may require. If no portion of Tenant's Work will
be performed at the same time as Landlord's Work, then Tenant's contractor shall
only be subject to Landlord's reasonable approval. It shall be reasonable for
Landlord to require a specific contractor to work on the structural components
of the Building in connection with Tenant's Work. Tenant's obligations to pay
for electricity furnished to the Leased Premises shall commence upon Tenant's
entry upon the Leased Premises as provided in this Section. After completion of
Landlord's Work, Landlord will provide electricity to the Premises pursuant to
Section 8.1 below. However, Landlord does not assume responsibility for the
availability of electricity during the period prior to completion of Landlord's
Work.
Section 2.6. Occupancy of Leased Premises. The taking of occupancy of all
----------------------------
or part of the Leased Premises by Tenant or anyone claiming by, under or through
Tenant shall be conclusive evidence that (a) Tenant accepts possession; (b) the
Leased Premises and the Building were in good and satisfactory condition, except
the agreed punchlist items and latent defects of which Tenant notifies Landlord
in writing within six (6) months after the Commencement Date; and (c) Landlord's
Work, if any, was satisfactorily completed at the time such occupancy was so
taken, subject to punch list items indicated on a list delivered by Tenant to
Landlord and agreed to by Landlord on or before the date Tenant takes occupancy
of the Leased Premises.
Section 2.7. After Hours Access. Tenant shall, at all times, have access to
------------------
the Leased Premises and the west elevator shall be operational at all times
(subject to customary maintenance and repair obligations). Tenant shall have
access to the Common Areas, loading dock, and telephone and power closets
serving any of Tenant's equipment which are located within the Building but
outside of the Leased Premises at all times with prior notice to Landlord for
purposes of constructing Tenant's Work, performing its repair and maintenance
obligations set forth in this Lease, and to realize the rights otherwise granted
to Tenant under this Lease. Tenant agrees that Landlord may establish for the
Building from time to time "Normal Business Hours," defined initially as 7:00
a.m. until 6:00 p.m. weekdays and 8:00 a.m. until 1:00 p.m. Saturdays, excluding
"Legal Holidays," which are defined to include, but are not necessarily limited
to, New Year's Day, Memorial Day, the Fourth of July, Labor Day, Thanksgiving
Day and Christmas Day. Landlord shall provide Tenant with reasonable advance
notice of any other Legal Holidays which may affect access to the Building.
Landlord shall provide for the issuance of after-hours passes at no charge to
specifically named persons designated by Tenant, and other appropriate
arrangements shall be made (for example, if appropriate, the issuance of keys)
to facilitate use of the Leased Premises. In the event Landlord installs
equipment which will permit Identification and allocation of the additional
expense incurred as a result of such after-hours access, Tenant agrees to pay as
Additional Rent those expenses attributable to its after-hours access. No
customer or invitee may be admitted after Normal Business Hours unless
accompanied by an employee of Tenant having the foregoing right of admission or
unless such customer or invitee is issued an after-hours pass as described
above, and Tenant shall exercise due care to cause all persons gaining entry
under such special rights to avoid loss or damage to the property of Landlord
and other tenants or occupants. Any keys issued under this Section shall remain
the property of Landlord, shall not be duplicated and shall be returned to
Landlord upon request. (The term "keys" includes any devices serving the same
purpose.)
ARTICLE 3. RENT AND SECURITY DEPOSIT
Section 3.1. Fixed Rent and First Monthly Rent Payment. Tenant shall pay
-----------------------------------------
Landlord the fixed rent stipulated in Article I (the "Fixed Rent"). The Fixed
Rent shall be payable in equal monthly installments in the amount stipulated in
Article 1 as monthly Fixed Rent, in advance, on the first day of each calendar
month during the term of this Lease. If the Term does not commence on the first
day of a calendar month or does not end on the last day of a calendar month, the
monthly Fixed Rent for such month or months shall be prorated, and the prorated
amounts shall be paid in advance. All Fixed Rent shall be paid without any prior
demand and without any deduction or set-off whatsoever, in lawful currency of
the United States of America, at the address of Landlord set forth in Article 1,
or at such other place as Landlord may from time to time designate in writing.
Upon execution of this Lease, Tenant agrees to pay Landlord an amount equal
to the monthly Fixed Rent, which Landlord shall hold without interest to Tenant
and apply to the first full monthly Fixed Rent obligation of Tenant.
Section 3.2. Additional Rent and Rent Defined. Any sums or charges to be
--------------------------------
paid by Tenant pursuant to the provisions of this Lease, other than the Fixed
Rent, represent obligations of Tenant for additional rent ("Additional Rent")
and shall be payable within five business days after Landlord gives written
notice and demand for payment unless otherwise provided in this Lease. Payment
shall be made at the location specified in Article 1, unless otherwise
designated by notice from Landlord in writing, and shall be recoverable in the
same manner as the Fixed Rent. Landlord shall have the same rights against
Tenant for default in payment of Additional Rent as for default in payment of
the Fixed Rent.
As used in this Lease, the term "Rent" shall mean Fixed Rent and Additional
Rent.
Section 3.3. Past Due Rent and Additional Rent. If Tenant shall fail to pay
---------------------------------
any Rent before the sixth day after such Rent is due and payable, Tenant agrees
to pay as Additional Rent each day after such sixth day that the Rent remains
unpaid, a late charge which shall be the greater of (a) $25.00 per day, or (b)
5% of the amount of such unpaid Rent divided by 30. The late charge shall accrue
daily until the unpaid Rent (including the late charge) is paid. Tenant agrees
that such amounts are not a penalty, but are intended as liquidated damages and
reflect a reasonable estimate by the parties of the cost to reimburse Landlord
for the loss of the use of the money and the additional administrative costs
resulting from late payments. Tenant shall also be responsible for the payment
of reasonable attorneys' fees incurred by Landlord in collecting any delinquent
Rent from Tenant. Any election by Landlord to waive in any instance the
requirement for Tenant's payment of late charges and/or attorneys' fees incurred
by Landlord pursuant to this Section of any other provision in this Lease shall
not operate to waive or impair Landlord's right to collect such sums from Tenant
upon any other breach of Tenant's obligations under this Lease.
Section 3.4. Security Deposit. Tenant shall deposit with Landlord within
----------------
five(5) days after signing this Lease, and shall keep on deposit with Landlord
throughout the term of this Lease, a letter of credit in form and content as set
forth in the Rider attached hereto and incorporated herein by this reference
(the "Security Deposit") as security for the payment by Tenant of the Rent and
for the faithful performance of all the terms, conditions and covenants of this
Lease. If at any time during the Term Tenant defaults in the payment or
performance of any of its obligations under this Lease, Landlord may but shall
not be required to make draws upon the Letter of Credit as provided in the Rider
and use amounts drawn thereunder, in payment of any Rent in default, in
reimbursement of any expense incurred by Landlord and in payment of the damages
incurred by Landlord by reason of Tenant's default, or at the option of
Landlord, Landlord may retain the Security Deposit as liquidated damages. In
such event, on written demand of Landlord, Tenant shall immediately remit to
Landlord a sufficient amount in cash to restore the Security Deposit to its
original amount. If, upon termination of this Lease, Landlord has not applied
any amounts drawn under the Letter of Credit to sums owed to Landlord as
permitted by this Section above, then within thirty (30) business days after the
termination of this Lease, Landlord will refund such amounts to Tenant without
interest. Tenant is hereby notified that any questions regarding the Security
Deposit, including any request for its return, should be directed to Landlord at
the address for Landlord set forth in Article 1.
Landlord shall deliver the Letter of Credit to any purchaser of Landlord's
interest in the Leased Premises in the event such interest is sold, and
thereupon, Landlord shall be discharged from further liability with respect to
the Letter of Credit. With respect to a purchaser of Landlord's interest in the
Leased Premises and amounts drawn under the Letter of Credit, if any, and held
as a Security Deposit hereunder, Landlord shall be discharged of from any
further liability with respect to the Security Deposit if either Landlord
delivers the Security Deposit to the purchaser, or the purchaser assumes all of
the obligations of Landlord with respect to the Security Deposit. Landlord shall
have the right to commingle the amounts drawn on the Letter of Credit with other
funds of Landlord. Notwithstanding these provisions above if claims of Landlord
exceed the Letter of Credit, Tenant shall remain liable for the balance of such
claims.
3
<PAGE>
ARTICLE 4. TENANT'S SHARE OF OPERATING COSTS
Section 4.1. Definitions. As used in this Lease, the term "Operating Costs"
-----------
shall mean any and all costs, charges, expenses, and disbursements of every kind
and nature which Landlord shall pay or become obligated to pay in connection
with the operation, ownership, maintenance, management, and repair of the
Building, including, but not limited to, the following:
(a) All wage, salary and labor costs of all persons engaged in the
operation, maintenance, management, and repair of the Building (including,
but not limited to, all applicable taxes, insurance and benefits).
(b) Cost of all building supplies and materials.
(c) Cost of all utilities (including, but not limited to, sewer and water
service) and fuel, if any, provided by Landlord pursuant to Article 8.1 or
utilized in connection with the operation of the Building and/or the Leased
Premises not charged directly or separately to Tenant or another tenant in
the Building.
(d) Cost of all insurance including, but not limited to, casualty, rental
abatement, and liability insurance.
(e) Cost of all maintenance and service agreements including, but not
limited to, window cleaning, elevator maintenance and janitorial service
for the Common Areas of the Building.
(f) Cost of repairs and general maintenance including, but not limited to,
exterior building maintenance and maintenance of sidewalks, parking areas,
and landscaping.
(g) All personal property sales and use taxes (but not including any such
taxes related to personal property owned by Landlord or third parties) and
real property taxes, assessments and other governmental charges of any kind
whatsoever (including, without limitation, assessments, fees, and charges
imposed for public improvements or benefits, or for public services such as
fire protection, street, sidewalk and road maintenance or refuse removal,
and interest on unpaid installments) which may be levied, assessed or
imposed, or become liens upon or arise out of the use, occupancy,
ownership, or possession of the Premises, and which accrue during or are
allocable to the Term or any extension (collectively, "Taxes"). The Taxes
which relate to real property interests are sometimes referred to
hereinafter as "Real Property Taxes". The term Taxes shall not, however,
include inheritance, estate, succession, transfer, gift, franchise, income
or excess profits taxes imposed upon the Landlord, or any special
assessments for improvements installed as of the date hereof, whether now
assessed or not, and Tenant shall have no liability therefor.
(h) All costs of making any alterations to the Building for life-safety
systems or energy conservation or other capital improvements, whether new
or in substitution or replacement of existing equipment or systems required
by any governmental requirement which Is imposed after the date Landlord's
Work is completed, and alterations which are primarily for the purpose of
reducing or stabilizing Operating Costs or providing additional or
increased services to the tenants of the Building, in any case, amortized
over the useful life of such improvements.
(i) Management fees either as charged to Landlord by independent management
companies or an amount not exceeding the amount typically charged by
independent management companies if Landlord itself manages the Building.
Notwithstanding anything to the contrary contained in this Lease, Operating
Costs shall not include the following:
(A) Capital expenditures except as provided in (h) above.
(B) Depreciation, amortization, ground rents or interest payments on
encumbrances.
(C) Leasing commissions, marketing costs, attorneys' fees and other
expenses related to leasing tenant space, constructing improvements for the
benefit of a tenant or occupant and allowances or concessions provided to any
tenant or occupant.
(D) Repairs required because of casualty or condemnation damage.
(E) Costs incurred because Landlord or any other tenant violated the terms
of any lease, contract or other obligation (including, without limitation,
fines, penalties and attorneys' fees).
(F) Advertising and promotional expenses.
(G) Expenses in connection with services or other benefits not provided to
Tenant, or for which Tenant is charged directly or separately, but which are
provided to another tenant, including, without limitation, utility services.
(H) Costs for sculpture, paintings or other objects of art.
(I) Overhead and profit paid to subsidiaries or affiliates of Landlord for
management or other services on or to the Building or for supplies or other
materials to the extent that the costs of services, supplies or materials exceed
the competitive costs of the services, supplies or materials were they provided
by a disinterested third party.
(J) Any expense for which Landlord is compensated through proceeds of
insurance or agreements of indemnity or surety bonds or guarantees or for which
Landlord is reimbursed by third parties.
(K) Costs incurred due to the violation of the Building of any law, rule or
regulation in effect as of completion of Landlord's Work for which Tenant was
not responsible to address as part of Tenant's Work.
(L) Costs incurred for repair or mitigation of latent defects in the
Building or defects in the original construction of the Building, or Landlord's
Work of which Landlord is notified within six (6) months after the Commencement
Date.
(M) Costs relating to negligence or fault of other tenants.
Section 4.2. Utility Costs. Landlord shall provide basic utility service
-------------
set forth in Section 8.1 below. During the Term, Tenant shall at its expense
arrange directly with the utility companies serving the Leased Premises to
provide and pay for all electricity and gas furnished or required in the Leased
Premises, and any deposits required therefor. Landlord shall incur no liability
whatsoever and the obligations of Tenant under this Lease shall not be
diminished or affected by reason of the unavailability, change or cessation of
such utility service, except as otherwise set forth in Section 8.2 of this
Lease.
Section 4.3. Janitorial. Tenant will contract for and pay for all
----------
janitorial services utilized in the Leased Premises. Tenant will keep the Leased
Premises in a clean condition, free from garbage or debris in a manner
consistent with other office buildings in the Downtown Denver office market.
4
<PAGE>
Section 4.4. Tenant's Share of the Increase in the Operating Costs. For
-----------------------------------------------------
each calendar year during the Term, Tenant shall pay to Landlord, at the time
and in the manner provided below, Tenant's Share of the Increase in Operating
Costs, as defined below.
(a) The term "Tenant's Share of the Increase in Operating Costs" for any
year shall mean the product of (i) the difference, if any, between the
actual Operating Costs for the Building for such year when expressed on a
square-foot basis and the Landlord's operating cost limitation indicated in
Article 1 ("Landlord's Operating Cost Limitation"), also expressed on a
square-foot basis, and (ii) the number of rentable square feet in the
Leased Premises (as stated in Article 1). In the event that actual
Operating Costs are less than Landlord's Operating Cost Limitation, there
shall be no credit or refund to the Tenant.
(b) For each full calendar year during the Term beginning with the calendar
year 2001, Landlord shall compute and deliver to Tenant a reasonable
estimate of Tenant's Share of the Increase in Operating Costs for such
year, and without further notice, Tenant shall pay to Landlord
simultaneously with Tenant's monthly payments of Fixed Rent during such
year, monthly installments equal to one-twelfth of such estimate. With the
first such monthly installment of Tenant's Share of the increase in
Operating Costs to be paid by Tenant for any calendar year, Tenant shall
include payment of the amount of the estimated increase prorated for the
period from the preceding January 1 to the first day of the next month
following the date of the notice. In any year Landlord may subsequently
revise the estimated adjustment in Operating Costs to allow for any new
expenses or other information which may impact Operating Costs for that
fiscal period, and in that case, after receipt of Landlord's notice of the
revised estimates Tenant shall pay monthly installments of Tenant's Share
of the Increase in Operating Costs based on Landlord's adjusted projections
as provided in this paragraph above.
(c) Unless delayed by causes beyond Landlord's reasonable control, Landlord
shall deliver to Tenant within 120 days after the end of each calendar year
during the Term, a written statement (the "Statement") setting out in
reasonable detail Tenant's Share of the Increase in Operating Costs for
such year. If the aggregate of monthly installments of Tenant's Share of
the Increase in Operating Costs actually paid by Tenant to Landlord during
any calendar year differs from the amount of Tenant's Share of the Increase
in the Operating Costs payable according to the Statement for such year
under this Section 4.3, then within thirty (30) days after the date of
delivery of the Statement, Tenant shall either (1) pay the amount (without
interest) by which the certified Tenant's Share of the Increase in
Operating Costs exceeds the amount previously paid on account of the
estimated Tenant's Share of the Increase In Operating Costs, or (2) be
credited against the next installment of Rent (or receive a check if there
is no Rent thereafter due) with the amount (without interest) by which the
amount previously paid on account of the estimated Tenant's Share of the
Increase in Operating Costs exceeds the certified Tenant's Share of the
Increase in Operating Costs.
(d) If Landlord and Tenant disagree on the accuracy of Tenant's Share of
the Increase in Operating Costs as set forth in the Statement, Tenant shall
nevertheless make payment in accordance with any notice given by Landlord,
but the disagreement shall Immediately be referred by Landlord for prompt
decision by a mutually acceptable public accountant or other professional
consultant who shall be deemed to be acting as expert and not as an
arbitrator, and a determination signed by the selected expert shall be
final and binding on both Landlord and Tenant. Any adjustment required to
any previous payment made by Tenant or Landlord by reason of any such
decision shall be made within fourteen (14) days after the decision. If the
adjustment calls for a credit to Tenant equal to 3% or more of the payments
made but disputed by Tenant, Landlord will pay the cost of the expert;
otherwise Tenant will pay the cost of the expert.
(e) Neither party may claim a readjustment in respect of Tenant's Share of
the Increase in Operating Costs for any year if based upon any error of
computation or allocation except by notice delivered to the other party
within ninety (90) days after the date of delivery of the Statement for
such year. Upon written request from Tenant within the 90-day period,
Landlord will provide reasonable documentation verifying Tenant's Share of
the Increase in Operating Costs.
(f) Notwithstanding anything to the contrary set forth in this Section 4,
for the purposes of calculating Tenant's Share of the Increase in the
Operating Costs "Controlled Expenses" (as hereinafter defined) shall not
exceed the "Maximum Controlled Expenses" (as hereinafter defined).
"Controlled Expenses" shall mean all Operating Costs except those
attributable to utilities, if any, not separately billed to Tenant or
another tenant in the Building, Taxes, costs of insurance, including,
without limitation, liability insurance, business interruption insurance,
casualty insurance and worker's compensation insurance, and costs of
compliance with any laws, rules or regulations. If Landlord is managing the
Building Complex itself the management fees included within Operating
Expenses shall be a Controlled Expense. "Maximum Controlled Expenses" shall
mean: (a) for calendar year 2000, the full amount of the actual expenses
for Controlled Expenses as determined in accordance with the foregoing
provisions; (b) for calendar year 2001 and each calendar year thereafter,
the prior calendar year's Maximum Controlled Expenses multiplied by 1.05.
The limitations described above shall be a limitation only on the
calculation and passthrough to Tenant of Tenant's Share of the Increase in
the Operating Costs. Landlord may, in accordance with advice from its
accountants and other professionals, reasonably contest any utility rate
increases associated with the Building and/or tax assessments and to apply
for all rebates to which it is entitled so long as it has knowledge
thereof. The costs of all such contests and applications shall be included
in Operating Costs however, any penalties or fines In connection with such
amounts shall not be so included. To the extent any rebates or refunds are
actually received by Landlord, they shall be applied to reduce the total
Operating Costs for the year in which such amounts are received, If any
such amounts attributable to periods during the term hereof are received by
Landlord following the expiration of the term hereof (according to its
terms and not as a result of an Event of Default, as hereinafter defined),
Landlord agrees to forward to Tenant any amounts to which Tenant is
entitled as and when received notwithstanding the fact that this Lease has
so expired, provided Tenant has given to Landlord a valid forwarding
address.
Section 4.5. Reduction in the Event of Casualty or Taking by Eminent
-------------------------------------------------------
Domain. If any part of the Building is taken by condemnation or in any other
- ------
manner for any public or quasi-public use or purpose (other than temporary use
or occupancy) or damaged or destroyed by fire or other casualty, and if the Term
shall continue in force as to any part of the Leased Premises, Landlord's
Operating Cost Limitation shall be equitably reduced, permanently or
temporarily, as appropriate, to take into account any decrease in Operating
Costs attributable to such taking or damage or destruction.
ARTICLE 5. CONDUCT OF BUSINESS BY TENANT
Section 5.1. Use of Leased Premises. Tenant shall use the Leased Premises
----------------------
solely for general office use and for the purpose set forth in Article 1 above
and for no other purpose.
Section 5.2. Compliance with Laws and Requirements of Public Authorities.
-----------------------------------------------------------
(a) At all times during the Term, Tenant shall give prompt notice to
Landlord of any notice Tenant receives of the violation of any law or
requirement of any public authority affecting the Leased Premises or the
Building. Tenant, at its sole cost and expense, shall comply with all laws and
requirements of public authorities, which, with respect to the Leased Premises
or the use, condition or occupancy thereof, or the abatement of any nuisance,
shall impose any violation, order or duty on Landlord or Tenant, arising from
(i) Tenant's use of the Leased Premises; (ii) the manner of conduct of Tenant's
business or operation of its installations, equipment or other property in the
Leased Premises; (iii) any cause or condition created by or at the insistence of
Tenant; or (iv) breach of any of Tenant's obligations under this Lease.
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(b) Tenant shall not do, permit or suffer any act or thing to be done in or
to the Leased Premises which is immoral or contrary to law or in violation of
the certificate of occupancy issued for the Building.
(c) Tenant agrees that it shall not keep, use, sell or offer for sale in or
upon the Leased Premises any article which may be prohibited by the
then-available standard forms of fire insurance policies with extended coverage.
Tenant agrees to pay any increase in premiums for insurance that may be charged
during the Term on the amount of such insurance which may be carried by Landlord
on the Leased Premises or the Building resulting from the type of business
conducted by Tenant in the Leased Premises, whether or not Landlord has
consented to that business. Landlord acknowledges that use of the Premises for
uses that are considered general office uses will not result in an increase in
Landlord's insurance premiums. In determining whether increased premiums are the
result of Tenant's use of the Leased Premises, a schedule issued by the
organization making the insurance rate on the Leased Premises and showing the
various components of such rate shall be conclusive evidence of the several
items and charges which make up the insurance rate on the Leased Premises.
(d) Tenant shall pay as Additional Rent all costs, expenses, fines,
penalties or damages which may be imposed upon Landlord by reason of Tenant's
failure to comply with the provisions of this Section.
(e) The judgment of any court of competent jurisdiction or the admission by
Tenant, whether Landlord is a party to the proceeding or not, that Tenant has
violated any law or requirement of public authorities affecting the Building or
the Leased Premises shall be conclusive of such violation as between Landlord
and Tenant.
(f) Tenant shall strictly comply with all statutes, laws, ordinances,
rules, regulations, and precautions now or hereafter mandated or advised by any
federal, state, local or other governmental entity with jurisdiction over the
Premises with respect to the use, generation, storage, or disposal of any
hazardous or toxic material regulated by any federal, state or local
governmental entity (collectively "Hazardous Materials"). Tenant shall not
cause, or allow anyone else to cause, any Hazardous Materials to be used,
generated, stored or disposed of in, on or about the Premises or any
improvements now or hereafter constructed therein, except for hazardous or toxic
substances in small quantities as are typically used in an office space, but
which are used, stored and disposed of in strict compliance with all applicable
laws, without the prior written consent of Landlord, which consent may be
withheld in the sole discretion of Landlord, and which consent may be revoked at
any time. Tenant's indemnification of Landlord pursuant to this Lease shall
extend to all liability, including all foreseeable and unforeseeable
consequential damages, directly or indirectly arising out of the use,
generation, storage, or disposal of Hazardous Materials by Tenant or any person
claiming by, through or under Tenant, including, without limitation, the cost of
any required or necessary repair, cleanup, or detoxification and the preparation
of any closure or other required plans, whether such action is required or
necessary prior to or following the termination of this Lease, to the full
extent that such action is attributable, directly or indirectly, to the use,
generation, storage, or disposal of Hazardous Materials by Tenant or any person
claiming by, through or under Tenant. Neither the written consent by Landlord to
the use, generation, storage, or disposal of Hazardous Materials nor the strict
compliance by Tenant with all statutes, laws, ordinances, rules, regulations,
and precautions pertaining to Hazardous Materials shall excuse Tenant from
Tenant's obligation of indemnification. In the event Tenant is in breach of the
covenants herein, after notice to Tenant and the expiration of the cure period
permitted under applicable law, regulation, or order, Landlord may, in its sole
discretion, declare Tenant to be in default under this Lease and/or cause the
Premises to be free from the Hazardous Materials and such cause shall be deemed
Additional Rent hereunder and shall immediately be due and payable from Tenant.
(g) Landlord shall have the express right, but no more frequently than once
each calendar year during the lease term, and sixty (60) days prior to the
termination or other expiration of this Lease, to conduct an environmental
investigation at the Leased Premises (and at any other part of the Building
which Tenant utilizes for any operation, equipment or supplemental system). If
either Tenant installs a UPS system or backup generator in or on the Building,
or Landlord has a reasonable basis to believe that there may be a problem
involving Hazardous Materials in the Premises or Building caused by Tenant, its
agents, invitees, employees or contractors, or resulting from Tenant's use of
the Premises, then Tenant will pay, as Additional Rent within fifteen days of
receipt of an invoice therefore, the cost of the first environmental
investigation thereafter conducted by Landlord. If the first environmental
investigation details no contamination (or any other violation of any applicable
Hazardous Material law or applicable law, rule or regulation of a governmental
entity with jurisdiction over the Premises) that was caused by Tenant, its
agents, invitees, employees or contractors, or resulted from Tenant's use of the
Premises, then the cost of any environmental investigation conducted thereafter
shall be borne by Landlord unless such later environmental investigation
discloses any contamination or violation of applicable laws (provided such
violation or contamination was caused by Tenant, its agents, invitees, employees
or contractors, or resulted from Tenant's use of the Premises). Tenant will pay,
as Additional Rent within fifteen days of receipt of an invoice therefore, the
cost of the first environmental investigation and any subsequent environmental
investigation which reveals a violation of any applicable Hazardous Material law
or applicable law, rule or regulation of a governmental entity with jurisdiction
over the Premises that was caused by Tenant, Its agents, invitees, employees or
contractors, or resulted from Tenant's use of the Premises. If contamination (or
any other violation of any applicable Hazardous Material law or applicable law,
rule or regulation of a governmental entity with jurisdiction over the Premises)
is found and was caused by Tenant, its agents, invitees, employees or
contractors, or resulted from Tenant's use of the Premises, Tenant will
immediately remediate the contamination. Tenant shall indemnify and hold
Landlord harmless against and from any and all claims, liability, damage,
penalties, actions, demands or expenses of any kind or nature (including
attorney's fees), without limitation damage to any property and injury
(including death) to any person, arising from Tenant's breach of this Lease,
Tenant's use of the Premises for the conduct of its business, or from any
activity, work or other thing done, permitted or suffered by Tenant or omission
of Tenant in and about the Premises. It shall further indemnify and hold
Landlord harmless against and from any and all claims arising from any breach or
default in the performance of any obligation on Tenant's part to be performed
under the terms of this Lease or arising from any act or any of the foregoing
acts or omissions by any of Tenant's agents, employees, contractors,
subcontractors or invitees, or from any litigation concerning any of the
foregoing in which Landlord is made a party defendant, and from and against all
costs, attorneys fees, expenses and liabilities incurred in connection with any
such claim or action or proceeding brought thereon. Except as limited by
Sections 10.3 and 10.4 below Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises from any cause other than Landlord's sole negligence.
Section 5.3. Rules and Regulations.
---------------------
(a) Tenant and its agents, employees, contractors and invitees shall
faithfully observe and comply with the Rules and Regulations attached as Exhibit
-------
D, and such reasonable changes to them, whether by modification, elimination or
- -
addition, as Landlord from may make time to time for the use, safety,
cleanliness, and care of the Leased Premises and the Building, and the comfort,
quiet, and convenience of occupants of the Building provided that such changes
are applicable to and consistently applied among all tenants of the Building and
do not unreasonably interfere with Tenant's operation in the Premises. Such
changes shall be effective upon written notice from Landlord to Tenant. In the
case of any conflict or inconsistency between the provisions of this Lease and
any of the rules and regulations as originally promulgated or as changed, the
provisions of this Lease shall control. (The rules and regulations, as changed
in accordance with this Section from time to time, are called the "Rules and
Regulations.")
(b) Nothing contained in this Lease shall be construed to impose upon
Landlord any liability for the failure of any other tenant or other party to
comply with the Rules and Regulations or the provisions in any other lease, but
Landlord shall use reasonable efforts to enforce the Rules and Regulations
uniformly.
Section 5.4. Permitted Weight Loads. Tenant shall not place in or move
----------------------
about the Leased Premises any article the weight of which exceeds the maximum
floor load limit for the Building, which is 50 pounds per square foot, without
Landlord's prior written consent, which consent shall not be unreasonably
withheld, If Tenant proposes to bring any article exceeding this limit into the
Building, Landlord may engage an engineering consultant to advise Landlord
regarding the placement of the article and any requirements to support the
weight, and Tenant shall pay the fees of that consultant, any costs necessary to
comply with the consultant's recommendations, and any other costs incurred by
Landlord as a result of moving or placing the article in the Leased Premises.
6
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Section 5.5. Signage. Tenant shall not install any sign in any window of
-------
the Leased Premises or any sign elsewhere in the Leased Premises which is
visible from the exterior of the Building. Any signs of Tenant in the Common
Area (as defined in Section 6.1) shall conform to the Building standard and
shall be subject to Landlord's prior written approval, which consent shall not
be unreasonably withheld. Tenant shall have the right to install, at Tenant's
sole cost and expense, a sign on the exterior of the Building, provided: (i)
Tenant makes the requisite submittals to Landlord required under Section 7.2 of
this Lease or in connection with the approval of Tenant's Work; (ii) Tenant
obtains any and all requirements of any governmental or quasi-governmental
authority with jurisdiction over the Building; and (iii) Tenant pays all costs,
fees and expenses in connection with the installation, maintenance, operations,
repair and removal of the sign (at the end of the Term). The size, location,
method of installation and all other matters in connection with the exterior
sign are subject to Landlord's prior written consent which will not be
unreasonably withheld.
ARTICLE 6. COMMON AREA
Section 6.1. Control of Common Area.
----------------------
(a) As used in this Lease, the term "Common Area" shall mean that part of
the Building designated by Landlord for the common use of all tenants, which
includes but is not limited to parking area, sidewalks, landscaping, curbs,
driveways, delivery passages, loading areas, private streets and alleys,
lighting facilities, drinking fountains, meeting rooms, break rooms, locker
rooms, public toilets, and the like.
(b) Landlord grants Tenant a non-exclusive license for the Term to use and
occupy in common with the invitees of Landlord and Tenant and such other persons
as Landlord and Tenant shall designate, the Common Area, subject to the terms
and conditions of this Lease and to reasonable Rules and Regulations prescribed
from time to time by Landlord. Tenant shall not solicit business within the
Common Area or distribute handbills or take any action which would interfere
with the rights of other persons to use the Common Area.
(c) Landlord reserves the right, at anytime and from time to time, without
incurring availability to Tenant to change the arrangement, dimensions, and/or
location of public entrances, passageways, doors, doorways, corridors,
elevators, stairs, toilets, or other parts of the Common Area. In such event,
Landlord shall repair any physical damage caused to the Leased Premises. Tenant
shall, at all times, have access to the Leased Premises, at least one elevator
shall be operational at all times (subject to customary maintenance and repair
obligations), no such changes shall unreasonably interfere with Tenant's normal
business operations in the Leased Premises, and Landlord shall use reasonable
efforts during any construction associated with any such change to prohibit any
unreasonable interference with Tenant's normal business operations in the Leased
Premises.
Section 6.2. Parking. During the Term, Tenant and its employees shall have
-------
the right to use the number of parking spaces stipulated in Article 1, all on an
unassigned basis and subject to the terms and conditions of this Lease and to
reasonable Rules and Regulations prescribed from time to time by Landlord,
including the designation of specified areas (which may change from
time-to-time, but in no event will be located outside a three-block radius of
the Building) in which automobiles operated by Tenant and its employees shall be
parked. Upon request of Landlord, Tenant shall furnish to Landlord a complete
list of the license numbers of all automobiles operated by Tenant and its
employees. Tenant shall pay to Landlord a parking fee for the parking spaces
(the "Fee") in the amount of Thirty Five Dollars ($35.00) per space per month.
The Fee shall equal the monthly charge per parking space set forth above
multiplied by the number of parking spaces to which Tenant is then entitled. All
payments of the Fee shall be made as Additional Rent in advance, without notice
or set off, at Landlord's Notice Address, or at such place as Landlord from time
to time designates in writing. Tenant shall pay the Fee on the Commencement Date
and on the first day of each succeeding calendar month during the initial Term
or any extension thereof. If Tenant takes occupancy of the Premises on a day
other than the first day of a calendar month, the Fee for the fractional month
shall be prorated on a daily basis and shall be paid on the date Tenant takes
occupancy of the Premises. If Tenant fails to pay the Fee in a timely manner,
Landlord shall have all rights and remedies afforded it under Section 16 hereof.
The Fee for the parking spaces shall be due and payable in full each month
regardless of whether Tenant actually uses all or only a portion of the parking
spaces allocated for Tenant each month. Provided Tenant is not in default under
this Lease beyond any applicable cure period, Landlord will provide the maximum
number of spaces Landlord can legally provide in that specific area located
immediately contiguous to the northern boundary of the Building as depicted on
Exhibit G attached hereto for Tenant's exclusive use during the term of this
Lease.
ARTICLE 7. REPAIRS, ALTERATIONS AND MECHANICS' LIENS
Section 7.1. Repairs.
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(a) Landlord, at its expense, shall make all necessary repairs, interior or
exterior, structural or otherwise, to keep the Building, including building
equipment and systems, in good order and repair, excluding, however, all repairs
which Tenant is obligated to make pursuant to this Section 7.1. Tenant shall
give Landlord prompt notice of any defective condition in any plumbing, heating
system or electrical lines located in, servicing or passing through the Leased
Premises, and following such notice, Landlord shall remedy the condition with
due diligence, subject to unavoidable delay, but at the expense of Tenant if
repairs are necessitated by damage or injury attributable to Tenant, Tenant's
servants, agents, employees, invitees, or licensees; provided, however, that no
liability of Landlord to Tenant shall accrue under this Lease unless and until
Tenant has given notice to Landlord of the specific repair to be made.
(b) Tenant, at its sole cost and expense, shall take good care of the
Leased Premises, including all building equipment and systems located in and
exclusively serving the Leased Premises and Tenant's property and fixtures.
Tenant shall make and be responsible for all repairs, interior or exterior,
structural or otherwise, as and when needed to preserve the Leased Premises,
including such building equipment and systems, and Tenant's property and
fixtures, in good working order and condition, the need for which arises out of
(i) the performance or existence of any alteration or modification to the Leased
Premises made by Tenant, (ii) the installation, use or operation of Tenant's
property or fixtures, (iii) the moving of Tenant's property or fixtures in or
out of the Building or in and about the Leased Premises, (iv) the acts,
omission, negligence or misuse by Tenant or those holding under Tenant, or their
use or occupancy or manner or use or occupancy of the Leased Premises or (v) as
may be required by Article 5. All repairs made by or on behalf of Tenant shall
be made and performed in conformity with the provisions of Section 7.2 and shall
be at least equal in quality and class to the original construction of the
Leased Premises, If Tenant fails after 10 days' notice by Landlord to proceed
with due diligence to make repairs required to be made by Tenant, the same may
be made by Landlord at the expense of Tenant, and the expenses of those repairs
incurred by Landlord shall be reimbursed immediately as Additional Rent after
submission of a bill or statement for such repairs.
Section 7.2. Alterations.
-----------
(a) Except for Tenant's Work which has been approved by Landlord as set
forth in this Lease, Tenant shall make no alterations, additions, or
improvements in or to the Leased Premises without Landlord's prior written
consent which consent will not be unreasonably withheld. Landlord will make good
faith and commercially reasonable efforts to respond within five (5) business
day to any requested alteration, addition or improvement proposed by Tenant,
unless greater time is required to allow engineers or other specialists time to
review the submittal. Any notice from Landlord stating that Landlord does not
consent to any proposed installation, alteration or improvement will specify the
reasons for the objection. Any contractors and sub-contractors chosen by Tenant
to perform the work in the Building or Leased Premises must be approved in
advance by Landlord, which consent will not be unreasonably withheld, unless the
alteration, addition or improvement involve the structural components of the
Building or the Building systems, in which case Landlord, in its sole
discretion, shall have the right to require Tenant to hire contractors regularly
engaged by Landlord to perform work in the Building. Before making any
alterations, additions, installations or improvements, Tenant, at its expense,
shall obtain all permits, approvals and certificates required by any
7
<PAGE>
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Landlord. Tenant agrees to carry and to
cause all contractors and sub-contractors hired by Tenant to carry such
workmen's compensation, general liability, personal and property damage
insurance as Landlord may reasonably require, and Landlord shall be named as an
additional insured on each of these policies. An increase in any taxes as a
result of such alterations by Tenant shall be paid by Tenant.
(b) All fixtures and all paneling, partitions, railings and like
installations, alterations, additions and improvements installed in the Leased
Premises at any time (including, but not limited to, those items installed
pursuant to Tenant's Work), either by Tenant or by Landlord on Tenant's behalf,
shall become the property of Landlord and shall remain upon and be surrendered
with the Leased Premises unless Landlord, by notice to Tenant no later than 20
days prior to the date fixed as the Expiration Date (or in the event of
termination of this Lease in advance of the Expiration Date, by notice to Tenant
given with the notice of termination), elects to have them removed by Tenant, in
which event, the same shall be removed from the Leased Premises by Tenant.
Notwithstanding the foregoing, Landlord will make its election regarding removal
of improvements at the time Landlord approves such improvements if such election
by Landlord is expressly requested in writing by Tenant at that time and only in
respect to certain specific improvements as determined by Landlord in its sole
discretion. Notwithstanding the foregoing and provided that the following items
can be disconnected from any Building system without the need for rewiring or
reworking any Building system, then Tenant shall have the right to remove the
supplemental generator, supplemental HVAC unit, and the UPS system, if any,
installed by Tenant as authorized under this Lease. Nothing in this Section
shall be construed to give Landlord title to or to prevent Tenant's removal of
trade fixtures, movable office furniture and equipment, but upon removal of any
such furniture, equipment and trade fixtures from the Leased Premises, Tenant
shall return the Leased Premises to the condition existing prior to installation
(subject to ordinary wear and tear, and damage by casualty) and repair any
damage to the Leased Premises or the Building due to such removal. All property
that was permitted or required to be removed by Tenant at the end of the Term
but which remains in the Leased Premises shall be deemed abandoned and, at the
election of Landlord, Landlord may either retain the property as Landlord's
property or remove the property from the Leased Premises at Tenant's expense.
Section 7.3. Mechanics' Liens.
----------------
(a) Tenant shall pay, before delinquency, all costs for work done or caused
to be done by Tenant in the Leased Premises which could result in any lien or
encumbrance on all or any part of Landlord's interest in the Building; shall
keep the title to the Building free and clear of any lien or encumbrance in
respect to such work; and shall indemnify and hold harmless Landlord against any
claim, loss, cause of action, cost, demand, damages, judgment and legal or other
expense (including without limitation attorneys' fees), whether in respect of
any lien or otherwise, arising out of the supply of material, services or labor
for such work. Tenant shall immediately notify Landlord of any such lien, claim
of lien or other action of which it has or reasonably should have knowledge and
which affects the title to the Building, and shall cause the same to be removed
or bonded over as authorized by law within five (5) days (or such additional
time as Landlord may consent to in writing). If Tenant fails to do so, Landlord
may take such action as Landlord deems necessary to remove the same, and the
entire cost of that action shall be immediately due and payable by Tenant to
Landlord as Additional Rent.
(b) Notwithstanding the foregoing, if Tenant shall desire to contest any
lien or claim of lien, it shall have the right to do so on the condition that
Tenant shall furnish Landlord, within the time stated above for removal of such
lien or claim of lien, security in an amount not less than that required by
statute in a form reasonably acceptable to Landlord, plus estimated costs, and
if final judgment establishing the validity or existence of a lien for any
amount is established, Tenant shall immediately pay and satisfy the same.
(c) At least 10 days prior to the commencement of any work by Tenant on the
Leased Premises, Tenant shall provide Landlord with written notice of the
proposed work and the names and addresses of the persons supplying labor and
materials for the proposed work so that Landlord may avail itself of the
provisions of statutes such as Cob. Rev. Stat. 38-22-105(2). During any such
work, Landlord or its representatives shall have the right to enter and inspect
the Leased Premises at reasonable times after notice as required by Section
12.1, and shall have the right to post and keep posted thereon notices such as
those provided for by Cob. Rev. Stat. 38-22-105(2) and to take any further
action which Landlord may deem to be proper for the protection of Landlord's
interest in the Leased Premises.
ARTICLE 8. UTILITIES AND BUILDING SERVICES
Section 8.1. Utilities and Services Provided.
-------------------------------
(a) Subject to limitations and restrictions imposed by federal, state
and/or local authorities and so long as Tenant is not in default under the terms
of this Lease, Landlord shall furnish or cause to be furnished the following
building standard service:
(i) Heating and air-conditioning equipment for the Leased Premises
asset forth in the plans attached to the Work Letter as Schedule B-I,
provided Tenant shall contract for the utilities necessary to run such
equipment as provided above in Section 4.2.
(ii) Domestic cold and temperate water for the operation of lavatories and
ordinary drinking fountains in the Building.
(iii) Capacity for electric current to the Leased Premises limited to not
more than 6 watts per square foot in the Leased Premises for normal office
lighting and business machines which operate on standard 110 voltage and do
not require special or additional air-conditioning. Subject to Landlord's
review and approval as required under this Lease and compliance with all
laws, rules, regulations and codes applicable to the Building, Tenant shall
have the right to provide capability for electric current to the Premises
in excess of 6 watts per square foot level set forth above.
(b) Tenant shall purchase, install, maintain, repair and replace, as
necessary, all light bulbs and fluorescent and other lighting tubes and ballasts
used in the Leased Premises. Landlord shall purchase, install, maintain, repair
and replace, as necessary, all light bulbs and fluorescent and other lighting
tubes and ballasts used in the common areas of the Building, and the cost of
such items and service shall be included in Operating Costs. Landlord may, at
intervals not shorter than 75% of the rated life of the fluorescent tubes being
used, cause all such tubes to be replaced at the same time, so as to maintain
full operating efficiency and so as to avoid the undue expense of piecemeal
replacement. No fluorescent tubes, other than standard warm and white types, may
be used.
(c) If heat generating machines or equipment (other than standard office
equipment, such as typewriters, calculators, and small reproduction machines)
are used in the Leased Premises which affect the temperature otherwise
maintained by the air-conditioning system, Tenant (provided it complies with the
requirements of Section 7.2 hereof) shall have the right to install
supplementary air-conditioning units for the Leased Premises at the expense of
Tenant, and Tenant will bear the cost of operating such equipment. Any
air-conditioning units required for Tenant's computer systems shall be installed
at the expense of Tenant, and the costs of operation and maintenance shall be
paid by Tenant.
(d) If Tenant uses or consumes water for any purposes other than ordinary
drinking and lavatory purposes, or in unusual quantities (of which fact Landlord
shall reasonably judge), Landlord may install a water meter at Tenant's expense
which Tenant shall thereafter maintain at Tenant's expense in good working order
and repair to register such water consumption. Tenant shall pay for water
consumed as shown on such meter as Additional Rent as and when bills are
rendered, and on Tenant's default in making such payment, Landlord may pay such
charges and collect the same as additional rent from Tenant. Such a meter shall
also be installed and maintained at Tenant's expense if required by law or
governmental order. Tenant shall not waste or permit the waste of water.
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Section 8.2. Interruption of Services. Landlord does not warrant that any
------------------------
service will be free from interruptions caused by repairs, improvements, changes
of service, alterations, strikes, lockouts, labor controversies, accidents,
inability to obtain fuel, water or supplies or other cause beyond the reasonable
control of Landlord. No such interruption of service shall be deemed an eviction
or disturbance of Tenant's use and possession of all or any part of the Leased
Premises, or render Landlord liable to Tenant for damages, by abatement of rent
or otherwise except as specifically provided below, or relieve Tenant from
performance of Tenant's obligations under this Lease. Tenant hereby waives and
releases all claims against Landlord for damages for interruption or stoppage of
service.
Notwithstanding the provisions of this subsection above, if utility service
to the Leased Premises is interrupted so that Tenant is prevented from using the
Leased Premises for Tenant's normal business operations for five consecutive
business days, and the cause is within Landlord's control, then Fixed Rent shall
abate beginning with the sixth business day and continuing until service is
restored, and if any such interruption causes the Leased Premises or any
material portion thereof to be unusable for Tenant's normal business operations
for more than ninety (90) consecutive days, Tenant shall have the right to
terminate this Lease by notice to Landlord given after the 90th day and prior to
the time, if at all, such services are restored, in which event both parties
shall be relieved of all further obligations hereunder and the Letter of Credit
shall be immediately returned to Tenant. However, Tenant will not be entitled to
any abatement of Fixed Rent if the interruption in utility service arises from
(i) any renovation or alteration to the Leased Premises conducted by Tenant or
at Tenant's request, (ii) any wrongful act or negligence on the part of Tenant
or its contractors, agents, employers or representatives, or (iii) the failure
by Tenant to timely pay any charges for such service and all other Rent due
under this Lease. (For purposes of this Lease, the Term "business day" means any
day other than a Saturday, Sunday or Legal Holiday.)
Section 8.3. Energy Conservation and Security Policies. Landlord shall be
-----------------------------------------
deemed to have observed and performed the terms and conditions to be performed
by Landlord under this Lease, including those relating to the provision of
utilities and services, if in so doing it acts in accordance with a directive,
policy, or request of a governmental or quasi-governmental authority serving the
public interest in the fields of energy conservation or security.
ARTICLE 9. TENANT'S PROPERTY TAX AND OTHER TAXES
In addition to the Fixed Rent and other Additional Rent to be paid by
Tenant under this Lease, Tenant shall reimburse Landlord, upon demand, for any
and all taxes payable by Landlord (other than net income taxes) whether or not
now customary or within the contemplation of Landlord and Tenant: (a) upon or
with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of all or any part of the Leased
Premises; or (b) upon the measured value of Tenant's personal property located
in the Leased Premises, it being the intention of Landlord and Tenant that, to
the extent possible, such personal property taxes shall be billed to and paid
directly by Tenant; or (c) upon this transaction. Any reimbursement referred to
above shall be collectible by Landlord as Additional Rent under this Lease.
ARTICLE 10. INSURANCE AND INDEMNITY
Section 10.1. Landlord's Insurance. Landlord shall keep in force and effect
--------------------
(a) a policy of general liability, including bodily injury and property damages
insurance with limits in the amount of not less than $1,000,000 for any
occurrence and $2,000,000 policy aggregate; and (b) standard fire and extended
coverage property insurance covering the full replacement cost of the Building
(excluding Tenant Work).
Section 10.2. Tenant's Insurance. At all times Tenant shall keep in full
------------------
force and effect a policy of general liability, including bodily injury and
property damage insurance with respect to the Leased Premises, in such limits as
reasonably required from time to time by Landlord. The limits of general
liability insurance on the Commencement Date shall be not less than $1,000,000
for any occurrence and $2,000,000 policy aggregate. These policies shall name
Landlord and any person, firm or corporation designated by Landlord as
additional insureds, and shall contain a clause that the insurer will not cancel
or change the insurance without first giving Landlord 30 days' prior written
notice. The insurance shall be written by an insurance company, licensed and
qualified to do business in Colorado, which is reasonably acceptable to
Landlord. A copy of the policy or a certificate of insurance shall be delivered
to Landlord on or before the Commencement Date and each anniversary of the
Commencement Date throughout the Term.
Section 10.3. Indemnity and Non-Liability.
---------------------------
(a) Neither Landlord nor Landlord's agents, employees, contractors,
officers, directors, shareholders, partners, or principals (disclosed or
undisclosed) shall be liable to Tenant or Tenant's agents, employees,
contractors, invitees, or licensees or any other occupant of the Leased
Premises, and Tenant shall save Landlord, its successors and assigns and their
respective agents, employees, contractors, officers, directors, shareholders,
partners, and principals (disclosed or undisclosed) harmless for any loss, cost,
liability, cause of action, claim, damage, expense (including reasonable
attorneys' fees and disbursements), penalty, fine or judgment incurred in
connection with or arising from any injury to Tenant or to any other person or
for any damage to or loss (by theft or otherwise) of any of Tenant's property or
of the property of any other person, irrespective of the cause of such injury,
damage, or loss (including the acts or negligence of any tenant or of any owners
or occupants of adjacent or neighboring property or caused by operations in
construction of any private, public, or quasi-public work) unless due to the
negligence or intentional acts of Landlord or Landlord's agents or employees.
However, even if such loss or damage is caused by the negligence of Landlord,
its agents or employees, Tenant waives, to the full extent permitted by law, any
claim for consequential damages in connection therewith. Landlord and its agents
and employees shall not be liable, to the extent of Tenant's insurance coverage,
for any loss or damage to any person or property even if due to the negligence
or intentionally tortious conduct of Landlord, its agents or employees.
(b) Neither any (i) performance by Landlord, Tenant, or others of any
repairs, improvements, alterations, additions, installations, substitutions,
betterments, or decorations in or to the Building, Building equipment, or the
Leased Premises, (ii) failure of Landlord or others to make any such repairs or
improvements, (iii) damage to the Building, Building equipment, the Leased
Premises, or Tenant's property, (iv) injury to any persons caused by other
tenants in the Building, by operations in the construction of any private,
public, or quasi-public work, or by any other cause, (v) latent defect in the
Building, Building equipment, or the Leased Premises, nor (vi) inconvenience or
annoyance to Tenant or injury to or interruption of Tenant's business by reason
of any of the events or occurrences referred to in the foregoing subdivisions
(i) through (v) shall impose any liability on Landlord by Tenant, except such
liability as may be imposed upon Landlord: (1) by law for Landlord's negligence
or the negligence of Landlord or its agents or employees in the operation or
maintenance of the Building or the Building equipment; or (2) for the breach by
Landlord of any express covenant of this Lease on Landlord's part to be
performed. No representation, guaranty, or warranty is made or assurance given
that the security systems, devices, or procedures of the Building will be
effective to prevent injury to Tenant or any other person or damage to, or loss
(by theft or otherwise) of, any of Tenant's property or of the property of any
other person, and Landlord reserves the right to discontinue or modify at any
time such security systems or procedures, if any, without liability to Tenant.
Landlord will provide Tenant with reasonable advance notice prior to
discontinuing such security systems.
(c) Subject to Paragraph 10.4 below, Tenant agrees to indemnify, defend,
and hold Landlord, its employees, agents, and contractors harmless from all
liability, costs, or expenses, including attorneys' fees, on account of damage
to the person or property of any third party, including any other tenant in the
Building, to the extent caused by the acts or omissions of Tenant, its
employees, agents or contractors. Subject to Paragraph 10.4 below, Landlord
agrees to indemnify, defend, and hold Tenant, its employees, agents, and
contractors harmless from all liability, costs, or expenses, including
attorneys' fees, on account of damage to the person or property of any third
party, including any other tenant in the Building, to the extent caused by the
acts or omissions of Landlord, its employees, agents or contractors.
9
<PAGE>
(d) Tenant shall pay to Landlord as Additional Rent, within five days
following rendition by Landlord to Tenant of bills or statements therefor, sums
equal to all losses, costs, liabilities, causes of action, claims, damages,
expenses, fines, penalties, and judgments referred to in this Section 10.3.
Tenant hereby agrees to indemnify, defend and hold Landlord, its employees,
agents and contractors harmless from all liability, costs and expenses,
including attorneys' fees arising out of Tenant's default in the performance of
any of the terms of this Lease.
(e) Tenant's obligations under this Section 10.3 shall survive the
expiration or earlier termination of this Lease.
Section 10.4. Waiver of Subrogation. Notwithstanding any other provision of
---------------------
this Lease to the contrary, Landlord and Tenant each hereby waive any right of
recovery against the other party, its employees, agents, and contractors for any
loss or damage that is caused by any peril covered by standard fire and extended
coverage insurance or any other insurance actually carried (or required to be
carried under this Lease) by the party suffering the loss or damage and in force
at the time of such loss or damage. Landlord and Tenant shall cause their
respective insurers to issue appropriate waivers of subrogation rights and
endorsements to all policies of insurance carried in connection with the
Building or the Leased Premises or the contents thereof. Tenant agrees to cause
all other occupants of the Leased Premises claiming by, under, or through Tenant
to execute and deliver to Landlord a waiver of claims as stated above and to
obtain waivers of subrogation rights and endorsements as stated above.
ARTICLE 11. DAMAGE BY CASUALTY
Section 11.1. Notice. Tenant shall give immediate written notice to
------
Landlord of any damage to the Leased Premises by fire or other casualty.
Section 11.2. Restoration of Improvements.
---------------------------
(a) In the event the Leased Premises are damaged by fire or other casualty,
unless this Lease is terminated as provided below, Landlord shall proceed with
reasonable diligence, at its sole cost and expense, to repair the Leased
Premises. If such repairs cannot, in Landlord's sole determination, be made
within 120 days after the occurrence of such damage (without the payment of
overtime or other premiums), Landlord shall notify Tenant within 30 days after
such casualty of the approximate length of time Landlord estimates will be
required to complete such repairs, and either party may terminate this Lease by
written notice to the other within 15 days after Landlord notifies Tenant of the
estimated time for completion of such repairs. Until any such repairs to the
Leased Premises are completed, the Fixed Rent shall be abated in proportion to
the part of the Leased Premises, if any, that is unusable by Tenant In the
conduct of its business (but there shall be no abatement of Fixed Rent by reason
of any portion of the Leased Premises being unusable for a period of five
business days or less). If the fire or other casualty is due to the negligence
or misconduct of Tenant, its agents, employees, contractors, or invitees, there
shall be no abatement of Fixed Rent, and Tenant shall be liable to Landlord for
the amount by which the cost of such repairs exceeds the insurance proceeds
received by Landlord or the amount of insurance proceeds that would have been
received by Landlord had Landlord maintained the insurance required under this
Lease, whichever is greater. If any deadline for the giving of any notice
required from Landlord under this Section or for the completion of repairs is
delayed because of (a) insurance settlement procedures, (b) failure of any
mortgagees to agree to or approve the repair, changes, deletions or additions in
construction requested by Tenant, or (c) strikes, lockouts, casualties, acts of
God, war, material or labor shortages, government regulations or control or
other causes beyond the control of Landlord, then the period for the giving of
such notice or the completion of such repair shall be extended for the amount of
time Landlord is so delayed.
(b) If the Building or the Leased Premises shall be totally destroyed or
substantially damaged by a casualty or if insurance proceeds from any insured
casualty shall not be made available to Landlord by the holder of any mortgages
affecting the Building, then, in either event, Landlord may elect either to
rebuild and repair the Building and the Leased Premises or to terminate this
Lease, effective upon giving notice of such election, in writing, to Tenant
within 30 days after the occurrence of such casualty. Without limiting the
generality of the foregoing, the Building shall be deemed to have been
substantially damaged if more than one-third of the rentable square feet of the
Building (as stated in Article 1) has been damaged or destroyed or if the
Building shall be so damaged that Landlord shall decide to demolish it. Damage
to the Building or the Leased Premises caused by a casualty not covered by
Landlord's insurance shall be deemed substantial if the cost of repairing such
damage will, in Landlord's sole determination, exceed $50,000. Landlord's
obligation to rebuild and repair under this Section shall in any event be
limited to restoring the Building and the Leased Premises to substantially the
condition in which they existed prior to the casualty. In no event shall
Landlord be required to repair any of Tenant's leasehold Improvements, fixtures,
equipment, furniture, furnishings, and personal property, and Tenant agrees
that, promptly after the completion of such work by Landlord, it will proceed
with reasonable diligence and at its sole cost and expense to rebuild, repair,
and restore its fixtures, equipment and other installations.
Section 11.3. Damage During Last Year of Lease Term. Without limiting
-------------------------------------
Landlord's rights under Section 11.2, in the event the Leased Premises shall be
substantially damaged, in Landlord's reasonable judgment, during the last year
of the Term, Landlord may elect either to rebuild or repair the Leased Premises
or to terminate this Lease effective upon giving notice of such election, in
writing, to the Tenant within 30 days after the happening of the fire or other
casualty.
ARTICLE 12. RIGHTS RESERVED TO LANDLORD
Section 12.1. Access to Leased Premises. Landlord and Landlord's agents
-------------------------
shall have the right (but shall not be obligated) to enter the Leased Premises
in any emergency at anytime, and to perform any acts related to the safety,
protection or preservation of the Leased Premises. Landlord shall give such
notice of such entry as is reasonable under the circumstances to prevent damage
to or interfere with any of Tenant's equipment in the Leased Premises. At other
reasonable times, and upon reasonable notice, Landlord and its agents may enter
the Leased Premises to examine them and make such repairs, replacements and
improvements as Landlord may deem necessary and reasonably desirable to the
Leased Premises or to any other portion of the Building or for the purpose of
complying with laws, regulations and other requirements of governmental
authorities. Tenant shall permit Landlord to install, use, maintain and replace
unexposed pipes, wires, ducts, and conduits in and through the Leased Premises
and Landlord will use commercially reasonable efforts not to unreasonably
interfere with Tenant's operation in the Premises in connection with Landlord's
exercise of this right. Landlord may, during the progress of any work in the
Leased Premises, take all necessary materials and equipment into the Leased
Premises and close or temporarily suspend operation of entrances, doors,
corridors, elevators or other facilities without such interference constituting
an eviction. Tenant shall not be entitled to any abatement of Rent or any
damages by reason of loss or interruption of business or otherwise during such
periods. During such periods, Landlord shall use reasonable efforts to minimize
any interference with Tenant's use of the Leased Premises for its normal
business operations. Tenant shall at all times have access to the Leased
Premises, and at least one elevator shall be operational at all times (subject
to customary maintenance and repair obligations). Throughout the Term, Landlord
shall have the right to enter the Leased Premises at reasonable hours, and upon
reasonable notice, for the purposes of showing the same to prospective
purchasers and mortgagees, and during the last six months of the Term, to
prospective tenants. Also during the last six months of the Term, Landlord may
place "For Rent" notices upon the Common Areas of the Building. If Tenant is not
present to open and permit an entry into the Leased Premises, Landlord or
Landlord's agents may enter the same whenever such entry may be necessary or
permissible by master key or forcibly, provided reasonable care is exercised to
safeguard Tenant's property. Such entry shall not render Landlord or its agents
liable, nor shall the obligations of Tenant under this Lease be affected by such
entry unless Landlord fails to use reasonable care in such entry.
Section 12.2. Relocation of Leased Premises. [Intentionally Omitted]
-----------------------------
Section 12.3. Additional Rights. Landlord shall have the following
-----------------
additional rights exercisable without notice (except as provided below) and
without liability to Tenant for damage or injury to property, personal business,
all claims for damage being hereby released, and without effecting an eviction
or disturbance of Tenant's use or possession of the Leased Premises or giving
rise to any claim for setoffs or abatement of Rent. Landlord shall use
reasonable efforts to minimize any interference with Tenant's use of the Leased
Premises
10
<PAGE>
for its normal business operations, Tenant shall at all times have access to the
Leased Premises, and at least one elevator shall be operational at all times
(subject to customary maintenance and repair obligations):
(a) Upon 30 days' notice, to change the name, number or designation by
which the Building may be known;
(b) To make such changes in or to the Building, including the Building
equipment and systems, as Landlord may deem necessary or desirable,
provided that any such change does not deprive Tenant of a reasonable means
of access to the Leased Premises or unreasonably interfere with the use of
the Leased Premises, or unreasonably interfere with any supplemental system
installed by Tenant hereunder;
(c) To have access to all mail chutes, if any, according to the rules of
the United States Postal Service or any successor;
(d) To require all persons entering or leaving the Building during such
hours as Landlord may from time to time reasonably determine to identify
themselves to a watchman by registration or otherwise and to establish
their right to enter or leave, and to exclude or expel any peddler,
solicitor or beggar at any time from the Leased Premises or the Building;
(e) To approve the weight, size and location of safes, and other heavy
articles in and about the Leased Premises and the Building or Tenant
agreeing that Tenant shall not install such items until Tenant has obtained
that approval in writing which approval shall not be unreasonably withheld;
(f) To grant to anyone the exclusive right to conduct any business or
render any services in the Building, provided such exclusive right shall
not operate to exclude Tenant from using the Premises for its general
office and network operations center;
(g) To close the Building at such reasonable times after Normal Business
Hours as Landlord may determine, subject, however, to Tenant's right to
admittance under such regulations as shall be prescribed from time to time
by Landlord and as otherwise provided in this Lease;
(h) To install a key pad or other coded access system in the Building, the
cost of which shall be included in Operating Costs under Section 4.1(g)
above.
ARTICLE 13. EMINENT DOMAIN
Section 13.1. Taking of Leased Premises. If all of the Leased Premises
-------------------------
shall be taken for any public or quasi-public use under any statute or by right
of eminent domain, or purchased under threat of such taking, this Lease shall
automatically terminate on the date on which the condemning authority takes
possession of the Leased Premises (the "Date of Taking"). If so much of the
Leased Premises (but less than all) is taken as shall render the Leased Premises
untenantable, Tenant shall have the right to terminate within thirty (30) days
after the Date of Taking.
Section 13.2. Partial Taking of Building. If only part of the Building is
--------------------------
taken or purchased as set out in Section 13.1, then:
(a) If in the reasonable opinion of Landlord, substantial alteration or
reconstruction (or demolition) of the Building is necessary as a result of
the taking or purchase, whether or not the Leased Premises are or may be
affected, Landlord shall have the right to terminate this Lease by giving
Tenant at least thirty (30) days' written notice of such termination, and
(b) If more than one-third of the rentable square feet of the Building is
included in such taking or purchase, Landlord and Tenant shall each have
the right to terminate this Lease by giving the other at least thirty (30)
days' written notice thereof.
If either party exercises its right of termination under Section 13.1 or
13.2 (and any such right must be exercised within thirty (30) days after the
Date of Taking, failing which such right shall be deemed waived), this Lease
shall terminate on the date stated in the notice, provided, however, that no
such termination may occur later than sixty (60) days after the Date of Taking.
Section 13.3. Surrender. On the date of any termination under Section 13.1
---------
or 13.2, Tenant shall immediately surrender to Landlord the Leased Premises and
all interests under this Lease, and Tenant shall pay Landlord Rent through the
date of termination (or through the Date of Taking, if such date shall not be
the same as the date of termination).
Section 13.4. Rent Adjustment for Partial Taking of Leased Premises. If any
-----------------------------------------------------
portion of the Leased Premises (but less than the whole thereof) is so taken,
and no rights of termination conferred under this Article are timely exercised,
the Term shall expire with respect to the portion so taken on the Date of
Taking. In such event, the Rent thereafter payable under this Lease shall be
adjusted pro rata by Landlord in order to account for the resulting reduction in
the number of rentable square feet in the Leased Premises.
Section 13.5. Awards. Upon any such taking or purchase, Landlord shall be
------
entitled to receive and retain the entire award or consideration for the
affected lands and improvements, and Tenant shall not have or advance any claim
against Landlord for the value of its property or its leasehold estate of the
unexpired Term, or for the costs of removal or relocation, or business
interruption expense or any other damages arising out of such taking or
purchase. Nothing in this Article shall give Landlord any interest in or
preclude Tenant from seeking and recovering on its own account, a separate award
from the condemning authority attributable to the taking or purchase of Tenant's
trade fixtures and any tenant improvements paid for by Tenant, or the removal or
relocation of its business and effects, or the interruption of its business,
provided that Landlord's award is not diminished by the separate award. If any
such award made or compensation paid to either party specifically includes an
award amount for the other, the party first receiving the same shall promptly
account therefor to the other.
ARTICLE 14. ASSIGNMENT AND SUBLETTING
Section 14.1. Consent Required. Tenant shall not assign, mortgage, pledge,
---------------
encumber or in any manner transfer this Lease or any part of the Leased
Premises, or allow any third party to occupy the Leased Premises, without the
prior written consent of Landlord in each instance, which Landlord shall not
unreasonably withhold. Any attempt to do any of such acts without such consent
shall be null and void and of no effect. A transfer of control of Tenant,
including but not limited to a transfer of stock if Tenant is a corporation
(unless pursuant to a legitimate capital restructuring, i.e. an IPO) shall be
deemed an assignment under this Lease and shall be subject to all the provisions
of this Article, including the requirement of obtaining Landlord's prior written
consent. The consent by Landlord to any assignment, mortgage, pledge,
encumbrance, transfer, subletting or occupancy by a third party shall not
constitute a waiver of the necessity for such consent to any subsequent
assignment, mortgage, pledge, encumbrance, transfer, subletting or occupancy by
a third party. This prohibition against assigning, mortgaging, pledging,
encumbering, transferring, subletting or occupancy by a third party shall be
construed to include a prohibition against any assignment, mortgage, pledge,
encumbrance, transfer, subletting or occupancy by a third party by operation of
law.
<PAGE>
If this Lease is assigned, or if all or any part of the Leased Premises or
any part is sublet or occupied by anybody other than Tenant, Landlord may
collect Rent from the assignee, subtenant or occupant, and apply the net amount
collected to the Fixed Rent and Additional Rent reserved under this Lease, but
no such assignment, subletting, occupancy or collection shall be deemed a waiver
of this covenant, or the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of its
covenants in this Lease.
Notwithstanding any assignment, mortgage, pledge, encumbrance, transfer,
sublease or occupancy by a third party, Tenant shall remain fully liable on this
Lease and shall not be released from performing any of the terms, covenants and
conditions of this Lease.
Further, any consent to a sublease or other occupancy agreement shall be
conditioned upon Landlord recovering fifty percent (50%) of the difference, if
any, between the Fixed Rent paid by the sublessee or occupant (less brokerage
commissions and tenant improvement allowance) over the Fixed Rent due the
Landlord under this Lease, and any consent to an assignment shall be conditioned
upon receipt of fifty percent (50%) of any premium fee or other charge paid by
the proposed assignee to the Tenant.
Tenant acknowledges and agrees that, without otherwise limiting the grounds
under this Lease or applicable law on which Landlord may reasonably withhold its
consent to any request by Tenant to assign this Lease or sublet the Leased
Premises or otherwise transfer any interest in this Lease or right to occupy the
Leased Premises, it shall be reasonable for Landlord to withhold its consent to
any such request to an assignment, sublease or other transfer if,
(1) the use of the Leased Premises contemplated by the proposed
transferee would significantly increase the pedestrian and/or vehicular
traffic in and around the Building or would generally not conform with the
other tenant uses in the Building, or
(2) The financial strength and business reputation of the proposed
transferee is unacceptable to Landlord in its reasonable discretion.
Without limiting the generality of the foregoing, Tenant acknowledges that the
Leased Premises may not be used for welfare agencies; medical offices;
counseling clinics; employment agencies; parole offices; call services;
telephone bank offices; governmental offices; travel agencies; merchandise
sales; storage of merchandise; safe deposit businesses; recording, dance or
music studios; labor unions; beauty salons or barber shops; schools; public
stenographers' or typists' offices; businesses of photographic or multilith or
multigraph reproductions or offset printing (not precluding, however, the use of
part of a leased space for the tenant's own printing in connection with its own
business operations); executive suites; preparation of food for sale on or off
of the premises; sale of food; and businesses dealing generally with the public
so as to generate a large amount of foot traffic within or around the Building.
Notwithstanding anything to the contrary contained hereinabove in this
Section 14, Tenant shall have the right, without obtaining Landlord's prior
written consent, to assign or sublease all or any portion of the Premises to the
following parties on the following conditions: (A) Any subsidiary or affiliate
of Tenant, provided Tenant owns a substantial interest in such affiliate or
subsidiary; (B) Any parent corporation of Tenant; (C) Any subsidiary or
affiliate of Tenant's parent corporation if such parent owns a substantial
interest in such subsidiary or affiliate; or (D) Any corporation into which
Tenant may be merged or consolidated or which purchases all or substantially all
of the assets or stock of Tenant; provided that the resulting corporation has a
net worth at least equal to Tenant's net worth as of the date hereof. Tenant's
rights hereunder are further conditioned on: (i) Tenant continues to remain
primarily liable on its obligations set forth herein; (ii) Any such subtenant
and/or assignee shall assume and be bound by all obligations of Tenant for
payment of all amounts of rental and other sums and the performance of all
covenants required by Tenant pursuant to this Lease; (iii) Any such subtenant
and/or assignee intends to operate the Premises in accordance with the usage
restrictions of this Lease; and (iv) Not less than thirty (30) days prior to the
effective date of such transaction, Tenant shall provide Landlord with copies of
the documents evidencing such transaction and such evidence as Landlord may
reasonably require to establish that such transaction falls within the terms and
provisions of this subparagraph. A transfer of stock of Tenant shall not be
deemed an assignment under this Lease unless such transfer (i) is made without
receipt of adequate consideration therefor (including, without limitation, the
value of services); and (ii) results in a change of control of management of
Tenant. If Tenant becomes a publicly traded company, then in no event shall any
transfer of stock via the publicly recognized over the counter exchange be
deemed an assignment under this provision.
ARTICLE 15. BANKRUPTCY
Section 15.1. Prior to Commencement Date. If at any time prior to the
--------------------------
Commencement Date there shall be filed against Tenant by any third party in any
court pursuant to any statute either of the United States or of any state a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee or conservator of all or a portion of
Tenant's property which is not dismissed within sixty (60) days, this Lease
shall ipso facto be canceled and terminated, and in such event, neither Tenant
---- -----
nor any person claiming through or under Tenant or by virtue of any statute or
of an order of any court, shall be entitled to possession of the Leased
Premises, and Landlord, in addition to exercising the other rights and remedies
provided in this Lease or in any statute or rule of law, may retain as damages
any Rent, Security Deposit or moneys received by it from Tenant or others on
behalf of Tenant. If at any time prior to the Commencement Date there shall be
filed by Tenant in any court pursuant to any statute either of the United States
or of any state a petition in bankruptcy or insolvency or for reorganization or
for the appointment of a receiver or trustee or conservator of all or a portion
of Tenant's property or if Tenant makes an assignment for the benefit of
creditors, this Lease shall ipso facto be canceled and terminated, and in such
---- -----
event, neither Tenant nor any person claiming through or under Tenant or by
virtue of any statute or of an order of any court, shall be entitled to
possession of the Leased Premises, and Landlord, in addition to exercising the
other rights and remedies provided in this Lease or in any statute or rule of
law, may retain as damages any Rent, Security Deposit or moneys received by it
from Tenant or others on behalf of Tenant.
Section 15.2. During the Term of this Lease. If on the Commencement Date or
-----------------------------
at any time during the Term there shall be filed against Tenant in any court
pursuant to any statute either of the United States or of any state a petition
in bankruptcy or insolvency of for reorganization or for the appointment of a
receiver or trustee or conservator of all or a portion of Tenant's property
which is not dismissed within sixty (60) days, this Lease, at the option of
Landlord may be canceled and terminated, and in such event, neither Tenant nor
any person claiming through or under Tenant or by virtue of any statute or of an
order of any court shall be entitled to possession or to remain in possession of
the Leased Premises but shall immediately surrender the Leased Premises to
Landlord, and Landlord, in addition to exercising the other rights and remedies
provided in this Lease or in any statute or rule of law, may retain as damages
any Rent, Security Deposit, or moneys received by it from Tenant or others on
behalf of Tenant. If on the Commencement Date or at any time during the Term
there shall be filed by Tenant in any court pursuant to any statute either of
the United States or of any state a petition in bankruptcy or insolvency of for
reorganization or for the appointment of a receiver or trustee or conservator of
all or a portion of Tenant's property, or if Tenant makes an assignment for the
benefit of creditors, this Lease, at the option of Landlord may be canceled and
terminated, and in such event, neither Tenant nor any person claiming through or
under Tenant or by virtue of any statute or of an order of any court shall be
entitled to possession or to remain in possession of the Leased Premises but
shall immediately surrender the Leased Premises to Landlord, and Landlord, in
addition to exercising the other rights and remedies provided in this Lease or
in any statute or rule of law, may retain as damages any Rent, Security Deposit,
or moneys received by it from Tenant or others on behalf of Tenant.
Section 15.3. Measure of Damages. In the event of the termination of this
------------------
Lease pursuant to Section 15.1 or 15.2 above, Landlord shall be entitled to the
same rights and remedies as set forth in Article 16.
Section 15.4. Adequate Assurance of Future Performance. In the event of the
----------------------------------------
occurrence of any of the events specified in this Article, if Landlord shall not
choose to exercise, or by law shall not be able to exercise, its rights under
this Lease to terminate this Lease upon the occurrence of such events, then, in
addition to any other rights of Landlord allowed under this Lease or by law,
Landlord shall not be obligated to provide Tenant with any of the services
specified in Article 8, unless Landlord has received compensation in advance for
such
12
<PAGE>
services, and the parties agree that Landlord's reasonable estimate of the
compensation required with respect to such services shall control. Further,
neither Tenant, as debtor-in-possession, nor any trustee or other person
(referred to in this Lease as the "Assuming Tenant") shall be entitled to assume
this Lease unless, on or before the date of such assumption, the Assuming Tenant
(x) cures, or provides adequate assurance that the latter will promptly cure,
any existing default under this Lease, (y) compensates, or provides adequate
assurance that the Assuming Tenant will promptly compensate, Landlord for any
pecuniary loss, including, without limitation, attorneys' fees and disbursements
resulting from such default, and (z) provides adequate assurance of future
performance under this Lease. The parties agree that, for such purposes, any
cure or compensation shall be effected by the immediate payment of any monetary
default or any required compensation, or the immediate correction or bonding of
any nonmonetary default; any "adequate assurance" of such cure or compensation
shall be effected by the establishment of an escrow fund for the amount at issue
or by bonding; and "adequate assurance" of future performance shall be effected
by the deposit of cash security in an amount equal to the sum of six (6) months'
Fixed Rent for the calendar year immediately preceding such assignment plus an
amount equal to any increase in Rent under Article 4 for the calendar year
preceding the year in which such assumption is intended to become effective,
which deposit shall be held by Landlord for the balance of the Term, without
interest, as security for the full performance of all of Tenant's obligations
under this Lease.
Landlord and Tenant agree that the foregoing provision was a material part
of the consideration for this Lease.
ARTICLE 16. TENANTS DEFAULT
Section 16.1. Events of Default. The occurrence of any of the following
-----------------
events shall constitute a default by Tenant under this Lease:
(a) Tenant shall have failed to pay any installment of Rent within five
days after written notice that such payment is overdue; provided, however,
Tenant is not entitled to more than two (2) notices of delinquent payments
during any calendar year and, if thereafter during such calendar year any Fixed
Rent, Additional Rent or other monetary sum owing is not paid when due, an Event
of Default shall automatically occur;
(b) Tenant shall have failed to comply with any other, non-monetary
obligation of Tenant under this Lease and Tenant shall have failed to cure such
non-monetary default within 15 days after Landlord, by written notice, has
informed Tenant of such noncompliance (except that in the case of a default
which cannot with due diligence be cured within a period of 15 days, Tenant
shall have such additional time to cure same as may reasonably be necessary,
provided Tenant begins to correct the breach within the 15-day period and
proceeds promptly, effectively, continuously and with due diligence to cure such
default after receipt of said notice);
(c) Tenant shall abandon the Leased Premises;
(d) Whenever Tenant, its employees, agents, mortgagees, invitees or any
other individuals who are in or about the Building as a result of Tenant's
presence in the Building have caused on more than one occasion material damage
to the Building.
Section 16.2. Termination or Re-Entry. In the event of any default by
-----------------------
Tenant, then, notwithstanding the fact that Landlord has or may have some other
remedy under or by virtue of this Lease or in law or in equity, Landlord shall
have the following remedies:
(a) Landlord may give Tenant a notice of termination of this Lease (the
"Termination Notice"), specifying a day not less than five days after Landlord
gives Tenant the Termination Notice, and, upon the giving of the Termination
Notice, this Lease and the Term and estate granted by it shall expire and
terminate upon the day specified in the Termination Notice as fully and
completely and with the same force and effect as if the day so specified were
the Expiration Date, and all rights of Tenant shall terminate, but Tenant shall
remain liable for damages as provided below.
(b) Landlord, without further notice and without terminating this Lease,
may enter upon, re-enter, possess and repossess itself of the Leased Premises,
by force, summary proceeding, ejectment or otherwise, and may dispossess and
remove Tenant and all other persons and property from the Leased Premises and
may have, hold and enjoy the Leased Premises and the right to receive all rental
and other income of and from the Leased Premises.
(c) Landlord shall have the right of injunction, and Tenant agrees to pay
the premium for any bond required in connection with such injunction.
(d) Landlord shall be permitted to exercise any other rights or remedies
set forth in this Lease or otherwise applicable to it by operation of law or
contract.
Section 16.3. Damages. Tenant covenants and agrees that in the event of the
-------
expiration or termination of this Lease or re-entry by Landlord under any of the
provisions of this Article 16 or pursuant to law by reason of Tenant's default
under this Lease, Tenant shall remain liable for all Rent (including any late
charges imposed under Section 3.3) accrued and unpaid to the date of such
termination or re-entry. Landlord will use commercially reasonable efforts to
mitigate its damages. Tenant shall also pay to Landlord as damages with respect
to this Lease the following:
(a) All expenses incurred by Landlord for legal costs, for attorneys' fees
and disbursements incurred by Landlord in enforcing the performance by Tenant
and in exercising the rights and remedies of Landlord under this Lease, whether
or not Landlord resorts to formal litigation or other legal proceedings, and for
any court costs; for reletting (including without limitation advertising and
brokerage costs); for putting and maintaining the Leased Premises in good order
condition and repair; for preparing the Leased Premises for reletting; and for
all costs incurred in connection with the appointment of and performance by any
receiver. If the new lease term extends beyond the Term or the premises covered
thereby includes other premises not part of the Leased Premises, a fair
apportionment of the reletting expenses will be made, and any rental concessions
will be amortized over the term of the new lease, plus,
(b) Sums equal to the Rent which would have been payable by Tenant had this
Lease not been so terminated, or had Landlord not so re-rented the Lease
Premises, payable upon the days specified in this Lease following such
termination or such re-entry and until the Expiration Date of the Lease;
provided, however, that if the Lease Premises shall be leased or re-let during
said period, Landlord shall credit Tenant with the new rent, if any, received by
Landlord from such leasing or re-letting, after first deducting from the gross
rents as and when received by Landlord from such leasing or re-letting the
expenses incurred or paid by Landlord in terminating this Lease or of
re-entering the Leased Premises and of securing possession thereof, as well as
the expense of leasing and re-letting, including altering and preparing any
portion of the Leased Premises for new tenants, brokers' commissions and all
other expenses properly chargeable against the Leased Premises and the rents for
the Leases Premises. If the new lease term extends beyond the Term or the
premises covered thereby includes other premises not part of the Leased
Premises, a fair apportionment of the reletting expenses will be made, and any
rental concessions will be amortized over the term of the new lease, as more
fully described in subsection (a) above; but in no event shall Tenant be
entitled to receive any excess of such net rental payments over the Rent payable
by Tenant to Landlord under this Lease.
At the election of Landlord, in lieu of collecting any or further monthly
deficiencies as set forth in this subsection (b) above, Landlord shall be
entitled to recover from Tenant, as liquidated damages for such breach, in
addition to any damages becoming due under subsection (a) above, a sum which
represents the excess, if any, of the present value of the aggregate of the Rent
which would have been payable by Tenant for the period commencing with the date
of the breach and ending with this Expiration Date of the Lease, had this Lease
not so terminated or had Landlord not so re-entered the Leased Premises, minus
the present reasonable fair market rental value of the Leased Premises for the
same period, both discounted to the date of the default of an annual rate of not
more than one point in excess of the discount rate as announced from time to
time by the Federal Reserve Bank in Denver Colorado
13
<PAGE>
Suit or suits for the recovery of any and all damages or any installments
of damage payments provided for under this Lease may be brought by Landlord from
time to time at its election, and nothing contained in this Lease shall be
deemed to require Landlord to postpone suit until the date when the Term would
have expired if it had not been terminated under the provisions of this Article
16, or under provisions of any law, or had Landlord not re-entered the Leased
Premises.
Nothing contained in this Lease shall be construed as limiting or
precluding the recovery by Landlord against Tenant of any damages to which
Landlord may lawfully be entitled in any cause other than those particularly
provided for above.
ARTICLE 17. SURRENDER
Section 17.1. Possession. Upon the expiration or earlier termination of
----------
this Lease, Tenant shall immediately surrender possession of the Leased Premises
in as good a state and condition as they were entered into, reasonable wear and
tear and casualty damage (other than that which Tenant is obligated to repair)
excepted. Upon such surrender, all rights, title and interest of Tenant in the
Leased Premises shall cease.
Section 17.2. Trade Fixtures, Personal Property and Improvements. Subject
--------------------------------------------------
to Tenant's right under Article 8, after the expiration or other termination of
this Lease, all of Tenant's trade fixtures, personal property, and improvements
remaining in the Leased Premises shall be deemed conclusively to have been
abandoned by Tenant and may be appropriated, sold, destroyed or otherwise
disposed of by Landlord without notice or obligation to compensate Tenant or to
account for same, and Tenant shall pay to Landlord on written demand all costs
incurred by Landlord in connection with the property including, but not limited
to, the costs of repairing any damage to the Building or the Leased Premises
caused by removal of such property. Tenant's obligations under this Section
shall survive the expiration or earlier termination of this Lease.
Section 17.3. Merger. The voluntary or other surrender of this Lease by
------
Tenant or the cancellation of this Lease by mutual agreement of Tenant and
Landlord shall not work a merger, and, at Landlord's option, shall terminate all
or any subleases and subtenancies or operate as an assignment to Landlord of all
or any subleases or subtenancies. Landlord's option under this Section shall be
exercised by notice to Tenant and all known sublessees or subtenants in the
Leased Premises.
Section 17.4. Payments After Termination. No payments of money by Tenant to
--------------------------
Landlord after the expiration or other termination of the Term shall reinstate,
continue or extend the Term or make ineffective any notice given to Tenant prior
to the payment of such money. After the service of notice or the commencement of
a suit, or after final judgment granting Landlord possession of the Leased
Premises, Landlord may receive and collect any sums of Rent due under this
Lease, and the payment of those sums shall not make ineffective any notice or in
any manner affect any pending suit or any judgment obtained.
ARTICLE 18. HOLDING OVER
If Tenant retains possession of all or any part of the Leased Premises
after the expiration or termination of this Lease, at Landlord's option Tenant
shall be deemed to be unlawfully retaining possession or shall be deemed to be a
month-to-month tenant of the Leased Premises on all the terms and conditions of
this Lease, except that Tenant shall pay as Rent a sum equal to twice the
amount, including Fixed Rent and Additional Rent payable for the month preceding
such holding over, computed on a daily basis for each day that Tenant remains in
possession. In addition to such Rent, Tenant shall be liable for and shall pay
to Landlord all damages, consequential as well as direct, sustained by reason of
Tenant's holding over.
ARTICLE 19. NO WAIVER: REMEDIES CUMULATIVE
Section 19.1. No Waiver. No waiver by Landlord or Tenant of a breach of any
---------
covenants, agreements, obligations or conditions of this Lease shall be
construed to be a waiver or any future breach of the same or any other covenant,
agreement, obligation or condition of this Lease.
Section 19.2. Remedies Cumulative. The rights and remedies created by this
-------------------
Lease are cumulative, and the use of one remedy shall not be taken to exclude or
waive the right to use of another, or exclude any other right or remedy allowed
by law.
ARTICLE 20. ESTOPPEL CERTIFICATE, SUBORDINATION ATTORNMENT
Section 20.1. Estoppel Certificate. At any time upon not less than 10 days'
--------------------
prior written request, Tenant and Landlord each shall execute and deliver in
recordable form and in substance satisfactory to the other, an estoppel
certificate certifying (a) the date to which Rent has been paid; (b) the amount
of any Security Deposit; (c) that Tenant has accepted the Leased Premises; (d)
that this Lease is in full force and effect and has not been modified or amended
(or if modified or amended, denominating the same); and (e) that there are not
defenses or offsets to the obligation for Rent or defaults of the other party
under this Lease (or if any be claimed, denominating the same); and (f) such
other matters as the requesting party may reasonably request. If the certificate
is to be delivered to a purchaser of all or part of the Building (including the
Land), it shall further include the agreement of Tenant to recognize such
purchaser as Landlord under this Lease. The purchaser must assume Landlord's
obligations under this Lease, and thereafter Tenant will pay Rent to the
purchaser or its designee in accordance with the terms of this Lease, and Tenant
acknowledges that any such purchaser may rely on such estoppel certificate.
Tenant's failure to deliver such certificate within such time shall be
conclusive evidence that this Lease is in full force and effect without
modification, that there are no defaults and that all of the foregoing and any
other matters required to be stated in the certificate are true and correct.
Section 20.2. Subordination. This Lease is subject and subordinate to all
-------------
ground or underlying leases, mortgages and deeds of trust which now affect the
Building or any portion thereof (including the Land) and to all renewals,
modifications, consolidations, replacements and extensions thereof. It is
further agreed that this Lease may, at the option of Landlord, be made
subordinate to any ground or underlying leases, mortgages, or deeds of trust
which in the future may affect the Building or any portion thereof (including
the Land) or affect any ground or underlying leases and that Tenant, or Tenant's
successors in interest, will execute and deliver upon the demand of Landlord any
and all instruments desired by Landlord subordinating this Lease to such lease,
mortgage or deed of trust. At Tenant's request, Landlord agrees to use its
reasonable efforts to obtain a non-disturbance agreement (acknowledging that so
long as Tenant fulfills all of its obligations under the Lease, its possession
will not be disturbed) from any present or future mortgagees of the Building (on
the lenders then current form); however, such efforts shall not require Landlord
to expend any costs or expenses, including attorneys' fees, in making such
request.
Section 20.3. Attornment. Tenant agrees that, at the option of the ground
----------
lessor under any ground lease now or later affecting all or part of the Building
(including the Land), Tenant shall attorn to such ground lessor in the event of
the termination or cancellation of such ground lease, and if requested by such
ground lessor, enter into a new lease with the ground lessor (or a successor
ground-lessee designated by such ground lessor) for the balance of the Term then
remaining under this Lease upon the same terms and conditions as those provided
in this Lease.
Section 20.4. Mortgages. In the event of foreclosure or exercise of power
---------
of sale under any mortgage or deed of trust now or later affecting all or part
of the Building (including the Land), the holder of any such mortgage or deed of
trust (or purchaser at any sale pursuant thereto) shall have the option (a)
supplementing this Article, to require Tenant to attorn to such holder or
purchaser, and to enter
14
<PAGE>
into a new lease with such holder or purchaser (as Landlord) for the balance of
the Term then remaining under this Lease upon the same terms and conditions as
those provided in this Lease, or (b) notwithstanding this Article, to elect that
this Lease become or remain, as the case may be, superior to said mortgage or
deed of trust.
Tenant shall, upon request by any such holder or purchaser, execute and
deliver any and all instruments desired by such holder or purchaser evidencing
the superiority of this Lease to any such mortgage or deed of trust.
ARTICLE 21. QUIET ENJOYMENT
Landlord covenants and agrees with Tenant that upon Tenant paying the Fixed
Rent and Additional Rent and observing and performing all of the terms,
covenants and conditions on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the Leased Premises, subject, nevertheless, to
the terms and conditions of this Lease and to any ground leases, underlying
leases and mortgages.
ARTICLE 22. NOTICES
Whenever any notice is required or permitted under this Lease, such notice
shall be in writing. Any notice or document required or permitted to be
delivered under this Lease shall be deemed to be delivered and received (a) when
delivered personally to any representative of the party served, or (b) one
business day after timely deposit with a commercial overnight courier service,
charges prepaid, or (c) three business days after deposit in the United States
mail, postage prepaid, registered or certified mail, return receipt requested,
addressed to the appropriate address for the notified party first given in
Article I, or at such other address as such party shall have previously
specified by written notice delivered in accordance with this Article.
ARTICLE 23. MISCELLANEOUS PROVISIONS
Section 23.1. Governing Law. This Lease shall be governed by and construed
-------------
under the laws of the State of Colorado.
Section 23.2. Construction. The necessary grammatical changes required to
------------
make the provisions of this Lease apply in the plural sense where there is more
than one party constituting Tenant and to either corporations, associations,
partnerships or individuals, male or female, shall in all instances be assumed
as though fully expressed. As used in this Lease, the term "Tenant" shall mean
and include, at any given time, Tenant named in this Lease and any person, firm,
corporation, or other legal entity, immediate or remote, to which interest in
this Lease shall be assigned pursuant to the terms of this Lease. If there is
more than one person or entity who or which are the Tenant under this Lease, the
obligations imposed upon Tenant under this Lease shall be joint and several. The
relationship between Landlord and Tenant created under this Lease shall be that
of lessor and lessee, and nothing in this Lease shall be construed as creating
any joint venture or partnership. The captions used in this Lease are for
convenience only, and do not in any way limit or amplify the terms and
provisions of this Lease. As used in this Lease, the term "mortgage" includes a
"deed of trust".
Section 23.3. Security Services. Landlord shall not be obligated to provide
-----------------
or maintain any security patrol or security system. However, if Landlord elects
to provide such patrol or system, the cost thereof shall be included in
Operating Costs as defined in Section 4.1. Landlord shall not be responsible for
the quality of any such patrol or system which may be provided under or for
damage or injury to Tenant, its employees, invitees or others due to the
failure, action or inaction of such patrol or system.
Section 23.4. Parties Bound. It is agreed that this Lease, and each and all
-------------
covenants and obligations of it, shall be binding upon and inure to the benefit
of, as the case may be, the parties to this Lease, their respective heirs,
executors, administrators, successors and assigns, subject to all agreements and
restrictions contained in this Lease with respect to assignment or other
transfer of Tenant's interest in this Lease. Landlord and Tenant, each to the
other, represent that the person signing this Lease has the full authority to
execute and deliver this Lease.
Section 23.5. No Representations by Landlord. Neither Landlord nor
------------------------------
Landlord's agents have made any representations or promises with respect to the
physical condition of the Building or any portion thereof (including the Land),
the Demised Premises, permissible uses of the Leased Premises, the rents,
leases, expenses or operation or any other matter or thing affecting or related
to the Leased Premises except as expressly set forth in this Lease, and no
rights, easements, or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in the provisions of this Lease. Tenant
has inspected the Building and the Leased Premises and is thoroughly acquainted
with their condition, and agrees to accept the same "as is" subject to the punch
list items, if any, permitted in Section 2.6 of this Lease and latent defects
which Tenant must notify landlord in writing within six (6) months after the
Commencement Date. All understandings and agreements previously made between the
parties to this Lease are merged in this contract, which alone fully and
completely expresses the agreement between Landlord and Tenant, and any
executory agreement later made shall be ineffective to change, modify, discharge
or effect an abandonment of it, in whole or in part, or a surrender of this
Lease or of all or any part of the Leased Premises or of any interest of Tenant
in the Leased Premises unless such executory agreement is in writing and signed
by Landlord and Tenant.
Section 23.6. Brokers. Tenant warrants that it has had no dealings with any
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broker, agent or any other person in connection with the negotiation or
execution of this Lease other than the broker(s) identified in Article I.
Landlord warrants to Tenant that it has had no dealings with any broker, agent
or any other person in connection with the negotiation or execution of this
Lease other than the broker(s) identified in Article 1. Landlord shall pay a
commission to Landlord's broker pursuant to a separate written agreement between
Landlord and Landlord's broker, and a cooperating broker's commission shall be
payable by Landlord's broker to Tenant's broker pursuant to a separate agreement
between Landlord's broker and Tenant's broker.
Tenant agrees to indemnify and hold harmless Landlord from and against any
and all cost, expense, or liability (including without limitation, reasonable
attorneys' fees and disbursements) for commissions or other compensation and
charges claimed by any broker or agent with respect to this Lease other than the
brokers identified in Article 1 on account of Tenant's acts. Landlord agrees to
indemnify and hold harmless Tenant from and against any and all cost, expense,
or liability (including without limitation, reasonable attorneys' fees and
disbursements) for commissions or other compensation and charges claimed by any
broker or agent with respect to this Lease other than the brokers identified in
Article 1 on account of Landlord's acts.
Section 23.7. Severability. The invalidity or unenforceability of any
------------
provision of this Lease shall not affect or impair the validity of any other
provision.
Section 23.8. Force Majeure. In the event either party shall be delayed or
-------------
hindered in or prevented from the performance of any act required under this
Lease, other than the payment of money, by reason of strikes, lock-outs, labor
troubles, inability to procure materials, failure of power, restrictive
governmental laws or regulations, riots, insurrection, war or other reason of a
like nature not the fault of the party obligated to perform the act, in
performing work or doing acts required under the terms of this Lease, then
performance of such act shall be extended for a period equivalent to the period
of such delay.
Section 23.9. Definition of Landlord. As used in this Lease, the term
----------------------
"Landlord" shall mean only the owner, or the mortgagee in possession, for the
time being, of the Building or the owner of a lease of the Building, but
excluding the Land; so that in the event of any sale of the Building or of the
Building excluding the Land, any sale of such lease, or in the event of a lease
of the Building, or of the Building excluding the Land, said Landlord shall be
and hereby is entirely freed and relieved of all covenants and obligations of
landlord under this Lease which are to be performed or observed subsequent to
any such transaction, and it shall be deemed and construed without further
15
<PAGE>
agreement between the parties or their successors in interest, or between the
parties and any such purchaser or lessee, that such purchaser or lessee has
assumed and agreed to perform and observe any and all covenants and obligations
of Landlord under this Lease.
Section 23.10. No Option. The submission of this Lease for examination or
---------
execution does not constitute a reservation of or option for the Leased
Premises, and this Lease becomes effective as a lease only upon execution and
delivery of it by Landlord and Tenant.
Section 23.11. Exculpatory Clause. All separate and personal liability of
------------------
Landlord or any officer or partner of Landlord, of every kind or nature, if any,
is waived by Tenant, and by every person now or later claiming by, through or
under Tenant; and Tenant shall look solely to the Building for the payment of
any claim against Landlord.
Section 23.12. Attorneys' Fees. Notwithstanding any provision of this Lease
---------------
to the contrary, in the event of any litigation arising under this Lease, the
prevailing party shall be awarded of its reasonable attorneys' fees and
disbursements.
Section 23.13. No Recording. Tenant shall not record this Lease, or any
------------
portion or any reference to it or any estoppel certificate executed by Landlord
or Tenant. In the event Tenant records this Lease, or permits or causes this
Lease, or any portion of it or reference to it to be recorded, this Lease shall
terminate at Landlord's option or Landlord may declare a default under this
Lease and pursue any and all of its remedies provided in this Lease.
LANDLORD:
938 BANNOCK, LLC
By: BRUCE BERGER REALTY, INC. AS IT'S MANAGER
By: /s/ Bruce Berger
----------------------------------------
Bruce Berger, President
TENANT:
INFLOW, INC., a Delaware corporation
/s/ Arthur H. Zeile
-------------------------------------------
Name: Arthur H. Zeile
--------------------------------------
Title: President & C.E.O.
-------------------------------------
16
<PAGE>
RIDER TO BANNOCK CENTER OFFICE BUILDING
LEASE AGREEMENT
BETWEEN 938 BANNOCK, LLC
AND
INFLOW, INC.
This Rider supplements and is a part of the foregoing Bannock Center Office
Building Lease Agreement between 938 Bannock, LLC as Landlord and INFLOW, INC.,
as Tenant, relating to those specific premises more fully described in the
Lease.
Any undefined capitalized term in this Rider has the same meaning as set forth
in the Lease, unless the context indicates otherwise.
In the event of any conflict between the provisions of this Rider and the other
portions of the Lease, the terms of this Rider will govern the agreement of the
parties.
The Lease is supplemented as follows:
ARTICLE 24 RIGHT OF OFFER. Landlord hereby grants to Tenant, after the initial
lease-up of the Building (provided such Building is fully leased within nine
months after the Commencement Date, and if the Building is not fully leased
within such nine-month period, the right to offer shall nonetheless apply) the
right to offer to lease any office space in the Building as such space is
vacated by the current tenant (either at the end of its term or after
termination of its lease) and available for lease to the general public (the
"Offer Space"). Tenant shall have such right with respect to the Offer Space on
the following basis:
A. Landlord agrees to notify Tenant prior to the expiration of the then existing
lease term for the Offer Space, or vacation thereof, that the same will be
available for leasing by Tenant. Tenant shall have ten (10) days after receipt
of any such notice within which to notify Landlord if Tenant desires to lease
the Offer Space, or the portion so offered, for the balance of Tenant's Lease
Term hereunder. If Tenant does not so notify Landlord within the ten (10) day
period, it shall be conclusively deemed that Tenant does not desire to lease
such space, Landlord shall be free to lease the Offer Space to anyone whom it
desires, Landlord shall have no obligation to ever offer the Offer Space to
Tenant for lease again, Tenant's rights under the right of offer granted
hereunder shall terminate and Tenant shall have no further rights with respect
to such space.
B. If Tenant elects to add all of the Offer Space to its Lease, such Offer Space
shall be added upon the terms and conditions and at a rental rate comparable to
those on which Landlord would lease the Offer Space, if it became available for
leasing in the Building as of the time Tenant's occupancy thereof would
commence but in no event shall the rental rate be less than the rent which
Tenant is then paying. Such terms and conditions may include, among other
things, escalations, pass-throughs and other matters then included in Landlord's
standard lease form for the Building which it uses for the leasing of space to
third parties. If Landlord and Tenant cannot agree, in writing, on the terms,
conditions and rental rate for the Offer Space within ten days after Tenant
notifies Landlord of its intent to exercise its right of first offer, then it
shall be conclusively deemed that Tenant does not desire to lease such space,
Landlord shall be free to lease the Offer Space to anyone whom it desires,
Landlord shall have no obligation to ever offer the Offer Space to Tenant for
lease again, Tenant's rights under the right of offer granted hereunder shall
terminate and Tenant shall have no further rights with respect to such space.
C. The right of offer herein granted shall continue only so long as there have
been no defaults hereunder by Tenant and only so long as there are at least
sixty (60) months remaining on the initial Term. However, if there is less than
sixty (60) months remaining on the initial Term, Tenant may only exercise the
right of first offer granted herein by extending the Term to expire at least
five (5) years from the date Tenant actually takes occupancy of the Offer Space.
In the event of an assignment of the Lease or a subletting or vacation of more
than 25% of the Premises, Tenant's rights under this Paragraph are null and
void. Notwithstanding the foregoing, this right granted in this Section is
personal to Tenant, is not assignable and may not be exercised by any sublessee
or assignee of Tenant, regardless of whether the sublessee or assignee has been
approved by Landlord.
ARTICLE 25 TERMINATION RIGHT. Tenant may elect to terminate this Lease
("Termination Option") effective as of the sixtieth month of the initial lease
Term (the "Early Termination Date"), by giving Landlord written notice
("Tenant's Notice") on or before the date that is two hundred seventy days prior
to the Early Termination Date (the "Required Notice Date") provided that: (1) on
or before the Early Termination Date, Tenant has paid Landlord all amounts due
and owing under the Lease through the Early Termination Date; and (2) Tenant
pays to Landlord concurrently with Tenant's Notice a termination fee equal to
the unamortized portion of Landlord's Costs calculated by amortizing Landlord's
Costs over the initial Term on a daily basis, in equal monthly installments.
"Landlord's Costs" means Landlord's costs related to this Lease, including, but
not limited to:$263,325 for leasehold improvements costs (the tenant improvement
allowance), $7,500 for legal costs, and $105,330 for leasing commissions.
Tenant's right to exercise the Termination Option is conditioned on Tenant not
being in default at the time of exercise of the Termination Option or on the
Early Termination Date. If the Termination Option is timely exercised, Tenant
will deliver possession of the Premises to Landlord on the Early Termination
Date in accordance with the terms of the Lease and all other terms and
provisions will apply as if the Lease had expired according to its terms,
including Tenant's obligation for payment of any Additional Rent attributable to
periods prior to the Early Termination Date at such time as such obligation is
determined, If Tenant fails to timely give notice, Tenant will be deemed to have
waived its right to terminate under this Paragraph. Tenant's right to terminate
the Lease pursuant to this Paragraph is personal to Tenant and may not be
assigned except to an entity for which Landlord's consent to the assignment is
not required pursuant to Section 14.1 of the Lease.
ARTICLE 26 SECURITY DEPOSIT / LETTER OF CREDIT. Tenant shall provide to
Landlord, within five (5) days after mutual execution hereof, a clean,
unconditional, irrevocable letter of credit from Silicon Valley Bank or other
lending institution reasonably acceptable to Landlord in the form attached
hereto as Exhibit F (the "Letter of Credit") as a guaranty and security for the
performance of Tenant's obligations under this Lease on the following terms and
conditions:
A. It is understood and agreed that the Letter of Credit, as renewed or
substituted annually, prior to its stated expiration, in the same form as
attached hereto, shall be kept in effect from the date of execution of this
Lease the date that is seven years from the date the Letter of Credit is
initially issued in favor of Landlord (the "LC Termination Date"). The initial
Letter of Credit shall be in the amount of $300,000.00 (the "LC Maximum").
Tenant shall have the right at any time to replace the Letter of Credit with a
cash Security Deposit in the amount of the then-current balance under the Letter
of Credit. On the first day of each Lease Year after the first Lease Year if the
Letter of Credit has not been presented for payment in accordance with this
paragraph, the LC Maximum shall be reduced by $42,850.00. If the foregoing
reductions are not accomplished automatically pursuant to the terms of the
Initial Letter of Credit, Tenant shall present Landlord with an extension or
renewal of the initial Letter of Credit, or a substitute Letter of Credit in the
same form as Exhibit F in the amount of the then applicable LC Maximum, no later
than thirty (30) business days prior to the expiration date of such initial (or
any renewal or substituted) Letter of Credit, from a lending institution
subject to Landlord's reasonable approval; such extension, renewal or substitute
Letter of Credit shall be effective no later than the day prior to the
expiration of the initial Letter of Credit (or any then applicable replacement
thereof). Landlord shall cooperate with Tenant in coordinating any such renewal,
extension or substitution, If the issuing bank notifies Landlord of its
intention not to renew the Letter of Credit, Landlord shall so notify Tenant,
and Landlord shall thereafter have the immediate right to draw the entire
balance of the Letter of Credit which amounts will be held as a Security Deposit
under this Lease. Thereafter, and provided Tenant is not in default hereunder,
Tenant shall have the right to replace the amounts drawn under the Letter of
Credit and held as a Security Deposit, with a replacement Letter of Credit on
the terms set forth herein, and within five (5) business days of receipt of a
conforming replacement Letter of Credit, Landlord will return the funds held as
a Security Deposit to Tenant. Tenant agrees that if an Event of Default by
Tenant (as defined in Paragraph 16), or if a replace of substitute Letter of
Credit has not been presented as required herein, Landlord, without further
notice, shall have a right to present the Letter of Credit (or the renewal,
extension or substitute) for payment and draw thereunder amounts Landlord
expects to be necessary to cure the default, with amounts received to be held
and applied in accordance with subparagraph B below. Any
17
<PAGE>
amounts drawn and not applied to cure a default shall be held as a Security
Deposit pursuant to Section 3.4. Any failure of Tenant to provide Landlord with
an extension, renewal or substitute Letter of Credit as required hereunder,
shall be deemed an Event of Default under the Lease and Landlord shall have a
right to present the Letter of Credit in accordance with the foregoing
provision. If the Letter of Credit has not been presented for payment in
accordance with this paragraph on or before the LC Termination Date, Landlord
shall return the Letter of Credit to Tenant within ten (10) business days after
the LC Termination Date (or after a termination of this Lease except as a result
of Tenant's default). The Letter of Credit shall be transferable and assignable
to any person or entity who or which is the successor or assignee of Landlord's
interest under the Lease and Tenant shall cooperate in effecting any such
transfer or assignment from time to time, including obtaining a substitute
Letter of Credit (at Tenant's cost and expense for the first such assignment and
at Landlord's cost thereafter), if the existing Letter of Credit is not capable
of further transfer or assignment. Landlord shall give written notice to Tenant
of transfer of Landlord's interest resulting in transfer of the Letter of
Credit. Landlord shall deliver the then current effective Letter of Credit to
Tenant upon receipt of any conforming renewal or substitute Letter of Credit
provided in accordance with this Paragraph and cooperate with the issuing bank
to effect the release of such then current effective Letter of Credit.
B. If an Event of Default occurs or this Lease is terminated pursuant to
Paragraph 16, then in addition to any other rights or remedies Landlord may have
pursuant to this Lease or applicable law, Landlord may use and apply or retain
all or any portion of the amounts received under the Letter of Credit, if any,
for the costs Landlord incurred related to this Lease. By the later of thirty
(30) days following the later of the expiration of the Lease or Tenant's
vacation of the Premises, any amounts drawn upon the Letter of Credit that are
not applied for payment of amounts in accordance with the foregoing provision
shall be returned to Tenant, without payment of interest. Landlord and Tenant
agree that the annual fees charged by the lending institution issuing the Letter
of Credit (or any renewal, extension, or substitute therefor) shall be paid by
Tenant.
ARTICLE 27 ROOF RIGHTS. Tenant shall have the right install, at Tenant's
sole cost and expense, satellite dishes, antennas or other telecommunications
equipment on an approximately 200 square foot portion of the roof of the
Building. Tenant's rights under this Section 27 are expressly contingent upon:
(i) Tenant makes the requisite submittals to Landlord required under Section 7.2
of this Lease; (ii) Tenant complies with any and all requirements of and obtains
any requisite approvals from any governmental or quasi-governmental authority
with jurisdiction over the Building; (iii) the height of the satellite antenna
shall not exceed four feet from the roof; (iv) Landlord may require, in its sole
and absolute discretion, that the satellite antenna be screened from view. The
size, location, method of installation and all other matters in connection with
the satellite antenna are subject to Landlord's prior written consent which will
not be unreasonably withheld.
ARTICLE 28 OPTION TO EXTEND. As additional consideration for the covenants
of Tenant hereunder, Landlord hereby grants unto Tenant an option (the "Option")
to extend the term of the Lease for one (1) additional term of five (5) years
(the "Option Term"). The Option shall apply only to the original space leased
hereunder and any Offer Space thereafter leased by Tenant and shall be on the
following terms and conditions:
A. Written notice of Tenant's interest in exercising the Option shall be
given to Landlord no earlier than twelve (12) months and no later than nine (9)
months prior to the expiration of the initial Term ("Tenant's Notice"). Not
later than thirty (30) days after receiving Tenant's Notice, Landlord shall give
to Tenant notice of the terms, conditions and rental rate applicable during the
Option Term, in accordance with subparagraph E below ("Landlord's Notice").
B. Tenant shall have fifteen (15) days following Tenant's receipt of
Landlord's Notice within which to exercise the Option by delivering written
notice of such exercise to Landlord under the exact terms, conditions and rental
rate set forth in Landlord's Notice, If Tenant timely exercises the Option, the
Lease shall be deemed extended and thereafter the parties shall execute an
amendment to the Lease setting forth the terms of the extension.
C. Unless Landlord is timely notified by Tenant in accordance with
subparagraphs A and B above, it shall be conclusively deemed that Tenant does
not desire to exercise the Option, and the Lease shall expire in accordance
with its terms, at the end of the initial Lease Term.
D. Tenant's right to exercise its Option shall be conditioned on: (i)
Tenant not being in default under the Lease at the time of exercise of the
Option or at the time of the commencement of the Option Term; and (ii) Tenant
not having subleased more than twenty-five percent (25%) of the Premises or
assigned its interest under the Lease as of the commencement of the Option Term
or having vacated more than twenty-five percent (25%) of the Premises.
E. The Option granted hereunder shall be upon the terms and conditions
contained in the Lease except that there shall be no further option to extend
the term of the Lease beyond the Option Term and except that the rental to be
paid by Tenant to Landlord during the Option Term shall be the rate which
Landlord would quote to third parties for space comparable to the Premises if it
were to become available for leasing, for a lease term scheduled to commence at
the time of commencement of the Option Term, but in no event shall the rental
rate be less than the rent which Tenant is paying immediately prior to the
commencement of the Option Term. Such rental rate may include escalations and
pass-throughs.
F. After exercise of the Option above described, there shall be no further
rights on the part of Tenant to extend the term of the Lease.
ARTICLE 29 STORAGE SPACE. As of the Commencement Date, Tenant has the right to
use approximately 2,700 square feet, but no more then 3,000 sq ft storage space
located on the South east side of the Mezzanine level of the Building as
depicted on Exhibit A attached hereto. Tenant will not pay any Fixed Rent for
the storage space. Tenant accepts the storage space in its "as is" condition. If
Tenant elects to utilize the storage space, Tenant shall be solely responsible
to partition the storage space and to build out the storage space in compliance
with all applicable laws, rules, regulations and codes. Landlord will provide
lighting and access to the storage space at all times, and Landlord shall
provide no other services, maintenance, repair, or utilities. Landlord may
utilize any portion of the storage space to provide HVAC duct work servicing any
tenant of the Building. Except those portions of the storage space utilized by
Landlord, Tenant shall be fully responsible for all security, maintenance and
repair to the storage area. The use of the storage space shall be at Tenant's
sole risk and Landlord assumes no responsibility or liability for any damage or
loss to property located in the storage space or injury to persons while in the
storage space. Except to the extent terms and provisions of the Lease are
specifically inapplicable by their nature to the storage space, all terms and
provisions of the Lease shall apply thereto. Storage space shall be used
strictly for storage.
ARTICLE 30 PROHIBITED USE. During the Primary Lease Term and any extension
thereof, and until such time as (a) there is an Event of Default by Tenant, (b)
Tenant has ceased operations in the Premises, or (c) this Lease is terminated or
otherwise expires according to its terms, Landlord covenants that it will not
hereafter lease space in the Building to a tenant who provides or intends to
provide drug or alcohol rehabilitation services or to a medical clinic whose
services are inconsistent with a professional business environment as reasonably
determined by Landlord in consultation with Tenant.
ARTICLE 31 SECURITY TO THE PREMISES. Tenant shall have the right to install, at
Tenant's sole cost and expense, a security system for the Leased Premises with
non-standard locks and other access controls provided Tenant complies with the
following express contingencies: (i) Tenant makes the requisite submittals to
Landlord required under Section 7.2 of this Lease; and (ii) Tenant complies with
any and all requirements of and obtains any requisite approvals from any
governmental or quasi-governmental authority with jurisdiction over the
Building. The size, location, method of installation and all other matters in
connection with the security system are subject to Landlord's prior written
consent which will not be unreasonably withheld. Notwithstanding the foregoing
to the contrary, Tenant must insure that Landlord has the full access to the
Premises at all times pursuant to Section 12.1 of the Lease.
18
<PAGE>
ARTICLE 32 SUPPLEMENTAL SYSTEMS. Tenant shall have the right install, at
Tenant's sole cost and expense, supplemental systems to support its network
operation center including, without limitation, the following: (A) Tenant shall
have the right to do any of the following with respect to the fire suppression
system: (i) convert the present system within the Leased Premises to a dry-pipe,
pre-action system or to Install such a system; (ii) install a gas fire
suppression system in the Leased Premises; provided such system does not
adversely impact the structural integrity of the Building, including but not
limited to floor load guidelines, and or (iii) install any other fire
suppression system; provided, however, that such system must be able to be
disconnected from the Building system without necessitating a rewiring or
reworking of any Building system; (B) Tenant shall have the right to install and
maintain an uniterruptible power supply and its associated batteries, at
Tenant's option either within the Leased Premises, in the storage space, or at
an alternate location reasonably acceptable to both Landlord and Tenant and to
integrate the Building power into such system; provided, however, that such
system must be able to be disconnected from the Building system without
necessitating a rewiring or reworking of any Building system and such system
does not adversely impact the structural integrity of the Building, including
but not limited to floor load guidelines; (C) Tenant shall have the right to
install and maintain a power generator outside the Leased Premises at a location
reasonably acceptable to both Landlord and Tenant and to integrate the Building
power into such generator; provided, however, that such generator must be able
to be disconnected from the Building power without necessitating a rewiring or
reworking of any Building system; (D) Tenant shall have the right to install,
maintain, repair and replace from time to time supplementary air conditioning
equipment in the Leased Premises or at a location reasonably acceptable to both
Landlord and Tenant; provided, however, that such system must be able to be
disconnected from the Building system without necessitating a rewiring or
reworking of any Building system and such system does not adversely impact the
structural integrity of the Building, including but not limited to floor load
guidelines; and (E) Tenant shall have the right to vent the air conditioning
equipment through the roof of the Building and to discard air conditioning
condensate into Building wastewater lines. Landlord hereby grants to Tenant a
license during the Term of the Lease at no additional cost to extend fiber optic
or other telecommunication cable to the Building utilizing the existing
electrical chasers and the existing floor sleeves, and riser space in connection
with such cable to support Tenant's network operation center; provided Tenant
carries out such installation in compliance with all applicable laws, rules and
regulations of governmental and quasi-governmental authorities with jurisdiction
over the Building, Tenant replaces all fire stopping disturbed in connection
with its extension of fiber optic or other telecommunication cable, and Tenant
strictly complies with the express conditions set forth below. In connection
with the supplemental systems noted herein, Tenant shall comply with the
following express conditions: (a) Tenant shall make the requisite submittals to
Landlord required under Section 7.2 of this Lease; (b) Tenant must satisfy any
and all requirements of and obtain any requisite approvals from any governmental
or quasi-governmental authority with jurisdiction over the Building with respect
to the supplemental systems; (c) Landlord may require, in its sole and absolute
discretion, that any of the supplemental systems be screened from view; and (d)
Tenant shall pay, within ten (10) days after receipt of an invoice therefore,
any engineering costs incurred by Landlord to review any submittals required of
Tenant in connection with its supplemental systems. The type, size, location,
method of installation and all other matters in connection with the supplemental
systems are subject to Landlord's prior written consent which consent will not
be unreasonably withheld. As a part of Landlord's Work, Landlord shall Install a
shut off valve on the existing wet sprinkler system in case Tenant elects to
install a dry system in the future pursuant to the terms of the Lease. Landlord
will deduct Three Hundred Dollars ($300) from the Finish Allowance with respect
to such installation.
ARTICLE 33 MODIFICATIONS OF RULES AND REGULATIONS. Notwithstanding anything to
the contrary in the Rules and Regulations, (i) Tenant shall have the right to
order beverages, food and other items for consumption in the Leased Premises
from any vendor; (ii) Landlord shall provide garbage receptacles for the
Building which Tenant shall be permitted to use; and (iii) Tenant shall have the
right to locate beverage and vending machines in the Leased Premises.
ARTICLE 34 PENTHOUSE SPACE. As of the Commencement Date, Tenant has the right to
use the penthouse space located above the third floor at the north end of the
Building. Tenant will not pay any Fixed Rent for the penthouse space. Tenant
accepts the penthouse space in its "as Is" condition. Tenant shall be solely
responsible for compliance with all applicable laws, rules, regulations and
codes with respect to its use of the penthouse space. Landlord will not provide
or guaranty any access, services, maintenance, repair, or utilities to the
penthouse space. Landlord will have no responsibility for security, maintenance
and repair of the penthouse space. The use of the penthouse space shall be at
Tenant's sole risk and Landlord assumes no responsibility or liability for any
damage or loss to property located in the penthouse space or injury to persons
while in the penthouse space. Except to the extent terms and provisions of the
Lease are specifically inapplicable by their nature to the penthouse space, all
terms and provisions of the Lease shall apply thereto.
19
<PAGE>
EXHIBIT A
PLAN SHOWING TENANT'S SPACE
---------------------------
[DIAGRAM]
<PAGE>
EXHIBIT B
WORK LETTER
-----------
RE: Lease dated as of September 8,1999, by and between 938 Bannock, LLC
("Landlord") and INFLOW, INC. ("Tenant") (the "Lease"), pertaining to those
specific Leased Premises more specifically described in the Lease (the "Leased
Premises")
Ladies and Gentlemen:
Concurrently herewith, you, as Tenant, and the undersigned, as Landlord, have
executed the referenced Lease, which provisions of said Lease are herein
incorporated by reference as if fully set forth herein. (Initially capitalized
terms not otherwise defined have the same meaning as in the Lease.) In
consideration of the execution of the Lease, Landlord has agreed to complete
certain improvements in the Leased Premises and Tenant and Landlord agree as
follows:
1. Landlord, at its sole cost and expense, shall remodel the Building in a good
and workmanlike manner and substantially in accordance with plans which have
been delivered to Tenant listed on Exhibit B-I, receipt of which is hereby
acknowledged by the Tenant ("Landlord's Work"). In addition to the foregoing,
Landlord's Work shall include the following items:
. Landlord agrees to prepare the third floors of the north and south buildings
for Tenant's finish flooring materials, in accordance with reasonable industry
standards.
. Landlord agrees to finish the perimeter walls on the third floor in accordance
with the plans attached on Schedule B-1 as modified by the supplemental drawings
attached thereto.
. Landlord agrees to repair existing roof to ensure that it is in good working
order.
. Landlord will provide a fire protection system per plans attached as
Exhibit B-1.
. Landlord will furr out over existing conditions the north and west perimeter
walls of the second floor north building in accordance with the plans attached
on Schedule B-1 as modified by the supplemental drawings attached thereto.
. Landlord will furr out over existing conditions the south wall of the second
floor north building to the height of the existing materials in accordance with
the plans attached on Schedule B-1 as modified by the supplemental drawings
attached thereto.
. Landlord to install a partition in the abandoned north stairwell landing.
. Landlord to prepare for Tenant's finish flooring material on the second floor
of the north building in accordance with reasonable industry standards.
Landlord shall perform Landlord's Work in compliance with all applicable laws,
rules, regulations and codes. Landlord shall give notice to Tenant of completion
of Landlord's Work (which may be satisfied by delivering the certificate
required by Article 2 of the Lease). Landlord shall use reasonable efforts to
cause the Landlord's Work to be completed on or before the Scheduled Completion
Date of Landlord's Work, as stated in Article 1 of the Lease. Upon completion of
Landlord's Work and completion of any punch list items listed in a written
agreement signed by Tenant and Landlord, Landlord shall have no further
obligation for the improvements to the Leased Premises.
2. Tenant will complete improvements in the Leased Premises ("Tenant's Work") in
accordance with construction documents which shall include all architectural,
mechanical, and electrical working drawings to be provided to Landlord (the
"Working Drawings"). Tenant shall perform Tenant's Work in compliance with all
applicable laws, rules, regulations and codes. All plans and Working Drawings
shall be subject to Landlord's reasonable approval, which approval shall not be
unreasonably withheld, and Tenant's Work shall be completed in accordance with
Article 7 of the Lease. Tenant acknowledges that Landlord has disclosed to
Tenant that the Leased Premises contains lead-based paint and that Tenant, as a
part of Tenant's Work, must address the lead-based paint in compliance with all
applicable laws. Tenant acknowledges that Landlord has no responsibility or
liability with respect to the lead-based paint in the Premises.
3. All costs related to the Tenant's Work, including, but not limited to, design
fees, costs of preparation of the Working Drawings, and costs of materials and
construction, but specifically excluding costs incurred due to Tenant Delay, are
considered "Tenant Work Costs." Landlord will pay the Tenant Work Costs up to a
maximum of $15.00 per rentable square foot in the Leased Premises as reflected
in Article 1 (the "Finish Allowance"). Tenant shall be responsible for the
direct payment of all Tenant Work Costs. The Finish Allowance will be paid by
the Landlord to the Tenant in three payments: 25% of the Finish Allowance will
be paid by Landlord upon Tenant's commencement of the Tenant Work within the
Premises; 25% of the Finish Allowance will be paid upon 50% completion of
Tenant's Work (as certified by Tenant's architect); and the balance of the
Finish Allowance will be paid upon (i) completion of Tenant's Work and Tenant's
occupancy of the Premises, (ii) receipt of paid invoices from Tenant evidencing
the applicable construction, along with appropriate lien waivers from Tenant's
general contractor and any subcontractors involved In Tenant's Work,
substantially in a form reasonably acceptable to Landlord, and (iii) obtaining a
certificate of occupancy. Tenant agrees to not occupy the Leased Premises prior
to the receipt of a certificate of occupancy. In addition to the Finish
Allowance, Landlord will pay to Tenant within five (5) days after mutual
execution of this Lease, $.10 per rentable square foot in the Leased Premises
as reflected in Article 1 toward the cost of a preliminary space plan for the
Leased Premises prepared by B2/SJ.
Please sign and return this letter and all accompanying copies of it
to indicate your approval of the terms of this agreement.
Very truly yours,
938 BANNOCK, LLC
By: BRUCE BERGER REALTY, INC. AS IT'S MANAGER
------------------------------------------
By: /s/ Bruce Berger
------------------------------------------
Bruce Berger, President
CONFIRMED AND AGREED:
INFLOW, INC., a Delaware corporation
By: /s/ Arthur H. Zeile
----------------------------------
(Printed Name) Arthur H. Zeile
---------------------------
(Title) President & C.E.O.
---------------------------
B-1
<PAGE>
EXHIBIT B-1
938 BANNOCK CONSTRUCTION DRAWINGS
<TABLE>
<CAPTION>
DRAWING DESCRIPTION ORIGINAL DATE REVISION DATE
<S> <C> <C> <C>
AO.1 Cover Sheet, Project & Code Data 6/14/99 8/20/99
D1.0 Basement Demolition Plan 6/14/99 8/20/99
D1.1 First Floor Demolition Plan 6/14/99 8/20/99
D1.2 Second Floor Demolition Plan 6/14/99 8/20/99
D1.3 Third Floor Demolition Plan 6/14/99 8/20/99
D1.4 Roof Demolition Plan 6/14/99 8/20/99
A2.0 Basement Plan 6/14/99 8/20/99
A2.1 First Floor Plan 6/14/99 8/20/99
A2.2 Second Floor Plan 6/14/99 8/20/99
A2.3 Third Floor Plan 6/14/99 8/20/99
A2.4 Roof Plan 6/14/99 8/20/99
A2.5 Enlarged Floor & Reflected Ceiling Plans, Details 6/14/99 8/20/99
A2.6 Enlarged Floor Plans & Details 6/14/99 8/20/99
A4.1 Demolition Elevation, New Elevation 6/14/99 8/20/99
A5.1 Wall Sections, details 6/14/99 8/20/99
A8.1 Door and Window Schedule 6/14/99 8/20/99
S1.0 General Notes 6/14/99 8/20/99
S2.1 First Floor Framing Plan 6/14/99 8/20/99
S2.2 Second Floor Framing Plan 6/14/99 8/20/99
S2.3 Third Floor Framing Plan 6/14/99 8/20/99
S2.4 Roof Framing Plan 6/14/99 8/20/99
M1.0 Mechanical Legend, Schedules and Details 6/14/99 8/20/99
M2.0 Basement Plan - New Work - HVAC 6/14/99 8/20/99
M2.1 First Floor HVAC Plan 6/14/99 8/20/99
M2.2 Second Floor Plan - New Work HVAC 6/14/99 8/20/99
M2.3 Third Floor Plan New Work - HVAC 6/14/99 8/20/99
M2.4 Roof Plan New Work - HVAC 6/14/99 8/20/99
P1.0 Plumbing Schedules and Isometric 6/14/99 8/20/99
P2.1 First Floor Plumbing Plan 6/14/99 8/20/99
P2.2 Second Floor Plumbing Plan 6/14/99 8/20/99
P2.3 Third Floor Plumbing Plan 6/14/99 8/20/99
P2.4 Roof Plumbing Plan 6/14/99 8/20/99
P2.5 Riser Diagram "D" 6/14/99 8/9/99
E0.0 One-Line Diagram and Schedules 6/14/99 8/11/99
E1.0 Conceptual Electrical Plan Basement 6/14/99 8/13/99
E1.1 Conceptual Electrical Plan First Floor 6/14/99 8/13/99
E1.2 Conceptual Electrical Plan Second Floor 6/14/99 8/13/99
E1.3 Conceptual Electrical Plan Third Floor 6/14/99 8/13/99
E1.4 Electrical Panels 6/14/99 n/a
Frontier Fire Protection. Inc.:
-------------------------------
Page 1 Basement Floor Sprinkler Plan 8/19/99
Page 2 First Floor Sprinkler Plan 8/19/99
Page 3 Second Floor Sprinkler Plan 8/19/99
Page 4 Third Floor Sprinkler Plan 8/19/99
</TABLE>
Prepared 9/8/99
<PAGE>
[DIAGRAM]
<PAGE>
[DIAGRAM]
C-1
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
---------------------
1. Security. Landlord may from time to time adopt appropriate systems and
--------
procedures for the security or safety of the Building, any persons
occupying, using or entering thereof, and Tenant shall comply with
Landlord's reasonable requirements relative thereto. Landlord may from time
to time install and change locking mechanisms on entrances to the Building,
common areas thereof, and the Leased Premises. Tenant shall not add to or
change existing locking mechanism on any door in or to the Leased Premises.
2. Windows. Tenant shall observe Landlord's rules with respect to maintaining
-------
uniform coverings at all windows in the Leased Premises so that the
Building presents a uniform exterior appearance, and shall not install any
window shades, screens, drapes, covers, or other materials on or at any
window in the Leased Premises without Landlord's prior written consent.
Tenant shall ensure that window coverings are closed on all windows in the
Leased Premises while they are exposed to the direct rays of sun.
3. Repairs, Maintenance, Alterations, and Improvements. Tenant shall carry out
---------------------------------------------------
Tenant's repair, maintenance, alterations, and improvements in the Leased
Premises only during times agreed to in advance by Landlord and In a manner
which will not interfere with the rights of other tenants in the Building.
4. Water Fixtures. Tenant shall not use water fixtures for any purpose for
--------------
which they are not intended, nor shall water be wasted by tampering with
such fixtures. Any cost or damage resulting from such misuse by Tenant
shall be paid for by Tenant.
5. Personal Use of Leased Premises. The Leased Premises shall not be used or
-------------------------------
permitted to be used for residential or lodging purposes or for the storage
of personal effects or property not required for business purposes.
6. Carpet Pads. In those portions of the Leased Premises where carpet has been
-----------
provided directly or indirectly by Landlord, Tenant shall, at its own
expense, install and maintain pads to protect the carpet under all
furniture having casters.
7. Bicycles, Animals. Tenants shall not bring any animals or birds into the
-----------------
Building, and shall not permit bicycles or other vehicles inside or on the
sidewalks outside the Building except in areas designated from time to time
by Landlord for such purposes.
8. Deliveries. Tenant shall ensure that deliveries of materials and supplies
----------
to the Leased Premises are made through such entrances, elevators, and
corridors and at such times as may from time to time be designated by
Landlord, and shall promptly pay or cause to be paid to Landlord the cost
of repairing any damage in the Building caused by any person making such
deliveries.
9. Furniture and equipment. Tenant shall ensure that furniture and equipment
-----------------------
being moved into or out of the Leased Premises is moved through such
entrances, elevators, and corridors and at such time as may from time to
time be designated by Landlord, and by movers or a moving company approved
by Landlord, and shall promptly pay or cause to be paid to Landlord the
cost of repairing any damage in the Building caused thereby.
10. Solicitations. Landlord reserves the right to restrict or prohibit
-------------
canvassing, soliciting, or peddling in the Building.
11. Food and Beverages. Only persons approved from time to time by Landlord may
------------------
prepare, solicit orders for, sell, serve, or distribute food or beverages
in the Building, or use the elevators, corridors, or common areas for any
such purpose. Except with Landlord's prior written consent and in
accordance with arrangements approved by Landlord, Tenant shall not permit
on the Leased Premises the use of equipment for dispensing food or
beverages or for the preparation, solicitation of orders for, sales,
serving, or distribution of food or beverages (but the foregoing shall not
prohibit a refrigerator, microwave oven, or coffee machines solely for the
use by Tenant's employees).
12. Refuse. Tenant shall place all refuse in proper receptacles provided by
------
Tenant at its expense in the Leased Premises or in receptacles (if any)
provided by Landlord for the Building, and shall keep sidewalks and
driveways outside the Building, and lobbies, corridors, stairwells, ducts,
and shafts of the Building free of all refuse.
13. Obstructions. Tenant shall not obstruct or place anything in or on the
------------
sidewalks or driveways outside the Building or in the lobbies, corridors,
stairwells, or other common areas of the Building, or use such locations
for any purpose except access to and exit from the premises, without
Landlord's prior written consent. Landlord may remove at Tenant's expense,
any such obstruction or thing (unauthorized by Landlord) without notice or
obligation to Tenant.
14. Dangerous or Immoral Activities. Tenant shall not make any use of the
-------------------------------
Leased Premises which involves the danger of injury to any person, nor
shall the same be used for any immoral purpose.
15. Proper Conduct. Tenant shall not conduct itself in any manner which is
--------------
inconsistent with the character of the Building as a first quality building
or which will impair the comfort and convenience of other tenants in the
Building.
16. Definition of "Tenant". In these Rules and Regulations, "Tenant" includes
----------------------
the employees, agents, invitees, and licensees or Tenant and others
permitted by Tenant to use or occupy the Leased Premises.
17. Noise. Tenant shall not make, or permit to be made, any unseemly or
-----
disturbing noises or disturb or interfere with occupants of the Building or
neighboring buildings or premises or those having business with them,
whether by use of any musical instrument, radio, television set, talking
machines, unusual noise, whistling, singing, or in any other way. Tenant
shall not throw anything out of the doors, windows, skylights, or down the
passageways.
18. No Smoking. No smoking is permitted in the Building Common Areas, including
----------
without limitation the locker facilities, common conference rooms, vending
areas, halls and lobbies.
D-1
<PAGE>
EXHIBIT E
[Intentionally Omitted]
E-1
<PAGE>
EXHIBIT F
FORM LETTER OF CREDIT
(Letterhead and Address of Bank)
Irrevocable Standby Letter of Credit No. _______________________
Date: ___________________________
Beneficiary:
938 Bannock LLC
do Bruce Berger Realty
960 Cherokee Street
Denver, CO 80204
attn: Mr. Bruce Berger
as "Landlord"
Applicant: INFLOW, Inc.
1860 Lincoln Street, Suite 305
Denver, Colorado 80295
Amount: $300,000
Expiry Date: _______________________
Location: At our counter in _____________________
Dear Sir/Madam:
We hereby establish our Irrevocable Standby Letter of Credit No. ___________ in
your favor. Available by payment with _______________________ Bank,
_____________________, Attention: of Beneficiary's draft at sight drawn on us,
and accompanied by the following documents:
1. The original of this Letter of Credit and amendment, if any.
2. A signed and dated certification from the Beneficiary stating the following:
(a) "A Default (as defined in the Lease) has occurred by Inflow, Inc. under that
certain Office Lease Agreement (the "Lease") between Inflow, Inc. ("Tenant") and
938 Bannock, LLC (the "Landlord") and Tenant has failed to cure its default
after the expiration of any applicable cure period, and therefore, the
undersigned is entitled to the amount set forth In the draft.
It is a condition of this Letter of Credit that it will be deemed automatically
renewed without an amendment for a period of one (1) year from the present or
each future expiration date unless at least thirty (30) days prior to such
expiry date we notify you in writing sent by overnight mail that we elect not to
renew this Letter of Credit for such additional period. In no event shall this
Letter of Credit be automatically extended beyond _________________.
This Letter of Credit is transferrable by the issuing bank in whole but not in
part and only once upon our receipt of the attached Exhibit "A" (Transfer Form)
duly completed and executed by the beneficiary together with this original
Letter of Credit and all amendments if any accompanying our transfer charges
(i.e., 1/4 of 1 percent minimum USD 250.00).
The amount of this Letter of Credit shall be decreased on the following dates,
provided that the available amount exceeds the following aggregate amount(s):
Effective Date: Aggregate Amount(s)
All documents including the draft(s) must indicate the number and date of this
credit.
Each draft presented hereunder must be accompanied by this original Letter of
Credit for our endorsement thereon of the amount of such draft(s).
Documents must be sent to use via overnight courier (i.e., Federal Express, UPS,
DHL or other express courier) at our address: ________________________________.
We hereby engage with drawers and/or bona fide holders that draft(s) drawn under
and negotiated in conformance with the terms and conditions of the subject
credit will be duly honored on presentation.
F-1
<PAGE>
EXHIBIT G
Depiction of Parking Area
[DIAGRAM]
<PAGE>
Exhibit 10.13
BANNOCK CENTER
(900 BANNOCK BUILDING)
OFFICE BUILDING
LEASE
AGREEMENT
between
938 BANNOCK LLC
Landlord
and
INFLOW, INC.
Tenant
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. REFERENCE DATA
ARTICLE 2. LEASED PREMISES AND TERM
Section 2.1. Leased Premises
Section 2.2. Term
Section 2.3. Completion of Leased Premises
Section 2.4. Commencement and Expiration Date Agreement
Section 2.5. Tenant's Entry Upon Premises Before Commencement Date
Section 2.6. Occupancy of Leased Premises
Section 2.7. After Hours Access
ARTICLE 3. RENT AND SECURITY DEPOSIT
Section 3.1. Fixed Rent and First Monthly Rent Payment
Section 3.2. Additional Rent and Rent Defined
Section 3.3. Past Due Rent and Additional Rent
Section 3.4. Security Deposit
ARTICLE 4. TENANT'S SHARE OF OPERATING COSTS
Section 4.1. Definitions
Section 4.2. Adjustment in Operating Costs
Section 4.3. Tenant's Share of the Increase in the Operating Costs
Section 4.4. Reduction in the Event of Casualty or Taking by Eminent Domain
ARTICLE 5. CONDUCT OF BUSINESS BY TENANT
Section 5.1. Use of Leased Premises
Section 5.2. Compliance with Laws and Requirements of Public Authorities
Section 5.3. Rules and Regulations
Section 5.4. Permitted Weight Loads
Section 5.5. Signage
ARTICLE 6. COMMON AREA
Section 6.1. Control of Common Area
Section 6.2. Parking
ARTICLE 7. REPAIRS, ALTERATIONS AND MECHANICS' LIENS
Section 7.1. Repairs
Section 7.2. Alterations
Section 7.3. Mechanics' Liens
ARTICLE 8. UTILITIES AND BUILDING SERVICES
Section 8.1. Utilities and Services Provided
Section 8.2. Interruption of Services
Section 8.3. Energy Conservation and Security Policies
ARTICLE 9. TENANT'S PROPERTY TAX AND OTHER TAXES
ARTICLE 10. INSURANCE AND INDEMNITY
Section 10.1. Tenant's Insurance
Section 10.2. Indemnity and Non-Liability
Section 10.3. Waiver of Subrogation
ARTICLE 11. DAMAGE BY CASUALTY
Section 11.1. Notice
Section 11.2. Restoration of Improvements
Section 11.3. Damage During Last Year of Lease Term
ARTICLE 12. RIGHTS RESERVED TO LANDLORD
Section 12.1. Access to Leased Premises
Section 12.2. Relocation of Leased Premises
Section 12.3. Additional Rights
ARTICLE 13. EMINENT DOMAIN
Section 13.1. Taking of Leased Premises
Section 13.2. Partial Taking of Building
Section 13.3. Surrender
Section 13.4. Rent Adjustment for Partial Taking of Leased Premises
Section 13.5. Awards
ARTICLE 14. ASSIGNMENT AND SUBLETTING
Section 14.1. Consent Required
ARTICLE 15. BANKRUPTCY
Section 15.1. Prior to Commencement Date
SectIon 15.2. During the Term of this Lease
Section 15.3. Measure of Damages
Section 15.4. Adequate Assurance of Future Performance
ARTICLE 16. TENANT'S DEFAULT
Section 16.1. Events of Default
Section 16.2. Termination or Re-Entry
Section 16.3. Damages
<PAGE>
TABLE OF CONTENTS (continued)
ARTICLE 17. SURRENDER
Section 17.1. Possession
Section 17.2. Trade Fixtures, Personal Property and Improvements
Section 17.3. Merger
Section 17.4. Payments After Termination
ARTICLE 18. HOLDING OVER
ARTICLE 19. NO WAIVER; REMEDIES CUMULATIVE
Section 19.1. No Waiver
Section 19.2. Remedies Cumulative
ARTICLE 20. ESTOPPEL CERTIFICATE, SUBORDINATION ATTORNMENT
Section 20.1. Estoppel Certificate
Section 20.2. Subordination
Section 20.3. Attornment
Section 20.4. Mortgages
ARTICLE 21. QUIET ENJOYMENT
ARTICLE 22. NOTICES
ARTICLE 23. MISCELLANEOUS PROVISIONS
Section 23.1. Governing Law
Section 23.2. Construction
Section 23.3. Security Services
Section 23.4. Parties Bound
Section 23.5. No Representations by Landlord
Section 23.6. Brokers
Section 23.7. Severability
Section 23.8. Force Majeure
Section 23.9. Definition of Landlord
Section 23.10. No Option
Section 23.11. Exculpatory Clause
Section 23.12. Attorneys' Fees
Section 23.13. No Recording
EXHIBITS
EXHIBIT A (Plan Showing Leased Premises)
EXHIBIT B (Work Letter)
EXHIBIT C (Depiction of Parking Area)
EXHIBIT D (Rules and Regulations)
EXHIBIT E (Depiction of Generator Pad)
<PAGE>
LEASE
This Lease is made between Landlord and Tenant named in Article 1 as of the
date set forth in Article 1 Landlord and Tenant, in consideration of the
covenants contained in this Lease, agree as follows:
ARTICLE 1. REFERENCE DATA
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the information stated for that subject in this
Article 1:
DATE OF LEASE: October 11, 1999.
LANDLORD: 938 Bannock LLC
PROPERTY MANAGER: Venture Group Real Estate Management, Inc.
LANDLORD'S AND PROPERTY MANAGER'S ADDRESS:
c/o Venture Group Real Estate copy to: Mr. Bruce Berger
Management, Inc. Bruce Berger Realty
5299 DTC Boulevard, Suite 240 960 Cherokee Street
Englewood, CO 80111 Denver, CO 80204
303/572-1188
TENANT: INFLOW, INC., a Delaware corporation
TENANT'S ADDRESS:
Prior to Commencement Date:
1860 Lincoln, Suite 305
Denver, CO 80295
attn: Legal Department
After Commencement Date:
INFLOW, INC.
938 Bannock Street
Denver, CO 80204
attn: Legal Department
PREMISES or LEASED PREMISES: That specific building known as 900 Bannock Street
containing approximately 9,912 rentable square feet of space as depicted on
Exhibit A attached hereto and Incorporated herein by this reference.
TENANT'S USE OF THE LEASED PREMISES: General office, computer and
telecommunications equipment room, and network operations center
BUILDING: 900 Bannock Building
BUILDING ADDRESS: 900 Bannock Street
Denver, CO 80204
SCHEDULED COMPLETION DATE FOR LANDLORD'S WORK: See Work Letter
COMMENCEMENT DATE: November 1,1999.
EXPIRATION DATE: January 31, 2010.
TERM: One Hundred Twenty Three (123) Months
RENTABLE SQUARE FEET OF LEASED PREMISES 9,912 SQ. FT.
RENTABLE SQUARE FEET OF BUILDING: 9,912 SQ. FT.
<TABLE>
<CAPTION>
FIXED RENT: Monthly Fixed Rent Annual Fixed Rent
<S> <C> <C>
Lease Years 1 - 5 $11,068.40 $132,820.80
Lease Years 6 - end of initial term $12,720.40 $152,644.60
</TABLE>
"Lease Year" shall mean each twelve (12) month period beginning with the
Commencement Date, or any anniversary thereof, and ending on the preceding day
one (1) year later; provided, however, that if the Commencement Date is a date
other than the first day of a calendar month, the first Lease Year shall include
the days from the Commencement Date to the first day of the following calendar
month, and each subsequent Lease Year shall commence on the anniversary of the
first day of such calendar month.
LANDLORD'S OPERATING COST LIMITATION: Operating Costs for the Building for
Calendar Year 2000, which includes property taxes payable in the year 2001 for
the year 2000.
(Tenant's Pro Rata Share of any Increase in Operating Costs over Landlord's
Operating Cost Limitation: 100%)
FIRST YEAR FOR TENANT'S PAYING OPERATING COST ESCALATION:
Year Beginning January 1, 2001.
TENANT FINISH COST: See Work Letter
SECURITY DEPOSIT: $22,136.80
GUARANTOR: N/A
1
<PAGE>
NUMBER OF PARKING SPACES: 11 surface parking spaces (subject to provisions of
Section 6.2)
BROKER: Venture Group Real Estate, L.L.C. for Landlord; Liberty-Greenfield,
LLLP for Tenant
SPECIAL PROVISIONS: See Attached Rider
The Exhibits listed below in this Section are incorporated in this Lease by
reference and are to be construed as part of this Lease:
(a) Exhibit A, Plan Showing Leased Premises.
(b) Exhibit B, Work Letter.
(c) ExhibIt C, Depiction of Parking Area
(d) Exhibit D, Rules and Regulations.
(e) Exhibit E, Depiction of Generator Pad
(f) Rider
ARTICLE 2. LEASED PREMISES AND TERM
Section 2.1. Leased Premises. Landlord hereby leases to Tenant, and Tenant
---------------
hereby leases from Landlord, the premises described below, upon and subject to
the covenants, agreements, terms, conditions, limitations, exceptions and
reservations of this Lease. Landlord and Tenant covenant and agree as a material
part of the consideration for this Lease to keep and perform all of the
covenants, agreements, terms and conditions by each of them to be kept and
performed under this Lease, and this Lease is made upon the condition of such
performance.
The premises leased to Tenant under this Lease is the Building (and the
space included therein) indicated on the plan attached to this Lease as
Exhibit A (the "Leased Premises"). For purposes of this Lease, the parties agree
- ---------
that the rentable square feet of the Leased Premises is as stipulated in
Article 1.
Section 2.2. Term. The term of this Lease (the `Term") shall be as
----
indicated in Article 1. The Term and Tenant's obligation to pay Rent (as defined
in Section 3.2, but subject to the period of abatement of Fixed Rent and the Fee
as set forth in the Rider) shall commence on the Commencement Date as set forth
in Article 1 and, unless the Term is extended as provided in this Lease, shall
expire on the Expiration Date set forth in Article 1.
If Landlord has not completed Landlord's Work within 120 days after the
Scheduled Completion Date for Landlord's Work as set forth In Article 1, then at
Tenant's option as indicated by Tenant's written notice received by Landlord no
later than five (5) business days thereafter, this Lease and all rights, duties
and obligations of the parties shall terminate effective one day after the date
of such notice. If Tenant fails to timely deliver such notice of termination,
this Lease shall remain in full force and effect.
Section 2.3. Completion of Leased Premises. For the purposes of Section
-----------------------------
2.2, the Leased Premises shall be conclusively deemed available for Tenant to
commence Tenant's Work (as defined in the Work Letter) upon mutual execution of
this Lease. Except for Landlord's Work, as described in Exhibit B to this Lease
---------
(the "Work Letter"), Landlord has no obligation for the completion or remodeling
of the Leased Premises and Tenant accepts the Leased Premises In their "as is"
condition as of the date of mutual execution of this Lease. Landlord's Work
shall be deemed substantially completed when Landlord certifies in writing that
Landlord's Work has been substantially completed. Landlord's Work, if any, shall
be deemed substantially completed notwithstanding that minor or non-material
details of construction, mechanical adjustment or decoration that do not
materially interfere with Tenant's ability to perform the Tenant Work (so-called
"punch list items") remain to be performed, or that portions of Landlord's Work
are incomplete because such work cannot be done until Tenant's Work is
completed. Landlord agrees to perform or complete the punch list items within 30
business days after mutual execution of the punch list by Tenant and Landlord.
In the event Landlord Is delayed In completing Landlord's Work by any delay,
interference or hindrance of such work by Tenant, Tenant's contractors or any of
their employees or agents, or by any changes in such work requested by Tenant
and agreed to by Landlord or by Tenant's failure to timely and properly perform
any of its obligations imposed pursuant to Exhibit B, then the Scheduled
---------
Completion Date for Landlord's Work set forth in Article 1 shall be
correspondingly adjusted.
Section 2.4. Commencement and Expiration Date Agreement. [Intentionally
------------------------------------------
Omitted]
Section 2.5. Tenant's Entry Upon Leased Premises Before Commencement Date.
------------------------------------------------------------
On the condition that Tenant complies at all times with the provisions and
requirements of this Lease (other than the obligation to pay Fixed Rent and the
Fee for parking) Tenant may enter upon the Leased Premises prior to the
Commencement Date to commence construction of Tenant's Work as set forth in the
Work Letter.
Section 2.6. Occupancy of Leased Premises. The taking of occupancy of all
----------------------------
or part of the Leased Premises by Tenant or anyone claiming by, under or through
Tenant shall be conclusive evidence that: (a) Tenant accepts possession of the
Leased Premises; and (b) the Leased Premises and the Building were in good and
satisfactory condition and were delivered in the condition required under the
Lease, except for the completion of Landlord's Work.
ARTICLE 3. RENT AND SECURITY DEPOSIT
Section 3.1. Fixed Rent and First Monthly Rent Payment. Tenant shall pay
-----------------------------------------
Landlord the fixed rent stipulated in Article 1 (the "Fixed Rent"). The Fixed
Rent shall be payable in equal monthly installments in the amount stipulated in
Article 1 as monthly Fixed Rent, in advance, on the first day of each calendar
month during the term of this Lease. If the Term does not commence on the first
day of a calendar month or does not end on the last day of a calendar month, the
monthly Fixed Rent for such month or months shall be prorated, and the prorated
amounts shall be paid in advance. All Fixed Rent shall be paid without any prior
demand and without any deduction or set-off whatsoever, in lawful currency of
the United States of America, at the address of Landlord set forth in Article 1,
or at such other place as Landlord may from time to time designate in writing.
Within sixty (60) days after the Commencement Date (acknowledging the
period of abatement of Fixed Rent and the Fee for parking as set forth in the
Rider), Tenant agrees to pay Landlord an amount equal to the monthly Fixed Rent
and Fee, which Landlord shall hold without interest to Tenant and apply to the
first full monthly Fixed Rent and Fee obligation of Tenant. Landlord will
provide Tenant an invoice for the first installment of Fixed Rent and the Fee
for parking which invoice will provide for a payment date by Tenant no later
than sixty (60) days after the Commencement Date. Thereafter Landlord shall have
no obligation to provide Tenant an invoice prior to any payment of Rent,
Additional Rent or the Fee, unless expressly required hereunder.
Section 3.2. Additional Rent and Rent Defined. Any sums or charges to be
--------------------------------
paid by Tenant pursuant to the provisions of this Lease, other than the Fixed
Rent, represent obligations of Tenant for additional rent ("Additional Rent")
and shall be payable within five business days after Landlord gives written
notice and demand for payment unless otherwise provided in this Lease. Payment
shall be made at the location specified in Article 1, unless otherwise
designated by notice from Landlord in writing, and shall be recoverable in the
same manner as the Fixed Rent. Landlord shall have the same rights against
Tenant for default in payment of Additional Rent as for default in payment of
the Fixed Rent.
As used in this Lease, the term "Rent" shall mean Fixed Rent and Additional
Rent.
2
<PAGE>
Section 3.3. Past Due Rent and Additional Rent. If Tenant shall fail to pay
---------------------------------
any Rent before the sixth day after such Rent is due and payable, Tenant agrees
to pay as Additional Rent each day after such sixth day that the Rent remains
unpaid, a late charge which shall be the greater of (a) $25.00 per day, or (b)
5% of the amount of such unpaid Rent divided by 30. The late charge shall accrue
daily until the unpaid Rent (including the late charge) is paid. Tenant agrees
that such amounts are not a penalty, but are intended as liquidated damages and
reflect a reasonable estimate by the parties of the cost to reimburse Landlord
for the loss of the use of the money and the additional administrative costs
resulting from late payments. Tenant shall also be responsible for the payment
of reasonable attorneys' fees incurred by Landlord in collecting any delinquent
Rent from Tenant. Any election by Landlord to waive in any instance the
requirement for Tenant's payment of late charges and/or attorneys' fees incurred
by Landlord pursuant to this Section of any other provision in this Lease shall
not operate to waive or impair Landlord's right to collect such sums from Tenant
upon any other breach of Tenant's obligations under this Lease.
Section 3.4. Security Deposit. Tenant shall deposit with Landlord upon
----------------
signing this Lease, and shall keep on deposit with Landlord in a separate,
interest bearing account throughout the term of this Lease, the security deposit
referenced in Article 1 of this Lease (the "Security Deposit") as security for
the payment by Tenant of the Rent and for the faithful performance of all the
terms, conditions and covenants of this Lease. If at any time during the Term
Tenant defaults in the payment or performance of any of its obligations under
this Lease, Landlord may but shall not be required to use the Security Deposit,
or so much thereof as necessary, in payment of any Rent in default, in
reimbursement of any expense incurred by Landlord and in payment of the damages
incurred by Landlord by reason of Tenant's default, or at the option of
Landlord, Landlord may retain the Security Deposit as liquidated damages. In
such event, on written demand of Landlord, Tenant shall immediately remit to
Landlord a sufficient amount in cash to restore the Security Deposit to its
original amount. If, upon termination of this Lease, Landlord has not applied
the Security Deposit balance to sums owed to Landlord as permitted by this
Section above, then within 60 days after the termination of this Lease Landlord
will refund the Security Deposit to Tenant with interest. Tenant is hereby
notified that any questions regarding the Security Deposit, including any
request for its return, should be directed to Landlord at the address for
Landlord set forth in Article 1.
Landlord shall deliver the Security Deposit to the purchaser of Landlord's
interest in the Leased Premises in the event such interest is sold, and
thereupon, Landlord shall be discharged from further liability with respect to
the Security Deposit. Landlord shall be discharged from any further liability
with respect to the Security Deposit if either Landlord delivers the Security
Deposit to the purchaser, or the purchaser assumes all of the obligations of
Landlord with respect to the Security Deposit. Notwithstanding these provisions
above if claims of Landlord exceed the Security Deposit, Tenant shall remain
liable for the balance of such claims.
ARTICLE 4. TENANT'S SHARE OF OPERATING COSTS
Section 4.1. Definitions. As used in this Lease, the term "Operating Costs"
-----------
shall mean any and all costs, charges, expenses, and disbursements of every kind
and nature which Landlord shall pay or become obligated to pay in connection
with the operation, ownership, maintenance, management, and repair of the
Building, including, but not limited to, the following:
(a) All wage, salary and labor costs of all persons engaged in the
operation, maintenance, management, and repair of the Building (including,
but not limited to, all applicable taxes, insurance and benefits).
(b) Cost of all building supplies and materials.
(c) Cost of all utilities (including, but not limited to, sewer and water
service) and fuel, if any, provided by Landlord pursuant to Article 8.1 or
utilized in connection with the operation of common areas of the Building
and not otherwise charged directly or separately to Tenant.
(d) Cost of all insurance including, but not limited to, casualty, business
interruption and liability insurance.
(e) Cost of all maintenance and service agreements including, but not
limited to, window cleaning (but expressly excluding maintenance, repair or
replacement of the roof of the Building).
(f) Cost of repairs and general maintenance including, but not limited to,
exterior building maintenance and maintenance of sidewalks, parking areas,
and landscaping (but expressly excluding maintenance, repair or replacement
of the roof of the Building).
(g) All personal property sales and use taxes (but not including any such
taxes related to personal property owned by Landlord) and real property
taxes, assessments and other governmental charges of any kind whatsoever
(including, without limitation, assessments, fees, and charges imposed for
public improvements or benefits, or for public services such as fire
protection, street, sidewalk and road maintenance or refuse removal, and
interest on unpaid installments) which may be levied, assessed or imposed,
or become liens upon or arise out of the use, occupancy, ownership, or
possession of the Premises, and which accrue during or are allocable to the
Term or any extension (collectively, "Taxes"). The Taxes which relate to
real property interests are sometimes referred to hereinafter as "Real
Property Taxes". The term Taxes shall not, however, include inheritance,
estate, succession, transfer, gift, franchise, income or excess profits
taxes imposed upon the Landlord, or any special assessments for
improvements installed as of the date hereof, whether now assessed or not,
and Tenant shall have no liability therefor.
(h) All costs of making any alterations to the Building for life-safety
systems or energy conservation or other capital improvements, whether new
or in substitution or replacement of existing equipment or systems required
by any governmental requirement which is imposed after the date Landlord's
Work is completed, and alterations which are primarily for the purpose of
reducing or stabilizing Operating Costs or providing additional or
increased services to the tenants of the Building, in any case, amortized
over the useful life of such improvements.
(i) Management fees either as charged to Landlord by independent management
companies or an amount not exceeding the amount typically charged by
independent management companies if Landlord itself manages the Building.
Notwithstanding anything to the contrary contained in this Lease, Operating
Costs shall not include the following:
(A) Capital expenditures except as provided in (h) above.
(B) Depreciation, amortization, ground rents or interest payments on
encumbrances.
(C) Leasing commissions, marketing costs, attorneys' fees and other
expenses related to leasing tenant space, constructing improvements for the
benefit of a tenant or occupant and allowances or concessions provided to any
tenant or occupant.
(D) Repairs required because of casualty or condemnation damage.
(E) Costs incurred because Landlord or any other tenant violated the terms
of any lease, contract or other obligation (including, without limitation,
fines, penalties and attorneys' fees).
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(F) Advertising and promotional expenses.
(G) Expenses in connection with services or other benefits not provided to
Tenant, or for which Tenant is charged directly or separately, but which are
provided to another tenant, including, without limitation, utility services.
(H) Costs for sculpture, paintings or other objects of art.
(I) Overhead and profit paid to subsidiaries or affiliates of Landlord for
management or other services on or to the Building or for supplies or other
materials to the extent that the costs of services, supplies or materials exceed
the competitive costs of the services, supplies or materials were they provided
by a disinterested third party.
(J) Any expense for which Landlord is compensated through proceeds of
insurance or agreements of indemnity or surety bonds or guarantees or for which
Landlord is reimbursed by third parties.
(K) Costs incurred due to the violation of the Building of any law, rule or
regulation in effect as of completion of Landlord's Work for which Tenant was
not responsible to address as part of Tenant's Work.
(L) Costs incurred for repair or mitigation of latent defects in the
Building or defects in the original construction of the Building, or Landlord's
Work of which Landlord is notified within six (6) months after the Commencement
Date.
(M) Costs relating to negligence or fault of other tenants.
(N) Costs relating to maintenance, repair or replacement of the roof of the
Building as such obligations are the sole and exclusive responsibility of Tenant
under this Lease.
Section 4.2. Utility Costs. Landlord shall provide basic utility service
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set forth in Section 8.1 below. During the Term, Tenant shall at its expense
arrange directly with the utility companies serving the Leased Premises to
provide and pay for all electricity and gas furnished or required in the Leased
Premises, and any deposits required therefor. Landlord shall incur no liability
whatsoever and the obligations of Tenant under this Lease shall not be
diminished or affected by reason of the unavailability, change or cessation of
such utility service, except as otherwise set forth in Section 8.2 of this
Lease.
Section 4.3. Janitorial. Tenant will contract for and pay for all
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janitorial services utilized in the Leased Premises. Tenant will keep the Leased
Premises in a clean condition, free from garbage or debris in a manner
consistent with other office buildings in the Downtown Denver office market.
Section 4.4. Tenant's Share of the Increase in the Operating Costs. For
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each calendar year during the Term, Tenant shall pay to Landlord, at the time
and in the manner provided below, Tenant's Share of the Increase in Operating
Costs, as defined below.
(a) The term "Tenant's Share of the Increase in Operating Costs" for any
year shall mean the product of (i) the difference, if any, between the
actual Operating Costs for the Building for such year when expressed on a
square-foot basis and the Landlord's operating cost limitation indicated in
Article 1 ("Landlord's Operating Cost Limitation"), also expressed on a
square-foot basis, and (ii) the number of rentable square feet in the
Leased Premises (as stated in Article 1). In the event that actual
Operating Costs are less than Landlord's Operating Cost Limitation, there
shall be no credit or refund to the Tenant.
(b) For each full calendar year during the Term beginning with the calendar
year 2001, Landlord shall compute and deliver to Tenant a reasonable
estimate of Tenant's Share of the Increase in Operating Costs for such
year, and without further notice, Tenant shall pay to Landlord
simultaneously with Tenant's monthly payments of Fixed Rent during such
year, monthly installments equal to one-twelfth of such estimate. With the
first such monthly installment of Tenant's Share of the Increase in
Operating Costs to be paid by Tenant for any calendar year, Tenant shall
include payment of the amount of the estimated increase prorated for the
period from the preceding January 1 to the first day of the next month
following the date of the notice. In any year Landlord may subsequently
revise the estimated adjustment in Operating Costs to allow for any new
expenses or other information which may impact Operating Costs for that
fiscal period, and in that case, after receipt of Landlord's notice of the
revised estimates Tenant shall pay monthly installments of Tenant's Share
of the Increase in Operating Costs based on Landlord's adjusted projections
as provided in this paragraph above.
(c) Unless delayed by causes beyond Landlord's reasonable control, Landlord
shall deliver to Tenant within 120 days after the end of each calendar year
during the Term, a written statement (the "Statement") setting out in
reasonable detail Tenant's Share of the Increase in Operating Costs for
such year. If the aggregate of monthly installments of Tenant's Share of
the Increase in Operating Costs actually paid by Tenant to Landlord during
any calendar year differs from the amount of Tenant's Share of the Increase
in the Operating Costs payable according to the Statement for such year
under this Section 4.3, then within thirty (30) days after the date of
delivery of the Statement, Tenant shall either (1) pay the amount (without
interest) by which the certified Tenant's Share of the Increase in
Operating Costs exceeds the amount previously paid on account of the
estimated Tenant's Share of the Increase in Operating Costs, or (2) be
credited against the next installment of Rent (or receive a check if there
is no Rent thereafter due) with the amount (without interest) by which the
amount previously paid on account of the estimated Tenant's Share of the
Increase in Operating Costs exceeds the certified Tenant's Share of the
Increase in Operating Costs.
(d) If Landlord and Tenant disagree on the accuracy of Tenant's Share of
the Increase in Operating Costs as set forth in the Statement, Tenant shall
nevertheless make payment in accordance with any notice given by Landlord,
but the disagreement shall immediately be referred by Landlord for prompt
decision by a mutually acceptable public accountant or other professional
consultant who shall be deemed to be acting as expert and not as an
arbitrator, and a determination signed by the selected expert shall be
final and binding on both Landlord and Tenant. Any adjustment required to
any previous payment made by Tenant or Landlord by reason of any such
decision shall be made within fourteen (14) days after the decision. If the
adjustment calls for a credit to Tenant equal to 3% or more of the payments
made but disputed by Tenant, Landlord will pay the cost of the expert;
otherwise Tenant will pay the cost of the expert.
(e) Neither party may claim a readjustment in respect of Tenant's Share of
the Increase in Operating Costs for any year if based upon any error of
computation or allocation except by notice delivered to the other party
within ninety (90) days after the date of delivery of the Statement for
such year. Upon written request from Tenant within the 90-day period,
Landlord will provide reasonable documentation verifying Tenant's Share of
the increase in Operating Costs.
(f) Notwithstanding anything to the contrary set forth in this Section 4,
for the purposes of calculating Tenant's Share of the Increase in the
Operating Costs "Controlled Expenses" (as hereinafter defined) shall not
exceed the "Maximum Controlled Expenses" (as hereinafter defined).
"Controlled Expenses" shall mean all Operating Costs except those
attributable to utilities, if any, not separately billed to Tenant or
another tenant in the Building, Taxes, costs of insurance, including,
without limitation, liability insurance, business interruption insurance,
casualty insurance and worker's compensation insurance, and costs of
compliance with any laws, rules or regulations. If Landlord is managing the
Building Complex itself the management fees included within Operating
Expenses shall be a Controlled Expense.
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"Maximum Controlled Expenses" shall mean: (a) for calendar year 2000, the full
amount of the actual expenses for Controlled Expenses as determined in
accordance with the foregoing provisions; (b) for calendar year 2001 and each
calendar year thereafter, the prior calendar year's Maximum Controlled Expenses
multiplied by 1.05. The limitations described above shall be a limitation only
on the calculation and passthrough to Tenant of Tenant's Share of the Increase
in the Operating Costs. Landlord may, in accordance with advice from its
accountants and other professionals, reasonably contest any utility rate
increases associated with the Building and/or tax assessments and to apply for
all rebates to which it is entitled so long as it has knowledge thereof. The
costs of all such contests and applications shall be included in Operating Costs
however, any penalties or fines in connection with such amounts shall not be so
included. To the extent any rebates or refunds are actually received by
Landlord, they shall be applied to reduce the total Operating Costs for the year
in which such amounts are received. if any such amounts attributable to periods
during the term hereof are received by Landlord following the expiration of the
term hereof (according to its terms and not as a result of an Event of Default,
as hereinafter defined), Landlord agrees to forward to Tenant any amounts to
which Tenant is entitled as and when received notwithstanding the fact that this
Lease has so expired, provided Tenant has given to Landlord a valid forwarding
address.
Section 4.5. Reduction in the Event of Casualty or Taking by Eminent Domain. If
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any part of the Building is taken by condemnation or in any other manner for any
public or quasi-public use or purpose (other than temporary use or occupancy) or
damaged or destroyed by fire or other casualty, and if the Term shall continue
in force as to any part of the Leased Premises, Landlord's Operating Cost
Limitation shall be equitably reduced, permanently or temporarily, as
appropriate, to take into account any decrease In Operating Costs attributable
to such taking or damage or destruction.
ARTICLE 5. CONDUCT OF BUSINESS BY TENANT
Section 5.1. Use of Leased Premises. Tenant shall use the Leased Premises
----------------------
solely for general office use and for the purpose set forth in Article 1 above
and for no other purpose.
Section 5.2. Compliance with Laws and Requirements of Public Authorities.
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(a) At all times during the Term, Tenant shall give prompt notice to
Landlord of any notice Tenant receives of the violation of any law or
requirement of any public authority affecting the Leased Premises or the
Building. Tenant, at its sole cost and expense, shall comply with all laws and
requirements of public authorities, which, with respect to the Leased Premises
or the use, condition or occupancy thereof, or the abatement of any nuisance,
shall impose any violation, order or duty on Landlord or Tenant, arising from
(i) Tenant's use of the Leased Premises; (ii) the manner of conduct of Tenant's
business or operation of its installations, equipment or other property in the
Leased Premises; (iii) any cause or condition created by or at the insistence of
Tenant; or (iv) breach of any of Tenant's obligations under this Lease.
(b) Tenant shall not do, permit or suffer any act or thing to be done in or
to the Leased Premises which is immoral or contrary to law or in violation of
the certificate of occupancy issued for the Building.
(c) Tenant agrees that it shall not keep, use, sell or offer for sale in or
upon the Leased Premises any article which may be prohibited by the
then-available standard forms of fire insurance policies with extended coverage.
Tenant agrees to pay any increase in premiums for insurance that may be charged
during the Term on the amount of such insurance which may be carried by Landlord
on the Leased Premises or the Building resulting from the type of business
conducted by Tenant in the Leased Premises, whether or not Landlord has
consented to that business. Landlord acknowledges that use of the Premises for
uses that are considered general office uses and a computer and
telecommunications equipment room will not result in an increase in Landlord's
insurance premiums. In determining whether increased premiums are the result of
Tenant's use of the Leased Premises, a schedule issued by the organization
making the insurance rate on the Leased Premises and showing the various
components of such rate shall be conclusive evidence of the several items and
charges which make up the insurance rate on the Leased Premises.
(d) Tenant shall pay as Additional Rent all costs, expenses, fines,
penalties or damages which may be imposed upon Landlord by reason of Tenant's
failure to comply with the provisions of this Section.
(e) The judgement of any court of competent jurisdiction or the admission
by Tenant, whether Landlord is a party to the proceeding or not, that Tenant has
violated any law or requirement of public authorities affecting the Building or
the Leased Premises shall be conclusive of such violation as between Landlord
and Tenant.
(f) Tenant shall strictly comply with all statutes, laws, ordinances,
rules, regulations, and precautions now or hereafter mandated or advised by any
federal, state, local or other governmental entity with jurisdiction over the
Premises with respect to the use, generation, storage, or disposal of any
hazardous or toxic material regulated by any federal, state or local
governmental entity (collectively "Hazardous Materials"). Tenant shall not
cause, or allow anyone else to cause, any Hazardous Materials to be used,
generated, stored or disposed of in, on or about the Premises or any
improvements now or hereafter constructed therein, except for hazardous or toxic
substances in small quantities as are typically used in an office space or in a
computer and telecommunications equipment room, but which are used, stored and
disposed of in strict compliance with all applicable laws, without the prior
written consent of Landlord, which consent may be withheld in the sole
discretion of Landlord, and which consent may be revoked at any time. Tenant's
indemnification of Landlord pursuant to this Lease shall extend to all
liability, including all foreseeable and unforeseeable consequential damages,
directly or indirectly arising out of the use, generation, storage, or disposal
of Hazardous Materials by Tenant or any person claiming by, through or under
Tenant, including, without limitation, the cost of any required or necessary
repair, cleanup, or detoxification and the preparation of any closure or other
required plans, whether such action is required or necessary prior to or
following the termination of this Lease, to the full extent that such action is
attributable, directly or indirectly, to the use, generation, storage, or
disposal of Hazardous Materials by Tenant or any person claiming by, through or
under Tenant. Neither the written consent by Landlord to the use, generation,
storage, or disposal of Hazardous Materials nor the strict compliance by Tenant
with all statutes, laws, ordinances, rules, regulations, and precautions
pertaining to Hazardous Materials shall excuse Tenant from Tenant's obligation
of indemnification. In the event Tenant is in breach of the covenants herein,
after notice to Tenant and the expiration of the cure period permitted under
applicable law, regulation, or order, Landlord may, in its sole discretion,
declare Tenant to be in default under this Lease and/or cause the Premises to be
free from the Hazardous Materials and such cause shall be deemed Additional Rent
hereunder and shall immediately be due and payable from Tenant.
(g) Landlord shall have the express right, but no more frequently than once
each calendar year during the lease term, and sixty (60) days prior to the
termination or other expiration of this Lease, to conduct an environmental
investigation at the Leased Premises (and at any other part of the Building
which Tenant utilizes for any operation, equipment or supplemental system). if
either Tenant installs a UPS system or backup generator in or on the Building,
or Landlord has a reasonable basis to believe that there may be a problem
involving Hazardous Materials in the Premises or Building caused by Tenant, its
agents, invitees, employees or contractors, or resulting from Tenant's use of
the Premises, then Tenant will pay, as Additional Rent within fifteen days of
receipt of an invoice therefore, the cost of the first environmental
investigation thereafter conducted by Landlord. If the first environmental
investigation
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details no contamination (or any other violation or any applicable Hazardous
Material law or applicable law, rule or regulation of a governmental entity with
jurisdiction over the Premises) that was caused by Tenant, its agents, invitees,
employees or contractors, or resulted from Tenant's use of the Premises, then
the cost of any environmental investigation conducted thereafter shall be borne
by Landlord unless such later environmental Investigation discloses any
contamination or violation of applicable laws (provided such violation or
contamination was caused by Tenant, its agents, invitees, employees or
contractors, or resulted from Tenant's use of the Premises). Tenant will pay, as
Additional Rent within fifteen days of receipt of an invoice therefore, the cost
of the first environmental investigation and any subsequent environmental
investigation which reveals a violation of any applicable Hazardous Material law
or applicable law, rule or regulation of a governmental entity with jurisdiction
over the Premises that was caused by Tenant, its agents, invitees, employees or
contractors, or resulted from Tenant's use of the Premises. If contamination (or
any other violation of any applicable Hazardous Material law or applicable law,
rule or regulation of a governmental entity with jurisdiction over the Premises)
is found and was caused by Tenant, its agents, invitees, employees or
contractors, or resulted from Tenant's use of the Premises, Tenant will
immediately remediate the contamination. Tenant shall indemnify and hold
Landlord harmless against and from any and all claims, liability, damage,
penalties, actions, demands or expenses of any kind or nature (including
attorney's fees), without limitation damage to any property and injury
(including death) to any person, arising from Tenant's breach of this Lease,
Tenant's use of the Premises for the conduct of its business, or from any
activity, work or other thing done, permitted or suffered by Tenant or omission
of Tenant in and about the Premises. It shall further indemnify and hold
Landlord harmless against and from any and all claims arising from any breach or
default in the performance of any obligation on Tenant's part to be performed
under the terms of this Lease or arising from any act or any of the foregoing
acts or omissions by any of Tenant's agents, employees, contractors,
subcontractors or invitees, or from any litigation concerning any of the
foregoing in which Landlord is made a party defendant, and from and against all
costs, attorneys fees, expenses and liabilities incurred in connection with any
such claim or action or proceeding brought thereon. Except as limited by
Sections 10.3 and 10.4 below Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises from any cause other than Landlord's sole negligence.
Section 5.3. Rules and Regulations.
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(a) Tenant and its agents, employees, contractors and invitees shall
faithfully observe and comply with the Rules and Regulations attached as
Exhibit D, and such reasonable changes to them, whether by modification,
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elimination or addition, as Landlord from may make time to time for the use,
safety, cleanliness, and care of the Leased Premises and the Building, and the
comfort, quiet, and convenience of occupants of the Building provided that such
changes do not unreasonably interfere with Tenant's operation in the Premises.
Such changes shall be effective upon written notice from Landlord to Tenant. In
the case of any conflict or inconsistency between the provisions of this Lease
and any of the rules and regulations as originally promulgated or as changed,
the provisions of this Lease shall control. (The rules and regulations, as
changed in accordance with this Section from time to time, are called the "Rules
and Regulations.")
(b) Nothing contained in this Lease shall be construed to impose upon
Landlord any liability for the failure of any other tenant or other party to
comply with the Rules and Regulations or the provisions in any other lease, but
Landlord shall use reasonable efforts to enforce the Rules and Regulations
uniformly.
Section 5.4. Permitted Weight Loads. Tenant shall not place in or move
----------------------
about the Leased Premises any article the weight of which exceeds the maximum
floor load limit for the Building, which is 100 pounds per square foot, without
Landlord's prior written consent, which consent shall not be unreasonably
withheld. If Tenant proposes to bring any article exceeding this limit into the
Building, Landlord may engage an engineering consultant to advise Landlord
regarding the placement of the article and any requirements to support the
weight, and Tenant shall pay the fees of that consultant, any costs necessary to
comply with the consultant's recommendations, and any other costs incurred by
Landlord as a result of moving or placing the article in the Leased Premises.
Section 5.5. Signage. Tenant shall not install any sign in any window of
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the Leased Premises or any sign elsewhere in the Leased Premises which is
visible from the exterior of the Building. Any signs of Tenant in the Common
Area (as defined in Section 6.1) shall conform to the Building standard and
shall be subject to Landlord's prior written approval, which consent shall not
be unreasonably withheld. Tenant shall have the right to install, at Tenant's
sole cost and expense, a sign on the exterior of the Building, provided: (i)
Tenant makes the requisite submittals to Landlord required under Section 7.2 of
this Lease or in connection with the approval of Tenant's Work; (ii) Tenant
obtains any and all requirements of any governmental or quasi-governmental
authority with jurisdiction over the Building; and (iii) Tenant pays all costs,
fees and expenses in connection with the installation, maintenance, operations,
repair and removal of the sign (at the end of the Term). The size, location,
method of installation and all other matters in connection with the exterior
sign are subject to Landlord's prior written consent which will not be
unreasonably withheld.
ARTICLE 6. COMMON AREA
Section 6.1. Control of Common Area.
----------------------
(a) As used in this Lease, the term "Common Area" shall mean that part of
the Building designated by Landlord as parking areas, sidewalks, landscaping,
curbs, driveways, delivery passages, private streets and alleys, lighting
facilities, and the like.
(b) Landlord grants Tenant a non-exclusive license for the Term to use and
occupy in common with the invitees of Landlord and Tenant and such other persons
as Landlord and Tenant shall designate, the Common Area, subject to the terms
and conditions of this Lease and to reasonable Rules and Regulations prescribed
from time to time by Landlord. Tenant shall not solicit business within the
Common Area or distribute handbills or take any action which would interfere
with the rights of other persons to use the Common Area.
(c) Landlord reserves the right, at any time and from time to time, without
incurring any liability to Tenant to change the arrangement, dimensions, and/or
location of the Common Areas. In such event. Landlord shall repair any physical
damage caused to the Leased Premises. Tenant shall, at all times, have access to
the Leased Premises, and no such changes shall unreasonably interfere with
Tenant's normal business operations in the Leased Premises, and Landlord shall
use reasonable efforts during any construction associated with any such change
to prohibit any unreasonable interference with Tenant's normal business
operations in the Leased Premises.
Section 6.2. Parking. During the Term, Tenant and its employees shall have
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the right to use the number of parking spaces stipulated in Article 1, all on an
unassigned basis and subject to the terms and conditions of this Lease and to
reasonable Rules and Regulations prescribed from time to time by Landlord,
including the designation of specified areas (which may change from
time-to-time, but in no event will be located outside a three block radius of
the Building) in which automobiles operated by Tenant and its employees shall be
parked. Notwithstanding the foregoing, Landlord in its sole and absolute
discretion, shall have the right to reduce the number of parking spaces
stipulated in Article 1, to no less than eight (8) spaces by delivering written
notice to Tenant of such reduction, which
6
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reduction will take effect thirty (30) days after Landlord delivers written
notice to Tenant. Upon request of Landlord, Tenant shall furnish to Landlord a
complete list of the license numbers of all automobiles operated by Tenant and
its employees. Tenant shall pay to Landlord a parking fee for the parking spaces
(the "Fee") In the amount of Thirty Five Dollars ($35.00) per space per month
plus a fiat fee for the Exclusive Spaces (as defined below) of Three Hundred
Fifteen Dollars ($315). The Fee shall equal the monthly charge per parking space
set forth above multiplied by the number of parking spaces to which Tenant is
then entitled plus Three Hundred Fifteen Dollars ($315) for the Exclusive
Spaces. All payments of the Fee shall be made as Additional Rent in advance,
without notice or set off, at Landlord's Notice Address, or at such place as
Landlord from time to time designates in writing. Tenant shall pay the Fee on
the Commencement Date and on the first day of each succeeding calendar month
during the initial Term or any extension thereof. If Tenant takes occupancy of
the Premises on a day other than the first day of a calendar month, the Fee for
the fractional month shall be prorated on a daily basis and shall be paid on the
date Tenant takes occupancy of the Premises. If Tenant fails to pay the Fee in a
timely manner, Landlord shall have all rights and remedies afforded it under
Section 16 hereof. The Fee for the parking spaces shall be due and payable in
full each month regardless of whether Tenant actually uses all or only a portion
of the parking spaces allocated for Tenant each month. Provided Tenant is not in
default under this Lease beyond any applicable cure period, Landlord will
designate that specific area located immediately contiguous to the east of the
Building (but to the west of the alley adjacent to thereto), as depicted on
Exhibit C, for Tenant's exclusive use during the Term of this Lease (the
"Exclusive Spaces") for parking spaces in addition to those noted above, and for
location of Tenant's Generator Pad authorized under the Rider.
ARTICLE 7. REPAIRS, ALTERATIONS AND MECHANICS' LIENS
Section 7.1. Repairs.
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(a) Landlord, at its expense, shall make all necessary repairs, interior or
exterior, structural or otherwise, to keep the Building, including building
equipment and systems, in good order and repair, excluding, however, all repairs
which Tenant is obligated to make pursuant to this Section 7.1. Tenant shall
give Landlord prompt notice of any defective condition in any plumbing, heating
system or electrical lines located in, servicing or passing through the Leased
Premises, and following such notice, Landlord shall remedy the condition with
due diligence, subject to unavoidable delay, but at the expense of Tenant if
repairs are necessitated by damage or injury attributable to Tenant, Tenant's
servants, agents, employees, invitees, or licensees; provided, however, that no
liability of Landlord to Tenant shall accrue under this Lease unless and until
Tenant has given notice to Landlord of the specific repair to be made.
(b) Tenant, at its sole cost and expense, shall take good care of the
Leased Premises, including all building equipment and systems located in and
exclusively serving the Leased Premises and Tenant's property and fixtures.
Tenant shall be solely responsible for all maintenance, repairs and replacement
of the roof of the Building. Tenant shall make and be responsible for all
repairs, interior or exterior, structural or otherwise, as and when needed to
preserve the Leased Premises, including such building equipment and systems, and
Tenant's property and fixtures, in good working order and condition, the need
for which arises out of (i) the performance or existence of any alteration or
modification to the Leased Premises made by Tenant, (ii) the installation, use
or operation of Tenant's property or fixtures, (iii) the moving of Tenant's
property or fixtures in or out of the Building or in and about the Leased
Premises, (iv) the acts, omission, negligence or misuse by Tenant or those
holding under Tenant, or their use or occupancy or manner or use or occupancy of
the Leased Premises or (v) as may be required by Article 5. All repairs made by
or on behalf of Tenant shall be made and performed in conformity with the
provisions of Section 7.2 and shall be at least equal in quality and class to
the original construction of the Leased Premises. If Tenant fails after 10 days'
notice by Landlord to proceed with due diligence to make repairs required to be
made by Tenant, the same may be made by Landlord at the expense of Tenant, and
the expenses of those repairs incurred by Landlord shall be reimbursed
immediately as Additional Rent after submission of a bill or statement for such
repairs.
Section 7.2. Alterations.
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(a) Tenant shall make no alterations, additions, or improvements in or to
the Leased Premises without Landlord's prior written consent which consent will
not be unreasonably withheld. Landlord will make good faith and commercially
reasonable efforts to respond within five (5) business day to any requested
alteration, addition or improvement proposed by Tenant, unless greater time is
required to allow engineers or other specialists time to review the submittal.
Any notice from Landlord stating that Landlord does not consent to any proposed
installation, alteration or improvement will specify the reasons for the
objection. Any contractors and sub-contractors chosen by Tenant to perform the
work in the Building or Leased Premises must be approved in advance by Landlord,
which consent will not be unreasonably withheld, unless the alteration, addition
or improvement involve the structural components of the Building or the Building
systems, in which case Landlord, in its sole discretion, shall have the right to
require Tenant to hire contractors regularly engaged by Landlord to perform work
in the Building. Before making any alterations, additions, installations or
improvements, Tenant, at its expense, shall obtain all permits, approvals and
certificates required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits, approvals and certificates to Landlord. Tenant
agrees to carry and to cause all contractors and sub-contractors hired by Tenant
to carry such workmen's compensation, general liability, personal and property
damage insurance as Landlord may reasonably require, and Landlord shall be named
as an additional insured on each of these policies. An increase in any taxes as
a result of such alterations by Tenant shall be paid by Tenant.
(b) All fixtures and all paneling, partitions, railings and like
installations, alterations, additions and improvements installed in the Leased
Premises or on the Building at any time (including, but not limited to, those
items installed pursuant to Tenant's Work), either by Tenant or by Landlord on
Tenant's behalf, shall become the property of Landlord and shall remain upon and
be surrendered with the Leased Premises unless Landlord, by notice to Tenant no
later than 20 days prior to the date fixed as the Expiration Date (or in the
event of termination of this Lease in advance of the Expiration Date, by notice
to Tenant given with the notice of termination), elects to have them removed by
Tenant, in which event, the same shall be removed from the Leased Premises by
Tenant. Notwithstanding the foregoing, Landlord will make its election regarding
removal of improvements at the time Landlord approves such improvements if such
election by Landlord is expressly requested in writing by Tenant at that time
and only in respect to certain specific improvements as determined by Landlord
in its sole discretion. Notwithstanding the foregoing and provided that the
following items can be disconnected from any Building system without the need
for rewiring or reworking (as opposed to capping off a supplemental system in
connection with its removal) any Building system, or would require Landlord to
replace such Item to return the Building to a good and working condition, then
Tenant shall have the right to remove the supplemental generator, supplemental
HVAC unit, and the UPS system, if any, installed by Tenant as authorized under
this Lease. Nothing in this Section shall be construed to give Landlord title to
or to prevent Tenant's removal of trade fixtures, movable office furniture and
equipment (including, without limitation, Tenant's backup generators, UPS system
and portable HVAC units), but upon removal of any such furniture, equipment and
trade fixtures from the Leased Premises, Tenant shall return the Leased Premises
in a good and working condition which, at a minimum requires: (i) a HVAC system,
in a good and working condition, suitable to serve the entire Building for
general office purposes; (ii) capacity for electric current to the Building,
with a step down capability to provide 8 watts per square foot in the Leased
Premises for normal office lighting and business machines which operate on
standard 110 voltage; and (iii) all other Building systems be in a good and
working condition to allow Landlord to utilize the Building
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for standard office uses. Tenant will repair any damage to the Leased
Premises or the Building due to such removal. All property that was
permitted or required to be removed by Tenant at the end of the Term but
which remains in the Leased Premises shall be deemed abandoned and, at the
election of Landlord, Landlord may either retain the property as Landlord's
property or remove the property from the Leased Premises at Tenant's
expense. Notwithstanding any other provision of this Lease or the Rider to
the contrary, Tenant shall have no right to remove any installation,
alteration, addition or improvement if the removal of such item would: (i)
necessitate rewiring or reworking any Building system (as opposed to
capping off a supplemental system in connection with its removal); or (ii)
require Landlord to replace such item to return the Building to a good and
working condition as described above.
Section 7.3. Mechanics' Liens.
----------------
(a) Tenant shall pay, before delinquency, all costs for work done or
caused to be done by Tenant in the Leased Premises which could result in
any lien or encumbrance on all or any part of Landlord's interest in the
Building; shall keep the title to the Building free and clear of any lien
or encumbrance in respect to such work; and shall indemnify and hold
harmless Landlord against any claim, loss, cause of action, cost, demand,
damages, judgment and legal or other expense (including without limitation
attorneys' fees), whether in respect of any lien or otherwise, arising out
of the supply of material, services or labor for such work. Tenant shall
immediately notify Landlord of any such lien, claim of lien or other action
of which it has or reasonably should have knowledge and which affects the
title to the Building, and shall cause the same to be removed or bonded
over as authorized by law within five (5) days (or such additional time as
Landlord may consent to in writing). If Tenant fails to do so, Landlord may
take such action as Landlord deems necessary to remove the same, and the
entire cost of that action shall be immediately due and payable by Tenant
to Landlord as Additional Rent.
(b) Notwithstanding the foregoing, if Tenant shall desire to contest
any lien or claim of lien, it shall have the right to do so on the
condition that Tenant shall furnish Landlord, within the time stated above
for removal of such lien or claim of lien, security in an amount not less
than that required by statute in a form reasonably acceptable to Landlord,
plus estimated costs, and if final judgment establishing the validity or
existence of a lien for any amount is established, Tenant shall immediately
pay and satisfy the same.
(c) At least 10 days prior to the commencement of any work by Tenant
on the Leased Premises, Tenant shall provide Landlord with written notice
of the proposed work and the names and addresses of the persons supplying
labor and materials for the proposed work so that Landlord may avail itself
of the provisions of statutes such as Colo. Rev. Stat. 38-22-105(2). During
any such work, Landlord or its representatives shall have the right to
enter and inspect the Leased Premises at reasonable times after notice as
required by Section 12.1, and shall have the right to post and keep posted
thereon notices such as those provided for by Colo. Rev. Stat. 38-22-105(2)
and to take any further action which Landlord may deem to be proper for the
protection of Landlord's interest in the Leased Premises.
ARTICLE 8. UTILITIES AND BUILDING SERVICES
Section 8.1. Utilities and Services Provided.
-------------------------------
(a) Subject to limitations and restrictions imposed by federal, state
and/or local authorities and so long as Tenant is not in default under the
terms of this Lease, Landlord shall furnish or cause to be furnished
domestic cold and temperate water for the operation of lavatories and
ordinary drinking fountains in the Building.
(b) Tenant shall purchase, install, maintain, repair and replace, as
necessary, all light bulbs and fluorescent and other lighting tubes and ballasts
used in the Leased Premises. Landlord shall purchase, install, maintain, repair
and replace, as necessary, all light bulbs and fluorescent and other lighting
tubes and ballasts used in the common areas of the Building, and the cost of
such items and service shall be included in Operating Costs. Landlord may, at
intervals not shorter than 75% of the rated life of the fluorescent tubes being
used, cause all such tubes to be replaced at the same time, so as to maintain
full operating efficiency and so as to avoid the undue expense of piecemeal
replacement. No fluorescent tubes, other than standard warm and white types, may
be used.
(c) If heat generating machines or equipment (other than standard office
equipment, such as typewriters, calculators, and small reproduction machines)
are used in the Leased Premises which affect the temperature otherwise
maintained by the air-conditioning system, Tenant (provided it complies with the
requirements of Section 7.2 hereof) shall have the right to install
supplementary air-conditioning units for the Leased Premises at the expense of
Tenant, and Tenant will bear the cost of operating such equipment. Any
air-conditioning units required for Tenant's computer systems shall be installed
at the expense of Tenant, and the costs of operation and maintenance shall be
paid by Tenant.
(d) If Tenant uses or consumes water for any purposes other than ordinary
drinking and lavatory purposes, or in unusual quantities (of which fact Landlord
shall reasonably judge), Landlord may install a water meter at Tenant's expense
which Tenant shall thereafter maintain at Tenant's expense in good working order
and repair to register such water consumption. Tenant shall pay for water
consumed as shown on such meter as Additional Rent as and when bills are
rendered, and on Tenant's default in making such payment, Landlord may pay such
charges and collect the same as additional rent from Tenant. Such a meter shall
also be installed and maintained at Tenant's expense if required by law or
governmental order. Tenant shall not waste or permit the waste of water.
(e) Landlord and Tenant hereby acknowledge and agree that Tenant has
already contracted for and replaced the current electric transformer serving the
Building with a 480 volt transformer to serve the Leased Premises. Tenant hereby
acknowledges and agrees: (i) Landlord has no obligation or responsibility to
provide any capacity for electric current to the Leased Premises; (ii) Landlord
has no obligation or responsibility to provide any electricity service to the
Leased Premises; and (iii) Tenant will provide electric capacity to the Leased
Premises at the expiration or early termination of this Lease, as provided in
Section 7.2(b), with a step down capability of 6 watts per square foot in the
Leased Premises for normal office lighting and business machines which operate
on standard 110 voltage. Subject to Landlord's review and approval as required
under this Lease and compliance with all laws, rules, regulations and codes
applicable to the Building, Tenant shall have the right to provide additional
capability for electric current to the Leased Premises. Landlord shall cooperate
with Tenant in connection with any such request by Tenant for additional power.
Section 8.2. Interruption of Services. Landlord does not warrant that any
------------------------
service will be free from interruptions caused by repairs, improvements, changes
of service, alterations, strikes, lockouts, labor controversies, accidents,
inability to obtain fuel, water or supplies or other cause beyond the reasonable
control of Landlord. No such interruption of service shall be deemed an eviction
or disturbance of Tenant's use and possession of all or any part of the Leased
Premises, or render Landlord liable to Tenant for damages, by abatement of rent
or otherwise except as specifically provided below, or relieve Tenant from
performance of Tenant's obligations under this Lease. Tenant hereby waives and
releases all claims against Landlord for damages for interruption or stoppage of
service.
Notwithstanding the provisions of this subsection above, if utility service
to the Leased Premises is interrupted so that Tenant is prevented from using the
Leased Premises for Tenant's normal business operations for five consecutive
business days, and the cause is within Landlord's control, then Fixed Rent shall
abate beginning with the sixth business day and continuing until service is
restored, and if any such interruption causes the Leased Premises or any
material portion thereof to be unusable for Tenant's normal business operations
for more than ninety (90) consecutive days, Tenant shall have the right to
terminate this Lease by notice to Landlord given after
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the 90th day and prior to the time, if at all, such services are restored, in
which event both parties shall be relieved of all further obligations hereunder.
However, Tenant will not be entitled to any abatement of Fixed Rent if the
interruption in utility service arises from (i) any renovation or alteration to
the Leased Premises conducted by Tenant or at Tenant's request, (ii) any
wrongful act or negligence on the part of Tenant or its contractors, agents,
employers or representatives, or (iii) the failure by Tenant to timely pay any
charges for such service and all other Rent due under this Lease. (For purposes
of this Lease, the Term "business day" means any day other than a Saturday,
Sunday or Legal Holiday.)
Section 8.3. Energy Conservation and Security Policies. Landlord shall be
-----------------------------------------
deemed to have observed and performed the terms and conditions to be performed
by Landlord under this Lease, including those relating to the provision of
utilities and services, if in so doing it acts in accordance with a directive,
or requirement of a governmental or quasi-governmental authority serving the
public interest in the fields of energy conservation or security.
ARTICLE 9. TENANT'S PROPERTY TAX AND OTHER TAXES
In addition to the Fixed Rent and other Additional Rent to be paid by
Tenant under this Lease, Tenant shall reimburse Landlord, upon demand, for any
and all taxes payable by Landlord (other than net income taxes) whether or not
now customary or within the contemplation of Landlord and Tenant: (a) upon
or with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of all or any part of the Leased
Premises; or (b) upon the measured value of Tenant's personal property located
in the Leased Premises, It being the intention of Landlord and Tenant that, to
the extent possible, such personal property taxes shall be billed to and paid
directly by Tenant; or (c) upon this transaction. Any reimbursement referred to
above shall be collectible by Landlord as Additional Rent under this Lease.
ARTICLE 10. INSURANCE AND INDEMNITY
Section 10.1. Landlord's Insurance. Landlord shall keep in force and effect
--------------------
(a) a policy of general liability, including bodily injury and property damages
insurance with limits in the amount of not less than $1,000,000 for any
occurrence and $2,000,000 policy aggregate; and (b) standard fire and extended
coverage property insurance covering the full replacement cost of the Building
(excluding Tenant Work but including the roof).
Section 10.2. Tenant's Insurance. At all times Tenant shall keep in full
------------------
force and effect a policy of general liability, including bodily injury and
property damage insurance with respect to the Leased Premises, in such limits as
reasonably required from time to time by Landlord. The limits of general
liability insurance on the Commencement Date shall be not less than $1,000,000
for any occurrence and $2,000,000 policy aggregate. These policies shall name
Landlord and any person, firm or corporation designated by Landlord as
additional insureds, and shall contain a clause that the insurer will not cancel
or change the insurance without, first giving Landlord 30 days' prior written
notice. The insurance shall be written by an insurance company, licensed and
qualified to do business in Colorado, which is reasonably acceptable to
Landlord. A copy of the policy or a certificate of insurance shall be delivered
to Landlord on or before the Commencement Date and each anniversary of the
Commencement Date throughout the Term.
Section 10.3. Indemnity and Non-Liability.
---------------------------
(a) Neither Landlord nor Landlord's agents, employees, contractors,
officers, directors, shareholders, partners, or principals (disclosed or
undisclosed) shall be liable to Tenant or Tenant's agents, employees,
contractors, invitees, or licensees or any other occupant of the Leased
Premises, and Tenant shall save Landlord, its successors and assigns and their
respective agents, employees, contractors, officers, directors, shareholders,
partners, and principals (disclosed or undisclosed) harmless for any loss, cost,
liability, cause of action, claim, damage, expense (including reasonable
attorneys' fees and disbursements), penalty, fine or judgment incurred in
connection with or arising from any injury to Tenant or to any other person or
for any damage to or loss (by theft or otherwise) of any of Tenant's property or
of the property of any other person, irrespective of the cause of such injury,
damage, or lose (including the acts or negligence of any tenant or of any owners
or occupants of adjacent or neighboring property or caused by operations in
construction of any private, public, or quasi-public work) unless due to the
negligence or intentional acts of Landlord or Landlord's agents or employees.
However, even if such loss or damage is caused by the negligence of Landlord,
its agents or employees, Tenant waives, to the full extent permitted by law, any
claim for consequential damages in connection therewith. Landlord and its agents
and employees shall not be liable, to the extent of Tenant's insurance coverage,
for any loss or damage to any person or property even if due to the negligence
or intentionally tortious conduct of Landlord, its agents or employees.
(b) Neither any(i) performance by Landlord, Tenant, or others of any
repairs, improvements, alterations, additions, installations, substitutions,
betterments, or decorations in or to the Building, Building equipment, or the
Leased Premises, (ii) failure of Landlord or others to make any such repairs or
improvements, (iii) damage to the Building, Building equipment, the Leased
Premises, or Tenant's property, (iv) injury to any persons caused by other
tenants in the Building, by operations in the construction of any private,
public, or quasi-public work, or by any other cause, (v) latent defect in the
Building, Building equipment, or the Leased Premises, nor (vi) inconvenience or
annoyance to Tenant or injury to or interruption of Tenant's business by reason
of any of the events or occurrences referred to in the foregoing subdivisions
(i) through (v) shall impose any liability on Landlord by Tenant, except such
liability as may be imposed upon Landlord: (1) by law for Landlord's negligence
or the negligence of Landlord or its agents or employees in the operation or
maintenance of the Building or the Building equipment; or (2) for the breach by
Landlord of any express covenant of this Lease on Landlord's part to be
performed. No representation, guaranty, or warranty is made or assurance given
that the security systems, devices, or procedures of the Building will be
effective to prevent injury to Tenant or any other person or damage to, or loss
(by theft or otherwise) of, any of Tenant's property or of the property of any
other person, and Landlord reserves the right to discontinue or modify at any
time such security systems or procedures, if any, without liability to Tenant.
Landlord will provide Tenant with reasonable advance notice prior to
discontinuing or modifying such security systems. Tenant acknowledges that, as
of the date of this Lease, there is no security system in the Leased Premises.
Landlord will not add a security system without Tenant's consent.
(c) Subject to Paragraph 10.4 below, Tenant agrees to indemnify, defend,
and hold Landlord, its employees, agents, and contractors harmless from all
liability, costs, or expenses, including attorneys' fees, on account of damage
to the person or property of any third party, including any other tenant in the
Building, to the extent caused by the acts or omissions of Tenant, its
employees, agents or contractors. Subject to Paragraph 10.4 below, Landlord
agrees to indemnify, defend, and hold Tenant, its employees, agents, and
contractors harmless from all liability, costs, or expenses, including
attorneys' fees, on account of damage to the person or property of any third
party, including any other tenant in the Building, to the extent caused by the
acts or omissions of Landlord, its employees, agents or contractors.
(d) Tenant shall pay to Landlord as Additional Rent, within five days
following rendition by Landlord to Tenant of bills or statements therefor, sums
equal to all losses, costs, liabilities, causes of action, claims, damages,
expenses, fines, penalties, and judgments referred to in this Section 10.3.
Tenant hereby agrees to indemnify, defend and hold Landlord, its employees,
agents and contractors harmless from all liability, costs and expenses,
including attorneys' fees arising out of Tenant's default in the performance of
any of the terms of this Lease.
(e) Tenant's obligations under this Section 10.3 shall survive the
expiration or earlier termination of this Lease.
Section 10.4. Waiver of Subrogation. Notwithstanding any other provision of
---------------------
this Lease to the contrary, Landlord and Tenant each hereby waive any right of
recovery against the other party, its employees, agents, and contractors for any
loss or damage that
9
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is caused by any peril covered by standard fire and extended coverage insurance
or any other insurance actually carried (or required to be carried under this
Lease) by the party suffering the loss or damage and in force at the time of
such loss or damage. Landlord and Tenant shall cause their respective insurers
to issue appropriate waivers of subrogation rights and endorsements to all
policies of insurance carried in connection with the Building or the Leased
Premises or the contents thereof. Tenant agrees to cause all other occupants of
the Leased Premises claiming by, under, or through Tenant to execute and deliver
to Landlord a waiver of claims as stated above and to obtain waivers of
subrogation rights and endorsements as stated above.
ARTICLE 11. DAMAGE BY CASUALTY
Section 11.1. Notice. Tenant shall give immediate written notice to
------
Landlord of any damage to the Leased Premises by fire or other casualty.
Section 11.2. Restoration of Improvements.
---------------------------
(a) in the event the Leased Premises are damaged by fire or other casualty,
unless this Lease is terminated as provided below, Landlord shall proceed with
reasonable diligence, at its sole cost and expense, to repair the Leased
Premises. If such repairs cannot, in Landlord's sole determination, be made
within 120 days after the occurrence of such damage (without the payment of
overtime or other premiums), Landlord shall notify Tenant within 30 days after
such casualty of the approximate length of time Landlord estimates will be
required to complete such repairs, and either party may terminate this Lease by
written notice to the other within 15 days after Landlord notifies Tenant of the
estimated time for completion of such repairs. Until any such repairs to the
Leased Premises are completed, the Fixed Rent shall be abated in proportion to
the part of the Leased Premises, if any, that is unusable by Tenant in the
conduct of its business (but there shall be no abatement of Fixed Rent by reason
of any portion of the Leased Premises being unusable for a period of five
business days or less). If the fire or other casualty is due to the negligence
or misconduct of Tenant, its agents, employees, contractors, or invitees, there
shall be no abatement of Fixed Rent, and Tenant shall be liable to Landlord for
the amount by which the cost of such repairs exceeds the insurance proceeds
received by Landlord or the amount of insurance proceeds that would have been
received by Landlord had Landlord maintained the insurance required under this
Lease, whichever is greater. If any deadline for the giving of any notice
required from Landlord under this Section or for the completion of repairs is
delayed because of (a) insurance settlement procedures, (b) failure of any
mortgagees to agree to or approve the repair, changes, deletions or additions in
construction requested by Tenant, or (c) strikes, lockouts, casualties, acts of
God, war, material or labor shortages, government regulations or control or
other causes beyond the control of Landlord, then the period for the giving of
such notice or the completion of such repair shall be extended for the amount of
time Landlord is so delayed.
(b) If the Building or the Leased Premises shall be totally destroyed or
substantially damaged by a casualty or if insurance proceeds from any insured
casualty shall not be made available to Landlord by the holder of any mortgages
affecting the Building, then, in either event, Landlord may elect either to
rebuild and repair the Building and the Leased Premises or to terminate this
Lease, effective upon giving notice of such election, in writing, to Tenant
within 30 days after the occurrence of such casualty. Without limiting the
generality of the foregoing, the Building shall be deemed to have been
substantially damaged if more than one-third of the rentable square feet of the
Building (as stated In Article 1) has been damaged or destroyed or if the
Building shall be so damaged that Landlord shall decide to demolish it. Damage
to the Building or the Leased Premises caused by a casualty not covered by
Landlord's insurance shall be deemed substantial if the cost of repairing such
damage will, in Landlord's sole determination, exceed $50,000. Landlord's
obligation to rebuild and repair under this Section shall in any event be
limited to restoring the Building and the Leased Premises to substantially the
condition in which they existed prior to the casualty. In no event shall
Landlord be required to repair any of Tenant's leasehold improvements, fixtures,
equipment, furniture, furnishings, and personal property, and Tenant agrees
that, promptly after the completion of such work by Landlord, it will proceed
with reasonable diligence and at its sole cost and expense to rebuild, repair,
and restore its fixtures, equipment and other installations.
Section 11.3. Damage During Last Year of Lease Term. Without limiting
-------------------------------------
Landlord's rights under Section 11.2, in the event the Leased Premises shall be
substantially damaged, in Landlord's reasonable judgment, during the last year
of the Term, Landlord may elect either to rebuild or repair the Leased Premises
or to terminate this Lease effective upon giving notice of such election, in
writing, to Tenant within 30 days after the happening of the fire or other
casualty.
ARTICLE 12. RIGHTS RESERVED TO LANDLORD
Section 12.1. Access to Leased Premises. Landlord and Landlord's agents
-------------------------
shall have the right (but shall not be obligated) to enter the Leased Premises
in any emergency at any time, and to perform any acts related to the safety,
protection or preservation of the Leased Premises. Landlord shall give such
notice of such entry as is reasonable under the circumstances to prevent damage
to or interfere with any of Tenant's equipment in the Leased Premises. At other
reasonable times, and upon reasonable notice, Landlord and its agents may enter
the Leased Premises to examine them and make such repairs, replacements and
improvements as Landlord may deem necessary and reasonably desirable to the
Leased Premises or to any other portion of the Building or for the purpose of
complying with laws, regulations and other requirements of governmental
authorities. Landlord may, during the progress of any work in the Leased
Premises, take all necessary materials and equipment into the Leased Premises
and close or temporarily suspend operation of entrances, doors, corridors,
elevators or other facilities without such interference constituting an
eviction. Tenant shall not be entitled to any abatement of Rent or any damages
by reason of loss or interruption of business or otherwise during such periods.
During such periods, Landlord shall use reasonable efforts to minimize any
interference with Tenant's use of the Leased Premises for its normal business
operations. Tenant shall at all times have access to the Leased Premises.
Throughout the Term, Landlord shall have the right to enter the Leased Premises
at reasonable hours, and upon reasonable notice, for the purposes of showing the
same to prospective purchasers and mortgagees, and during the last six months of
the Term, to prospective tenants. Also during the last six months of the Term,
Landlord may place "For Rent" notices upon the Common Areas and exterior
portions of the Building. If Tenant is not present to open and permit an entry
into the Leased Premises, Landlord or Landlord's agents may enter the same
whenever such entry may be necessary or permissible by master key or forcibly,
provided reasonable care is exercised to safeguard Tenant's property. Such entry
shall not render Landlord or its agents liable, nor shall the obligations of
Tenant under this Lease be affected by such entry unless Landlord fails to use
reasonable care in such entry.
Section 12.2. Relocation of Leased Premises. [Intentionally Omitted]
-----------------------------
Section 12.3. Additional Rights. Landlord shall have the following
-----------------
additional rights exercisable without notice (except as provided below) and
without liability to Tenant for damage or injury to property, personal business,
all claims for damage being hereby released, and without effecting an eviction
or disturbance of Tenant's use or possession of the Leased Premises or giving
rise to any claim for setoffs or abatement of Rent. Landlord shall use
reasonable efforts to minimize any interference with Tenant's use of the Leased
Premises for its normal business operations and Tenant shall at all times have
access to the Leased Premises:
(a) Upon 30 days' notice, to change the name, number or designation by
which the Building may be known;
(b) To make such changes in or to the Building, including the Building
equipment and systems, as Landlord may deem necessary or desirable,
provided that any such change does not deprive Tenant of a reasonable means
of access to the Leased Premises or interfere with the use of the Leased
Premises, or interfere with any supplemental system installed by Tenant
hereunder;
(c) To have access to all mail chutes, if any, according to the rules of
the United States Postal Service or any successor
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(d) To exclude or expel any peddler, solicitor or beggar at any time from
the Leased Premises or the Building;
(e) To approve the weight, size and location of safes, and other heavy
articles in and about the Leased Premises and the Building or Tenant
agreeing that Tenant shall not install such items until Tenant has obtained
that approval in writing which approval shall not be unreasonably withheld;
ARTICLE 13. EMINENT DOMAIN
Section 13.1. Taking of Leased Premises. If all of the Leased Premises
-------------------------
shall be taken for any public or quasi-public use under any statute or by right
of eminent domain, or purchased under threat of such taking, this Lease shall
automatically terminate on the date on which the condemning authority takes
possession of the Leased Premises (the "Date of Taking"). If so much of the
Leased Premises (but less than all) is taken as shall render the Leased Premises
untenantable, Tenant shall have the right to terminate within thirty (30) days
after the Date of Taking.
Section 13.2. Partial Taking of Building. If only part of the Building is
--------------------------
taken or purchased as set out in Section 13.1, then:
(a) If in the reasonable opinion of Landlord, substantial alteration or
reconstruction (or demolition) of the Building is necessary as a result of
the taking or purchase, whether or not the Leased Premises are or may be
affected, Landlord shall have the right to terminate this Lease by giving
Tenant at least thirty (30) days' written notice of such termination, and
(b) If more than one-third of the rentable square feet of the Building is
included in such taking or purchase, Landlord and Tenant shall each have
the right to terminate this Lease by giving the other at least 30 days'
written notice thereof.
If either party exercises its right of termination under Section 13.1 or
13.2 (and any such right must be exercised within 30 days after the Date of
Taking, failing which such right shall be deemed waived), this Lease shall
terminate on the date stated in the notice, provided, however, that no such
termination may occur later than 60 days after the Date of Taking.
Section 13.3. Surrender. On the date of any termination under Section 13.1
---------
or 13.2, Tenant shall immediately surrender to Landlord the Leased Premises and
all interests under this Lease, and Tenant shall pay Landlord Rent through the
date of termination (or through the Date of Taking, if such date shall not be
the same as the date of termination).
Section 13.4. Rent Adjustment for Partial Taking of Leased Premises. If any
-----------------------------------------------------
portion of the Leased Premises (but less than the whole thereof) is so taken,
and no rights of termination conferred under this Article are timely exercised,
the Term shall expire with respect to the portion so taken on the Date of
Taking. In such event, the Rent thereafter payable under this Lease shall be
adjusted pro rata by Landlord in order to account for the resulting reduction In
the number of rentable square feet In the Leased Premises.
Section 13.5. Awards. Upon any such taking or purchase, Landlord shall be
------
entitled to receive and retain the entire award or consideration for the
affected lands and improvements, and Tenant shall not have or advance any claim
against Landlord for the value of its property or its leasehold estate of the
unexpired Term, or for the costs of removal or relocation, or business
interruption expense or any other damages arising out of such taking or
purchase. Nothing in this Article shall give Landlord any interest in or
preclude Tenant from seeking and recovering on its own account, a separate award
from the condemning authority attributable to the taking or purchase of Tenant's
trade fixtures and any tenant improvements paid for by Tenant, or the removal or
relocation of its business and effects, or the interruption of its business,
provided that Landlord's award is not diminished by the separate award. If any
such award made or compensation paid to either party specifically includes an
award amount for the other, the party first receiving the same shall promptly
account therefor to the other.
ARTICLE 14. ASSIGNMENT AND SUBLETTING
Section 14.1. Consent Required. Tenant shall not assign, mortgage, pledge,
----------------
encumber or in any manner transfer this Lease or any part of the Leased
Premises, or allow any third party to occupy the Leased Premises, without the
prior written consent of Landlord in each instance, which Landlord shall not
unreasonably withhold. Any attempt to do any of such acts without such consent
shall be null and void and of no effect. A transfer of control of Tenant,
including but not limited to a transfer of stock if Tenant is a corporation
(unless pursuant to a legitimate capital restructuring, i.e. an IPO) shall be
deemed an assignment under this Lease and shall be subject to all the provisions
of this Article, including the requirement of obtaining Landlord's prior written
consent. The consent by Landlord to any assignment, mortgage, pledge,
encumbrance, transfer, subletting or occupancy by a third party shall not
constitute a waiver of the necessity for such consent to any subsequent
assignment, mortgage, pledge, encumbrance, transfer, subletting or occupancy by
a third party. This prohibition against assigning, mortgaging, pledging,
encumbering, transferring, subletting occupancy by a third party shall be
construed to include a prohibition against any assignment, mortgage; pledge,
encumbrance, transfer, subletting or occupancy by a third party by operation of
law.
If this Lease is assigned, or if all or any part of the Leased Premises or
any part is sublet or occupied by anybody other than Tenant, Landlord may
collect Rent from the assignee, subtenant or occupant, and apply the net amount
collected to the Fixed Rent and Additional Rent reserved under this Lease, but
no such assignment, subletting, occupancy or collection shall be deemed a waiver
of this covenant, or the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of its
covenants in this Lease.
Notwithstanding any assignment, mortgage, pledge, encumbrance, transfer,
sublease or occupancy by a third party, Tenant shall remain fully liable on this
Lease and shall not be released from performing any of the terms, covenants and
conditions of this Lease.
Further, any consent to a sublease or other occupancy agreement shall be
conditioned upon Landlord recovering fifty percent (50%) of the difference, if
any, between the Fixed Rent paid by the sublessee or occupant (less brokerage
commissions and tenant improvement allowance) over the Fixed Rent due the
Landlord under this Lease, and any consent to an assignment shall be conditioned
upon receipt of fifty percent (50%) of any premium fee or other charge paid by
the proposed assignee to the Tenant.
Tenant acknowledges and agrees that, without otherwise limiting the grounds
under this Lease or applicable law on which Landlord may reasonably withhold its
consent to any request by Tenant to assign this Lease or sublet the Leased
Premises or otherwise transfer any interest in this Lease or right to occupy the
Leased Premises, it shall be reasonable for Landlord to withhold its consent to
any such request to an assignment, sublease or other transfer if,
(1) the use of the Leased Premises contemplated by the proposed
transferee would significantly increase the pedestrian and/or vehicular
traffic in and around the Building or would generally not conform with the
other tenant uses in the Building, or
(2) The financial strength and business reputation of the proposed
transferee is unacceptable to Landlord in its reasonable discretion.
11
<PAGE>
Without limiting the generality of the foregoing, Tenant acknowledges that the
Leased Premises may not be used for welfare agencies: medical offices;
counseling clinics; employment agencies; parole offices; call services;
telephone bank offices; governmental offices; travel agencies; merchandise
sales; storage of merchandise; safe deposit businesses: recording, dance or
music studios; labor unions; beauty salons or barber shops; schools; public
stenographers' or typists' offices; businesses of photographic or multilith or
multigraph reproductions or offset printing (not precluding, however, the use of
part of a leased space for the tenant's own printing In connection with its own
business operations); executive suites; preparation of food for sale on or off
of the premises; sale of food; and businesses dealing generally with the public
so as to generate a large amount of foot traffic within or around the Building.
Notwithstanding anything to the contrary contained hereinabove In this
Section 14, Tenant shall have the right, without obtaining Landlord's prior
written consent, to assign or sublease all or any portion of the Premises to the
following parties on the following conditions: (A) Any subsidiary or affiliate
of Tenant, provided Tenant owns a substantial interest In such affiliate or
subsidiary; (B) Any parent corporation of Tenant; (C) Any subsidiary or
affiliate of Tenant's parent corporation if such parent owns a substantial
interest In such subsidiary or affiliate; or (D) Any corporation into which
Tenant may be merged or consolidated or which purchases all or substantially all
of the assets or stock of Tenant; provided that the resulting corporation has a
net worth at least equal to Tenant's net worth as of the date hereof. Tenant's
rights hereunder are further conditioned on: (i) Tenant continues to remain
primarily liable on its obligations set forth herein; (ii) Any such subtenant
and/or assignee shall assume and be bound by all obligations of Tenant for
payment of all amounts of rental and other sums and the performance of all
covenants required by Tenant pursuant to this Lease; (iii) Any such subtenant
and/or assignee intends to operate the Premises in accordance with the usage
restrictions of thIs Lease; and (iv) Not less than thirty (30) days prior to the
effective date of such transaction, Tenant shall provide Landlord with copies of
the documents evidencing such transaction and such evidence as Landlord may
reasonably require to establish that such transaction falls within the terms and
provisions of this subparagraph. A transfer of stock of Tenant shall not be
deemed an assignment under this Lease unless such transfer (i) is made without
receipt of adequate consideration therefor (including, without limitation, the
value of services); and (ii) results in a change of control of management of
Tenant. If Tenant becomes a publicly traded company, then in no event shall any
transfer of stock via the publicly recognized over the counter exchange be
deemed an assignment under this provision.
ARTICLE 15. BANKRUPTCY
Section 15.1. Prior to Commencement Date. If at anytime prior to the
--------------------------
Commencement Date there shall be filed against Tenant by any third party in any
court pursuant to any statute either of the United States or of any state a
petition In bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee or conservator of all or a portion of
Tenant's property which is not dismissed within sixty (60) days, this Lease
shall ipso facto be canceled and terminated, and in such event, neither Tenant
---- -----
nor any person claiming through or under Tenant or by virtue of any statute or
of an order of any court, shall be entitled to possession of the Leased
Premises, and Landlord in addition to exercising the other rights and remedies
provided in this Lease or in any statute or rule of law, may retain as damages
any Rent, Security Deposit or moneys received by it from Tenant or others on
behalf of Tenant. If at any time prior to the Commencement Date there shall be
filed by Tenant in any court pursuant to any statute either of the United States
or of any state a petition in bankruptcy or insolvency or for reorganization or
for the appointment of a receiver or trustee or conservator of all or a portion
of Tenant's property or if Tenant makes an assignment for the benefit of
creditors, this Lease shall ipso facto be canceled and terminated, and in such
---- -----
event, neither Tenant nor any person claiming through or under Tenant or by
virtue of any statute or of an order of any court, shall be entitled to
possession of the Leased Premises, and Landlord, in addition to exercising the
other rights and remedies provided in this Lease or in any statute or rule of
law, may retain as damages any Rent, Security Deposit or moneys received by it
from Tenant or others on behalf of Tenant.
Section 15.2. During the Term of this Lease. If on the Commencement Date or
-----------------------------
at anytime during the Term there shall be filed against Tenant in any court
pursuant to any statute either of the United States or of any state a petition
in bankruptcy or insolvency of for reorganization or for the appointment of a
receiver or trustee or conservator of all or a portion of Tenant's property
which is not dismissed within sixty (60) days, this Lease, at the option of
Landlord may be canceled and terminated, and in such event, neither Tenant nor
any person claiming through or under Tenant or by virtue of any statute or of an
order of any court shall be entitled to possession or to remain in possession of
the Leased Premises but shall immediately surrender the Leased Premises to
Landlord, and Landlord, in addition to exercising the other rights and remedies
provided in this Lease or in any statute or rule of law, may retain as damages
any Rent, Security Deposit, or moneys received by it from Tenant or others on
behalf of Tenant. If on the Commencement Date or at any time during the Term
there shall be filed by Tenant in any court pursuant to any statute either of
the United States or of any state a petition in bankruptcy or insolvency of for
reorganization or for the appointment of a receiver or trustee or conservator of
all or a portion of Tenant's property, or if Tenant makes an assignment for the
benefit of creditors, this Lease, at the option of Landlord may be canceled and
terminated, and in such event, neither Tenant nor any person claiming through or
under Tenant or by virtue of any statute or of an order of any court shall be
entitled to possession or to remain in possession of the Leased premises but
shall immediately surrender the Leased Premises to Landlord, and Landlord, in
addition to exercising the other rights and remedies provided in this Lease or
in any statute or rule of law, may retain as damages any Rent, Security Deposit,
or moneys received by it from Tenant or others on behalf of Tenant.
Section 15.3. Measure of Damages. In the event of the termination of this
------------------
Lease pursuant to Section 15.1 or 15.2 above, Landlord shall be entitled to the
same rights and remedies as set forth in Article 16.
Section 15.4. Adequate Assurance of Future Performance. in the event of the
occurrence of any of the events specified in this Article, if Landlord shall not
choose to exercise, or by law shall not be able to exercise, its rights under
this Lease to terminate this Lease upon the occurrence of such events, then, in
addition to any other rights of Landlord allowed under this Lease or by law,
Landlord shall not be obligated to provide Tenant with any of the services
specified in Article 8, unless Landlord has received compensation in advance for
such services, and the parties agree that Landlord's reasonable estimate of the
compensation required with respect to such services shall control. Further,
neither Tenant, as debtor-in-possession, nor any trustee or other person
(referred to in this Lease as the Assuming Tenant ) shall be entitled to assume
this Lease unless, on or before the date of such assumption, the Assuming Tenant
(x) cures, or provides adequate assurance that the latter will promptly cure,
any existing default under this Lease, (y) compensates, or provides adequate
assurance that the Assuming Tenant will promptly compensate, Landlord for any
pecuniary loss, including, without limitation, attorneys' fees and
disbursements, resulting from such default, and (z) provides adequate assurance
of future performance under this Lease. The parties agree that, for such
purposes, any cure or compensation shall be effected by the immediate payment of
any monetary default or any required compensation, or the immediate correction
or bonding of any nonmonetary default; any "adequate assurance" of such cure or
compensation shall be effected by the establishment of an escrow fund for the
amount at issue or by bonding; and "adequate assurance" of future performance
shall be effected by the deposit of cash security in an amount equal to the sum
of six (6) months' Fixed Rent for the calendar year immediately preceding such
assignment plus an amount equal to any increase in Rent under Article 4 for the
calendar year preceding the year in which such assumption is intended to become
effective, which deposit shall be held by Landlord for the balance of the Term,
without interest, as security for the full performance of all of Tenant's
obligations under this Lease.
Landlord and Tenant agree that the foregoing provision was a material part
of the consideration for this Lease.
ARTICLE 16. TENANT'S DEFAULT
Section 16.1. Events of Default. The occurrence of any of the following
-----------------
events shall constitute a default by Tenant under this Lease:
<PAGE>
(a) Tenant shall have failed to pay any installment of Rent within five
days after written notice that such payment is overdue; provided, however,
Tenant is not entitled to more than two (2) notices of delinquent payments
during any calendar year and, if thereafter during such calendar year any Fixed
Rent, Additional Rent or other monetary sum owing is not paid when due, an Event
of Default shall automatically occur;
(b) Tenant shall have failed to comply with any other, non-monetary
obligation of Tenant under this Lease and Tenant shall have failed to cure such
non-monetary default within 15 days after Landlord, by written notice, has
informed Tenant of such noncompliance (except that In the case of a default
which cannot with due diligence be cured within a period of 15 days, Tenant
shall have such additional time to cure same as may reasonably be necessary,
provided Tenant begins to correct the breach within the 15-day period and
proceeds promptly, effectively, continuously and with due diligence to cure such
default after receipt of said notice);
(c) Tenant shall abandon the Leased Premises:
(d) Whenever Tenant, Its employees, agents, mortgagees, invitees or any
other individuals who are in or about the Building as a result of Tenant's
presence In the Building have caused on more than one occasion material damage
to the Building and such damage has not promptly and adequately been repaired at
no cost to Landlord.
Section 16.2. Termination or Re-Entry. In the event of any default by
-----------------------
Tenant, then, notwithstanding the fact that Landlord has or may have some other
remedy under or by virtue of this Lease or in law or in equity, Landlord shall
have the following remedies:
(a) Landlord may give Tenant a notice of termination of this Lease (the
"Termination Notice"), specifying a day not less than five days after Landlord
gives Tenant the Termination Notice, and, upon the giving of the Termination
Notice, this Lease and the Term and estate granted by it shall expire and
terminate upon the day specified in the Termination Notice as fully and
completely and with the same force and effect as if the day so specified were
the Expiration Date, and all rights of Tenant shall terminate, but Tenant shall
remain liable for damages as provided below.
(b) Landlord, without further notice and without terminating this Lease,
may enter upon, re-enter, possess and repossess itself of the Leased Premises,
by force, summary proceeding, ejectment or otherwise, and may dispossess and
remove Tenant and all other persons and property from the Leased Premises and
may have, hold and enjoy the Leased Premises and the right to receive all rental
and other income of and from the Leased Premises.
(c) Landlord shall have the right of injunction, and Tenant agrees to pay
the premium for any bond required in connection with such injunction.
(d) Landlord shall be permitted to exercise any other rights or remedies
set forth in this Lease or otherwise applicable to it by operation of law or
contract.
Section 16.3. Damages. Tenant covenants and agrees that in the event of the
-------
expiration or termination of this Lease or re-entry by Landlord under any of the
provisions of this Article 16 or pursuant to law by reason of Tenant's default
under this Lease, Tenant shall remain liable for all Rent (including any late
charges Imposed under Section 3.3) accrued and unpaid to the date of such
termination or re-entry. Landlord will use commercially reasonable efforts to
mitigate its damages. Tenant shall also pay to Landlord as damages with respect
to this Lease the following:
(a) All expenses incurred by Landlord for legal costs, for attorneys' fees
and disbursements incurred by Landlord in enforcing the performance by Tenant
and in exercising the rights and remedies of Landlord under this Lease, whether
or not Landlord resorts to formal litigation or other legal proceedings, and for
any court costs; for reletting (including without limitation advertising and
brokerage costs); for putting and maintaining the Leased Premises in good order
condition and repair; for preparing the Leased Premises for reletting; and for
all costs incurred in connection with the appointment of and performance by any
receiver. If the new lease term extends beyond the Term or the premises covered
thereby includes other premises not part of the Leased Premises, a fair
apportionment of the reletting expenses will be made, and any rental concessions
will be amortized over the term of the new lease, plus,
(b) Sums equal to the Rent which would have been payable by Tenant had this
Lease not been so terminated, or had Landlord not so re-rented the Lease
Premises, payable upon the days specified in this Lease following such
termination or such re-entry and until the Expiration Date of the Lease;
provided, however, that if the Lease Premises shall be leased or re-let during
said period, Landlord shall credit Tenant with the new rent, If any, received by
Landlord from such leasing or re-letting, after first deducting from the gross
rents as and when received by Landlord from such leasing or re-letting the
expenses Incurred or paid by Landlord in terminating this Lease or of
re-entering the Leased Premises and of securing possession thereof, as wall as
the expense of leasing and re-letting, including altering and preparing any
portion of the Leased Premises for new tenants, brokers' commissions and all
other expenses properly chargeable against the Leased Premises and the rents for
the Leases Premises. If the new lease term extends beyond the Term or the
premises covered thereby includes other premises not part of the Leased
Premises, a fair apportionment of the reletting expenses will be made, and any
rental concessions wIll be amortized over the term of the new lease, as more
fully described in subsection (a) above; but In no event shall Tenant be
entitled to receive any excess of such net rental payments over the Rent payable
by Tenant to Landlord under this Lease.
At the election of Landlord, in lieu of collecting any or further monthly
deficiencies as set forth in this subsection (b) above, Landlord shall be
entitled to recover from Tenant, as liquidated damages for such breach, in
addition to any damages becoming due under subsection (a) above, a sum which
represents the excess, If any, of the present value of the aggregate of the Rent
which would have been payable by Tenant for the period commencing with the date
of the breach and ending with this Expiration Date of the Lease, had this Lease
not so terminated or had Landlord not so re-entered the Leased Premises, minus
the present reasonable fair market rental value of the Leased Premises for the
same period, both discounted to the date of the default of an annual rate of not
more than one point in excess of the discount rate as announced from time to
time by the Federal Reserve Bank in Denver Colorado
Suit or suits for the recovery of any and all damages or any installments
of damage payments provided for under this Lease may be brought by Landlord from
time to time at its election, and nothing contained in this Lease shall be
deemed to require Landlord to postpone suit until the date when the Term would
have expired if it had not been terminated under the provisions of this Article
16, or under provisions of any law, or had Landlord not re-entered the Leased
Premises.
Nothing contained in this Lease shall be construed as limiting or
precluding the recovery by Landlord against Tenant of any damages to which
Landlord may lawfully be entitled In any cause other than those particularly
provided for above.
ARTICLE 17. SURRENDER
Section 17.1. Possession. Upon the expiration or earlier termination of
----------
this Lease, Tenant shall immediately surrender possession of the Leased Premises
In as good a state and condition as they were entered into, reasonable wear and
tear and casualty damage (other than that which Tenant is obligated to repair)
excepted. Upon such surrender, all rights, title and interest of Tenant in the
Leased Premises shall cease.
Section 17.2. Trade Fixtures, Personal Property and Improvements. Subject
--------------------------------------------------
to Tenant's right under Article 8, after the expiration or other termination of
this Lease, all of Tenant's trade fixtures, personal property, and improvements
remaining in the Leased Premises shall be deemed conclusively to have been
abandoned by Tenant and may be appropriated, sold, destroyed or otherwise
disposed of by Landlord without notice or obligation to compensate Tenant or to
account for same, and Tenant shall pay to Landlord on written demand
<PAGE>
all costs incurred by Landlord in connection with the property including, but
not limited to, the costs of repairing any damage to the Building or the Leased
Premises caused by removal of such property. Tenant's obligations under this
Section shall survive the expiration or earlier termination of this Lease.
Section 17.3. Merger. The voluntary or other surrender of this Lease by
------
Tenant or the cancellation of this Lease by mutual agreement of Tenant and
Landlord shall not work a merger, and, at Landlord's option, shall terminate all
or any subleases and subtenancies or operate as an assignment to Landlord of all
or any subleases or subtenancies. Landlord's option under this Section shall be
exercised by notice to Tenant and all known sublessees or subtenants in the
Leased Premises.
Section 17.4. Payments After Termination. No payments of money by Tenant to
--------------------------
Landlord after the expiration or other termination of the Term shall reinstate,
continue or extend the Term or make ineffective any notice given to Tenant prior
to the payment of such money. After the service of notice or the commencement of
a suit, or after final judgment granting Landlord possession of the Leased
Premises, Landlord may receive and collect any sums of Rent due under this
Lease, and the payment of those sums shall not make ineffective any notice or in
any manner affect any pending suit or any judgment obtained.
ARTICLE 18. HOLDING OVER
If Tenant retains possession of all or any part of the Leased Premises
after the expiration or termination of this Lease, at Landlord's option Tenant
shall be deemed to be unlawfully retaining possession or shall be deemed to be a
month-to-month tenant of the Leased Premises on all the terms and conditions of
this Lease, except that Tenant shall pay as Rent a sum equal to twice the
amount, including Fixed Rent and Additional Rent payable for the month preceding
such holding over, computed on a daily basis for each day that Tenant remains in
possession. In addition to such Rent, Tenant shall be liable for and shall pay
to Landlord all damages, consequential as well as direct, sustained by reason of
Tenant's holding over.
ARTICLE 19. NO WAIVER; REMEDIES CUMULATIVE
Section 19.1. No Waiver. No waiver by Landlord or Tenant of a breach of any
---------
covenants, agreements, obligations or conditions of this Lease shall be
construed to be a waiver or any future breach of the same or any other covenant,
agreement, obligation or condition of this Lease.
Section 19.2. Remedies Cumulative. The rights and remedies created by this
-------------------
Lease are cumulative, and the use of one remedy shall not be taken to exclude or
waive the right to use of another, or exclude any other right or remedy allowed
by law.
ARTICLE 20. ESTOPPEL CERTIFICATE, SUBORDINATION ATTORNMENT
Section 20.1. Estoppel Certificate. At any time upon not less than 10 days'
--------------------
prior written request, Tenant-and Landlord each shall execute and deliver in
recordable form and in substance satisfactory to the other, an estoppel
certificate certifying (a) the date to which Rent has been paid; (b) the amount
of any Security Deposit; (c) that Tenant has accepted the Leased Premises; (d)
that this Lease is in full force and effect and has not been modified or amended
(or if modified or amended, denominating the same); and (e) that there are not
defenses or offsets to the obligation for Rent or defaults of the other party
under this Lease (or if any be claimed, denominating the same); and (f) such
other matters as the requesting patty may reasonably request. If the certificate
is to be delivered to a purchaser of all or part of the Building (including the
Land), it shall further include the agreement of Tenant to recognize such
purchaser as Landlord under this Lease. The purchaser must assume Landlord's
obligations under this Lease, and thereafter Tenant will pay Rent to the
purchaser or its designee in accordance with the terms of this Lease, and Tenant
acknowledges that any such purchaser may rely on such estoppel certificate.
Tenant's failure to deliver such certificate within such time shall be
conclusive evidence that this Lease is in full force and effect without
modification, that there are no defaults and that all of the foregoing and any
other matters required to be stated in the certificate are true and correct.
Section 20.2. Subordination. This Lease is subject and subordinate to all
-------------
ground or underlying leases, mortgages and deeds of trust which now affect the
Building or any portion thereof (including the Land) and to all renewals,
modifications, consolidations, replacements and extensions thereof. It is
further agreed that this Lease may, at the option of Landlord, be made
subordinate to any ground or underlying leases, mortgages, or deeds of trust
which in the future may affect the Building or any portion thereof (including
the Land) or affect any ground or underlying leases, and provided that so long
as Tenant fulfills all of its obligations under the Lease, its possession of the
Premises will not be disturbed. Tenant, or Tenant's successors in interest, will
execute and deliver upon the demand of Landlord any and all Instruments desired
by Landlord to confirm the subordination of this Lease to such lease, mortgage
or deed of trust. Landlord agrees to use its reasonable efforts to obtain a
non-disturbance agreement from any present or future mortgagees of the Building.
Section 20.3. Attornment. Tenant agrees that, at the option of the ground
----------
lessor under any ground lease now or later affecting all or part of the Building
(including the Land), Tenant shall attorn to such ground lessor in the event of
the termination or cancellation of such ground lease, and if requested by such
ground lessor, enter into a new lease with the ground lessor (or a successor
ground-lessee designated by such ground lessor) for the balance of the Term then
remaining under this Lease upon the same terms and conditions as those provided
In this Lease.
Section 20.4. Mortgages. In the event of foreclosure or exercise of power
---------
of sale under any mortgage or deed of trust now or later affecting all or part
of the Building (including the Land), the holder of any such mortgage or deed of
trust (or purchaser at any sale pursuant thereto) shall have the option (a)
supplementing this Article, to require Tenant to attorn to such holder or
purchaser, and to enter into a new lease with such holder or purchaser (as
Landlord) for the balance of the Term then remaining under this Lease upon the
same terms and conditions as those provided in this Lease, or (b)
notwithstanding this Article, to elect that this Lease become or remain, as the
case may be, superior to said mortgage or deed of trust.
Tenant shall, upon request by any such holder or purchaser, execute and
deliver any and all instruments desired by such holder or purchaser evidencing
the superiority of this Lease to any such mortgage or deed of trust.
ARTICLE 21. QUIET ENJOYMENT
Landlord covenants and agrees with Tenant that upon Tenant paying the Fixed
Rent and Additional Rent and observing and performing all of the terms,
covenants and conditions on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the Leased Premises, subject, nevertheless, to
the terms and conditions of this Lease and to any ground leases, underlying
leases and mortgages.
ARTICLE 22. NOTICES
Whenever any notice is required or permitted under this Lease, such notice
shall be in writing. Any notice or document required or permitted to be
delivered under this Lease shall be deemed to be delivered and received (a) when
delivered personally to any representative of the party served, or (b) one
business day after timely deposit with a commercial overnight courier service,
charges prepaid, or (c) three business days after deposit in the United States
mall, postage prepaid, registered or certified mail, return receipt requested,
<PAGE>
LANDLORD:
938 Bannock LLC
a Colorado limited liability company
Bruce Berger Realty Inc. as its man
By: /s/ ILLEGIBLE
----------------------------------
Title: President
-------------------------------
TENANT:
INFLOW, INC., a Delaware corporation
/s/ Arthur H. Zeile
-------------------------------------
Name: Arthur H. Zeile
--------------------------------
Title: CEO, President
-------------------------------
Attached to Lease Dated October 11, 1999.
16
<PAGE>
RIDER TO BANNOCK CENTER OFFICE BUILDING
LEASE AGREEMENT
BETWEEN 938 BANNOCK LLC
AND
INFLOW, INC.
This Rider supplements and is a part of the foregoing Bannock Center Office
Building Lease Agreement between 938 Bannock LLC as Landlord and INFLOW, INC.,
as Tenant, relating to those specific premises more fully described in the
Lease.
Any undefined capitalized term in this Rider has the same meaning as set
forth in the Lease, unless the context indicates otherwise.
In the event of any conflict between the provisions of this Rider and the
other portions of the Lease, the terms of this Rider will govern the agreement
of the parties.
The Lease is supplemented as follows:
ARTICLE 24 ROOF RIGHTS. Tenant shall have the right install, at Tenant's sole
cost and expense, satellite dishes, antennae (or other telecommunications
equipment) on an approximately 1,500 square foot portion of the roof of the
Building. Tenant's rights under this Section 24 are expressly contingent upon:
(i) Tenant makes the requisite submittals to Landlord required under Section 7.2
of this Lease; (ii) Tenant obtains any and all approvals and satisfies all
requirements of any governmental or quasi-governmental authority with
jurisdiction over the Building; (iii) the height of the satellite antenna (and
any other telecommunications item located on the roof) shall not exceed five
feet from the roof unless otherwise approved in writing by Landlord; (iv)
Landlord may require, in its sole and absolute discretion, that the satellite
antenna (and any other item located on the roof) be screened from view. The
size, location, method of installation and all other matters in connection with
the satellite antenna are subject to Landlord's prior written consent which will
not be unreasonably withheld.
ARTICLE 25 OPTIONS TO EXTEND. As additional consideration for the covenants of
Tenant hereunder, Landlord hereby grants unto Tenant two options (each an
"Option") to extend the term of the Lease for two (2) additional terms of five
(5) years each (each an "Option Term"). The Option shall apply to all of the
space currently under Lease in the Building at the time such Option is exercised
and shall be on the following terms and conditions:
A. Written notice (each "Tenant's Notice") of Tenant's interest in
exercising the applicable Option shall be given to Landlord (i) as to the first
Option Term, no earlier than twelve (12) months and no later than nine (9)
months prior to the expiration of the initial Term; and (ii) as to the second
Option Term, no earlier than twelve (12) months and no later than nine (9)
months prior to the expiration of the first Option Term. Not later than thirty
(30) days after receiving Tenant's Notice, Landlord shall give to Tenant notice
of the rental rate applicable during the applicable Option Term, in accordance
with subparagraph E below ("Landlord's Notice").
B. Tenant shall have fifteen (15) days following Tenant's receipt of
Landlord's Notice within which to exercise the then applicable Option by
delivering written notice of such exercise to Landlord under the exact terms,
conditions and rental rate set forth in Landlord's Notice. If Tenant timely
exercises the then applicable Option, the Lease shall be deemed extended and
thereafter the parties shall execute an amendment to the Lease setting forth the
terms of the extension.
C. Unless Landlord is timely notified by Tenant in accordance with
subparagraphs A and B above, it shall be conclusively deemed that Tenant does
not desire to exercise an Option, and the Lease shall expire in accordance with
its terms, at the end of the initial Lease Term (or the first Option Term, as
applicable).
D. Tenant's right to exercise an Option shall be conditioned on Tenant's
not being in default under the Lease at the time of exercise of the then
applicable Option or at the time of the commencement of the applicable Option
Term.
E. The Options granted hereunder shall be upon the terms and conditions
contained in the Lease except that there shall be no further option to extend
the term of the Lease beyond the second Option Term and except that the rental
to be paid by Tenant to Landlord during each such Option Term shall be as
follows: (i) Eighteen Dollars ($18) per Rentable Square Feet of the Leased
Premises (as defined in Article 1 of the Lease) for each year of first Option
Term; and (ii) Twenty One Dollars ($21) per Rentable Square Feet of the Leased
Premises (as defined in Article 1 of the Lease) for each year of second Option
Term.
F. After exercise of the second Option above described, there shall be no
further rights on the part of Tenant to extend the term of the Lease.
ARTICLE 26 MODIFICATIONS OF RULES AND REGULATIONS. Notwithstanding anything to
the contrary in the Rules and Regulations, (i) Tenant shall have the right to
order beverages, food and other items for consumption in the Leased Premises
from any vendor; and (ii) Tenant shall have the right to locate beverage and
vending machines in the Leased Premises.
ARTICLE 27 ACCESS. So long as Tenant is not in violation of the Lease beyond any
applicable cure period, Landlord will not limit or prohibit Tenant's access to
the Leased Premises, Common Areas, and all of Tenant's equipment and
supplemental systems serving the Leased Premises on a 24 hours per day, 7 days
per week, 365 days per year basis (without the requirement of prior notice to
Landlord). Tenant may make arrangements with its customers and vendors to
provide access to the Leased Premises at such times and on such conditions as
Tenant deems necessary to carry out its business operation in the Leased
Premises.
ARTICLE 28 RENT ABATEMENT. Notwithstanding anything to the contrary contained
herein, and provided Tenant is not in default under the terms of this Lease, the
Fixed Rent and parking Fee will be abated as to the entire Leased Premises
during the period commencing on the Commencement Date and ending 90 days
thereafter. Notwithstanding the abatement of Fixed Rent and the parking Fee
during such period, all other terms and provisions of this Lease shall apply to
the Leased Premises from and after the Commencement Date, including without
limitation, Tenant's payment of those utilities and services required to be paid
directly by Tenant.
ARTICLE 29 SECURITY SYSTEM. Tenant shall have the right to install a security
system for the Leased Premises, and to create a special security area within the
Leased Premises to encompass Tenant's equipment room (the "Equipment Room").
Tenant's security system may include the use of non-Building-standard locks and
other access controls which restrict access to Tenant and its customers,
provided that Landlord shall be provided with keys or other entry mechanisms to
ensure access as required by Section 12.1 of the Lease. Landlord shall not enter
Tenant's Equipment Room or permit any janitorial, maintenance, repair or other
service to such Equipment Room except as set forth below. In consideration of
Landlord agreeing to restrict its entry to the Equipment Room, Tenant hereby
agrees to indemnify and defend Landlord, its agents, employees and contractors
from any liability arising out of or in connection with the restriction on
Landlord's entry to the Equipment Room. Landlord or its agents shall have the
right, but not the obligation, to enter the Equipment Room only after at least
twenty-four (24) hours notice to Tenant and when accompanied by Tenant. Landlord
shall have the right (but no corresponding obligation) of immediate access to
the Equipment Room, without notice and company of Tenant, if Landlord reasonably
determines that such entry is necessary to prevent or respond to imminent danger
to the Leased Premises or other portions of the Building or to any person. Any
entry by Landlord will be conducted with reasonable caution under the
circumstances to prevent damage to or interference with any of the equipment in
the Equipment Room.
17
<PAGE>
ARTICLE 30 FLOOR LOAD. Tenant shall have the right to install, maintain, repair
and replace computer, telecommunication, and other equipment in the Leased
Premises, so long as the loading pattern of such equipment does not exceed the
relevant floor load capacity, and Landlord hereby approves and consents to the
same. Tenant shall have the right to move computer, telecommunication, and other
equipment in and out of the Leased Premises from time to time in the course of
its business, and Landlord hereby consents thereto. Upon prior request of
Landlord, Tenant will deliver its engineer's calculation of the floor load
pattern implemented in the Leased Premises.
ARTICLE 31 COLLOCATION / INTERCONNECTION. Provided that the agreement entered
into by Tenant and its customers and vendors (collectively, "Customers") for the
co-location of equipment shall expressly provide that the customer acquires no
possessory, leasehold or other real property right or interest in the Building
or Leased Premises (including but not limited to rights to enforce any provision
of this Lease as a third party beneficiary or otherwise), Tenant shall have the
right, at no additional charge hereunder, to enter agreements with its Customers
for the following: (a) to co-locate Customer equipment in the Leased Premises
without Landlord's consent, (b) to provide short-term rights to use portions of
the Leased Premises to its Customers without Landlord's consent, and (c) to
connect Customer equipment to telecommunications facilities in the Building,
provided such Customer equipment can be disconnected from the telecommunications
facilities in the Building without necessitating a rewiring or reworking any
Building system (as opposed to capping off such connection in connection with
its removal). Items (a) and (b) above shall not be considered subleases or
assignments under this Lease. Tenant hereby agrees to indemnify and defend
Landlord, its agents, employees and contractors from any liability arising out
of or in connection with the Customers use of the Leased Premises pursuant to
the collocation rights granted to Tenant hereunder.
ARTICLE 32 UPS SYSTEM. Subject to Landlord's approval of the plans therefor in
accordance with this Lease, and provided that Tenant shall be responsible for
ensuring that the same complies with all applicable laws, rules and regulations,
Tenant shall have the right to install UPS systems and their associated
batteries within the Leased Premises, and to integrate the Building power into
such systems.
ARTICLE 33 GROUNDING. Subject to Landlord's approval of the plans therefor in
accordance with this Lease, and provided that Tenant shall be responsible for
ensuring that the same complies with all applicable laws, rules and regulations,
Tenant shall have the right, at no additional charge, to (a) tie into any
existing grounding systems in the Building, or (b) at Tenant's option, if the
existing grounding systems do not meet Tenant's requirements, to install its own
electrical grounding system.
ARTICLE 34 GENERATOR. Subject to Landlord's approval of the plans therefor in
accordance with this Lease, and provided that Tenant shall be responsible for
ensuring that the same complies with all applicable laws, rules and regulations,
Tenant, at Tenant's expense, shall have the right to install, maintain, repair
and replace from time to time, at the location outside the Building identified
on Exhibit E attached hereto which will not exceed 200 square feet (the
"Generator Pad") one power generator, together with associated equipment and
fuel tanks, to provide primary or backup power, or both, to Tenant's equipment,
and to integrate Building power into the generator. Tenant shall not be
permitted to install or utilize any underground fuel or storage tank. Tenant
will owe no additional rent for the use of the Generator Pad. Landlord shall
provide to Tenant, at no additional charge, the right to utilize for the Term of
this Lease, riser space as necessary to connect the generators to Tenant's
equipment. Tenant shall construct an enclosure reasonably acceptable to Landlord
to screen the generators. Tenant shall schedule periodic operation and
maintenance of the generator only between the hours 5:00 p.m. and 8:00 p.m. (the
"Maintenance Hours") and Tenant may only run the generator outside of the
Maintenance Hours in the event of an electric failure or outage in the Premises
wherein the use of the generator is required. Tenant's maintenance, use and
operation of the generator shall at all times be in compliance with all
applicable laws, rules and regulations, including but not limited to noise
restrictions contained in applicable zoning ordinances.
ARTICLE 35 HVAC. Subject to Landlord's approval of the plans therefor in
accordance with this Lease, and provided that Tenant shall be responsible for
ensuring that the same complies with all applicable laws, rules and regulations,
Tenant, at Tenant's expense, shall have the right to install, maintain, repair
and replace from time to time an independent cooling system. Tenant shall have
the right to locate its HVAC equipment on the roof of the Building (the "Air
Conditioning Pad"). Tenant will owe no additional rent for the use of the Air
Conditioning Pad. Landlord shall provide, at no additional charge, the right to
utilize for the Term of this Lease, riser space as necessary to connect the
supplemental HVAC equipment located on the Air Conditioning Pad to the Leased
Premises. Tenant shall have the right to install coolant lines to support its
air conditioning systems. Tenant shall have the right to tap into Building
domestic water supply in order to operate a humidifier system in the Leased
Premises. Tenant shall have the right to vent through the Building ventilation
system and to install drains for the Tenant's air conditioning systems and to
discard air conditioning wastewater into the Building's sewage system.
ARTICLE 36 FIRE SYSTEM. Subject to Landlord's approval of the plans therefor in
accordance with this Lease, and provided that Tenant shall be responsible for
ensuring that the same complies with all applicable laws, rules and regulations,
Tenant, at Tenant's expense, shall have the right to do any or all of the
following: (a) install within the Leased Premises a dry-pipe, pre-action fire
suppression system, (b) relocate or encase any water mains or other water pipes
running through or adjacent to the Leased Premises, (c) install an FM 200 gas
fire suppression system in the Leased Premises, or (d) install any other fire
suppression system approved by Landlord, which approval shall not be
unreasonably withheld.
ARTICLE 37 STRUCTURAL. Tenant shall have the right, at its expense, to do any or
all of the following: (a) to reinforce floor load capacities; (b) to cover or
block up windows and/or exterior walls in the Leased Premises, provided that
such measures are reasonably acceptable to Landlord with respect to the external
aesthetics of the Building, and that such windows and/or exterior walls are
returned, at the sole cost and expense of Tenant, to an uncovered or unblocked
condition at the expiration or other early termination of the Lease Term, and
(c) to install up to three manholes adjacent to the Building for bringing
telecommunications fiber into the Building.
ARTICLE 38 CONDUIT/ RISER SPACE. Tenant shall have the right, at no additional
charge, to all of the following: (a) to use existing fiber optic cabling in the
Building or, at Tenant's election, to construct additional telecommunications
entrances into the Building and into the Leased Premises. Landlord acknowledges
that Tenant will require redundant entrances for its data center operations; (b)
to use existing riser space and available conduit, or at Tenant's option, to
install any additional conduit and facilities required in order to connect
Tenant's generator, power, HVAC equipment and piping, antennas, grounding, and
related equipment and for other purposes not inconsistent with the design of
such conduits or risers. Upon Tenant's request, Landlord shall provide, for
Tenant's use throughout the Term of the Lease, a license to utilize portions of
the Land (as defined in the Lease) as such portions are reasonably determined by
Landlord, to connect up to ten telecommunications cables from the Leased
Premises to the applicable utility easement whether such easement is located on
or off the Land on which the Building is located. The right set forth in the
preceding sentence may include Landlord granting licenses for the Term of this
Lease, to third party telecommunications providers. Landlord shall have the
right to reasonably dictate the location and method of installation of this
cabling. Tenant acknowledges that Landlord has made no warranty or
representation of any kind or nature, express or implied, and Landlord hereby
expressly disclaims any warranty or representation with respect to the current
status or condition of fiber optic cabling, if any, in the Building as of the
date of mutual execution of this Lease.
ARTICLE 39 CONDUIT TO 938 BANNOCK STREET. Tenant shall have the right, at no
additional charge, to connect the Leased Premises to Tenant's premises in the
building located at 938 Bannock Street via up to four, four-inch conduits,
subject to Landlord's approval which shall not be unreasonably withheld.
ARTICLE 40 LANDLORD'S REMEDIES. Notwithstanding anything to the contrary in the
Lease, in no event shall Landlord be entitled to enter the Leased Premises and
remove any personal property or equipment without judicial process, unless such
personal property or equipment is deemed abandoned at the end of the Term of the
Lease as provided in Section 7.2(b).
ARTICLE 41 LANDLORD'S WARRANTIES. Landlord represents and warrants to Tenant:
(i) the Building and the Leased Premises, as of the date hereof, are subject to
a deed of trust in favor of Bank One, Colorado; (ii) to the best of Landlord's
knowledge, the Leased Premises are not in violation of any applicable law, rule
or regulation, including but not limited to applicable hazardous materials laws,
rules and regulations; and (iii) to the best of Landlord's knowledge, there is
no asbestos-containing material ("ACM") in the Leased Premises. Landlord's
knowledge includes information contained that specific Asbestos Verification
Assessment dated January 13, 1993, and prepared by ERM
18
<PAGE>
EnviroClean-Rocky Mountain, Inc. If during Tenant's construction of Tenant's
Work pursuant to the Work Letter, Tenant discover and identifies ACM through
standard testing and point testing, Tenant will give Landlord written notice
within 48 hours after Tenant's discovery thereof. If such ACM is required to be
removed from the Leased Premises pursuant to applicable laws, rules or
regulations, Landlord will use reasonable efforts to remove such ACM from the
Leased Premises (the "ACM Removal"). Tenant will in no event disturb such ACM or
take any action that would result in a release of ACM or result in the ACM
becoming airborne or friable. If possible, Tenant will proceed with Tenant's
Work, but will not interfere with Landlord's ACM Removal. Landlord shall have no
obligation to remove any floor tile existing in the Leased Premises or the
Building as of the date of this Lease which floor tile may contain ACM.
ARTICLE 42 GENERAL CONDITIONS. In connection with the exercise of its rights
under the Lease, including but not limited to those rights specifically set
forth under Articles 29 through 39 of this Rider, Tenant hereby acknowledges
that all supplemental and/or new systems and facilities installed or connected
to the Building, or utilized in connection with Tenant's operation at the Leased
Premises: (i) must be designed and Installed in compliance with all applicable
laws, rules and regulations; (ii) the plans for the installation of such item
are subject to Landlord's approval in accordance with the Lease; and (iii) must
remain in or be removed from the Leased Premises (or those areas adjacent
thereto which Landlord authorized for use pursuant to this Lease) pursuant to
Section 7.2(b) of the Lease.
ARTICLE 43 TERMINATION RIGHT. Landlord has received and is currently reviewing
the Working Drawings for Tenant's Work as referenced in the Work Letter.
Landlord will send written notice to Tenant* either: (I) unconditionally
approving the Working Drawings; (ii) rejecting the Working Drawings and
notifying Tenant of the basis for rejection; or (iii) conditionally approving
the Working Drawings and noting the items that must be revised pursuant to
Landlord's conditional approval. In the event that Landlord conditionally
approves the Working Drawings or rejects the Working Drawings, then Tenant shall
have five (5) days after receipt of such notice to terminate this Lease by
delivering written notice to Landlord of termination, If Tenant delivers the
termination notice in a timely fashion, then this Lease shall be deemed
terminated as of the date Landlord receives Tenant's notice of termination and
Tenant will deliver possession of the Premises to Landlord on such date in its
then current condition. If Tenant fails to timely give notice of termination.**
Tenant will be deemed to have waived its right to terminate under this Article
and the Lease shall remain in full force and effect.
* By October 22, 1999
** Within TEN(10) Business days
19
<PAGE>
EXHIBIT A
LEASED PREMISES
[DIAGRAM]
<PAGE>
EXHIBIT B
WORK LETTER
-----------
939 BANNOCK LLC
RE: Lease dated as of October 11. 1999, by and between 938 Bannock LLC
("Landlord") and INFLOW, INC. ("Tenant") (the "Lease"), pertaining to those
specific Leased Premises more specifically described in the Lease (the "Leased
Premises")
Ladies and Gentlemen:
Concurrently herewith, you, as Tenant, and the undersigned, as Landlord, have
executed the referenced Lease, which provisions of said Lease are herein
incorporated by reference as if Fully set forth herein. (Initially capitalized
terms not otherwise defined have the same meaning as in the Lease.) In
consideration of the execution of the Lease, Landlord has agreed to complete
certain improvements in the Leased Premises and Tenant and Landlord agree as
follows:
1. Landlord, at its sole cost and expense, shall perform landscaping on the
south and west sides of the Building pursuant to those specific plans attached
hereto as Schedule B-1 (the "Landscaping"). Landlord will use commercially
reasonable efforts to complete the Landscaping prior to May 1, 2000.
Additionally, Landlord, at its sole cost and expense shall: (i) repaint the
exterior of the Building, and (ii) replace the existing awnings on the Building
(collectively "Landlord's Work"). Landlord shall perform the Landscaping and
Landlord's Work in compliance with all applicable laws, rules, regulations and
codes. Landlord shall give notice to Tenant of completion of Landlord's Work
(which may be satisfied by delivering the certificate required by Article 2 of
the Lease). Landlord shall use reasonable efforts to cause the Landlord's Work
to be completed on or before sixty (60) days after mutual execution of this
Lease (the "Scheduled Completion Date of Landlord's Work"). Upon completion of
Landlord's Work and completion of any punch list items listed in a written
agreement signed by Tenant and Landlord, Landlord shall have no Further
obligation for the improvements to the Leased Premises.
2. Tenant will complete improvements in and to the Leased Premises ("Tenant's
Work") in accordance with construction documents which shall include all
architectural, mechanical, and electrical working drawings to be provided to
Landlord (the "Working Drawings"). Tenant shall perform Tenant's Work in
compliance with all applicable laws, rules, regulations and codes. Landlord
specifically approves Tandem Enterprises, Inc. to serve as Tenant's general
contractor for the construction of Tenant's Work pursuant to this Work Letter.
Landlord acknowledges that Tenant will be constructing a computer and
telecommunications data center. All plans and Working Drawings shall be subject
to Landlord's reasonable approval, which approval shall not be unreasonably
withheld, and Tenant's Work shall be completed in accordance with Article 7 of
the Lease. Landlord shall not charge any supervision fee with respect to
Tenant's Work. Tenant acknowledges that Landlord has disclosed to Tenant that
the roof of the Leased Premises needs repair to ensure it is in a good and
working condition and that Tenant, as a part of Tenant's Work, must repair
and/or replace the roof in compliance with all applicable laws, rules and
regulations. Tenant has disclosed to Landlord its commitment to replace the roof
of the Building as a part of Tenant's Work. Landlord will provide Tenant with a
roof finish allowance in the amount of Ten Thousand Dollars ($10,000) (the "Roof
Allowance"). Tenant acknowledges that Landlord has disclosed to Tenant that the
Building requires an access ramp on the east side of the Building pursuant to
the requirements of Americans With Disabilities Act of 1990. Tenant, as a part
of Tenant's Work, must construct the access ramp in compliance with all
applicable laws, rules and regulations. Tenant has disclosed to Landlord its
commitment to construct the access ramp as a part of Tenant's Work. Landlord
will provide Tenant with a access ramp finish allowance in the amount of Ten
Thousand Dollars ($10,000) (the "Access Ramp Allowance"). In addition to the
foregoing, Tenant, as a part of Tenant's Work, will demolish all interior
non-masonry walls in the Building to allow Tenant to build out the Leased
Premises as contemplated herein. Landlord will provide Tenant with a demolition
allowance in the amount of Eighteen Thousand Six Hundred Forty Dollars ($18,640)
(the "Demolition Allowance"). The Roof Allowance, the Access Ramp Allowance and
the Demolition Allowance may hereinafter be collectively referred to as the
"Allowance."
Landlord will pay the Allowance to Tenant in three payments: 25% of the
Allowance will be paid by Landlord upon Tenant's commencement of the Tenant Work
within the Premises; 25% of the Allowance will be paid upon 50% completion of
Tenant's Work (as certified by Tenant's architect); and the balance of the
Allowance will be paid upon (i) completion of Tenant's Work and Tenant's
occupancy of the Premises, (ii) receipt of paid invoices from Tenant evidencing
the applicable construction, along with appropriate lien waivers from Tenant's
general contractor and any subcontractors involved in Tenant's Work,
substantially in a form reasonably acceptable to Landlord, and (iii) Tenant's
obtaining a certificate of occupancy.
3. Except for the Allowance which will be paid as set forth above, all costs
related to the Tenant's Work, including, but not limited to, design fees, costs
of preparation of the Working Drawings, and costs of materials and construction,
are considered "Tenant Work Costs." Tenant shall be responsible for the direct
payment of all Tenant Work Costs. Tenant agrees to not occupy the Leased
Premises prior to the receipt of a certificate of occupancy.
Please sign and return this letter and all accompanying copies of it to
Indicate your approval of the terms of this agreement. Very truly yours,
Very truly yours,
938 BANNOCK LLC, a Colorado limited liability company
Bruce Berger Realty Inc. as its manager
By: /s/ ILLEGIBLE
------------------------------------
Title: President
---------------------------------
CONFIRMED AND AGREED:
INFLOW, INC., a Delaware corporation
By: /s/ Arthur H. Zeile
---------------------------------
(Printed Name) Arthur H. Zeile
-------------------
(Title) CEO, President
--------------------------
B-1
<PAGE>
EXHIBIT C
DEPICTION OF PARKING AREA
[DIAGRAM]
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
---------------------
1. Security. Landlord may from time to time adopt appropriate systems and
--------
procedures for the security or safety of the Building, any persons
occupying, using or entering thereof, and Tenant shall comply with
Landlord's reasonable requirements relative thereto.
2. Windows. Tenant shall observe Landlord's rules with respect to maintaining
-------
uniform coverings at all windows in the Leased Premises so that the
Building presents a uniform exterior appearance, and shall not install any
window shades, screens, drapes, covers, or other materials on or at any
window in the Leased Premises without Landlord's prior written consent.
Tenant shall ensure that window coverings are closed on all windows in the
Leased Premises while they are exposed to the direct rays of sun.
3. Water Fixtures. Tenant shall not use water fixtures for any purpose for
--------------
which they are not intended, nor shall water be wasted by tampering with
such fixtures. Any cost or damage resulting from such misuse by Tenant
shall be paid for by Tenant.
4. Personal Use of Leased Premises. The Leased Premises shall not be used or
-------------------------------
permitted to be used for residential or lodging purposes or for the storage
of personal effects or property not required for business purposes.
5. Bicycles, Animals. Tenants shall not bring any animals or birds into the
-----------------
Building, and shall not permit bicycles or other vehicles inside or on the
sidewalks outside the Building except in areas designated from time to time
by Landlord for such purposes.
6. Deliveries. Tenant shall ensure that deliveries of materials and supplies
----------
to the Leased Premises are made through such entrances, elevators and
corridors as may from time to time be designated by Landlord, and shall
promptly pay or cause to be paid to Landlord the cost of repairing any
damage In the Building caused by any person making such deliveries.
7. Furniture and equipment. Tenant shall ensure that furniture and equipment
-----------------------
being moved into or out of the Leased Premises is moved through such
entrances, elevators, and corridors as may from time to time be designated
by Landlord, and by movers or a moving company approved by Landlord, and
shall promptly pay or cause to be paid to Landlord the cost of repairing
any damage in the Building caused thereby.
8. Solicitations. Landlord reserves the right to restrict or prohibit
-------------
canvassing, soliciting, or peddling in the Building.
9. Food and Beverages. Only persons approved from time to time by Landlord may
------------------
prepare, solicit orders for, sell, serve, or distribute food or beverages
in the Building, or use the elevators, corridors, or common areas for any
such purpose. Except with Landlord's prior written consent and in
accordance with arrangements approved by Landlord, Tenant shall not permit
on the Leased Premises the use of equipment for dispensing food or
beverages or for the preparation, solicitation of orders for, sales,
serving, or distribution of food or beverages (but the foregoing shall not
prohibit a refrigerator, microwave oven, or coffee machines solely for the
use by Tenant's employees).
10. Refuse. Tenant shall place all refuse in proper receptacles provided by
------
Tenant at Its expense in the Leased Premises or in receptacles (if any)
provided by Landlord forth. Building, and shall keep sidewalks and
driveways outside the Building, and lobbies, corridors, stairwells, ducts,
and shafts of the Building free of all refuse.
11. Obstructions. Tenant shall not obstruct or place anything in or on the
------------
sidewalks or driveways outside the Building or in the lobbies, corridors,
stairwells, or other common areas of the Building, or use such locations
for any purpose except access to and exit from the premises, without
Landlord's prior written consent. Landlord may remove at Tenant's expense,
any such obstruction or thing (unauthorized by Landlord) without notice or
obligation to Tenant.
12. Dangerous or Immoral Activities. Tenant shall not make any us. of the
-------------------------------
Leased Premises which involves the danger of Injury to any person, nor
shall the same be used for any immoral purpose.
13. Proper Conduct. Tenant shall not conduct itself in any manner which is
--------------
inconsistent with the character of the Building as a first quality
building.
14. Definition of "Tenant". In these Rules and Regulations, "Tenant" includes
----------------------
the employees, agents, invitees, and licensees or Tenant and others
permitted by Tenant to use or occupy the Leased Premises.
15. Noise. Tenant shall not make, or permit to be made, any unseemly or
-----
disturbing noises or disturb or interfere with occupants of neighboring
buildings or premises or those having business with them, whether by use of
any musical instrument, radio, television set, talking machines, unusual
noise, whistling, singing, or in any other way. Tenant shall not throw
anything out of the doors, windows, skylights, or down the passageways.
16. No Smoking. No smoking is permitted in the Building Common Areas, including
----------
without limitation the locker facilities, common conference rooms, vending
areas, halls and lobbies.
D-1
<PAGE>
EXHIBIT E
DEPICTION OF GENERATOR PAD
[DIAGRAM]
<PAGE>
EXHIBIT 10.14
STANDARD OFFICE LEASE AGREEMENT (GROSS)
THIS LEASE AGREEMENT (hereinafter called the "Lease Agreement") made as of the
9th day of June, 1999 by and between TIMESHARE SYSTEMS, INC., a Minnesota
corporation, having offices at 511 Eleventh Avenue South, Minneapolis,
Minnesota, 55415 (hereafter called the "Landlord"), and INFLOW, INC., a
Delaware corporation (hereafter called "Tenant").
WITNESSETH
----------
FOR AND IN CONSIDERATION of the sum of One Dollar ($1.00) in hand paid by
each of the parties to the other, and other good and valuable consideration,
receipt and sufficiency of which is hereby acknowledged, Landlord does hereby
lease and let unto Tenant, and Tenant does hereby hire, lease and take from
Landlord, that area outlined in red on Exhibit A-1 attached hereto, and by this
reference incorporated herein, and described as Suite 211, containing
approximately 15,898 contiguous, rentable square feet on the second floor,
(hereafter called the "Premises") at 511 11th Avenue South (hereafter called the
"Building") in the City of Minneapolis, County of Hennepin, State of Minnesota.
The term Building as it is used herein shall consist of the land and building
set forth in Exhibit A-2 hereto. The Premises area shall be measured from the
outside of exterior or corridor walls and from the center of demising walls to
obtain the useable area of the Premises, which shall be multiplied by a factor
of 1.15 to arrive at the rentable area of the Premises. Either of the parties
may have their architect measure the Premises at any time, and if the rentable
area differs from what is set forth above, then the other party may verify such
measurement and the finally agreed remeasurement shall be utilized with respect
to the rental amounts set forth below and with respect to calculating Tenant's
proportionate share of Real Estate Taxes and Operating Expenses. The parties
agree to execute a ratification agreement and/or lease amendment setting forth
the new square footage and Minimum Rent Schedule to reflect such remeasured
area.
ARTICLE 1 - TERM
A. To have and to hold said Premises for a term of 122 months, commencing
on July 1, 1999 and terminating on August 31, 2009 unless extended as provided
herein (hereafter called the "Term") upon the rentals and subject to the
conditions set forth in this Lease Agreement, and the Exhibits attached hereto.
The commencement and termination dates are specifically subject to the
provisions of Article 5 hereof.
B. Tenant shall have the right to renew the Term of the Lease Agreement for
two (2) periods of five (5) years each ("Renewal Term(s)"), subject to the
following terms, covenants and conditions: i) Tenant shall not be in default
beyond any applicable grace period in the performance of any of the terms,
covenants or conditions of this Lease Agreement, either at the time of the
exercise of the right to renew or at the commencement of the applicable Renewal
Term; ii) the Renewal Term(s) shall be on the same terms, covenants and
conditions as provided in this Lease Agreement, except the Minimum Rental during
the Renewal Term shall be at the rates as set forth in the table in Paragraph 3B
and there shall be no further renewal right after the commencement of the
second Renewal Term; and iii) Tenant shall exercise its right to renew by giving
written notice thereof to Landlord at least nine (9) calendar months prior to
the expiration of the initial Term or first Renewal Term, as the case may be,
time being of the essence. If Tenant fails to notify Landlord in the manner and
within the time as provided in this paragraph, Tenant's right to renew this
Lease Agreement shall expire and become null and void. If Tenant fails to
exercise the first Renewal Term, then the following Renewal Term shall also
terminate.
ARTICLE 2 - USE
A. The Premises shall be used by the Tenant solely for the following
purposes: General office purposes and computer and telecommunications equipment
room. Tenant shall not have the right to use the Premises for any other
purposes.
B. Landlord acknowledges that in connection with Tenant's use of the
Premises, it shall be installing specialized telecommunication equipment, and
various electrical equipment and facilities associated therewith
("Telecommunications Equipment"). Tenant shall be solely responsible for
ensuring that the Telecommunications Equipment can be operated consistent with
Landlord's current facilities and utilities and Tenant shall be solely
responsible for any special utility requirements created by the
Telecommunications Equipment (such as, but not limited to: all electrical power
utilized thereby, additional cooling requirements, uninterrupted power sources,
etc.) the installation of which shall be governed by Article 4 and Article 12
below. Tenant shall also be solely responsible to ensure that any
electrical/magnetic field ("EMF") is not emitted beyond the Premises at levels
exceeding those acceptable by the Food and Drug Administration for persons with
pacemakers or other electronic prosthetics (5 goss or 5,000 milligoss). In all
events, Tenant shall indemnify, defend with counsel reasonably acceptable to
Landlord, and save Landlord harmless from any claim for injury to a person or
damage to property asserted by any person against Landlord, its agents or
employees by reason of any EMF emitted from or created by the Telecommunications
Equipment. In addition, Tenant hereby assumes all risk in connection with the
presence of all EMF within the Premises emitted from or created by the
Telecommunications Equipment and hereby releases Landlord from any and all
liability or responsibility to Tenant, its agents, employees, contractors or
anyone claiming through or under Tenant by way of subrogation or otherwise for
the loss or damage to property or injury to persons arising out of or relating
to EMF emitted from or created by the Telecommunications Equipment.
C. Tenant and its "Affiliates" (as defined in Article 15 below) shall have
the right to provide telecommunication services to other tenants in the Building
on a non-exclusive basis with other providers of such services; provided all
such tenants shall be able to freely choose their telecommunications provider,
and Tenant shall not solicit such tenants (in person) except with Landlord's
prior approval.
D. If Landlord has space available, Tenant shall have the temporary right
and license to utilize space within the Building sufficient for use as temporary
office space by six (6) employees of Tenant (the "Temporary Use"). The Temporary
Use shall expire and terminate, automatically and without notice five (5)
business days after Tenant's receipt of a valid certificate of occupancy for its
Premises. Landlord shall have the right to terminate the Temporary Use after at
least 30 days notice; provided that Landlord will use its best efforts to
relocate Tenant to other available space in the Building for the Temporary Use
and provided further that Landlord shall only be entitled to exercise such right
to terminate if the Temporary Use space occupied by Tenant is being leased by
Landlord to a third party tenant. The Temporary Use shall be subject to the
provisions of this Lease which are not in conflict with this Paragraph, except
there shall be no payment of Minimum or Additional Rent in connection with the
Temporary Use (parking fees, if any, shall be applicable).
ARTICLE 3 - RENTALS
A. Tenant agrees to pay to Landlord as minimum rental (hereinafter called
"Minimum Rental") for the Premises, without notice set-off or demand, monthly
installments during the Term, and if properly exercised, each of the two Renewal
Terms, all as set forth in the table in Paragraph 3B below; said monthly
installments to be due and payable by Tenant in advance on the first day of each
calendar month during the Term of this Lease Agreement, or any extension or
renewal thereof, at the office of Landlord set forth in the preamble to this
Lease Agreement or at such other place as Landlord may designate. In the event
of any fractional calendar month, Tenant shall pay for each day in such partial
month a rental equal to 1/30 of the Minimum Rental. In no event shall Tenant be
obligated to pay any Minimum Rental or Additional Rent with respect to any
Renewal Term unless Tenant exercises and is granted its right to renew for such
term as provided herein.
B. The scheduled Minimum Rentals to be paid by Tenant are as follows:
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================================================================================
Per Annum Minimum
Rental Rate per
Rentable Square Foot of
Time Period Area Contained within
the Premises
- --------------------------------------------------------------------------------
July 1, 1999 through August 31, 1999 $0.00
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September 1, 1999 through August 31, 2000 $16.95
- --------------------------------------------------------------------------------
September 1, 2000 through August 31, 2001 $17.45
- --------------------------------------------------------------------------------
September 1, 2001 through August 31, 2002 $17.95
- --------------------------------------------------------------------------------
September 1, 2002 through August 31, 2003 $18.45
- --------------------------------------------------------------------------------
September 1, 2003 through August 31, 2004 $18.95
- --------------------------------------------------------------------------------
September 1, 2004 through August 31, 2005 $19.45
- --------------------------------------------------------------------------------
September 1, 2005 through August 31, 2006 $19.95
- --------------------------------------------------------------------------------
September 1, 2006 through August 31, 2007 $20.45
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September 1, 2007 through August 31, 2008 $20.95
- --------------------------------------------------------------------------------
September 1, 2008 through August 31, 2009 $21.45
- --------------------------------------------------------------------------------
September 1, 2009 through August 31, 2010 $21.95
- --------------------------------------------------------------------------------
September 1, 2010 through August 31, 2011 $22.45
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September 1, 2011 through August 31, 2012 $22.95
- --------------------------------------------------------------------------------
September 1, 2012 through August 31, 2013 $23.45
- --------------------------------------------------------------------------------
September 1, 2013 through August 31, 2014 $23.95
- --------------------------------------------------------------------------------
September 1, 2014 through August 31, 2015 $24.45
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September 1, 2015 through August 31, 2016 $24.95
- --------------------------------------------------------------------------------
September 1, 2016 through August 31, 2017 $25.45
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September 1, 2017 through August 31, 2018 $25.95
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September 1, 2018 through August 31, 2019 $26.45
================================================================================
ARTICLE 4 - CONSTRUCTION
A. Tenant has provided or shall provide Landlord with plans and/or a
description for permanent improvements to modify the Premises to accommodate
Tenant's intended use (hereafter called the "Preliminary Plans"), which
Preliminary Plans are subject to Landlord's approval, which approval shall not
be unreasonably withheld, conditioned or delayed. The Preliminary Plans shall be
deemed approved by Landlord if Landlord fails to approve or disapprove the same
in writing within five (5) business days of receipt of such Preliminary Plans
from Tenant. Subject to the further written approval of Landlord, which approval
also shall not be unreasonably withheld, conditioned or delayed, Tenant shall
make such modifications to the Preliminary Plans as it shall require (hereafter
called the "Final Plans"). Landlord shall not be permitted to charge any
supervisory or other fees or charges with respect to, or otherwise profit from,
the Tenant Improvements. The Final Plans shall be deemed approved by Landlord if
Landlord fails to approve or disapprove the same in writing within five (5)
business days of receipt of such Final Plans from Tenant. Subject to the further
written approval of Landlord, which approval also shall not be unreasonably
withheld, conditioned or delayed, Tenant shall from time to time make such
modifications to the Final Plans as it shall require (hereafter called the
"Change Requests"). Any Change Request shall be deemed approved by Landlord if
Landlord fails to approve or disapprove the same in writing within five (5)
business days of receipt of such Change Request from Tenant. Prior to approval
of the Preliminary and Final Plans and any Change Reguests, Tenant agrees to
make its architect and engineers reasonably available to Landlord for purposes
of responding to reasonable questions of Landlord regarding such Plans or Change
Requests and their impact upon the Building. If Landlord and Tenant have not
agreed on the Final Plans by July 1, 1999, then Tenant shall have the right to
terminate this Lease Agreement at any time thereafter but prior to the time, if
at all, that Landlord has approved the Final Plans. Tenant shall have the right
to select a general contractor, construction manager, subcontractors, architects
and engineers of its choice to perform the work contemplated by the Final Plans
("Work"). The general contractor, construction manager and major subcontractors
contemplated by Tenant shall be first approved by Landlord, which approval shall
not be unreasonably withheld, conditioned or delayed. Tenant shall furnish to
the Landlord a written statement certified by Tenant and the general contractor
who shall perform the Work listing all major subcontractors and suppliers
regarding the Work. Notwithstanding that possession to the Premises shall have
been delivered to Tenant, Tenant shall not have the right and license to enter
the Premises to do the Work until it has submitted such certification to
Landlord. Tenant shall be responsible for constructing the improvements as shown
on the Final Plans (hereafter called "Tenant Improvements") at Tenant's sole
cost and expense. Article 27 below, and Tenant's obligations thereunder shall
specifically be applicable to the Tenant Improvements and all Work performed or
to be performed by Tenant. Tenant acknowledges that the Work shall begin with
the Premises in its current "as is" condition with the exception of the
following ("Landlord's Work"): the Premises shall be in broom-clean condition.
After completion of the Tenant Improvements, Tenant shall use its best efforts
to supply to Landlord lien waivers from all suppliers, subcontractors and other
entities listed on the sworn construction statement, together with a blanket
lien waiver from Tenant's contractor for the full amount of the Work. In no
event shall any Tenant Improvement which alters any existing Building system or
any Building equipment servicing more than just the Premises be deemed a trade
fixture of Tenant and, accordingly, Tenant shall not be permitted to remove the
same at the end of the Term (or last Renewal Term, if applicable). Landlord, in
connection with its approval of the Final Plans, shall provide Tenant with a
list of those improvements which Landlord will require Tenant to remove at end
of the Term (or last Renewal Term, if applicable) pursuant to Article 19 below.
Any Tenant Improvements not on such list, or if Landlord fails to supply such
list to Tenant prior to approval of the Final Plans, then Landlord shall be
deemed to have waived its rights under Article 19 to require Tenant to so remove
such Tenant Improvements. Notwithstanding the foregoing in connection with any
Tenant's equipment or other personal property and/or trade fixtures being
removed by Tenant, unless otherwise agreed in writing by Landlord, Tenant shall
remove all conduit, cabling, piping and wiring which Tenant installed in
connection with such property being removed, and shall restore the Premises
and/or repair any damage thereto resulting from such removal. Tenant shall own,
and have the right to remove at any time during or at the end of the Term (or
last Renewal Term, if applicable), all personal property installed in the
Premises by Tenant and all of Tenant's equipment, including, without limitation,
generators, removable HVAC equipment, batteries, and UPS systems.
B. The parties acknowledge that the Tenant's Work shall include the
following matters (whether or not included within the Final Plans), and that
Tenant shall have the right to do any of the following matters to which Tenant
is entitled but which are not included in the Final Plans at a later time,
subject
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to the terms of Article 12. Any of the following shall be done at Tenant's
expense unless otherwise specified, but Tenant shall not pay any additional
charge to Landlord in connection with any of the same:
1. the following electrical systems requirements:
(i) reconfiguring the power distribution system in connection
with the power to be distributed to the "Electrical Room" (as defined
below);
(ii) providing of A/C electric capacity delivered to a pull box
within the Premises at a capacity for Tenant's needs (such electrical
capacity may exist, but Tenant is responsible for verifying same, as well
as confirming that such is sufficient for its needs, including the "Tenant
Generator", as defined below). If Tenant determines that its electrical
requirements exceed the existing service to the Premises, Tenant shall be
entitled to, at its sole cost and expense, increase such capacity, provided
it obtains the necessary governmental approvals and no additional costs for
service fees are incurred by Landlord. Landlord agrees to cooperate with
any applications Tenant may be required to make to any appropriate
governmental agencies and/or public or private utility providers in
connection therewith, provided the same shall be without cost to Landlord;
(iii) Tenant shall be entitled to install UPS electrical systems
and/or batteries all in a portion of the Premises along with the
Telecommunications Equipment ("Electrical Room"), or at an alternate
location reasonably acceptable to both Landlord and Tenant, and to
integrate the Building power into such systems.
(iv) Tenant shall have the right to tie into the Building's
existing grounding systems. At Tenant's option, if the existing grounding
systems do not meet Tenant's requirements, Tenant shall have the right to
install its own electrical grounding system.
(v) Tenant shall install for the Premises (including the
Electrical Room) an electric submeter for all electrical usage therein;
2. installation of the following:
(i) Tenant shall be entitled to remove or destroy any interior
walls within the Premises, if there are any. If Tenant delivers any modular
interior walls from within the Premises to Landlord, Landlord shall store
the same until the completion of Tenant's Work, at which time said removed
modular interior walls (together with any additional modular interior walls
Landlord may have in storage) shall be made available by Landlord to Tenant
for installation of offices and rooms (including the Electrical Room)
utilizing Landlord's modular walls, to the extent Tenant so desires;
(ii) installation of floor covering and wall coverings pursuant to
Final Plans;
(iii) extension of the demising walls above the ceiling to the deck
of the third floor, pursuant to Final Plans, if Tenant is installing any
demising walls, to the extent required by applicable building codes;
(iv) Tenant shall be entitled to install cabling and conduit from
the Premises to Tenant's telecommunication antennae and related equipment
on the roof of the Building (which placement, location and maintenance of
such equipment shall be governed by a separate license agreement in the
form of Exhibit B attached hereto and incorporated herein by reference).
Tenant agrees that at no time during the Term shall it use, license or
otherwise agree to utilize any space upon the Building or land upon which
it is located for antennae space, except pursuant to Exhibit B, and in no
event shall it use, license, utilize or rent space for antennae from other
tenants or licensees of the Building without the consent of Landlord, which
consent may be conditioned upon payment of reasonable fees to Landlord;
(v) Tenant shall be entitled, without charge, to use of the
Building's existing conduit and riser space and in the event existing
conduit is not available, the installation of conduit and cabling from the
Premises to HVAC, power and telecommunications facilities within and
outside of the Building. In connection therewith Landlord shall cooperate
with Tenant to locate and utilize an appropriate riser space from the
Premises to other necessary levels of the Building, such cooperation may
include core drilling (subject to Paragraph 4C below). Tenant shall also
have the right to construct dual telecommunication conduit entrances to the
Building (as reasonably approved by Landlord), which may include the
removal and replacement of curbing and/or sidewalks, and trenching and
repairing portions of the parking lot and/or other common areas, all
subject to Paragraph 4C below. Tenant agrees to use reasonable efforts to
cooperate and coordinate with other tenants of the Building desiring or
constructing such dual telecommunication conduit entrances, to the extent
Landlord notifies Tenant of the same. Notwithstanding anything contained in
this Lease Agreement to the contrary, all cabling and conduit, located on
the exterior of the Premises shall become the property of Landlord upon the
expiration of the Term and shall be surrendered with the Premises and
Tenant shall have no obligation to remove any of the same.
(vi) Tenant shall have the right to demolish any currently
existing tenant improvements or other similar construction within Tenant's
Premises, including, without limitation, cabling, water lines and other
pipes, with the exception of Building systems and except any pipes, cables
or ducts above the ceiling in the Premises which are located between the
existing corridor adjacent to the Premises and the first row of columns
within the Premises. If any pipes, cables or ducts are central to Building
systems, Tenant may relocate them (subject to paragraph 4c below) or leave
them within the Premises, at Tenant's option.
3. installation of the following heating, ventilation, air conditioning
systems, equipment or facilities ("HVAC"):
(i) Tenant shall have the right, at any time during the lease
Term, to install a separate and independent cooling system to provide HVAC
to the Premises, including but not limited to, condensers or other cooling
equipment on the roof of the Building, in the location depicted on Exhibit
F attached hereto, provided that the footprint for such equipment on the
roof shall not exceed 1200 square feet unless approved by Landlord
("Cooling Equipment"). Tenant shall not pay for such space unless it is
required to do so pursuant to Paragraph 35B below.
(ii) Tenant shall have the right to tap into the Building
water/steam supply in order to operate a humidifier system in the Premises,
subject to Paragraph 4C below.
(iii) Tenant shall have the right to modify the Building's heating
system servicing the Premises, including, without limitation, to remove,
cap or divert the same, subject to Paragraph 4C below.
(iv) Tenant may modify the duct work and other modifications
necessary to the Building's HVAC so as to service the Premises.
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<PAGE>
(v) Tenant shall have the right to install pipes at Tenant's
expense, not to exceed a total of twelve (12) inches in diameter and any
one pipe not to exceed six (6) inches in diameter, from the roof through
the core of the Building to support existing or future HVAC systems in the
Premises.
(vi) Landlord shall provide, at no additional charge, riser space
and/or appropriate other common space to connect Tenant's Cooling Equipment
to electricity sources and to the Premises.
(vii) Tenant shall have the right to vent through the Building
ventilation system and to install drains for the Cooling Equipment and to
discard any HVAC wastewater into the Building's sewage system.
4. Subject to the prior approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed, Tenant shall be entitled to
reinforce the floor load capacity of the Premises. Tenant shall be responsible
for assuring that its equipment and any of the Work performed within the
Premises does not exceed the floor capacities of the Building and/or Premises
and Tenant shall indemnify and hold Landlord harmless from all damage, liability
and costs (including reasonable attorneys' fees) in the event it over-loads the
floor capacity of the Premises, but only to the extent it exceeds 100 pounds per
useable square foot.
5. Tenant shall have the right, subject to paragraph 4c below, in its
discretion and at its expense, to do any or all of the following: (a) convert
the present sprinkler system within the Premise to a dry-pipe, pre-action
system, (b) relocate or encase any water mains or other water pipes running
through or adjacent to the Premises, (c) install an FM 200 gas system in the
Premises, and (d) install any other fire suppression system approved by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed.
6. Tenant shall have the right, at any time, to install and maintain up to
two of its own power generators, together with associated fuel storage tanks
(the "Tenant Generators") and to integrate Building power into such Tenant
Generators. Such installation and maintenance shall be in accordance with the
following:
(a) Landlord shall provide a pad site for the Tenant
Generators at no additional charge, which shall be located outside the
Building, on the ground floor, north of the East entrance, in the
location generally depicted on Exhibit E attached, the dimensions of
which are approximately 30 feet by 30 feet. Such pad site shall be
delivered to Tenant "as is" on the date of execution of this Lease
Agreement. Tenant may secure said area by fencing or other means
reasonably approved by Landlord; however, Tenant acknowledges that an
existing generator currently adjoins said pad location and access to
such adjoining pad may in no instance be blocked by Tenant or Tenant's
use of such pad. Landlord agrees for purposes of Paragraph 35B below
that the area so secured shall be the space actually used by Tenant
for the Tenant Generators. Tenant shall have the right, at its option
and at no additional charge, to install one of the two Tenant
Generators in the roof penthouse, next to the two Building generators,
instead of the location in the foregoing sentence, provided the same
does not exceed 1,000 square feet.
(b) Landlord shall provide, at no additional charge, riser
space and/or other appropriate common space to connect such Tenant
Generators to electrical sources and to the Premises.
(c) Tenant shall first obtain such governmental approvals,
authorizations and permits as are required to install and operate the
Tenant Generators.
(d) Tenant shall maintain the Tenant Generators and any
related equipment, at its sole cost and expense, in good order and
condition and will repair any damage to the Building and/or any other
equipment caused by the Tenant Generators and/or its installation
and/or removal. Landlord shall not be liable to Tenant or to any other
person for any loss or damage to the Tenant Generator regardless of
cause, other than the negligence or acts of Landlord, its agents or
employees.
(e) Tenant shall install such spill protection and other tank
monitoring devices for the Tenant Generators as shall be required by
governmental codes and regulations, (iii) Tenant shall provide
Landlord with copies of all warranties and evidence of any testing for
the Tenant Generators required by law, and (iv) Tenant shall indemnify
Landlord from and against any and all costs and liability arising from
a leak from any such fuel tank comprising part of the Tenant
Generators, including, without limitation, any clean-up costs.
(f) Upon the termination of the Lease Agreement, Tenant will
have the right to remove the Tenant Generators, provided, (i) the
Tenant Generators are removed within five (5) days following the
termination of the Lease Agreement, and (ii) Tenant shall repair all
damage to the Building, landscaping and/or any other equipment caused
by the removal of the Tenant Generators and shall restore the area to
the condition as existing prior to such installation.
C. All of Tenant's Work shall be performed in a good and workmanlike manner
and to the extent any of such Work involves alteration or replacement of any
existing equipment or facilities of the Building, Tenant shall use a standard
and grade equal to or better than such existing equipment and facilities. To the
extent any of Tenant's Work involves areas outside the Premises ("Exterior
Work"), Tenant and its contractors shall coordinate all such Work with Landlord
and Landlord's Building Manager, on a weekly basis. Tenant shall have the right
to perform Tenant's Work 24 hours per day, seven days per week, together with
reasonable access to freight elevators, loading docks and other common areas;
provided that Tenant will use reasonable efforts to avoid undue disturbance of
other tenants of the Building between 8:00 a.m. and 5:00 p.m. weekdays. In all
events, whenever the Tenant's Work involves the alteration and/or interference
with any of the Building's systems, including, but not limited to, electrical,
water, HVAC, sprinkler, plumbing and life/health/safety systems, Tenant shall
indemnify and hold Landlord harmless with respect to any interruption of such
systems to other portions of the Building and/or other tenants and the continued
operational integrity of such systems as a result of the Work. In all events,
Tenant, at his sole cost and expense, shall obtain all applicable governmental
approvals with respect to the installation or doing of all Work including the
Exterior Work. Tenant shall cause its contractors and subcontractors to utilize
only those parking areas designated by Landlord, and to the extent such use
utilizes parking spaces, Tenant shall utilize its parking licenses (as set forth
in Paragraph 14D and Exhibit C below) for such purposes and Tenant shall be
responsible for the license fees due thereunder during such parking use by
Tenant's contractors and subcontractors. Landlord agrees to cooperate, at no
out-of-pocket cost to it, with respect to the obtaining of any such governmental
approvals, such cooperation, however, shall not extend to providing any
concessions to the governmental authority with respect to zoning, parking or
other restrictions relating to the Building.
ARTICLE 5 - POSSESSION
A. Tenant shall have access and possession to the Premises pursuant to
Article 4 above. Construction delays affecting Tenant's Work due to material
shortages, strikes, or acts of God, or otherwise shall in no event postpone the
date of commencement of the Term of this Lease Agreement nor of the payment of
rentals. By occupying the Premises as a Tenant, or to install fixtures,
facilities or equipment, or to perform the Work, Tenant shall be conlusively
deemed to have accepted the same, except for any latent defects affecting the
Building.
ARTICLE 6 - TENANT'S PRO RATA SHARE OF REAL ESTATE TAXES AND OPERATING EXPENSES
ABOVE BASE
A. Commencing with calendar year 2001, during each full or partial calendar
year during the Term of this Lease Agreement, Tenant shall pay to landlord, as
Additional Rental, the amounts by which actual Real Estate Taxes and Operating
Expenses (both as hereafter defined) per square foot of rentable area in the
Building multiplied by the number of square fast of rentable area in the
Premises exceed the Real Estate Tax Base and the Operating Expense Base,
respectively (both as hereafter defined) prorated for the period that Tenant
occupied the Premises. Consistency shall be used with all methods
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in calculating the Operating Expense Base. In the event that during all or any
portion of any calendar year, the Building is not at least 95% rented and
occupied Landlord shall make any appropriate adjustment in occupancy-related
Operating Expenses for such year for the purpose of avoiding distortion of the
amount of such Operating Expenses to be attributed to Tenant by reason of
variation in total occupancy of the Building, by employing sound accounting and
management principles to determine occupancy-related Operating Expenses that
would have been paid or incurred by Landlord had the Building been 95% rented
and occupied, and the amount so determined shall be deemed to have been
Operating Expenses for such year, provided that Landlord will not be entitled to
receive from Tenant and other tenants more than 100% of the actual occupancy-
related Operating Expenses. If Landlord incurs costs or expenses associated with
or relating to separate items or categories of Operating Expenses that were not
part of Operating Expenses during the year of the Operating Expense Base, then
the Operating Expenses for the year of the Operating Expense Base will be deemed
increased by the amounts Landlord would have incurred during the year of the
Operating Expense Base with respect to such costs and expenses had such separate
items or categories of Operating Expenses been included in Operating Expenses
during the year of the Operating Expense Base. As used herein, the "Real Estate
Tax Base" shall be the actual per rentable square foot Real Estate Taxes for the
Building for the calendar year 2000, times the rentable square feet contained
within the Premises, and the "Operating Expense Base" shall be the actual per
rentable square foot Operating Expenses for the Building for the calendar year
2000, times the rentable square feet contained within the Premises. If the
actual Real Estate Taxes or Operating Expenses per square foot times the
rentable square feet contained within the Premises are less than the Real Estate
Tax Base or Operating Expense Base, respectively, Tenant shall not be entitled
to any refund or credit.
B. Commencing with calendar year 2001, Landlord shall, each year during
the Term of this Lease Agreement, give Tenant an estimate of Operating Expenses
and an estimate of Real Estate Taxes payable per square foot of rentable area in
the Building multiplied by the number of square feet of rentable area in the
Premises for the coming calendar year. If either such estimate exceeds the
respective Real Estate Tax Base or Operating Expense Base (as defined above),
Tenant shall pay, as Additional Rental, along with its monthly Minimum Rental
payments required hereunder, one-twelfth (1/12) of such excess estimated
Operating Expenses and/or Real Estate Taxes and such Additional Rental shall be
payable until subsequently adjusted for the following year pursuant to this
Article.
C. As soon as possible after the expiration of each calendar year beginning
with the year 2002, but in any event no later than ninety (90) days following
the close of the calendar year, Landlord shall determine and certify to Tenant
the actual Operating Expenses and Real Estate Taxes for the previous year per
square foot of rentable area in the Building and the amounts applicable to the
Premises. If such statement shows that Tenant's share of increases in Operating
Expenses and Real Estate Taxes over the Operating Expense Base and the Real
Estate Tax Base, respectively exceeds Tenant's estimated monthly payments for
the previous calendar year, then Tenant shall, within twenty (20) days after
receiving Landlord's certification, pay such deficiency to Landlord. In the
event of an overpayment by Tenant, such overpayment (not to exceed the amount of
the estimated payments) shall be refunded to Tenant, at the time of
certification, in the form of an adjustment in the Minimum Rental or Additional
Rental next coming due, or if at the end of the Term by a refund. By written
notice given to Landlord no later than six (6) months following delivery of the
written certification of Landlord, Tenant shall have the right to audit, or have
audited the written certification and the books and records from which such
certification is derived. Tenant shall pay the costs of any such audit, unless
it is determined that Tenant's overpayment was more than three percent (3%) of
the actual amount in which case Landlord shall reimburse Tenant for the
reasonable cost of the audit.
D. For purposes of this Article, the term "Real Estate Taxes" means the
total of all taxes, fees, charges and assessments, general and special, ordinary
and extraordinary, foreseen or unforeseen, which become due and payable upon the
Building. All reasonable costs and expenses incurred by Landlord during
negotiations for or contests of the amount of Real Estate Taxes shall be
included within the term "Real Estate Taxes". For purposes of this Article, the
term "Operating Expenses" shall be deemed to mean all reasonable costs and
expenses directly related to the Building incurred by Landlord in the repair
operation, management and maintenance of the Building including interior and
exterior and common area maintenance, management fees (to the extent the same
are included in the BOMA definition of "reasonable and customary fees for
management in the building), cleaning expenses, energy expenses except as
provided below, insurance premiums, and the amortization of capital investments
made to reduce operating costs (including reroofing costs) to the extent of
reasonably anticipated savings to be achieved thereby or that are necessary due
to govermnental requirements not in effect on the date of this Lease Agreement,
all in accordance with generally accepted accounting principles. Landlord agrees
that notwithstanding anything to the contrary in this Lease Agreement, Tenant's
proportionate share of Operating Expenses shall not be increased for any
calendar year by more than 3% over the previous calendar year. The following
shall not be included in Operating Expenses:
1. real estate brokerage and leasing commissions and other expenses
incurred for leasing;
2. cost of alterations or improvements of any tenant's premises;
3. allowances or concessions provided to any tenant or occupant of the
Building;
4. costs incurred to make major repairs or replacements of any
defective initial construction of the Building and related appurtenances
regardless of how such costs are characterized under generally accepted
accounting principles, and costs incurred for repairs or other items to the
extent Landlord is reimbursed by third parties;
5. legal expenses incurred in connection with the preparation or
negotiation of leases, subleases, assignments or other lease-related
documents with current, prior or prospective tenants or occupants of the
Building;
6. marketing or advertising costs to solicit new tenants;
7. wages, salaries, fees, and fringe benefits paid to executive
personnel or officers or partners of Landlord not having direct day to day
responsibility for operating or providing services to the Building;
8. the cost, above any applicable deductible, of repairs or other work
occasioned by fire, windstorm or other casualty of an insurable nature or
by the exercise of eminent domain;
9. costs incurred for alterations, replacements or improvements that
would be considered capital improvements under generally accepted
accounting and sound management principles consistently applied, except
current amortization (together with interest of ten percent (10%) per annum
on the unamortized amount) of the capital improvement cost over the
reasonable useful life of the improvement where such capital improvement is
reasonably necessary to improve the operation or maintenance efficiency of
the Building or as otherwise expressly permitted above, provided that the
amortization costs charged to direct costs for capital improvements to
improve the operation or maintenance efficiency of the Building shall be
limited to the estimated reduction in direct costs for the relevant years
resulting from such capital improvements;
10. expenses in connection with services or other benefits of a type
which are not provided or available to Tenant but which are provided to
another tenant of the Building or to some other third party. Tenant
acknowledges that janitorial expenses for the Building and for individual
tenant spaces are included within Operating Expenses notwithstanding that
janitorial services shall be supplied only to the office portions of the
Premises;
11. costs incurred due to violation by Landlord or any tenant of the
Building of the terms or conditions of any lease;
12. Landlord's general overhead except as it directly relates to the
management and operation of the Building;
13. all items and services for which any tenant reimburses Landlord or
pays third persons;
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14. ground lease rentals, principal or interest payments, refinancing
charges or points, or penalties resulting from late payments by the
Landlord, or depreciation;
15. costs incurred in connection with the cure or correction of latent
defects at the Building and cost incurred in connection with the clean-up
of Hazardous Substances from the Project or Building;
16. Landlord's cost of services sold separately to tenants for which
Landlord is entitled to be reimbursed by such tenants as an additional
charge;
17. costs incurred in connection with negotiations or disputes with
tenants of the Building and costs incurred due to the violation by Landlord
of the terms of any lease or other contract;
18. costs incurred in connection with renovating or otherwise
improving or decorating leased space for other tenants or other occupants
or vacant tenant space, other than common areas, and costs incurred in
connection with any construction or improvement of any portion of the
Building except the common areas and with construction or improvement of
any additional building or structure on the land on which the Premises is
located;
19. any particular item or service for which Tenant otherwise
reimburses Landlord by direct payment;
20. any expense for which Landlord is compensated through proceeds of
insurance or agreements of indemnity or surety bonds or guaranties or for
which Landlord is reimbursed by third parties;
21. any fines or penalties or other expenses incurred due to actual or
alleged violations by the Building of any governmental law, rule or
authority which is in effect on the date of this Lease Agreement and any
fines or penalties or other expenses incurred due to actual or alleged
violations by Landlord of any governmental law, rule or authority whether
or not in effect on the date of this Lease Agreement;
22. cost of legal, accounting and other professional services incurred
by Landlord in connection with leasing activities or other activities which
are not Operating Expenses, and costs of audits of any kind performed by
tenants;
23. any bad debt loss, rent loss, or reserves for bad debt or rent
loss;
24. Landlord's general corporate overhead and general administrative
expenses;
25. Costs arising from Landlord's charitable or political
contributions;
26. Real Estate Taxes; and
27. Any types of utility services (including, without limitation,
electricity, water, gas, sewer and telephone) that at any time during the
Term of this Lease Agreement (any Renewal Terms) are separately metered or
contracted for and paid for by Tenant directly, to the extent serving any
other tenant portions of the Building, except that Landlord may include
within Operating Expenses electrical usage by tenants not currently
separately submetered (but such tenants shall not exceed 10% of the
Building's area).
E. Landlord may at any time designate a fiscal year in lieu of a calendar
year and in such event, at the time of such a change, there may be a billing for
the fiscal year which is less than 12 calendar months. Any such change shall not
increase the amounts that Tenant would otherwise owe hereunder.
F. Landlord reserves, and Tenant hereby assigns to Landlord, the sole and
exclusive right to contest, protest, petition for review, or otherwise seek a
reduction in the Real Estate Taxes. In the event of any reductions in the Real
Estate Taxes due to Landlord's contesting the same which relate to taxes due and
payable for a year during the Term (or any Renewal Terms), such tax reduction,
after payment of Landlord's reasonable costs and expenses incurred in connection
with effectuating such reduction (unless such costs and expenses have already
been reimbursed as part of prior Real Estate Tax payments), shall be
retroactively given effect, and Tenant shall be refunded its Proportionate Share
of said reduction (but not below the Real Estate Tax Base).
G. Landlord shall keep and maintain records of all Operating Expenses and
Real Estate Taxes for a period of not less than two (2) years, which records
shall be made available to Tenant at reasonable times at Landlord's offices for
inspection and copying by Tenant or its representatives, at Tenant's cost. If
Tenant in good faith disputes the accuracy of the total amount of Operating
Expenses or Real Estate Taxes, Tenant may audit Landlord's books and records by
Tenant's representative. If such audit establishes that any of the actual
Operating Expenses or Real Estate Taxes are less than Landlord's final
determination thereof by three percent (3%) or more, then Landlord shall pay the
cost of such audit. Any over-charged or under-paid amounts shall be reimbursed
by the responsible party within thirty (30) days following delivery of such
audit to Landlord, provided Landlord does not contest the same. Any amounts
payable pursuant to this Lease Agreement shall continue to be paid during the
pendency of any audit or dispute, but upon final determination or resolution of
such dispute, any amounts payable by one party to the other hereunder shall bear
interest at the rate of twelve percent (12%) per annum.
H. Tenant agrees to pay as Additional Rent, which shall be collectable to
the same extent as Minimum Rental, any tax, charge or fee which may be levied,
assessed or imposed upon or measured by the rents reserved hereunder by any
governmental authority acting under any present of future law, before any fine,
penalty, interest or costs may be added thereto for non-payment. The foregoing
shall not be construed to include any form of income tax.
ARTICLE 7 - UTILITIES AND SERVICE; ACCESS, COLOCATION AND INTERCONNECTION
A. Landlord agrees to provide water and sanitary sewer services to the
common area restrooms of the Building, together with janitorial supplies and
cleaning services to such restroom facilities.
B. Landlord agrees to furnish standard heat, ventilation and air
conditioning, adequate for normal office operations, to the Premises, or, at
Tenant's option, exclusively to the office areas of the Premises (provided
Tenant does not remove and/or relocate the HVAC duct work serving the office
areas of the Premises), during normal business hours, at no additional charge.
Landlord shall also provide electricity and janitorial services to the office
areas of the Premises (specifically excluded from the Electrical Room), on a 24-
hour basis. Electricity to the Premises shall be by separate submeter installed
by Tenant at its expense, if not currently existing.
C. Tenant shall make arrangements to connect the Premises to Building power
in the high voltage room in the "penthouse" and equipment rooms, or otherwise as
approved by Landlord, which approval shall not be unreasonably withheld.
Thereafter, Landlord shall deliver to the Premises at all times, through the
duration of the Term and any Renewal Terms, a minimum of 1200 amps of 480 volt
a/c three phase power.
D. No temporary interruption or failure of such services incidental to the
making of repairs, alterations or improvements, or due to accidents or strike or
conditions or events not under Landlord's control, shall be deemed as an
eviction of the Tenant or relieve the Tenant from any of the Tenant's
obligations hereunder. Notwithstanding the foregoing, if for any reason
whatsoever, except due to force majeure or by any negligent act or omission or
intentional misconduct of Tenant and as a result: (i) all or any portion of the
Premises shall become untenantable (the "Untenantable Premises") for the normal
conduct of Tenant's business for a period of three (3) consecutive days, (ii)
Tenant shall vacate the Untenantable Premises and cease doing business therein
in (provided, however, that the continued presence of Tenant's security
personnel therein for the purposes of preservation of Tenant's property shall
not constitute a failure by Tenant to vacate the Untenantable Premises) and
(iii) Tenant shall give notice to Landlord of the facts set forth in clauses (i)
and (ii) above, then in such event, the portion of the Rents allocable to the
Untenantable Premises shall be fully abated for the period commencing on the day
that all
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the conditions set forth in (i), (ii) and (iii) above shall first be satisfied
and ending on the date that the Untenantable Premises shall be rendered usable
for the normal conduct of Tenant's business and Landlord shall have given notice
thereof (or the date Tenant shall re-occupy the Untenantable Premises for the
normal conduct of its business, if earlier).
E. For the purposes of this Article 7, normal business hours shall be
deemed to mean the period of time between 8:00 am. and 6:00 p.m., Monday through
Friday, and 8:00 a.m. to 1:00 p.m. Saturdays, and specifically excluding Sundays
and legal holidays. Landlord agrees that Tenant and its customers and vendors
shall have access to the Premises, common areas, power and telephone closets
serving the Premises, the elevator and parking area, freight elevators and
loading dock and any of Tenant's equipment in the Building or otherwise within
Landlord's control, 24 hours per day, 7 days per week, 52 weeks per year. After
normal business hours such access may be subject to the use of security cards
and other rules and regulations which Landlord may adopt from time to time with
respect to the Building, provided the same are reasonable and are equally
applicable to all tenants of the Building and are not inconsistent with the
foregoing and do not materially interfere with the conduct of Tenant's business.
Landlord specifically acknowledges that Tenant's business requires regular
access to the Premises for Tenant's customers after normal business hours.
Landlord also agrees that it will establish procedures that permit access to
areas other than the Premises after normal business hours, which procedures will
include a mechanism for access without advance notice for repairs and other
urgent matters that are unanticipated.
F. Tenant shall have all of the rights provided in this Section 7(F), at
no additional charge. Tenant shall have the right to place telecommunications
equipment of its customers within the Premises ("Co-Location") without
Landlord's consent and such Co-Location shall not be deemed an assignment or
sublease or restricted license under the terms of this Lease Agreement
regardless whether a written agreement exists between Tenant and its customers,
Tenant shall have the right in addition to Co-Location to provide rights to
temporarily use portions of the Premises (not to exceed 3 weeks in duraton) to
its customers and vendors without Landlord's consent. Tenant shall have the
right to connect customer equipment to telecommunications facilities in the
Building. Tenant shall have the right to interconnect its telecommunications
facilities with, and/or to provide telecommunications services to, other tenants
of the Building. Landlord shall provide access to and space within building
risers for the foregoing purposes at no additional charge.
G. Tenant shall have the right to make its own arrangements for power.
ARTICLE 8- NON-LIABILITY OF LANDLORD AND YEAR 2000 READINESS DISCLOSURE
A. Except in the event of negligence of Landlord, its agents, employees
or contractors, or as specifically provided herein, Landlord shall not be liable
for any loss or damage for failure to furnish heat, air conditioning,
electricity, elevator service, water, sprinkler system or janitorial service.
Landlord shall not be liable for personal injury, death or any damage from any
cause about the Premises or the Building except if caused by Landlord's
negligence or willful misconduct.
B. Landlord shall provide Tenant with a list of the Building's major
equipment ("Major Equipment") manufacturers, as reasonably requested by Tenant,
including model numbers and software version numbers of any software utilized
with such equipment, to the extent known or reasonably ascertainable by
Landlord. Major Equipment shall be deemed to include, without limitation, the
Building's fire surpression system. Landlord shall use its good faith efforts to
obtain from its vendor/servicors of its Major Equipment a Y2K compliance
statement with respect to such Major Equipment and shall utilize its good faith
efforts to conform any such Major Equipment so as to be Y2K compliant, to the
extent it discovers that any such Major Equipment is not Y2K compliant. The
foregoing is not a guaranty nor an indemnification that no interruptions or
malfunctions will result as a passage from the year 1999 to the year 2000, but
rather to simply disclose to Tenant the steps Landlord has and/or will take and
Tenant specifically releases Landlord from damages, liabilities or costs or
expenses which may arise out of such interruption and/or malfunction, unless
Landlord has breached the representations set forth in this Article.
ARTICLE 9- CARE OF PREMISES
A. Tenant agrees:
1. To keep the Premises in as good condition and repair as they
were in at the time Tenant took possession of same, reasonable wear and
tear and damage from fire and other casualty for which insurance is
normally procured excepted;
2. To keep the Premises in a clean and sanitary condition and
to be responsible for janitorial services for the switch room;
3. Not to commit any nuisance or waste on the Premises,
overload the Premises or the electrical, water and/or plumbing facilities
in the Premises or Building, throw foreign substances in plumbing
facilities, or wastefully use any of the utilities furnished by Landlord;
4. To abide by such rules and regulations as may from time to
time be reasonably promulgated by Landlord and of which Tenant has
received written notice, except to the extent any of the same conflict
with the terms and provisions of this Lease;
5. To obtain Landlord's prior approval (not to be unreasonably
withheld, conditioned or delayed) of the interior design of any portion
of the Premises visible from the common areas or from the outside of the
Building. "Interior design" as used in the preceding sentence shall
include but not be limited to floor and wall coverings, furniture, office
design, artwork and color scheme; and
6. Landlord shall have no obligation to maintain, repair or
replace any equipment and/or trade fixtures which services, or is
dedicated, solely or exclusively to the Premises and/or Tenant.
B. If Tenant shall fail to keep and preserve the Premises in the state of
condition required by the provisions of this Article 9, the Landlord may at its
option put or cause the same to be put into the condition and state of repair
agreed upon, and in such case the Tenant, on demand, shall pay the cost thereof.
C. Landlord agrees to keep and maintain the common areas of the Building
consistent with other Class B buildings in the Minneapolis central business
district and to supply janitorial services for only the office and common areas.
ARTICLE 10- NON-PERMITTED USE
A. Tenant agrees to use the Premises only for the purposes set forth in
Article 2 hereof. Tenant further agrees not to commit or permit any act to be
performed on the Premises or any omission to occur which shall be in violation
of any statute, regulation or ordinance of any governmental body or which will
increase the insurance rates on the Building or which will be in violation of
any insurance policy carried on the Building by the Landlord. Landlord agrees
that Tenant's use of the Premises as expressly permitted in this Lease Agreement
will not increase the insurance rates on the Building or violate any insurance
policy carried on the Building by Landlord. Tenant, at its expense, shall comply
with all governmental laws, ordinances, rules and regulations applicable to
Tenant's particular use of the Premises and shall promptly comply with all
governmental orders, rulings and directives for the correction, prevention and
abatement of any violation upon, or in connection with Tenant's particular use
of the Premises, including the making of any alterations or improvements to the
Premises, all at Tenant's sole cost and expense. The Tenant shall not disturb
other occupants of the Building by making any undue or unseemly noise and shall
not do or permit to be done in or about the Premises anything which will be
dangerous to life or limb. In connection with the foregoing provision, Tenant
covenants and agrees that it shall not store, process, produce or dispose of any
flammables, explosives, radioactive materials, ACM's, polychlorinated biphenyls
(PCB's), chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous waste, toxic substances, petroleum and petroleum
products, chloraflora carbons (CFC's) and substances declared to be hazardous or
toxic (collectively "Hazardous Substances") in violation of any present or
future federal, state or local environmental law, ordinance or regulation
("Environmental Laws") upon the Premises or any part thereof without first
obtaining Landlord's written consent, which consent may be withheld or denied in
Landlord's sole discretion, provided that Landlord hereby consents to Hazardous
Substances in small quantities as are typically used in an office building (such
as, toner, cleaning fluids,
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etc.) and in a telecommunications and computer equipment room. Tenant agrees to
indemnify and defend and hold Landlord harmless from and against all fines
suits, claims, actions, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) asserted against Landlord arising out of and in any
way connected with Tenant's failure to comply with its obligations of this
Paragraph or arising from the consented to presence of Hazardous Substances
which Landlord has consented to under this paragraph (specifically including any
diesel fuel), which indemnification shall survive the expiration of the
termination of this Lease Agreement.
B. Landlord represents that it was not the owner of the Building during
construction. Landlord warrants and represents that, to the best of its
knowledge, there are no Hazardous Substances in the Building, including, without
limitation, lead-based paint, except as may be disclosed in the environmnental
Report" (as defined hereafter). Landlord warrants and represents that, to the
best of its knowledge, there is no asbestos in the Building. Landlord shall make
available that certain Phase I Environmental Report prepared on behalf of the
FDIC/RTC ("Environmental Report") to Tenant. Landlord warrants and represents
that there is nothing contained in the Environmental Report which would
materially interfere with Tenant's use of the Premises and or construction of
its Work. Landlord hereby covenants that if, at any time during the Term of the
Lease Agreement, as the same may be extended, "Hazardous Substances" are
required to be removed, encapsulated or otherwise remediated by any legal
governmental authority having jurisdiction over the Building, the presence for
which Landlord is the "responsible party" and Tenant is not a "responsible
party" (as defined by Environmental Laws) then Landlord shall so remediate the
same as so required, at Landlord's sole cost and expense and not as a part of
Operating Expenses. Landlord agrees to indemnify and defend and hold Tenant
harmless from and against all fines, suits, claims, actions, damages,
liabilities, costs and expenses (including attorneys' fees) asserted by such
governmental authorities against Tenant arising out of or in any way connected
with Landlord's failure to comply with its obligations in the preceding
sentence, which indemnification shall survive the expiration or the termination
of this Lease Agreement.
ARTICLE 11 - INSPECTION
The Landlord or its employees or agents shall have the right without any
diminution of rent or other charges payable hereunder by Tenant to enter the
office portion of the Premises at all reasonable times for the purpose of
exhibiting the Premises to prospective tenants or purchasers, inspection,
cleaning, repairing, testing, altering or improving the same or said Building,
but nothing contained in this Article shall be construed so as to impose any
obligation on Landlord to make any repairs, alterations or improvements.
Landlord's rights under this section shall be exercised in such a manner as to
create the least practicable interference with Tenant's use and occupancy of the
Premises. Except in the case of an emergency posing imminent danger to any
person, the Premises, or any other portion of the Building which makes notice to
Tenant impractical, any entry on the Premises by Landlord shall be made at
reasonable times after reasonable notice to Tenant. In exercising Landlord's
rights of entry, Landlord shall comply with Tenant's reasonable security
regulations of which Landlord has been advised of in writing. Landlord hereby
recognizes that Tenant is engaged in a business that involves access to
privileged and confidential matters and information and agrees to take
reasonable precautions as to not compromise such confidentiality or Tenant's
security procedures. Therefore Landlord agrees that Landlord may enter and pass
through the Premises only when accompanied by a representative of Tenant,
provided that Tenant agrees to make such representative available. Landlord
agrees that it shall not enter the Premises for the purpose of exhibiting the
Premises to prospective tenants, except during the last nine (9) months of the
Term, as the same may be extended, or at any time when Tenant is in default.
ARTICLE 12 - ALTERATIONS
Except as provided in Section 4(B)(2)(v), Tenant will not make any
alterations, additions or improvements in or to the Premises or add, disturb or
in any way change any plumbing, wiring, life/safety or mechanical systems,
locks, or structural portions of the Building (any of the same, "Alterations")
without the prior written consent of the Landlord as to the character of the
Alterations, the manner of doing the work, and the contractor doing the work
(approval of the Preliminary Plans, Final Plans and any Change Requests shall be
governed by Article 4 and shall not require separate consent under this Article
12). Such consent shall not be unreasonably withheld, conditioned or delayed. If
Landlord fails to approve or disapprove any proposed Alterations in writing
within five (5) business days of receipt of a request therefor from Tenant, then
such Alterations shall be deemed approved by Landlord. All such work shall
comply with all applicable governmental laws, ordinances, rules and regulations.
Landlord shall not be permitted to charge any supervisory or other fees or
charges with respect to, or otherwise profit from, any Alterations. Tenant shall
have the right to perform approved Alterations 24 hours per day, seven days per
week, together with reasonable access to freight elevators, loading docks and
other common areas; provided that Tenant will use reasonable efforts to avoid
undue disturbance of other tenants of the Building between 8:00 a.m. and 5:00
p.m. weekdays. Landlord, in connection with its approval of any Alterations,
shall provide Tenant with a list of those improvements which Landlord will
require Tenant to remove at the end of the Term (or last Renewal Term, if
applicable) pursuant to Article 19 below. Any improvements not on such list, or
if Landlord fails to supply such list to Tenant prior to the approval of the
Alterations, then Landlord shall be deemed to have waived its rights under
Article 19 to require Tenant to so remove such improvements. Notwithstanding the
foregoing in connection with any Tenant's equipment or other personal property
and/or trade fixtures being removed by Tenant, unless otherwise agreed in
writing by Landlord, Tenant shall remove all conduit, cabling, piping and wiring
which Tenant installed in connection with such property being removed, and shall
restore the Premises and/or repair any damage thereto resulting from such
removal. Tenant shall own, and have the right to remove at any time during or at
the end of the Term (or last Renewal Term, if applicable), all personal property
installed in the Premises by Tenant and all of Tenant's equipment, including,
without limitation, generators, removable HVAC equipment, batteries, and UPS
systems.
ARTICLE 13 - SIGNS
Tenant agrees that no signs or other advertising materials shall be
erected, attached or affixed to any portion of the interior or exterior of the
Premises or the Building without the express prior written consent of Landlord.
Landlord, at its sole cost and expense, shall install Building standard tenant
graphics at the main entry to the Premises (which, if Tenant requests, may
incorporate Tenant's logo as may be agreed to between Landlord and Tenant) and
an indentification strip for Tenant on the Building's lobby directory. Tenant
shall have the right to use its standard graphics at the entrance inside
the Premises, and Landlord hereby consents thereto.
ARTICLE 14 - COMMON AREAS
A. Tenant agrees that the use of all corridors, passageways, elevators,
toilet rooms, parking areas and landscaped area in and around said Building, by
the Tenant or Tenant's employees, visitors or invitees, shall be subject to such
reasonable rules and regulations as may from time to time be made by Landlord
for the safety, comfort and convenience of the owners, occupants, tenants and
invitees of said Building and of which Tenant has received written notice,
except to the extent any of the same conflict with the terms and provisions of
this Lease. Tenant agrees that no awnings, curtains, drapes or shades shall be
used upon the Premises except as may be approved by Landlord, such approval not
to be unreasonably withheld, delayed or conditioned.
B. In addition to the Premises, Tenant shall have the right of non-
exclusive use, in common with others, of (a) all unrestricted automobile parking
areas, driveways and walkways, and (b) loading facilities, freight elevators and
other facilities as may be constructed in the Building, and (c) public restrooms
cafeteria, hallways, the lobby, elevators, sidewalks, hallways, stairways,
common entrances and other similar public areas and access ways, all to be
subject to the terms and conditions of this Lease Agreement and to reasonable
rules and regulations for the use thereof as prescribed from time to time by
Landlord and of which Tenant has received written notice, except to the extent
any of the same conflict with the terms and provisions of this Lease.
C. Provided that none of the same shall unreasonably interfere with the
conduct of Tenant's business or unreasonably increase the amount of Operating
Expenses or Real Estate Taxes that Tenant would otherwise owe: (a) Landlord
shall have the right to make changes or revisions in the site plan and in the
Building so as to provide additional leasing area, (b) Landlord shall also have
the right to construct additional buildings on the land described on Exhibit A-2
for such purposes as Landlord may deem appropriate, (c) subject to Tenant's
rights in respect of the Tenant Improvements, Landlord also reserves all
airspace rights above, below and to all sides of the Premises, including the
right to make changes, alterations or provide additional leasing areas.
D. Landlord and Tenant agree that Landlord will not be responsible for any
loss, theft or damage to vehicles, or the contents thereof, parked or left in
the parking areas of the Building and Tenant agrees to so advise its employees,
visitors or invitees who may use such parking areas. The parking areas shall
include those areas designated by Landlord, in its sole discretion, as either
restricted or unrestricted parking areas. Any restricted parking area shall be
leased only by separate license agreement with Landlord. Landlord agrees to
provide Tenant unassigned parking spaces pursuant to the license agreement in
the form of Exhibit C, and assigned parking spaces pursuant to the license
agreement in the form of Exhibit C-l. The parking spaces being made available to
Tenant pursuant to this Paragraph shall be made available at the commencement of
the Term and through January 1, 2000 and continuing thereafter during the
balance of the Term and Renewal Terms, but only to the extent Tenant continues
the initial number of parking spaces continuously. If
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Tenant should cease one or more such parking spaces after January 1, 2000, then
Landlord shall not and does not guaranty that Tenant shall be entitled to
subsequently have such parking spaces available to it, provided that Landlord
agrees to make such parking spaces available to Tenant again if the same become
available.
E. Landlord shall finalize reinstallation of carpeting in common areas
within the Building with due diligence after major construction of tenant areas
(including the Premises) has been finalized.
ARTICLE 15- ASSIGNMENT AND SUBLETTING
A. Tenant agrees not to assign, sublet, license, or encumber this Lease
Agreement, the Premises, or any part thereof, whether by voluntary act,
operation of law, or otherwise without the specific prior written consent of
Landlord; provided however, Landlord agrees not to unreasonably withhold,
condition, delay or deny such consent if: i) such assignment or sublease is in
writing and the assignee or sublessee assumes all the obligations of Tenant
under this Lease Agreement; ii) the remaining provisions of this Lease Agreement
continue to be applicable; and iii) Tenant shall remain liable hereunder.
Landlord further hereby gives its consent to an assignment of this Lease
Agreement or sublease of the Premises to any entity which controls, is
controlled by, or is under common control with Tenant or to any entity into or
with which Tenant is merged or to the purchaser of all or substantially all the
ownership interests or assets of Tenant. Any such assignment of subletting for
which consent is deemed given pursuant to the prior sentence, shall comply with
clauses i) through iii) of the first sentence of this Article. Tenant agrees to
give Landlord notice within ten 10 days after the occurrence of any such
event, together with a copy of any assignment and assumption agreement. Consent
by Landlord in one such instance shall not be a waiver of Landlord's rights
under this Article as to requiring consent for any subsequent instance. In the
event Tenant desires to sublet a part or all of the Premises, or assign this
Lease Agreement, and Landlord's consent is required hereunder, Tenant shall give
written notice to Landlord at least thirty (30) days prior to the proposed
subletting or assignment, which notice shall state the name of the proposed
subtenant or assignee, the terms of any sublease or assignment documents and
copies of financial reports or other relevant financial information of the
proposed subtenant or assignee. At Landlord's option, any and all payments by
the proposed assignee or sublessee with respect to the assignment of sublease
shall be paid directly to Landlord. In any event no subletting or assignment
shall release Tenant of its obligation to pay the rent and to perform all other
obligations to be performed by Tenant hereunder for the Term of this Lease
Agreement. The acceptance of rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision hereof.
B. Notwithstanding anything to the contrary contained in this Article,
Tenant may collaterally assign, mortgage, pledge, or hypothecate, without
Landlord's consent, its interest in this Lease Agreement to any financing
entity, or agent on behalf of any financing entity to whom Tenant: i) has
obligations for borrowed money or in respect of guarantees thereof, ii) has
obligations evidenced by bonds, debentures, notes, or similar instruments, or
iii) has obligations under or with respect to letters of credit, bankers'
acceptances and similar facilities or in respect of guarantees thereof.
C. Landlord's right to assign this Lease Agreement is and shall remain
unqualified upon any sale or transfer of the Building and, providing the
purchaser succeeds to the interests of Landlord under this Lease Agreement and
assumes the Landlord's obligations hereunder, Landlord shall thereupon be
entirely freed of all obligations of the Landlord accruing hereunder after such
conveyance and shall not be subject to any liability resulting from any act or
omission or event occurring after such conveyance.
ARTICLE 16- LOSS BY CASUALTY
A. If the Building is damaged or destroyed by fire or other casualty,
Landlord shall promptly repair the same unless this Lease is terminated as
provided herein. If 25% or more of the Building is damaged by fire or other
casualty, and in the reasonable opinion of Landlord: i) the Premises cannot be
restored to tenantable condition within a period of ninety (90) days following
the commencement of such restoration work, and/or ii) the cost of performing
such restoration work exceeds the proceeds of Landlord's casualty insurance or
the casualty insurance that Landlord is required to carry pursuant to this Lease
Agreement, whichever is greater, by more than $100,000, excluding any applicable
deductible, then Landlord shall not be required to make any repairs and
Landlord, if it elects not to make repairs, shall have the right to terminate
this Lease Agreement upon written notice to Tenant within thirty (30) days of
the date of such fire or other casualty, in which event, this Lease Agreement
shall terminate as of the date specified in such notice, which date shall be at
least 30 not more than sixty days after such notice, and Landlord and Tenant
shall be released from any and all liability thereafter accruing hereunder.
Landlord shall notify Tenant of its decision to rebuild or not within said
thirty (30) day period. Anything herein to the contrary notwithstanding, if the
Premises or any other portions of the Building providing essential services or
access to the Premises are destroyed or so damaged that they cannot be repaired
and made tenantable within ninety (90) days following commencement of such
restoration work, or so damaged that Landlord shall decide not to repair or
rebuild, or Landlord decides to repair or rebuild, but does not restore the
Premises or any such other portions of the Building to a tenantable condition
within ninety (90) after commencement of such restoration work (subject to an
extension of up to an additional sixty (30) days due to causes beyond Landlord's
control), or if for any other reason the Premises is not restored to a
tenantable condition within 150 days of the date of the fire or other casualty,
then, in any of such instances, Tenant may terminate this Lease Agreement by
giving notice to Landlord within thirty (30) days after Tenant's receipt of
Landlord's notice or the expiration of said ninety (90) day period (as extended
due to causes beyond Landlord's control, as set forth above) or the expiration
of the 150 day period as set forth above, as applicable, in which event this
Lease Agreement shall terminate as of the date of such notice and Landlord and
Tenant shall be released from any and all liability thereafter accruing
hereunder. If this Lease Agreement has not been terminated by either Landlord or
Tenant, then the rents due hereunder shall abate during such period of time as
the Premises are untenantable, in the proportion that the untenantable portion
of the Premises bears to entire Premises and, if necessary, shall be refunded to
Tenant. If the Premises is damaged so that Tenant cannot reasonably conduct its
business therein, then immediately following such damage, Tenant shall have the
right to relocate the Premises for the balance of the Term, including any
renewals, to any other space in the Building which may then be "Available for
Leasing" (as defined in Article 34 below), by notice given to Landlord within 45
days after such damage (but prior to the date when, if at all, the Premises is
restored). Landlord shall cooperate with Tenant in identifying such space which
is Available for Leasing and, if Tenant exercises such right, in arranging for
the relocation. If such relocated space varies in size from the Premises, a
ratification agreement pursuant to first substantive paragraph of this Lease
Agreement shall be entered into.
B. If the Premises are to be repaired under this Article 16, Landlord shall
repair any injury or damage to the Building itself and the Premises in
substantially the condition the same were in at the execution of this Lease
Agreement, specifically excluding any leasehold improvements constructed by
Tenant, Tenant's Equipment or any Collateral, all of which shall be restored to
the extent Tenant deems necessary, at Tenant's sole cost and expense. Tenant
shall at its own cost and expense, remove all of its furniture and other
personal property from the Premises as Landlord shall reasonably require in
connection with its repair and restoration of the Premises under this Article
16.
ARTICLE 17- WAIVER OF SUBROGATION
Landlord and Tenant hereby release the other from any and all liability or
responsibility to the other or anyone claiming through or under them by way of
subrogation or otherwise for any loss or damage to property caused by fire or
any of the extended coverage or supplementary contract casualties, even if such
fire or other casualty shall have been caused by the fault or negligence of the
other party, or anyone for whom such party may be responsible, provided however,
that this release shall be applicable and in force and effect only with respect
to loss or damage occurring during such times as the releasing party's policies
shall contain a clause or endorsement to the effect that any such release would
not adversely affect or impair said policies or prejudice the right of the
releasing party to recover thereunder. Landlord and Tenant agree that they will
request their insurance carriers to include in their policies such a clause or
endorsement. If extra cost shall be charged therefore, each party shall advise
the other of the amount of the extra cost, and the other party, at its election,
may pay the same, but shall not be obligated to do so.
ARTICLE 18 - EMINENT DOMAIN
If the entire Building is taken by eminent domain, this Lease Agreement
shall automatically terminate as of the date of taking. If a portion
constituting more than twenty-five percent (25%) of the Building is taken by
eminent domain, the Landlord shall have the right to terminate this Lease
Agreement, provided it gives written notice thereof to the Tenant within ninety
(90) days after the date of taking. If a portion of the Premises is taken by
eminent domain, Tenant shall have the right to terminate this Lease Agreement,
provided it gives written notice thereof to Landlord within ninety (90) days
after the date of taking or ninety (90) days after the date Tenant receives
notice of the taking, whichever is later. If neither Landlord nor Tenant
terminates, then the Landlord shall, at its expense, restore the Premises and
the Building to as near the condition which existed immediately prior to the
date of taking as reasonably possible, and the rentals shall abate during such
period of time as the Premises are untenantable, in the proportion that the
untenantable
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portion of the Premises bears to the entire Premises. All damages awarded for
such taking under the power of eminent domain shall belong to and be the sole
property of Landlord, irrespective of the basis upon which they are awarded,
provided, however, that nothing contained herein shall prevent Tenant from
making a separate claim to the condemning authority for its moving expenses and
trade fixtures. For purposes of this Article, a taking by eminent domain shall
include Landlord's giving of a deed under threat of condemnation, and shall be
deemed to occur on the earlier of the date fee simple title has vested or
possession has been obtained by the taking authority.
ARTICLE 19 - SURRENDER
On the last day of the Term of this Lease Agreement or on the sooner
termination thereof in accordance with the terms hereof, Tenant shall peaceably
surrender the Premises in good condition and repair consistent with Tenant's
duty to make repairs as provided in Article 9 hereof. On or before said last
day, Tenant shall at its expense remove all of its equipment from the Premises,
repairing any damage caused thereby, and any property not removed shall be
deemed abandoned, with the exception of any "Collateral" (as defined in Article
28 below) to the extent of any security interests by third parties. All
alterations, additions and fixtures other than Tenant's personal property and
equipment and trade fixtures, which have been made or installed by either
Landlord or Tenant upon the Premises shall remain as Landlord's property and
shall be surrendered with the Premises as a part thereof, or shall be removed by
Tenant (unless such right to remove has been waived by Landlord pursuant to
Article 4 above), in which event Tenant shall at its expense repair any damage
caused thereby. It is specifically agreed that any and all telephonic, coaxial,
ethernet, or other computer, word-processing, facsimile, or electronic wiring
installed by Tenant within the Premises (hereafter "Wiring") shall be removed at
Tenant's cost at the expiration of the Term, unless Landlord has specifically
requested in writing that said Wiring shall remain, whereupon said Wiring shall
be surrendered with the Premises as Landlord's property. If the Premises are not
surrendered at the end of the Term or the sooner termination thereof, Tenant
shall indemnify Landlord against loss or liability resulting from delay by
Tenant in so surrendering the Premises, including, without limitation, claims
made by any succeeding tenant founded on such delay. Tenant shall promptly
surrender all keys for the Premises to Landlord at the place then fixed for
payment of rental and shall inform Landlord of combinations on any locks and
safes on the Premises.
ARTICLE 20 - NON-PAYMENT OF RENT, DEFAULTS
If any one or more of the following occurs: (1) a rent payment or any other
payment due from Tenant to Landlord shall be and remain unpaid in whole or in
part for more than ten (10) days after written notice from Landlord that the
same is due and payable; (2) Tenant shall violate or default on any of the other
covenants, agreements, stipulations or conditions herein, or in any parking
agreement(s) or other agreements between Landlord and Tenant relating to the
Premises, and such violation or default shall continue for a period of thirty
(30) days after written notice from Landlord of such violation or default or if
such violation or default shall reasonably require longer than thirty (30) days
to cure, if Tenant shall fail to commence the cure of such default or violation
within thirty (30) days after receipt of notice thereof and/or fail to prosecute
a cure to completion with due diligence; or (3) if Tenant shall commence or have
commenced against Tenant proceedings under a bankruptcy, receivership,
insolvency or similar type of action and the same shall not be dismissed or
vacated within ninety (90) days; then the same shall be deemed a default under
this Lease Agreement and it shall be optional for Landlord, without further
notice or demand, to cure such default or to declare this Lease Agreement
forfeited and the said Term ended, or to terminate only Tenant's right to
possession of the Premises, and to re-enter the Premises, with process of law,
using such force as may be necessary to remove all persons or chattels
therefrom, and Landlord shall not be liable for damages by reason of such re-
entry or forfeiture; but notwithstanding re-entry by Landlord or termination
only of Tenant's right to possession of the Premises, the liability of Tenant
for the rent and all other sums provided herein shall not be relinquished or
extinguished for the balance of the Term of this Lease Agreement and Landlord
shall be entitled to periodically sue Tenant for all sums due under this Lease
Agreement or which become due prior to judgment, but such suit shall not bar
subsequent suits for any further sums coming due thereafter. Tenant shall be
responsible for, in addition to the rentals and other sums agreed to be paid
hereunder, the cost of any necessary maintenance, repair, restoration, reletting
(including related cost of removal or modification of tenant improvements) or
cure as well as reasonable attorney's fees incurred or awarded in any suit or
action instituted by Landlord to enforce the provisions of this Lease Agreement,
regain possession of the Premises, or the collection of the rentals due Landlord
hereunder. Tenant shall also be liable to Landlord for the payment of a late
charge in the amount of 5% of the rental installment or other sum due Landlord
hereunder if said payment has not been received within ten (10) days from the
date said payment becomes due and payable, or if any check is dishonored due to
insufficient funds. Tenant agrees to pay interest at the highest permissible
rate of interest allowed under the usury statutes of the State of Minnesota or
12% per annum, whichever is less, on all rentals and other sums due Landlord
hereunder not paid within ten (10) days from the date same become due and
payable. Each right or remedy of Landlord provided for in this Lease Agreement
shall be cumulative and shall be in addition to every other right or remedy
provided for in this Lease Agreement now or hereafter existing at law or in
equity or by statute or otherwise. In no event shall Landlord be entitled to
withhold utility services under this Lease Agreement as a remedy for Tenant's
default or to enter the Premises and remove or interfere with Tenant's property
or the property of Tenant's customers without judicial process.
ARTICLE 21 - LANDLORD'S DEFAULT
Landlord shall not be deemed to be in default under this Lease Agreement
until Tenant has given Landlord written notice specifying the nature of the
default and Landlord does not cure such default within thirty (30) days after
receipt of such notice or within such reasonable time thereafter as may be
necessary to cure such default where such default is of such a character as to
reasonably require more than thirty (30) days to cure. If Landlord commits a
default under this Lease, Tenant may pursue any remedies given in this Lease or
any remedies available at law or in equity.
ARTICLE 22 - HOLDING OVER
Tenant will, at the expiration of this Lease Agreement, whether by lapse of
time or termination, give up immediate possession to Landlord. If Tenant fails
to give up possession Landlord may, at its option, serve written notice upon
Tenant that such holdover constitutes any one of (i) creation of a month to
month tenancy, or (ii) creation of a tenancy at sufferance. If Landlord does not
give said notice, Tenant's holdover shall create a tenancy at sufferance. In any
such event the tenancy shall be upon the terms and conditions of this Lease
Agreement, except that the Minimum Rental shall be 150% the Minimum Rental
Tenant was obligated to pay Landlord under this Lease Agreement immediately
prior to termination (in the case of tenancy at sufferance such Minimum Rental
shall be prorated on the basis of a 365 day year for each day Tenant remains in
possession); excepting further that in the case of a tenancy at sufferance, no
notices shall be required prior to commencement of any legal action to gain
repossession of the Premises. In the case of a tenancy at sufferance, Tenant
shall also pay to Landlord all damages sustained by Landlord resulting from
retention of possession by Tenant, provided such damages shall not include
consequential damages. The provisions of this paragraph shall not constitute a
waiver by Landlord of any right of re-entry as otherwise available to Landlord;
nor shall receipt of any rent or any other act in apparent affirmance of the
tenancy operate as a waiver of the right to terminate this Lease Agreement for a
breach by Tenant hereof.
ARTICLE 23 - SUBORDINATION
Tenant agrees that this Lease Agreement shall be subordinate to any
mortgage(s) that may now or hereafter be placed upon the Building or any part
thereof, and to any and all advances to be made thereunder, and to the interest
thereon, and all renewals, replacements, and extensions thereof, provided that
this Lease Agreement shall continue in the event of any foreclosure and Tenant's
quiet possession shall not be disturbed. Tenant agrees to execute a specific
subordination agreement (in a form reasonably requested by mortgagee) if so
requested by Landlord, provided the mortgagee named in such subordination shall
agree to recognize this Lease Agreement or Tenant in the event of foreclosure
provided the Tenant is not in default by including non-disturbance language in
recordable form. In the event of any mortgagee electing to have the Lease
Agreement a prior encumbrance to its mortgage, then and in such event upon such
mortgagee notifying Tenant to that effect, this Lease Agreement shall be deemed
prior in encumbrance to the said mortgage, whether this Lease Agreement is dated
prior to or subsequent to the date of said mortgage. Landlord shall use its best
efforts to obtain a non-disturbance agreement from the existing mortgagee and
any future mortgagees, in a form reasonably satisfactory to such mortgagee and
Tenant.
ARTICLE 24 - INDEMNITY, INSURANCE AND SECURITY
A. Tenant will keep in force at its own expense for so long as this Lease
Agreement remains in effect public liability insurance with respect to the
Premises in which Landlord shall be named as an additional insured, in companies
and in form reasonably acceptable to Landlord with a minimum combined limit of
liability of Two Million Dollars ($2,000,000.00). This limit shall apply per
location. Said insurance shall also provide for
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contractual liability coverage. Tenant shall further provide for business
interruption insurance to cover the equivalent of six (6) months of lease
payments. Tenant will further deposit with Landlord the policy or policies of
such insurance or certificates thereof, or other acceptable evidence that such
insurance is in effect, which evidence shall provide that Landlord shall be
notified in writing thirty (30) days prior to cancellation, material change, or
failure to renew the insurance. Tenant further covenants and agrees to indemnify
and hold Landlord and Landlord's manager of the Building harmless for any claim,
loss or damage, including reasonable attorney's fees, suffered by Landlord,
Landlord's manager or Landlord's other tenants caused by: i) any bodily injury
or property damage caused by the negligence or willful misconduct of Tenant,
Tenant's employees or its agents in, at, or around the Premises; and ii)
Tenant's failure to comply with any and all governmental laws, rules, ordinances
or regulations applicable to Tenant's particular use of the Premises. If Tenant
shall not comply with its covenants made in this Article 24, Landlord may, at
its option, cause insurance as aforesaid to be issued and in such event Tenant
agrees to pay the premium for such insurance promptly upon Landlord's demand.
B. Tenant shall be responsible for the security and safeguarding of the
Premises and all property kept, stored or maintained in the Premises. Landlord
will make available to Tenant, at Tenant's request, the plans and specifications
for construction of the Building and the Premises. Landlord shall also provide
Tenant with any existing CAD drawings of the second floor and common areas such
as the UPS room, generator area, and other mechanical and electrical areas.
Landlord shall provide Tenant with one-line drawings of the Building's
mechanical and electrical systems, if existing. Landlord shall provide
documentation regarding Building systems, including without limitation
mechanical systems, electrical systems, generators, UPS and HVAC, as reasonably
requested by Tenant, if existing. All documentation shall be provided in
electronic format if available. Tenant acknowledges that Landlord makes no
representations, except as expressly set forth herein, that the configuration of
the Building and the Premises, including the location and dimensions of the
floors, walls, windows, doors and means of access thereto are suitable for the
particular needs of Tenant's business. The placement and sufficiency of safes,
vaults, cash or security drawers, cabinets or the like placed upon the Premises
by Tenant shall be at the sole responsibility and risk of Tenant. Tenant shall
maintain in force throughout the Term, insurance upon all of Tenant's property
within the Premises, including Tenant's equipment and any alterations,
additions, fixtures, or improvements in the Premises acknowledged by Landlord to
be the Tenant's.
C. Landlord shall carry and cause to be in full force and effect a fire
and extended coverage and other perils insurance policy on the Building in the
amount of the full replacement value of the Building from time to time, and all
of the property and fixtures of Landlord, but not contents owned by Tenant.
Landlord will also keep in force during this Term comprehensive general
liability insurance, including public liability and property damage, with
respect to the Building with a minimum combined limit of liability of
$2,000,000. This limit shall apply per location. The cost of such insurance
shall be an Operating Expense. Landlord will further deposit with Tenant the
policy or policies of such insurance or certificates thereof, or other
acceptable evidence that such insurance is in effect, which evidence shall
provide that Tenant shall be notified in writing thirty (30) days prior to
cancellation, material change, or failure to renew the insurance. Landlord
further covenants and agrees to indemnify and hold Tenant harmless for any
claim, loss or damage, including reasonable attorney's fees, suffered by Tenant
caused by: i) any bodily injury or property damage caused by the negligence or
willful misconduct of Landlord or Landlord's employees or agents in, at, or
around the Building (but specifically excluding the Premises); and ii)
Landlord's failure to comply with any and all governmental laws, rules,
ordinances or regulations applicable to the Building (but specifically excluding
the Premises) on the date of this Lease Agreement including, without limitation,
of the Americans with Disabilities Act of 1990, as amended.
ARTICLE 25- NOTICES
All notices from Tenant to Landlord required or permitted by any
provisions of this Lease Agreement shall be in writing, directed to Landlord
postage prepaid, certified or registered mail or sent by U.S. express mail or
any nationally recognized overnight carrier with a signed receipt obtained upon
delivery, at the address provided for Landlord in the preamble to this Lease
Agreement or at such other address as Tenant shall be advised to use by
Landlord. All notices from Landlord to Tenant required or permitted by any
provision of this Lease Agreement shall be in writing, directed to Tenant,
postage prepaid, certified or registered mail or sent by U.S. express mail or
any nationally recognized overnight carrier with a signed receipt obtained upon
delivery, at: INFLOW, Inc., 1860 Lincoln Street, Suite 305, Denver, Colorado
80295, attention: Art Zeile, or at such other address as Landlord shall be
advised to use by Tenant. Landlord and Tenant shall each have the right at any
time and from time to time to designate one (1) additional party to whom copies
of any notice shall be sent.
ARTICLE 26- APPLICABLE LAW
This Lease Agreement shall be construed under the laws of the State of
Minnesota.
ARTICLE 27- MECHANICS' LIEN
In the event any mechanic's lien shall at any time be filed against the
Premises or any part of the Building by reason of work, labor, services or
materials performed or furnished to Tenant or to anyone holding the Premises
through or under Tenant, Tenant shall forthwith cause the same to be discharged
of record. Tenant shall and hereby does indemnify Landlord from and against all
costs, damages and expenses (including reasonable attorney's fees) incurred by
Landlord as a result of any such mechanic's lien. If Tenant shall fail to cause
such lien forthwith to be discharged within twenty (20) days after being
notified of the filing thereof, or, within such twenty-day period, to otherwise
post security sufficient to bond over or discharge such lien, in a form
reasonably acceptable to Landlord, then, in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to, discharge the
same by paying the amount claimed to be due, or by bonding, and the amount so
paid by Landlord and all costs and expenses, including reasonable attorney's
fees incurred by Landlord in procuring the discharge of such lien, shall be due
and payable in full by Tenant to Landlord on demand. Landlord shall have the
right to post on the Premises notices of nonresponsibility for payment of labor
and materials supplied to the Premises pursuant to applicable law.
ARTICLE 28- SECURITY DEPOSIT
Intentionally deleted
ARTICLE 29- BROKERAGE
Except with respect to Tenant's Agent as set forth below, each of the
parties represents and warrants that there are no claims for brokerage
commissions or finder's fees in connection with this Lease Agreement and agrees
to indemnify the other against, and hold it harmless from all liabilities
arising from any other such claim, including without limitation, the cost of
attorney's fees in connection therewith. Landlord agrees to pay a commission to
Liberty-Greenfleld, LLLP, acting in connection with Griffin Companies,
(collectively "Tenant's Agent"), in an amount of $4.00 per square foot of
rentable area contained within the Premises in three (3) equal installments
payable with the first three (3) payments of Minimum Rent by Tenant to Landlord;
provided that in the event Tenant terminates this Lease Agreement or it is
otherwise canceled prior to the end of the fifth (5th) month of the Term, then
such commission shall not become due and any payments previously made shall be
returned to Landlord, Tenant's Agent shall be deemed a third party beneficiary
of Landlord's covenants contained in this Article.
ARTICLE 30- EXCULPATION
Tenant agrees to look solely to Landlord's interest in the Building
(including rental income and other income generated by the Building and any
proceeds from sale and any insurance or condemnation proceeds available for use
by Landlord) for the recovery of any judgment from Landlord, it being agreed
that Landlord and Landlord's partners, whether general or limited (if Landlord
is a partnership) or its directors, officers or shareholders (if Landlord is a
corporation) shall never be personally liable for any such judgment.
ARTICLE 31- ESTOPPEL CERTIFICATES
Each party hereto agrees that at any time, and from time to time during
the Term of this Lease Agreement (but not more often than twice in each calendar
year), within ten (10) days after request by the other party hereto, it will
execute, acknowledge and deliver to such other party or to any prospective
purchaser, assignee or mortgagee designated by such other party, an estoppel
certificate regarding this Lease Agreement in a form reasonably acceptable to
the party delivering the same. Tenant agrees to provide Landlord (but no more
often than twice in any calendar year), within ten (10) days of
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request, the then most current financial statements of Tenant, which shall be
certified by Tenant, and if available, shall be certified by a certified public
accountant. Landlord shall keep such financial statements confidential, except
Landlord shall, in confidence, be entitled to disclose such financial statements
to existing or prospective mortgagees or purchasers of the Building.
ARTICLE 32 -- GENERAL
This Lease Agreement does not create the relationship of principal and
agent or of partnership or of joint venture or of any association between
Landlord and Tenant, the sole relationship between Landlord and Tenant being
that of landlord and tenant. No waiver of any default of Tenant hereunder shall
be implied from any omission by Landlord to take any action on account of such
default if such default persists or is repeated, and no express waiver shall
affect any default other than the default specified in the express waiver and
that only for the time and to the extent therein stated. The covenants of Tenant
to pay the Minimum Rental and the Additional Rental are each independent of any
other covenant, condition, or provision contained in this Lease Agreement. The
marginal or topical headings of the several Articles, paragraphs and clauses are
for convenience only and do not define, limit or construe the contents of such
Articles, paragraphs or clauses. All preliminary negotiations are merged into
and incorporated in this Lease Agreement. This Lease Agreement can only be
modified or amended by an agreement in writing signed by the parties hereto. All
provisions hereof shall be binding upon the heirs, successors and assigns of
each party hereto. If any term or provision of this Lease Agreement shall to any
extent be held invalid or unenforceable, the remainder shall not be affected
thereby, and each other term and provision of this Lease Agreement shall be
valid and be enforced to the fullest extent permitted by law. If Tenant is a
corporation, each individual executing this Lease Agreement on behalf of said
corporation represents and warrants that he is duly authorized to execute and
deliver this Lease Agreement 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 Agreement is
binding upon said corporation in accordance with its terms. No receipt or
acceptance by Landlord from Tenant of less than the monthly rent herein
stipulated shall be deemed to be other than a partial payment on account for any
due and unpaid stipulated rent; no endorsement or statement of any check or any
letter or other writing accompanying any check or payment of rent to Landlord
shall be deemed an accord and satisfaction, and Landlord may accept and
negotiate such check or payment without prejudice to Landlord's rights to (i)
recover the remaining balance of such unpaid rent or (ii) pursue any other
remedy provided in this Lease Agreement. Either party may record a memorandum of
this Lease Agreement and the parties agree to execute a reasonable form
memorandum as presented by the other party. Time is of the essence with respect
to the due performance of the terms, covenants and conditions herein contained.
Submission of this instrument for examination does not constitute a reservation
of or option for the Premises, and this Lease Agreement shall become effective
only upon execution and delivery thereof by Landlord and Tenant.
ARTICLE 33 -- QUIET ENJOYMENT
Landlord covenants that Tenant, upon paying the rental and other charges
due hereunder and performing all of Tenant's obligations under this Lease
Agreement, shall peacefully and quietly hold, occupy and enjoy Premises
throughout the Term hereof, without molestation or hindrance by Landlord or any
person holding, under or through Landlord, subject, however, to the provisions
of this Lease Agreement and to any mortgages or ground or underlying leases
referred to in Article 23 hereof. Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to the Building
shall in no way affect this Lease Agreement or impose any liability on Landlord.
ARTICLE 34 -- LIMITED EXPANSION RIGHT
A. Provided Tenant is not then in default under this Lease Agreement
beyond the applicable grace period, Tenant shall have a first right of leasing
on the space(s) on the second floor of the Building as it currently exists or on
the second floor of any expansion wing of the Building, if constructed by
Landlord in the future (hereafter referred to as the "Option Space"), in the
event such Option Space is now vacant or becomes "Available for Leasing" (as
defined below) during the original Term, the first Renewal Term (if applicable)
and the first two years of the second Renewal Term (if applicable), subject to
and conditioned upon the provisions of this Article (the "Expansion Right").
B. Landlord shall notify Tenant ("Landlord's Notice") in the event any
portion of the Option Space becomes "Available for Leasing"; or in the event
Landlord has a third party interested in leasing any portion of the Option Space
which is then "Available for Leasing". Tenant shall notify Landlord ("Tenant's
Leasing Notice") within seven (7) business days after its receipt of Landlord's
Notice as to whether Tenant intends to exercise its Expansion Right with respect
to said Option Space as so identified in Landlord's Notice, time being of the
essence. If Tenant exercises its Expansion Right, it must do so with respect to
all the Option Space as so identified in Landlord's Notice. In such event,
Landlord and Tenant shall execute an amendment to the Lease Agreement
incorporating the Option Space as so identified into the Premises at the Minimum
Rent at the then applicable rates as set forth in the table of paragraph 3B
above with respect to Option Space in the Building as it exists on the date of
this Lease Agreement, or at the market rate (for comparable space) with respect
to Option Space in any expansion of the Building constructed after the date of
this Lease Agreement. In the event Tenant fails to notify Landlord within the
time period set forth above, Tenant's rights under this Article shall be null
and void with respect to any lease entered into for the Option Space as so
identified in Landlord's Notice; provided such Expansion Right shall again be
applicable in the event Landlord does not lease such Option Space within nine
(9) months of the Landlord's Notice or if such space becomes available again
thereafter.
C. Tenant's Expansion Right shall also include Tenant's providing
Landlord a Tenant's Leasing Notice (in the first instance and not in response to
Landlord's Notice) with respect to any Option Space contiguous to the Premises
which is then "Available for Leasing" provided no Landlord's Notice has been
given to Tenant with respect to any portion of such Option Space within the
previous nine (9) months.
D. The leasing of said Option Space shall commence as of the "Effective
Date" (as set forth below) and shall be in said Option Space's, then "AS-IS"
condition without any improvements, improvement allowances or other
modifications to be made by Landlord. For purposes of this Article, the
"Effective Date" shall mean the date on which Tenant shall begin paying rentals
upon the Option Space after it has exercised its rights to said space; which
shall be the later of thirty (30) days after Tenant's Leasing Notice under this
Article to Landlord exercising its rights hereunder (or such sooner date as
Tenant may elect to take possession of such Option Space) or the date when
Landlord delivers possession of the Option Space to Tenant. The provisions of
this Lease Agreement governing alterations of the Premises shall apply with
respect to the construction of any leasehold improvements Tenant desires to make
to such Option Space.
E. Notwithstanding anything to the contrary in the foregoing, if Tenant
exercises its rights under this Article and there remains less than thirty-six
(36) months from the Effective Date to the expiration of the Term, then the
Tenant shall not be entitled to exercise its rights under this Article unless it
exercises its Option to Renew the Term.
F. For purposes of this Article, "Available for Leasing" shall mean the
Option Space is not subject to any existing (as of the date of this Lease
Agreement) lease or first rights of refusal, first rights of negotiation, first
rights of leasing, expansion rights, or renewal rights and/or similar rights of
any other third party tenant, or any future lease or renewal right of any other
third party tenant acquired after the date hereof following a Landlord's Notice
and Tenant's waiver of its rights hereunder, or such rights have been waived in
writing (provided if all such rights are to expire within six (6) months,
Landlord may make such Option Space Available for Leasing contingent upon the
expiration of such rights).
G. If the Lease Agreement or Tenant's right to possession of the
Premises shall terminate in any manner whatsoever before Tenant shall exercise
its rights under this Article, then immediately upon such termination, this
Article and Tenant's rights hereunder shall simultaneously terminate and become
null and void. Such right is personal to Tenant; under no circumstances
whatsoever shall an assignee or subtenant which is not an affiliate or successor
to Tenant's business have any right to exercise any rights under this Article or
have any right to receive any Landlord's Notice.
ARTICLE 35- ADDITIONAL MATTERS.
Notwithstanding anything to the contrary in the foregoing provisions of
this Lease Agreement, Landlord and Tenant agree as follows. In the event of any
conflict between the foregoing provisions of the Lease Agreement and this
Article 35, the terms and provisions of this Article 35 shall control.
A. Landlord represents and warrants to Tenant: (i) the Building and the
Premises, as of the date hereof, are not subject to any ground lease, mortgage
or deed of trust except the mortgage originally in favor of Northland Financial
Company; (ii) Landlord has the full power and authority to enter into this Lease
without the consent or approval of any third party; (iii) the party executing
this Lease Agreement on behalf of Landlord has full power and
-12-
<PAGE>
authority to enter into this Lease Agreement on behalf of Landlord and to bind
Landlord to the terms of this Lease Agreement; and (iv) no other party has any
right to use or occupy the Premises from and after the Commencement Date.
B. Tenant shall have the right, throughout the Term and any Renewal Terms,
to utilize or create additional space in, on, or adjacent to the Building (at no
additional rental) to accommodate Tenant's equipment and facilities (e.g., the
construction at Tenant's expense of a structural platform to support an HVAC
cooling tower or an enclosure for a power generator) subject to Landlord's
consent, such consent not to be unreasonably withheld, conditioned or delayed.
If the space actually used by Tenant outside the Premises for (i) the foregoing
purposes and (ii) Tenant's generators, HVAC equipment, and UPS equipment,
exceeds 10% of the rentable square footage of the Premises (but specifically
excluding Roof Space for Equipment as defined in Exhibit B), then Tenant shall
pay rent for that portion of such space that exceeds the 10% threshold, at the
applicable per-square-foot rate for the Premises set forth in Paragraph 3B of
this Lease.
C. Tenant shall have the right, at no additional charge, to all of the
following: (a) to use existing fiber optic cabling in the Building or, at
Tenant's election, to construct additional telecommunications entrances into the
Building and into the Premises. Landlord acknowledges that Tenant will require
redundant entrances for its data center operations; (b) to use riser space for
conduit or cables between the Premises and the lowest level in the Building and
between the Premises and any telecommunications services located elsewhere in
the building, subject to approval by Landlord which shall not be unreasonably
withheld; and (c) to use existing riser space and available conduit, or at
Tenant's option, to install any additional conduit and facilities required in
order to connect Tenant's backup or supplemental generator, power, dry cooler,
HVAC equipment and piping, antennas, grounding, and related equipment and for
other purposed not inconsistent with the design of such conduits or risers.
D. Tenant shall have the right, at its expense, to do any or all of the
following subject to paragraph 4c: (a) to reinforce floor load capacities; (b)
to remove, cover or block up windows; (c) to install up to three manholes
adjacent to the Building for bringing telecommunications fiber into the
Building; and (d) to fence in any equipment or facilities located or installed
outside the Premises.
E. Tenant shall have the right to install its own security system for the
Premises and/or Tenant's equipment room within the Premises. Tenant shall have
the right to install security for such area with non-building-standard locks and
other access controls which restrict access to Tenant and its customers and
vendors, provided that Landlord shall be provided with keys or other entry
mechanisms which may be used in accordance with the terms of this Lease
Agreement. Landlord shall not enter Tenant's secured equipment room or permit
any janitorial, maintenance, repair or other service to such area except as
approved and supervised by Tenant. Any entry by Landlord will be conducted with
reasonable caution under the circumstances to prevent damage to or interference
with any of the equipment in the area.
F. Tenant shall have the right to install dishes, antennas and other
telecommunications equipment on the roof of the Building. Tenant's rights to do
so will be governed by a separate antenna license agreement in the form attached
hereto as Exhibit B. The total area to be used by Tenant for such purposes shall
not exceed two hundred (200) square feet. Landlord shall provide, at no charge,
easements, riser space and conduits from such rooftop area to the Premises.
Tenant shall be responsible for expenses associated with installation,
maintenance, operation, repair and removal of said items.
G. Landlord shall use reasonable efforts to confine noise and odors from
the cafeteria on the second floor to the space occupied by such cafeteria so
the same have negligible impact on the Premises.
H. Landlord acknowledges that it may have access to certain confidential
information of Tenant concerning Tenant's business, facilities, operations,
plans, customers, proprietary software, technology, and products ("Confidential
Information"). Landlord agrees that it will not use in any way, for its own
account or the account of any third party, except as expressly permitted by this
Lease, nor disclose to any third party (except as required by law or to its
attorneys, accountants, and other advisors and mortgagees and prospective
purchasers of the Premises as reasonably necessary and subject to the
confidentiality provisions hereof), any of Tenant's Confidential Information and
will take reasonable precautions to protect the confidentiality of such
information.
I. Any controversy or claim arising out of or relating to this Lease
Agreement which involves less than $50,000 or which relates to a denial of any
consent or approval shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitation Rules, including the
Expedited Procedures, and judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction; provided however, that in no
event shall a failure to pay rent or any claim of offset against rental payments
be subject to arbitration, nor shall Landlord be required to arbitrate rather
than commence or otherwise utilize an unlawful detainer action for Tenant's
failure or claimed failure to pay rent. Any arbitration of this Lease shall
be conducted in Hennepin County, Minnesota, unless the parties specifically
agree in writing to another location in Minnesota.
J. Notwithstanding anything to the contrary in any rules and regulations
adopted by Landlord, Tenant shall have the right to (i) install, maintain,
repair and replace computer, telecommunication, and other equipment in the
Premises, in any locations of Tenant's choosing, so long as the floor loads of
such equipment do not exceed the limitations set forth previously in this Lease
Agreement; and (ii) move computer, telecommunication, and other equipment in and
out of the Premises from time to time in the course of its business and Landlord
hereby consents thereto.
K. Notwithstanding anything to the contrary in any rules and regulations
adopted by Landlord, Tenant shall have the right to hang such signs, notices,
pictures, shelves, and similar items as are commonly located in office space
provided that the same are not visible from any common areas of the Building.
L. Landlord shall provide, at no additional charge, access to Building
garbage disposal facilities, such as dumpsters or temporary storage areas for
garbage, for use by Tenant.
M. The rules and regulations attached as Exhibit D are not incorporated
into this Lease Agreement to the extent they contradict any provision hereof.
IN WITNESS WHEREOF, this Lease Agreement has been duly executed by the
parties hereto as of the day and year indicated above.
TENANT: INFLOW, INC. LANDORD: TIMESHARE SYSTEMS,INC.
By: [illegible] By: [illegible]
--------------------------- ---------------------------
Its: CEO, President Its: President
------------------------ ------------------------
DATE 6/9/99 DATE 6/9/99
-------------------------- --------------------------
SCHEDULE OF EXHIBITS
Exhibit A-1 Graphical depiction of Premises
Exhibit A-2 Legal Description of Land and Building
Exhibit B License Agreement (Antenna)
Exhibit C License Agreement (Parking Lot Unassigned)
Exhibit C-1 License Agreement (Parking Lot Assigned)
Exhibit D Rules and Regulations
Exhibit E Tenant Generator Pad Location
Exhibit F Roof Cooling Equipment Location
-13-
<PAGE>
EXHIBIT A-1
[DIAGRAM]
FLOOR-II (ENTRANCE LEVEL)
<PAGE>
EXHIBIT A-2
LEGAL DESCRIPTION
All of Block 7, Atwaters Addition to the Town of Minneapolis; all of Block 8,
Morrison, Smith and Hancocks Addition to Minneapolis; and that part of 12th
Avenue South, Morrison, Smith and Hancocks Addition to Minneapolis; and Atwaters
Addition to the Town of Minneapolis, lying Southwesterly of a line connecting
the most Easterly corner of Block 7, Morrison, Smith and Hancocks Addition to
Minneapolis; and the most Northerly corner of Block 8, Morrison, Smith and
Hancocks Addition to Minneapolis and Northeasterly of a line connecting the most
Southerly corner of Block 7, Atwaters Addition to the Town of Minneapolis and
the most Westerly corner of Block 8, Atwaters Addition to the Town of
Minneapolis and that part of Block 8, Atwaters Addition to the Town of
Minneapolis; except that part of said Block 8 which lies Northeasterly of the
following described line:
Beginning at a point on the Southeasterly line of Lot 7, Block 8, distant 116.50
feet Southwesterly of the most Easterly corner thereof; thence run Northwesterly
to a point on the Northwesterly line of the Southeasterly half of Lot 9, said
Block 8, distant 10 feet Southwesterly of the Northeasterly line of said lot 9,
and there terminating.
Also except that part of the Northwesterly 1/2 of Lot 9, Block 8, Atwater's
Addition to the Town of Minneapolis which lies Northeasterly of the following
described line: Beginning at a point on the Southeasterly line of the
Northwesterly 1/2 of Lot 9, Block 8, said Addition, distant 5 feet Southwesterly
of the most Easterly corner thereof; thence run Northwesterly to the most
Northerly corner of Lot 9 and there terminating.
All of Block 7, Morrison, Smith and Hancocks Addition to Minneapolis, except
that part of Lots 9, 10, 11 and 12 of said Block 7, described as follows:
Beginning at the most Northerly corner of said Lot 12; thence south 30 degrees
04 minutes 33 seconds West, on an assumed bearing, along the Northwesterly line
of said Lot 12, a distance of 127.58 feet; thence Easterly, a distance of 259.94
feet along a non-tangential curve concave to the South having a radius of 240.00
feet, a central angle of 62 degrees 03 minutes 21 seconds and the chord of said
curve bears North 89 degrees 04 minutes 43 seconds East; thence North 30 degrees
06 minutes 24 seconds East along the prolongation of a radial line of said
curve, a distance of 0.08 feet to the Northeasterly line of said Lot 9; thence
North 59 degrees 54 minutes 07 seconds West along the Northeasterly line of said
Block 7, a distance of 212.08 feet to the point of beginning.
All according to the plats thereof on file and of record in the Hennepin County
Recorders Office and in the Office of the Registrar of Titles, and situate in
Hennepin County, Minnesota.
Part of the above shown below as Parcels 1 through 4, is Registered Property as
evidenced by Certificate No. 830754. Said Registered Property is described as
follows:
Parcel 1: Lots 3, 6, 8 and 9, Block 7;
That part of Lot 7, Block 7 lying Northeasterly of a line drawn parallel with
and distant 96 feet Southwesterly of the Southwesterly boundary line of 5th
Street;
The Northeasterly 60 feet of the Southwesterly 105 feet of Lot 1, Block 8;
Lots 2, 3, 4, 5, 6 and 10, Block 8;
That part of the Northwesterly 1/2 of vacated 12th Avenue South lying between
the extensions across it of the Northeasterly and Southwesterly lines of said
Lot 6, Block 7 and
That part of the Southeasterly 1/2 of vacated 12th Avenue South lying between
the extensions across it of the Northeasterly and Southwesterly lines of said
Northeasterly 60 feet of the Southwesterly 105 feet of Lot 1, Block 8,
all at Atwaters Addition to the Town of Minneapolis.
Parcel 2: That part of the following described Tract:
The Northwesterly 27 feet of the Northeasterly 100 feet of Lot 7;
Southwesterly 39 feet of the Northeasterly 139 feet of Lot 7;
The Northwesterly 1/2 of Lot 8 and
The Southeasterly 1/2 of Lot 9,
all in Block 8, Atwaters Addition to the Town of Minneapolis, which lies
Southwesterly of a line drawn from a point on the Southeasterly line of said Lot
7, distance 116.50 feet Southwesterly of the most Easterly corner thereof to a
point on the Northwesterly line of said Southeasterly 1/2 of Lot 9, distant 10
feet Southwesterly of the Northeasterly line thereof.
Parcel Lots: 3 and 8, Block 7,
That part of Lot 7, Block 7 lying Northeasterly of a line drawn parallel with
and distant 96 feet Southwesterly of the Southwesterly boundary line of 5th
Street and
Lot 9, Block 7 except that part thereof lying Northerly of the following
described line: Beginning at the most Northerly corner of Lot 12, said Block 7;
thence South 30 degrees 04 minutes 33 seconds West, on an assumed bearing, along
the Northwesterly line of said Lot 12, a distance of 127.58 feet; thence
Easterly, a distance of 259.94 feet along a non-tangential curve concave to the
South, having a radius of 240.00 feet, a central angle of 62 degrees, 03
minutes, 21 seconds and the chord of said curve bears North 89 degrees, 04
minutes, 43 seconds East, thence North 30 degrees, 06 minutes, 24 seconds East
along the prolongation of a radial line of said curve, a distance of 0.08 feet
to the Northeasterly line of said Lot 9 and said line there terminating,
all in Morrison, Smith and Hancocks Addition to Minneapolis.
Parcel 4: That part of the Northwesterly 1/2 of vacated 12th Avenue south lying
between the extensions across it of the Northeasterly line of Lot 7, Block 7,
Morrison, Smith and Hancocks Addition to Minneapolis and a line drawn parallel
to and distant 96 feet Southwesterly of the Northeasterly line of said Lot 7
Subject to minerals and mineral rights reserved by the State of Minnesota; (As
to all of above land except Lot 3, Block 7 in Parcel 1; Lot 3, Block 7 in Parcel
3 and the above portion of Lot 9, Block 8 in Parcel 2; and except that part of
Lot 6, Block 7 and of that part of the Northwesterly 1/2 of vacated 12th Avenue
South in Parcel 1 lying Northeasterly of extensions across it of the
Southwesterly lien of said Lot 6 and its extension);
Subject to covenants, restrictions, reservations and conditions subsequent,
including a right of re-entry and forfeiture of title upon default as contained
in Deed Doc. No. 1488605; (See Inst)
A-2-1
<PAGE>
EXHIBIT B
ANTENNAE LICENSE AGREEMENT
This License Agreement (the "Agreement"), dated as of this 9th day of June,
1999, is between TIMESHARE SYSTEMS, INC. (the "Licensor"), having an address at
511 Eleventh Avenue South, Minneapolis, MN 55415 and Inflow, Inc. (the
"Licensee"), having an address at Suite 211, 511 Eleventh Avenue South,
Minneapolis, MN 55415 (the "Premises").
N. Licensor agrees to permit Licensee to utilize for purposes provided
herein, the roof space (the exact location to be determined by Licensor with the
reasonable consent of Licensee, but in no event shall such space exceed 200
contiguous square feet without Licensor's consent, nor less than 200 square feet
without Licensee's consent) on the building ("Building") in which the Premises
are located (the "Roof Space"). Upon termination of Licensee's lease for the
Premises for any reason (including the failure to renew the Term), this License
Agreement and the license created hereby shall automatically expire with said
termination. The termination, cancellation or expiration of this License
Agreement or the license created hereunder shall not be cause or grounds for the
cancellation or termination of Licensee's lease for the Premises.
O. Licensee may install, use and maintain on such Roof Space equipment
("Equipment") from time to time as described in Exhibit A attached hereto. If so
requested by Licensor, Licensee shall, prior to installation of any Equipment in
the Roof Space, or if desired by Licensee, Licensee may at any time, at its sole
expense, install a screening and protective fence ("Fence") around the perimeter
of the Roof Space. The Fence style and installation shall be subject to
Licensor's prior approval, which shall not be unreasonably withheld, conditioned
or delayed.
P. Licensor agrees that Licensee may run cables (the "Cables") between the
Roof Space and the Licensee's Premises. Any damages to the Building or fixtures
or equipment located upon or within the Building resulting therefrom shall be
promptly repaired by Licensee. Landlord shall provide, at no charge, easements,
riser space and conduits from the Roof Space to the Premises.
Q. The Equipment and Fence shall remain the property of the Licensee or its
contractor. Licensee shall at its cost remove such Equipment and Fence (and if
so requested by Licensor, the Cables) at the expiration or sooner termination of
the license granted hereunder or this License Agreement, and restore the Roof
Space and Building to the condition they were in prior to Licensee's
installation of the Equipment, Fence and Cables. The obligations to remove the
Equipment, Fence and Cables and to restore and repair the Roof Space and
Building shall survive the expiration or sooner termination of the license and
this License Agreement
R. Licensee and/or its contractor shall bear all expenses in connection
with the installation, use and maintenance of such Equipment, Fence and Cables
and removal of the same. Licensee and/or its contractor shall maintain in force
during the term of this License Agreement comprehensive liability insurance in
amounts and in such form as reasonably satisfactory to Licensor and shall supply
the appropriate certificates of such insurance upon request.
S. Licensee and its contractors shall comply with all applicable federal,
state and local laws, regulations, and building codes in connection with the
installation, use, maintenance and removal of the Equipment, Fence and Cables.
In the event any such laws, regulations, or codes requires physical improvements
be made to the Building or other expenditures by or on behalf of the Building
and/or its owner, the costs of the same shall be borne by Licensee.
Notwithstanding the foregoing, any physical improvements, whether required by
law, regulation, code or otherwise, shall be subject to Licensor's approval,
which approval may be given or denied in Licensor's sole discretion. If any law,
regulation or code prohibits or disallows the Equipment, Fence and/or Cables or
the effective use of the license granted hereby, whether now or in the future,
Licensor shall be entitled to terminate the license granted hereby, without
penalty; and Licensee shall take such action so as to allow the Building to
again be in compliance with such law, regulation or code, including, if
necessary, the removal of the Equipment, Fence and/or Cables.
T. Licensor agrees to permit Licensee reasonable access to the Roof Space
and other areas so as to facilitate the installation, use, maintenance and
removal of the Equipment, Fence, and Cables. Licensee shall have access to the
Roof Space on a 24 hour per day, 7 days per week, 52 weeks per year basis, in
order to facilitate maintenance and repairs. Licensee agrees to sign the
Building's log book on each occasion Licensee enters the Roof Space, during
normal business hours. At times other than normal business hours, or when the
log book is not available for signing, Tenant shall page the Building Engineer
at 612-235-3000 or 612-522-0068 or Landlord at 651-470-4500 or shall leave a
message by calling 612-481-9999 or shall notify Landlord by such other
reasonable means as Landlord shall inform Tenant in writing.
U. Notwithstanding anything else contained herein to the contrary, the
license granted herein is subject to the non-interference of Licensee's
Equipment with the normal operation, functioning and use of any other equipment
(whether owned by Licensor or by other licensees and/or tenants of Licensor)
currently existing upon the roof of the Building. In the event of any such
interference, Licensor may terminate the License granted hereunder if such
interference is not corrected within three (3) days notice from Licensor to
Licensee. Notwithstanding anything else contained herein to the contrary,
Licensor does not guaranty nor warrant the reception, noninterference or
effective use of Licensee's antenna, or Equipment, either at initial
installation nor thereafter.
V. Licensee shall be required to get prior approval from Licensor
pertaining to the Equipment size, color, Fence specifications, location on roof,
method of mounting and the location of all Cables. In no instance shall this
installation breach or penetrate the roof membrane.
W. Any notice required or desired under this License Agreement shall be
deemed sufficiently given if given in compliance with the Licensee's lease
agreement for the Premises.
X. Licensee shall pay to Licensor, without set-off, or demand the sum of
$0.00 for the first Antenna and $750.00 per month for each additional Antennae
(as listed on Exhibit A, or otherwise located on the Building pursuant to this
License Agreement or the license created hereunder) during any months such
antenna or antennae are actually installed in the Roof Space, for use of the
roof space ("License Fee") during the Term of this License Agreement. Failure by
Licensee to pay said License Fee within ten (10) days of receiving notice from
Licensor that the same is due and payable shall entitle Licensor, upon 10 days
written notice to Licensee, to terminate this License Agreement and the license
created hereunder, and to such other relief as may be allowed by law or equity.
For purposes of this License, "Antenna" or "Antennae" shall mean any one
transmitting or receiving cell.
Y. In the event of default by either party of any of the terms and
conditions set forth in this License Agreement, whether suit be commenced or
not, the defaulting party agrees to pay the attorneys' fees, costs and expenses
of the prevailing party incurred in enforcing or attempting to enforce this
License Agreement.
Z. Licensee shall operate the Licensee facilities in a manner that will not
cause interference to Licensor and other Licensees of the Property provided that
their installations predate that of the Licensee's facilities. All operations by
Licensee shall be in compliance with all Federal Communications Commission
("FCC") requirements.
AA. Licensor waives any lien rights it may have concerning the Equipment
which are deemed Licensee's personal property and not fixtures, and Licensee has
the right to remove the same at any time without Licensor's consent.
BB. This Agreement may be terminated without further liability on thirty
(30) days prior written notice as follows: (i) by either party upon a default of
any covenant or term hereof by the other party, which default is not cured
within sixty (60) days of receipt of written notice or default provided that the
grace period for any monetary default is ten (10) days from receipt of notice;
or (ii) by Licensee for any reason or for no reason, provided Licensee delivers
written notice of early termination to Licensor with a thirty (30) day notice
provision prior to termination; or (iii) by Licensee if it does not obtain or
maintain any license, permit or other approval necessary for the construction
and operation of the Equipment; or (iv) by Licensee if Licensee is unable to
occupy and utilize the Premises under Licensee's lease due to an action of the
FCC, including without limitation, a take back of channels or change in
frequencies; or (v) by Licensee if Licensee determines that the Premises are not
appropriate for its operations for technological reasons, including, without
limitation, signal interference.
CC. If the Premises or Equipment are damaged, destroyed, condemned or
transferred in lieu of condemnation, Licensee may elect to terminate this
Agreement as of the date of the damage, destruction, condemnation or transfer in
lieu of condemnation by giving notice to Licensor no more than forty-five (45)
days following the date of such damage, destruction, condemnation or transfer in
lieu of condemnation.
B-1
<PAGE>
DD. Licensee may not assign, or otherwise transfer all or any part of its
interest in this Agreement without the prior written consent of Licensor,
provided, however, that Licensee may assign its interest without Licensor's
consent to any party to which it is assigning its interest in the Premises under
its lease, and provided further that Tenant may use the Roof Space for
colocation of customers equipment, otherwise in accordance with the terms of
this Agreement, without Licensor's consent.
EE. Licensor shall be responsible for compliance with all marking and
lighting requirements of the Federal Aviation Administration ("FAA") and the
FCC. Should Licensee be cited because the Property is not in compliance and,
should Licensor fail to cure the conditions of noncompliance, Licensee may
either terminate this Agreement or proceed to cure the conditions of
noncompliance at Licensor's expense, which accounts may be deducted from the
rent under Licensee's lease.
FF. In no event shall Licensee be entitled to erect any mono pole or other
tower-type structure.
GG. In the event the Equipment, Fence and/or Cables should interfere with
any roof maintenance, repair and/or replacement which Licensor reasonably deems
necessary to perform, Licensor shall first notify Licensee and then Licensee
shall cooperate with Licensor and its contractors with reasonably requirements
to remove such interference, including if necessary, the relocation and/or
temporary relocation of the Equipment, Fence and/or Cables. Such cooperation
including such relocations and/or temporary relocations shall be at the cost and
expense of Licensee.
LICENSOR:
--------
TIMESHARE SYSTEMS, INC.
By: /s/ illegible
--------------------------
Its: President
-------------------------
LICENSEE:
--------
INFLOW, INC.
By /s/ ILLEGIBLE
---------------------------
Its CEO, President
--------------------------
- --------------------------------------------------------------------------------
EXHIBIT A TO ANTENNAE LICENSE AGREEMENT
Equipment
Antennae, dishes and other telecommunications equipment as well as related
structures and base site cabinets and any other appropriate ancillary equipment
so long as all of the same are contained within 200 square feet of roof space
and do not exceed 10 feet in height.
B-2
<PAGE>
EXHIBIT C
LICENSE AGREEMENT
MINNEAPOLIS TECHNOLOGY CENTER
WEST PARKING LOT (UNASSIGNED)
This License Agreement is made as of the ___ day of ________,1999,
by and between TIMESHARE SYSTEMS, INC., a Minnesota corporation ("Licensor") and
Inflow, Inc. ("Licensee),
In consideration of the covenants and agreements contained herein,
and other good and valuable consideration, receipt and sufficiency of which
is acknowledged, Licensor and Licensee mutually agree as follows:
A. GRANT: Licensor hereby grants to Licensee, for the sole purpose of
parking the automobile(s) described in Licensee's application attached hereto,
fifteen (15) unassigned parking space(s) in the restricted parking areas of the
West parking lot ("Lot") located at Minneapolis Technology Center, 511 South
Eleventh Avenue South, Minneapolis, Minnesota.
B. TERM: Subject to Paragraph I below, the term of this License commences
this date and expires when the "Office Lease" (as defined below) expires or
earlier terminates; provided Licensee may terminate this License Agreement at
any time as to any parking space or spaces or in its entirety upon 30 days prior
notice.
C. LICENSE FEE: Licensee shall pay as its fee for this License the sum of
$75 per admittance card on or before the first day of each month to Timeshare
Systems, Inc., 511 South Eleventh Avenue South, Minneapolis, Minnesota, 55415,
or at such other address that Licensor may designate; together with any use,
sales or other tax (excepting income tax) payable or which may become payable by
Licensor as a result of said fee. In the event the term of this License
commences on other than the first day of a month, the fee will be prorated for
such month. The license fee shall commence on the date Licensor delivers a Lot
gate operator(s) or admittance card(s) to Licensee. The license fee shall
terminate on the expiration date of the license or on the date the Licensee
returns the Lot gate operator(s) and/or admittance card(s) whichever occurs
last. The fee for this License may be adjusted from time to time beginning
January 1, 2001 to whatever fee Licensor is then charging for Lot parking
stalls; provided that such charge shall not exceed the market rate for similar
parking in the area; and provided further that Licensor shall give thirty (30)
days prior written notice of any such increase and Licensee may, at any time
prior to (30) days subsequent to any such increase, terminate this License by
giving ten (10) days written notice to Licensor.
D. NEGATIVE COVENANTS: Licensee shall not:
1. Park more than one (1) standard sized (or smaller) automobile
per admittance card in the Lot, at any one time.
2. Allow any non-authorized automobile to be parked in the Lot
through use of Licensee's issued admittance card.
3. Allow any automobile to be stored overnight in the Lot.
Upon breach of any covenant set forth in this Paragraph 4 by Licensee,
Licensor may, at its option, and in addition to Licensor's remedies provided in
paragraph 5 hereof, charge Licensee the sum of $25.00 for each day of any such
violation, and/or may tow or have towed any automobile which is parked in
violation of any covenant set forth in this paragraph 4, and in such case
Licensee agrees to pay Licensor as an additional license fee hereunder all
towing and storage costs associated with said towing.
E. RIGHT OF RE-ENTRY AND EXPIRATION: Licensee agrees that this License is
made upon the condition that if the Licensee shall fail to pay the license fee
within ten (10) days after notice from Licensor that the same is due, fail to
keep any term or condition of this license and fail to remedy such failure
within ten (10) days after receiving notice from Licensor of the same, or shall
neglect or fail to keep, observe and perform any of the rules and regulations
from time to time adopted and promulgated by Licensor for the operation of the
Lot and fail to remedy the same within ten (10) days after receiving notice from
Licensor, then in any of said cases the Licensor may immediately or at any time
thereafter and without notice or demand, retake posession of the parking
stall(s), without such re-taking working a forfeiture of the license fee to be
paid by Licensee for the full term of this License. In the event of such
retaking or at the end of the Term, Licensee agrees to return to Licensor any
and all Lot gate operator(s) and/or admittance cards, upon notice from Licensor.
Licensee shall pay to Licensor, Licensor's replacement/lost fee for all such
operator(s) and/or admittance cards not returned.
F. PARKING LOT OPERATION: It is specifically understood and agreed that the
Lot area is operated without constant staffing and that Licensor shall not be
responsible for any loss, damage or casualty sustained by Licensee's automobile
or for the loss of any articles, personal property or any such other items from
Licensee's automobile.
G. OFFICE LEASE: Licensee presently has (or is contemporaneously executing)
a lease for office space within the Minneapolis Technology Center ("Office
Lease").
1. A termination of the Office Lease, whether by expiration of
the term or otherwise, shall automatically constitute a termination of this
License Agreement.
H. AUTHORIZED VEHICLES: Licensee agrees, upon request from Licensor, to
furnish Licensor or its authorized agent, the state automobile license number(s)
assigned to those automobile(s) of those persons employed on the premises and
who are designated by Licensee to use the Lot. Any such designation shall not
exceed the number of stalls licensed hereunder. If any automobile of Licensee or
of Licensee's officers, agents or employees who is not designated to park in the
Lot is parked therein, then Licensee shall pay to Licensor an amount equal to
$25 per day for each such vehicle for each day, or a part thereof, such amount
to be due and payable by Licensee within three (3) days after demand therefor.
I. CANCELLATION: Licensor shall have the right, upon thirty (30) days
prior written notice to Licensee, to cancel this License Agreement and allow
the Parking Lot to be used on an unrestricted basis for all tenants and their
invitees, provided that at least the same number of spaces shall remain
available for use by Licensee. Licensee from and after the cancellation date
specified in such written notice, shall have no further obligation for the
payment of the fee hereunder but the use of such Parking Lot shall be subject to
the terms of paragraphs 4(c), 6 and 7 hereof.
B-1
<PAGE>
J. LICENSE HOURS: Notwithstanding anything else contained herein to the
contrary, the license granted hereunder shall be limited to the following hours:
Monday through Friday (legal holidays specifically excluded) from 7:00 a.m. to
6:00 p.m. Licensee specifically agrees that should Licensee violate the
foregoing hours during a time period in which there is an event ("Event") at the
Hubert H. Humphrey Metrodome (located across 11th Avenue from the Minneapolis
Technology Center) Licensee shall pay to Licensor $25.00 for each such Event
violation (or such higher rate which Licensor may then be charging for dome
Event parking).
(LICENSEE) INFLOW, INC. (LICENSOR) TIMESHARE SYSTEMS, INC.
By _________________________ By _________________________
Its _______________________ Its _______________________
Date: ______________________ Date: ______________________
B-2
<PAGE>
EXHIBIT C-1
LICENSE AGREEMENT
MINNEAPOLIS TECHNOLOGY CENTER
PARKING LOT (ASSIGNED)
This License Agreement is made as of this ___ day of _______,1999, by and
between Timeshare Systems, Inc., a Minnesota corporation ("Licensor") and
Inflow, Inc. ("Licensee").
WITNESSETH:
In consideration of the covenants and agreements contained herein, and
other good and valuable consideration, receipt and sufficiency of which is
acknowledged, Licensor and Licensee mutually agree as follows:
A. GRANT: Licensor hereby grants to Licensee, for the sole purpose of
parking the automobile(s) described in Licensee's application attached hereto,
ten (10) assigned parking space(s) in the restricted parking areas of the East
parking lot ("Lot") located at Minneapolis Technology Center, 511 South Eleventh
Avenue South, Minneapolis, Minnesota. The assigned parking spaces shall be the
following:_________________________________________________ .
B. TERM: The term of this License shall be coterminous with the "Office
Lease" (as defined below) ; provided Licensee may terminate this License
Agreement at any time as to any parking space or spaces or in its entirety upon
30 days prior notice.
C. LICENSE FEE: Licensee shall pay as its fee for this License the sum of
$150 per parking space on or before the first day of each month to Timeshare
Systems, Inc., 511 South Eleventh Avenue South, Minneapolis, Minnesota, 55415,
or at such other address that Licensor may designate; together with any use,
sales or other tax (excepting income tax) payable or which may become payable by
Licensor as a result of said fee. In the event the term of this License
commences on other than the first day of a month, the fee will be prorated for
such month. The license fee shall commence on the date Licensor delivers a Lot
gate operator(s) or admittance card(s) to Licensee. The license fee shall
terminate on the expiration date of the license or on the date the Licensee
returns the Lot gate operator(s) and/or admittance card(s) whichever occurs
last. The license fee may be adjusted from time to time beginning January 1,
2000 to whatever fee Licensor is then charging for Lot parking stalls; provided
that such charge shall not at any time exceed the market rate for similar
parking in the area; and provided further that Licensor shall give thirty (30)
days prior written notice of any increase and Licensee may, at any time prior to
thirty (30) days subsequent to any such increase, terminate this License by
giving ten (10) days written notice to Licensor. Licensee shall be entitled to
one admitted card per stall for each such fee.
D. COVENANTS: Licensee shall:
1. Not park more than ten (10) automobiles in the Lot, at any
one time.
Upon breach of any covenant set forth in this Paragraph 4 by Licensee,
Licensor may, at its option, and in addition to Licensor's remedies provided in
paragraph 5 hereof, charge Licensee the sum of $25.00 for each day of any such
violation, and/or may tow or have towed any automobile which is parked in
violation of any covenant set forth in this paragraph 4, and in such case
Licensee agrees to pay Licensor as an additional license fee hereunder all
towing and storage costs associated with said towing.
E. RIGHT OF RE-ENTRY AND EXPIRATION: Licensee agrees that this License is
made upon the condition that if the Licensee shall fail to pay the license fee
after notice from Licensor that the same is due, fail to keep any term or
condition of this license and fail to remedy such failure within ten (10) days
after receiving notice from Licensor of the same, or shall neglect or fail to
keep, observe and perform any of the rules and regulations from time to time
adopted and promulgated by Licensor for the operation of the Lot and fail to
remedy the same within ten (10) days after receiving notice from Licensor, then
in any of said cases the Licensor may immediately or at any time thereafter and
without notice or demand, retake possession of the parking stall(s), without
such re-taking working a forfeiture of the license fee to be paid by Licensee
for the full term of this License. In the event of such retaking or at the end
of the Term, Licensee agrees to return to Licensor any and all Lot gate
operator(s) and/or admittance cards, upon notice from Licensor. Licensee shall
pay to Licensor, Licensor's replacement/lost fee for all such operator(s) and/or
admittance cards not returned.
F. PARKING LOT OPERATION: It is specifically understood and agreed that the
Lot area is operated without constant staffing and that Licensor shall not be
responsible for any loss, damage or casualty sustained by Licensee's automobile
or for the loss of any articles, personal property or any such other items from
Licensee's automobile.
G. OFFICE LEASE: Licensee presently has (or is contemporaneously executing)
a lease for space within the Minneapolis Technology Center ("Office Lease").
1. A termination of the Office Lease, whether by expiration of
the term or otherwise, shall automatically constitute a termination of this
License Agreement
H. AUTHORIZED VEHICLES: Licensee agrees, upon request from Licensor, to
furnish Licensor or its authorized agent, the state automobile license number(s)
assigned to those automobile(s) of those persons employed on the premises and
who are designated by Licensee to use the Lot, which may be revised from time to
time by Licensee. Any such designation shall not exceed the number of admittance
cards issued hereunder. After October 1, 1999, Licensor agrees to issue 2
admittance cards for each designated parking space so long as Tenant does not
park more automobiles at any one time than the number of designated spaces. If
Tenant violates the preceding sentence Landlord may terminate such number of
admittance cards so that they again equal the number of assigned number of
spaces. If any automobile of Licensee or of Licensee's officers, agents or
employees who is not designated to park in the Lot is parked therein, then
Licensee shall pay to Licensor an amount equal to $25 per day for each such
vehicle for each day, or a part thereof, such amount to be due and payable by
Licensee within three (3) days after demand therefor.
(LICENSEE) INFLOW, INC. (LICENSOR) TIMESHARE SYSTEMS, INC.
By______________________________ By______________________________
Its____________________________ Its____________________________
Date:___________________________ Date:___________________________
C-1
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be
installed or displayed on any part of the outside or inside of the Building
without the prior written consent of the Landlord. Landlord shall have the right
to remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on doors
and walls shall be printed, painted, affixed or inscribed at the expense of
Tenant by a person or vendor chosen by Landlord. In addition, Landlord reserves
the right to change from time to time the format of the signs or lettering and
to require previously approved signs or lettering to be appropriately altered.
2. If Landlord objects in writing to any curtains, blinds, shades or
screens attached to or hung in or used in connection with any window or door of
the Premises, Tenant shall immediately discontinue such use. No awning shall be
permitted on any part of the Premises. Tenant shall not place anything or allow
anything to be placed against or near any glass partitions or doors or windows
which may appear unsightly, in the opinion of Landlord, from outside the
Premises.
3. Tenant shall not obstruct any sidewalks, halls, passages, exits,
entrances, elevators, escalators or stairways of the Building. The halls,
passages, exits, entrances, shopping malls, elevators, escalators and stairways
are not for the general public, and Landlord shall in all cases retain the right
to control and prevent access to the Building of all persons whose presence in
the judgment of Landlord would be prejudicial to the safety, character,
reputation and interests of the Building and its tenants provided that nothing
contained in this rule shall be construed to prevent such access to persons with
whom any tenant normally deals in the ordinary course of its business, unless
such persons are engaged in illegal activities. No tenant and no employee or
invitee of any tenant shall go upon the roof of the Building.
4. The directory of the Building will be provided exclusively for the
display of the name and location of tenants only and Landlord reserves the
right to exclude any other names therefrom.
5. Tenant shall not cause any unnecessary labor by carelessness or
indifference to the good order and cleanliness of the Premises. Landlord shall
not in any way be responsible to any Tenant for any loss of property on the
Premises, however occurring, or for any damage to any Tenant's property by the
janitor or any other employee or any other person.
6. Landlord will furnish Tenant free of charge with two keys to each door
in the Premises. Landlord may make a reasonable charge for any additional keys,
and Tenant shall not make or have made additional keys, and Tenant shall not
alter any lock or install a new or additional lock or bolt on any doors of its
Premises. Tenant, upon the termination of its tenancy, shall deliver to Landlord
the keys of all doors which have been furnished to Tenant, and in the event of
loss of any keys so furnished, shall pay Landlord therefor.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions in
their installation.
8. No equipment, materials, furniture, packages, supplies, merchandise or
other property will be received in the Building or carried in the elevators
except between such hours and in such elevators as may be designated by
Landlord.
9. Tenant shall obtain Landlord's consent prior to placing a load upon any
floor which may exceed the load per square foot which such floor was designed to
carry and which is allowed by law. Landlord shall have the right to prescribe
the weight, size and position to all equipment, materials, furniture or other
property brought into the Building. Heavy objects shall stand on such platforms
as determined by Landlord to be necessary to properly distribute the weight.
Business machines and mechanical equipment belonging to Tenant which cause noise
or vibration that may be transmitted to the structure of the Building or to any
space in the Building to such a degree as to be objectionable to Landlord or to
any tenant shall be placed and maintained by Tenant, at Tenant's expense on
vibration eliminators or other devices sufficient to eliminate noise or
vibration. The persons employed to move such equipment in or out of the Building
must be acceptable to Landlord. Landlord will not be responsible for loss of, or
damage to, any such equipment or other property from any cause, and all damage
done to the Building by maintaining or moving such equipment or other property
shall be repaired at the expense of Tenant.
10. Tenant shall not waste electricity, water or air conditioning. Tenant
shall keep corridor doors closed.
11. Landlord reserves the right to exclude from the Building between the
hours of 6 p.m. and 7 a.m. the following day, or such other hours as may be
established from time to time by Landlord, and on Sundays and legal holidays any
person unless that person is known to the person or employee in charge of the
Building as being an employee of Tenant and has a pass or is properly
identified. Tenant shall be responsible for all persons for whom it requests
passes and shall be liable to Landlord for all acts of such persons. Landlord
shall not be liable for damages for any error with regard to the admission to or
exclusion from the Building of any person.
12. Tenant shall close and lock the doors of its Premises and entirely shut
off all water faucets or other water apparatus and electricity, gas or air
outlets before Tenant and its employees leave the Premises. Tenant shall be
responsible for any damage or injuries sustained by other tenants or occupants
of the Building or by Landlord for noncompliance with this rule.
13. 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 into any of them, and
the expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the Tenant who, or whose employees or invitees,
shall have caused it.
14. Tenant shall not install any radio or television antenna, satellite
dish, loudspeaker or other device on the roof or exterior walls of the Building
except by virtue of a separate license negotiated with Landlord. Tenant shall
not interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.
15. Except as approved by Landlord, Tenant shall not mark, drive nails,
screw or drill into the partitions, woodwork or plaster or in any way deface the
Premises. Tenant shall not cut or bore holes for wires. Tenant shall not affix
any floor covering to the floor of the Premises in any manner except as approved
by Landlord. Tenant shall repair any damage resulting from noncompliance with
this rule.
16. No animals are allowed in the Building with the exception of seeing-eye
or hearing animals. In the event any injuries are caused to Tenant's employees
or invitees, the owner of said animal agrees to indemnify and hold the Landlord
and its managing agent and all other tenants harmless from all costs (including
reasonable attorneys' fees) with respect to the presence of any animals in the
Building.
17. Tenant shall store all its trash and garbage within its Premises.
Tenant shall not place in any trash box or receptacle any material which cannot
be disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
18. No cooking shall be done or permitted by any Tenant on the Premises,
except by the Tenant of Underwriters' Laboratory approved microwave oven or
equipment for brewing coffee, tea, hot chocolate and similar beverages shall be
permitted provided that such equipment and use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and
regulations.
D-1
<PAGE>
19. Tenant shall not use in any space or in the public halls of the
Building any hand trucks except those equipped with the rubber tires and side
guards or such other material-handling equipment as Landlord may approve. Tenant
shall not bring any other vehicles of any kind into the Building.
20. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant except as Tenant's address.
21. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual. Emplyees
of Landlord shall not perform any work or do anything outside of their regular
duties unless under special instruction from Landlord, and no employee of
Landlord will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.
22. Parking is allowed between the hours of 7:00 am, to 6:00 p.m., Monday
through Friday, holidays excepted, in the east parking lot only, subject to
availability and at such rates as Landlord is then charging. Notwithstanding the
foregoing, no parking is allowed during professional sporting events and/or
other events occurring at the Hubert H. Humphrey Metrodome located at across
11th Avenue South from the Building. All visitors to the Building parking in
such parking lot shall pay the then prevailing parking charges. Any visitor
drop-offs are allowed only on the east side of the Building. Notwithstanding the
foregoing, parking by Tenant pursuant to a specific license agreement shall be
24 hours per day, 7 days a week.
23. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building. The
foregoing shall not be construed to allow Landlord to discriminatorily enforce
these Rules and Regulations as against Tenant and not other tenants of the
Building.
24. 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 terms,
covenants, agreements and conditions of any lease of premises in the Building.
25. Landlord reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for safety and
security, for care and cleanliness of the Building and for the preservation of
good order in and about the Building. Tenant agrees to abide by all such rules
and regulations in this Exhibit stated and any additional rules and regulations
which are adopted.
26. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and guests.
D-2
<PAGE>
FLOOR PLAN
PENTHOUSE/ROOF LEVEL
[DIAGRAM]
EXHIBIT E
<PAGE>
[DIAGRAM]
FUTURE EXPANSION
EXHIBIT F
<PAGE>
EXHIBIT 10.15
MIAMI NORTH, LLC
OFFICE LEASE AGREEMENT
COVER PAGE
TENANT: ___ Inflow, Inc. ________________
DATED:__________________
For the purposes of this lease Agreement by and between MIAMI NORTH, LLC
----------------
("Landlord"), by its agent, Anthony & Co., and INFLOW, INC. ("Tenant"), the
------------
terms set forth below, when preceded by a capital letter, shall have the meaning
set forth in this Cover Page and in the Lease.
<TABLE>
<S> <C>
I TENANT AND LANDLORD INFORMATION
A. Landlord: Miami North, A NORTH CAROLINA LIMITED LIABILITY COMPANY
-------------------------------------------------------
B. Tenant: Inflow, Inc., a Delaware Corporation
-------------------------------------------------------
C. Tenant's Notice Address: 1860 Lincoln St.
----------------
Suite 305
----------------
Denver, CO 80295
----------------
303-824-3005
----------------
303-824-3001 FAX
----------------
D. Tenant's Representative: Art Zeile, CEO
----------------
II DESCRIPTION OF PREMISES
A. Building: 4518 S. Miami Blvd., Bldg 4, Durham, NC 27703
---------------------------------------------
B. Business Hours: Monday-Friday, 8:00 am-6:00 pm, Saturday, 9:00 am-1:00 pm
---------------------------------------------------------
C. Premises: Approximately 14,443 rentable square feet
-----------------------------------------
D. Permitted Use: General office use and computer and telecommunications equipment
----------------------------------------------------------------
use.
---
III TERM
A. Commencement Date: July 1, 1999
------------
B. Expiration Date: September 30, 2009
------------------
IV RENT
A. Advance Rent: n/a
B. Base Annual Rent: Two Hundred Thirty-One Thousand Eighty-Eight Dollars ($231,088.00).
------------------------------- -----------
C. Base Rental Rate: Sixteen Dollars ($16.00________) per square foot.
-----------------------
D. Monthly Installment of
Basic Annual rent: Nineteen Thousand Two Hundred Fifty-Seven Dollars and
-----------------------------------------------------
33/100 ($19,257.33).
------
E. Security Deposit: None ($ ), See Rider A for lease
------------------------------ ------
security paragraph
</TABLE>
<PAGE>
<TABLE>
<S> <C>
V ADJUSTMENTS
A. Rental Rate Escalations: See Paragraph 5.01 for schedule of escalations.
B. Base Operating and Real Tenant pays pro rata share of increase in operating expenses above base
year 2000.
C. Tenant's Pro Rata Share: __Seventy-Nine Percent ( 79 %) of the Building. Total rentable
-----
square footage is 18,237.
------
VI MISCELLANEOUS
A. Broker: Anthony & Co.: Barbara F. Burgess and James M. Scofield, SIOR,
Liberty Greenfield Advisors: Mark Nealon
Carter Associates of the Carolinas, LLC: Bill Sandridge
B. Special Conditions See Rider A
-----------
C. Exclusive Rights See Rider A
-----------
</TABLE>
Tenant: Landlord:
INFLOW, INC. MIAMI NORTH, LLC
- ------------ ----------------
by: /s/ Art Zeile by: /s/ Gregg Sandreuter
---------------------------- ---------------------------
Name: Art Zeile Name: Gregg Sandreuter
-------------------------- -------------------------
Title: Chief Executive Officer Title: Manager
------------------------- ------------------------
Date: 6/28/99 Date: 6/29/99
-------------------- ---------------------
(Please Print or Type)
<PAGE>
TABLE OF CONTENTS
ARTICLE I PREMISES
ARTICLE II USE
ARTICLE III TERM
ARTICLE IV COMPLETION OF PREMISES
Section 4.01 Substantial Completion
Section 4.02 Notice
Section 4.03 Inspection and Punchlist
Section 4.04 Delayed Possession
Section 4.05 Landlord Improvements
ARTICLE V RENT AND SECURITY
Section 5.01 Base Rent
Section 5.02 CPI Adjustment
Section 5.03 Expense and Tax Escalations
Section 5.04 Personal Property Tax
Section 5.05 Security Deposit
ARTICLE VI AFFIRMATIVE OBLIGATIONS
Section 6.01 Compliance with Laws
Section 6.02 Services and Utilities
Section 6.03 Repairs and Maintenance
ARTICLE VII NEGATIVE OBLIGATIONS
Section 7.01 Alterations
Section 7.02 Assignment and Subleasing
ARTICLE VIII INSURANCE
Section 8.01 Insurance
Section 8.02 Indemnification
Section 8.03 Limitation of Landlord's Liability
ARTICLE IX LOSS OF PREMISES
Section 9.01 Damages
Section 9.02 Condemnation
ARTICLE X DEFAULT
Section 10.01 Tenant's Default
Section 10.02 Landlord's Remedies
Section 10.03 Self-Help
Section 10.04 Survival
ARTICLE XI NON DISTURBANCE
Section 11.01 Subordination
Section 11.02 Estoppel Certificate
Section 11.03 Quiet Possession
ARTICLE XII LANDLORD'S RIGHTS
Section 12.01 Rules
Section 12.02 Mechanic's Liens
Section 12.03 Right to Enter
Section 12.04 Holdover
Section 12.05 Signs
Section 12.06 Right to Relocate
ARTICLE XIII MISCELLANEOUS
Section 13.01 Broker's Warranty
Section 13.02 Attorneys' Fees
Section 13.03 Notices
Section 13.04 Partial Invalidity
Section 13.05 Waiver
Section 13.06 Binding on Successors
Section 13.07 Governing Law
Section 13.08 Lease not an Offer
Section 13.09 Recording
Section 13.10 Survival of Remedies
Section 13.11 Authority of Parties
Section 13.12 Business Days
Section 13.13 Entire Agreement
Section 13.14 Definition of Lease
<PAGE>
EXHIBITS
RIDER A
Exhibit A Floor Plan
Exhibit B Building
Exhibit C Land
Exhibit D Landlord Improvements
Exhibit E SW Corner Space
Exhibit F Rules and Regulations
<PAGE>
MIAMI NORTH, LLC
OFFICE LEASE
THIS LEASE ("Lease") is made June 29, 1999, between Miami North, LLC
("Landlord") and Inflow, Inc., a Delaware Corporation ("Tenant"). Landlord is a
Limited Liability Company, organized under the laws of North Carolina, with
principal offices at 702 Oberlin Road, Suite 100, Raleigh, North Carolina 27605.
ARTICLE 1
PREMISES
1.01 Premises. Landlord leases to Tenant that space located in 4518 S. Miami
Blvd., Building 4 in the Miami North Office Park located in Durham, North
Carolina ("Premises") as outlined on the Floor Plan attached as Exhibit A. The
Premises consists of approximately 14,443 square feet of rentable space and
13,130 square feet of usable space in the building ("Building") in which the
Premises are located. The exact amount of space in the Premises shall be
determined by Landlord in accordance with a final space plan consistent with
ANSI/BOMA Z65.1-1996 standard and not to exceed 10% r/u loss factor (except to
the extent, if at all, that Tenant's design for the Premises increases such
factor), and subject to verification by Tenant's architect. The Building is
shown as Exhibit B and is located on the land described in Exhibit C ("Land").
The Premises contain the fixtures, improvements, and other property now
installed plus any Landlord Improvements required by Section 4.02 and Exhibit D.
1.02 Common Areas. Tenant and its agents, employees, and invitees have the
non-exclusive right with others designated by Landlord to the free use of the
common areas ("Common Areas") in the Building and on the Land for the Common
Areas' intended and normal purpose. Common Areas include elevators, sidewalks,
parking areas, driveways, hallways, stairways, public bathrooms, common
entrances, lobby, and other similar public areas and access ways. Landlord may
change the Common Areas if the changes do not materially and unreasonably
interfere with Tenant's access to or use of the Premises.
ARTICLE II
USE
General office use and computer and telecommunications equipment room and any
other legally permitted use. Landlord warrants that applicable laws, ordinances,
regulations, and restrictive covenants permit the Premises to be used for
general offices, and computer and telecommunications equipment room. Tenant
shall not create a nuisance or use the Premises for any immoral or illegal
purposes.
ARTICLE III
TERM
The Lease begins ("Commencement Date") on July 1, 1999.
The Lease ends ("Expiration Date") on September 30, 2009, subject to Tenant's
right to extend as provided in Rider A.
ARTICLE IV
COMPLETION OF PREMISES
4.01 Tenant Improvements. Tenant shall receive an allowance for Tenant
improvements for interior upfitting, on an as needed basis, of up to $18.00 per
usable square foot. All costs incurred as a result of architectural,
engineering, design, construction management, permitting, demolition, and
construction shall be paid by Tenant but may be paid for out of the Tenant
improvement allowance. Landlord shall review Tenant's plans and provide its
written approval prior to commencement of construction. Landlord's approval
shall not be unreasonably withheld. Tenant shall commence payment of rent upon
October 1, 1999 regardless of condition of the Premises at that time. Landlord
shall make payments to Tenant from the allowance from time to time within ten
(10) days after receipt of request from Tenant for a payment, accompanied by
reasonable supporting documentation.
4.02 Landlord Improvements. Landlord, at its expense, has made or shall make
improvements to the Premises in accord with Exhibit D ("Landlord Improvements")
prior to the Commencement Date. The Landlord Improvements shall be completed in
a good and workmanlike manner and comply with all applicable laws, ordinances,
rules, and regulations of governmental authorities.
ARTICLE V
RENT AND SECURITY
5.01 Gross Rent. Tenant shall pay to Landlord Gross Rent during the Term, as
follows:
Base Rent and Total Monthly Rent are shown on a rentable square foot basis
DATE BASE RENTAL RENT TOTAL MONTHLY RENT
July 1, 1999-Sept. 30, 1999 $00.00 rsf $0.00
Oct. 1, 1999-Sept. 30, 2000 $16.00 rsf $19,257.33
Oct. 1, 2000-Sept. 30, 2001 $16.38 rsf $19,714.70
Oct. 1, 2001-Sept. 30, 2002 $16.76 rsf $20,172.06
Oct. 1, 2002-Sept. 30, 2003 $17.16 rsf $20,653.49
Oct. 1, 2003-Sept. 30, 2004 $17.57 rsf $21,146.96
Oct. 1, 2004-Sept. 30, 2005 $17.99 rsf $21,652.46
Oct. 1, 2005-Sept. 30, 2006 $18.43 rsf $22,182.04
<PAGE>
Oct. 1, 2006-Sept. 30, 2007 $18.87 rsf $22,711.62
Oct. 1, 2007-Sept. 30, 2008 $19.33 rsf $23,265.27
Oct. 1, 2008-Sept. 30, 2009 $19.81 rsf $23,842.99
The Gross Rent shall be paid:
(a) without advance notice, demand, offset, or deduction;
(b) by the first day of each month during the Term; and
(c) to Landlord at its address set forth in Section 13.03 or as
Landlord may specify in writing to Tenant.
If the Term does not begin on the first day or end on the last day of a month,
the Gross Rent for that partial month shall be prorated by multiplying the
monthly Gross Rent by a fraction, the numerator of which is the number of days
of the partial month included in the Term and the denominator of which is the
total number of days in the full calendar month.
If Tenant fails to pay part or all of the Gross Rent by the fifth (5th) business
day of the month due (except that the first time Tenant so fails to timely pay
in any calendar year, then the appropriate grace period shall be until ten (10)
days after Tenant receives notice from Landlord that such amounts are past due
and payable), it is past due, the Tenant shall also pay:
(a) a late charge equal to four percent (4%) of the unpaid Gross Rent
and Additional Rent, plus
interest at eighteen percent (18%) per annum or the maximum then allowed
by applicable law, whichever is less, on the remaining unpaid balance,
retroactive to the date originally due until paid.
5.02 Operating Expense Increases. Tenant shall pay to Landlord during the term
hereof, in addition to the Base Rent, Tenant's Share, as hereinafter defined, of
the amount by which all Operating Expenses, as hereinafter defined, for each
Comparison Year exceeds the amount of all Operating Expenses for the Base Year,
such excess being hereinafter referred to as the "Operating Expense Increase,"
in accordance with the following provisions:
(a) Definitions.
(i) "Base Year" is defined as the period beginning January 1,
2000 and ending December 31, 2000. Consistency shall be
used with all methods in calculating the base year
Operating Expenses.
(ii) "Tenant's Share" means Seventy-Nine Percent (79%), which is
calculated by dividing the rentable square footage of the
Premises (numerator) by the rentable square footage of the
Building (denominator), and expressing the fraction as a
percentage.
(iii) "Comparison Year" is defined as each calendar year during
the term of this Lease subsequent to the Base Year;
provided, however, Tenant shall have no obligation to pay a
share of the Operating Expense Increase applicable to the
first eighteen (18) months of the Lease Term. Tenant's
Share of the Operating Expense Increase for the first and
last Comparison Years of the Lease Term shall be prorated
according to that portion of such Comparison Year as to
which Tenant is responsible for a share of such increase.
(iv) "Property" means the Building and its equipment and
systems, and one-quarter (1/4) of the Land (excluding any
buildings thereon).
(v) "Real Estate Taxes" means real property taxes and currently
due installments of assessments, special or otherwise,
imposed upon the Property, and reasonable legal fees,
costs, and disbursements incurred for proceedings to
contest, determine, or reduce Real Estate Taxes, but only
to the extent the Real Estate Taxes are reduced, but shall
exclude federal, state or local income taxes, franchise,
gift, transfer, excise, capital stock, estate, succession,
or inheritance taxes, and penalties or interest for late
payment of Real Estate Taxes.
(vi) "Operating Expenses" means Landlord's operating expenses
that are reasonable, actual and necessary, out-of-pocket
(except Landlord may use its normal accrual method of
accounting), obtained at competitive prices, and that are
directly attributable to the operation, maintenance,
management, and repair of the Property, as determined under
generally accepted accounting principles consistently
applied, including:
(1) salaries, and other compensation; payroll taxes,
vacation, holiday, and other paid absences; and
welfare, retirement, and other fringe benefits that
are paid to employees, independent contractors, or
agents of Landlord engaged in the operation, repair,
management, or maintenance of the Property;
(2) repairs and maintenance of the Property and the cost
of supplies, tools, materials, and equipment for
Property repairs and maintenance, that under
generally accepted accounting principles
consistently applied, would not be capitalized;
(3) insurance premiums and other charges incurred by
Landlord for insurance on the Property and for its
employees including:
-a- fire insurance, extended coverage insurance,
and earthquake, windstorm, hail, and
explosion insurance;
<PAGE>
-b- public liability and property damage
insurance;
-c- workers' compensation insurance;
-d- boiler and machinery insurance; sprinkler
leakage, water damage, water damage legal
liability insurance; burglary, fidelity, and
pilferage insurance on equipment and
materials;
-e- insurance Landlord is required to carry under
this Lease or by any governmental authority
with respect to the Property; and
-f- other insurance as is customarily carried by
operators of comparable office buildings in
the Raleigh, North Carolina area;
(4) costs incurred for inspection and servicing, including all outside
maintenance contracts necessary or proper for the maintenance of
the Property, such as janitorial and window cleaning, rubbish
removal, exterminating, water treatment, elevator, electrical,
plumbing, and mechanical equipment, and the cost of materials,
tools, supplies, and equipment used for inspection and servicing;
(5) costs incurred for electricity, water, gas, fuel, or other
utilities;
(6) sales, use, and excise taxes on goods and services purchased by
Landlord, but Tenant's pro rata share shall exclude prepaid
services that are not used by Landlord;
(7) license, permit, and inspection fees;
(8) auditor's fees for public accounting;
(9) legal fees, costs, and disbursements;
(10) reasonable and customary management fees as stated by BOMA to a
person or entity other than Landlord (provided, such person or
entity may be affiliated with Landlord);
(11) the annual amortization over its useful life with a reasonable
salvage value on a straight-line basis of (i) the costs of any
capital improvements made by Landlord and required by any changes
in applicable laws, rules, or regulations of any governmental
authorities; or (ii) the costs of any equipment or capital
improvements made by Landlord, as a laborsaving measure or to
accomplish other savings in operating, repairing, managing, or
maintaining of the Property, but only to the extent of the
savings;
(12) any costs for substituting work, labor, materials, or services in
place of any of the above items, or for any additional work,
labor, materials, services or improvements to comply with any
governmental laws, rules, regulations, or other requirements
applicable to the Property, that, at the time of substitution or
addition, are considered operating expenses under generally
accepted accounting principles consistently applied;
(13) other costs reasonably necessary to operate, repair, manage, and
maintain the Property in a manner and condition consistent with
comparable office buildings in the Raleigh, North Carolina area;
and
(14) Notwithstanding anything to the contrary in items (1) through (13)
above, Operating Expenses shall exclude:
-a- leasing commissions, costs, disbursements, marketing costs,
attorneys' fees and other expenses incurred for leasing,
renovating, or improving space for tenants;
-b- costs incurred by Landlord in discharging its obligations under
Section 4.02 and Exhibit D;
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-c- costs (including permit, license, and inspection fees) incurred in
renovating, tenants or common areas;
-d- Landlord's cost of electricity or other service sold to tenants
for which Landlord is to be reimbursed as a charge over the Gross
Rent and Additional Rent payable under the lease with that tenant;
-e- depreciation and amortization on the Building except as expressly
permitted elsewhere in this Lease;
-f- costs of a capital nature including capital improvements, capital
repairs, capital equipment, and capital tools, as determined under
generally accepted accounting principles consistently applied,
except that the annual amortization of these costs shall be
included to the extent expressly permitted elsewhere in this
Lease;
<PAGE>
-g- costs incurred because the Landlord or other tenant violated the
terms of any lease or because Landlord violated any other contract
or obligation (including without limitation legal fees and
disbursements);
-h- interest on debt or amortization payments on mortgages or deeds of
trust or any other debt for borrowed money;
-i- advertising and promotional expenditures;
-j- repairs or other work needed because of fire, windstorm, or other
damage, casualty or cause insured against by Landlord or to the
extent Landlord's insurance provided coverage insurance;
-k- other expenses that under generally accepted accounting principles
consistently applied would not be considered normal maintenance,
repair, management, or operation expenses.
-l- fines or penalties incurred by Landlord;
-m- mortgage or ground rent uses;
-n- any types of utility services (including, without limitation,
electricity) or other benefits that at any time during the Term
are not provided to Tenant, or are separately metered or
contracted for and paid for by Tenant directly, to the extent
serving any portions of the Building or the Land except the Common
Areas;
-o- costs incurred due to the violation or alleged violation by the
Property of any law or regulation which is in effect on the date
of this Lease or the violation or alleged violation by Landlord of
any law or regulation whether or not in effect on the date of this
Lease;
-p- costs incurred for repair of latent defects in the Property;
-q- costs arising from the negligence or fault of other tenants or
occupants, Landlord or its agents, or any vendors, contractors or
providers of materials or services engaged by Landlord or its
agents.
-r- costs arising from or related to the presence in or about the
Property of hazardous materials (as defined under applicable laws
in effect on the date of this Lease) except any of the same which
are placed in the Property by Tenant;
-s- costs for sculpture, paintings, or other objects of art; and
-t- overhead and profit paid to subsidiaries or affiliates of Landlord
for management or other services on or to the Property or for
supplies or other materials, to the extent that the costs of the
services, supplies, or materials exceed the competitive costs of
the services, supplies, or materials were they not provided by a
subsidiary or affiliate.
Landlord shall use reasonable efforts to keep Operating Expenses at reasonable
amounts, while maintaining a high quality building.
(vi) "Adjustment Period" means each calendar year or partial calendar
year occurring during the Term.
(b) Credits/Reimbursements. Operating Expenses shall be reduced by
reimbursements, credits, discounts, reductions, or other allowances
received or receivable by Landlord for items of cost included in
Operating Expenses, except reimbursements to the Landlord by tenants
under this Article V.
(c) Tax Refund. If Landlord receives a refund of any portion of Real Estate
Taxes that were included in the Real Estate Taxes paid by Tenant, then
Landlord shall reimburse Tenant its pro rata share of the refunded taxes,
less any expenses that Landlord reasonably incurred to obtain the refund.
(d) Substituted Taxes. If any non-Real Estate Taxes are imposed against the
Landlord in substitution for any Real Estate Taxes, then the substituted
tax shall be considered a Real Estate Tax. Conversely, if any additional
Real Estate Taxes are imposed in substitution for any non-Real Estate
Taxes (that are not Substituted Taxes) they shall not be considered Real
Estate Taxes.
(e) Payment by Landlord. Subject to reimbursement under this Article V,
Landlord shall pay the Property's Operating Expenses and Real Estate
Taxes before delinquency.
(f) Payment by Tenant. If the Operating Expenses and Real Estate Taxes, when
combined for any Adjustment Period, exceed Base Operating and Real Estate
Tax Expense ("Operating and Real Estate Tax Expense Increase"), then
Tenant agrees to pay Landlord as Additional Rent, Tenant's Pro Rata Share
of the Operating and Real Estate Tax Expense Increase.
(g) Manner of Payment.
<PAGE>
(i) Within one hundred twenty (120) days after each Adjustment Period
ends, or as soon as reasonably practical, Landlord shall give
Tenant an itemized statement ("Statement") showing in reasonable
detail the:
(1) actual Operating Expenses and Real Estate Taxes for the
Adjustment Period;
(2) the Operating and Real Estate Tax Expense Increase for the
Adjustment Period;
(3) the amount of Tenant's Pro Rata Share of the Operating and
Real Estate Tax Expense Increase; and
(4) the amount Tenant owes toward the Operating and Real Estate
Tax Expense Increase.
Any Additional Rent due, including interest and penalty, shall
survive the Expiration Date.
(ii) During any Adjustment Period that is less than a complete calendar
year, unless this Lease was terminated because of Tenant's
default, Tenant's obligation for Additional Rent for those
Adjustment Periods shall be prorated by multiplying the Additional
Rent for the Adjustment Period by a fraction expressed as a
percentage, the numerator of which is the number of days of the
Adjustment Period included in the Term and the denominator of
which is 365.
(iii) Landlord shall keep and maintain records of all Operating Expenses
and Real Estate Taxes for a period of not less than two (2) years,
which records shall be made available to Tenant at reasonable
times at Landlord's offices for inspection and copying by Tenant
or its representatives, at Tenant's cost. Tenant shall have the
right to audit Landlord's books and records. If such audit
establishes that the sum total of all actual Operating Expenses or
Real Estate Taxes are less than Landlord's final determination of
such total by four percent (4%) or more, then Landlord shall pay
the cost of such audit. Any over-charged or under-paid amounts
shall be reimbursed by the responsible party with thirty (30) days
following delivery of such audit to Landlord.
5.03 Personal Property Tax. Before delinquency Tenant shall pay taxes assessed
during the Term against trade fixtures or personal property placed by Tenant in
the Premises. If these taxes are assessed against the Building, Tenant shall pay
its share of the taxes to Landlord within ten (10) days after receiving
Landlord's written statement setting forth the amount of taxes applicable to
Tenant's property and the basis for the charge to Tenant. Tenant's failure to
pay within the ten-day period shall entitle Landlord to the same remedies it has
upon Tenant's failure to pay Gross Rent or Additional Rent.
ARTICLE VI
AFFIRMATIVE OBLIGATIONS
6.01 Compliance with Laws.
(a) Landlord's Compliance. Landlord warrants, that on the Commencement
Date, the Building, the Property and Premises shall comply with
all applicable laws, ordinances, rules, and regulations of
governmental authorities, including the Americans with
Disabilities Act (ADA). ("Applicable Laws"). During the Term,
Landlord shall comply with all Applicable Laws regarding the
Premises and Building except to the extent Tenant must comply
under Section 6.01(b).
(b) Tenant's Compliance. Tenant shall comply with all Applicable Laws
(i) regarding the physical condition of the Premises, but only to
the extent the Applicable Laws pertain to the particular manner in
which Tenant uses the Premises; or (ii) that do not relate to the
physical condition of the Premises but relate to the lawful use of
the Premises and with which only the occupant can comply, such as
laws governing maximum occupancy, workplace smoking, and illegal
business operations, such as gambling. Notwithstanding the
foregoing, Tenant shall comply with any requirements imposed under
the Americans with Disabilities Act of 1990 ("ADA") which relate
exclusively to Tenant's buildout of the Premises.
6.02 Services and Utilities.
(a) Services. Landlord shall provide at its expense, subject to
reimbursement under Section 5.02:
(i) Janitorial services to the office portion of the Premises
(all business days, Monday through Friday);
(ii) Hot and cold water sufficient for drinking, lavatory,
toilet, and ordinary cleaning purposes;
(iii) [Intentionally Deleted].
(iv) Replacement of lighting tubes, lamp ballasts, and bulbs;
(v) Extermination and pest control to the office portion of the
premises when necessary; and
(vi) Maintenance of Common Areas in a manner consistent with
other comparable office buildings in the Raleigh, North
Carolina area. The maintenance shall include cleaning,
illumination, snow shoveling, deicing, repairs,
replacements, lawn care, and landscaping.
(b) Business Hours. "Business Hours" means:
<PAGE>
(i) Monday through Friday, 8:00 a.m. through 6:00 p.m., and
(ii) Saturday, 9:00 a.m. through 1:00 p.m., but excludes the
following holidays or the days on which the holidays are
designated for observance: New Year's Day, Easter (Good
Friday), Memorial Day, July Fourth, Labor Day, Thanksgiving
Day, and Christmas Day.
(c) 24 Hour Access. Tenant, its employees, agents, and invitees shall
have access to the Premises, twenty-four (24) hours a day, seven
(7) days a week, 52 weeks per year. During non business hours
Landlord may restrict access by requiring persons to show a badge
or identification card issued by Landlord, unless such persons are
authorized or accompanied by a representative of Tenant. Landlord
shall not be liable for denying entry to any person unaccompanied
by Tenant or unable to show the proper identification. Landlord
may temporarily close the Common Areas of the Building if required
in an emergency. Landlord shall use its best efforts to make any
such closure during non business hours only and, to the extent
reasonably possible, in a manner and for a time period so as not
to interfere with Tenant's operations in the Building, If Landlord
closes the Building, then the Gross Rent and Additional Rent shall
abate during any closing that lasts more than twenty-four (24)
hours.
(e) Interruption of Services. Landlord does not warrant that any
services Landlord supplies will not be interrupted. Services may
be interrupted because of accidents, repairs, alterations,
improvements, or any reason beyond the reasonable control of
Landlord, and such an interruption shall not:
(i) be considered an eviction or disturbance of Tenant's use
and possession of the Premises;
(ii) make Landlord liable to Tenant for damages;
(iii) abate Gross Rent or Additional Rent; or
(iv) relieve Tenant from performing Tenant's Lease obligations.
6.03 Repairs and Maintenance.
(a) Tenant's Care of Premises. Tenant shall:
(i) keep the Premises and fixtures in good order;
(ii) make repairs or replacements to the Premises or Building
needed because or Tenant's misuse or negligence, except to
the extent that the repairs or replacements are covered by
Landlord's insurance or the insurance Landlord is required
to carry under this Lease, whichever is greater;
(iii) repair and replace, to the extent repair and replacement
are desired by Tenant, special equipment or decorative
treatments installed by or at Tenant's request which Tenant
is entitled to remove at the end of the Lease term and that
serve the Premises only, except
(1) to the extent the repairs or replacements are needed
because of Landlord's misuse or primary negligence,
and are not covered by Tenant's insurance or the
insurance Tenant is required to carry under this
Lease, whichever is greater; or
(2) if the Lease is terminated under Article IX (Loss of
Premises); and
(iv) not commit waste.
(b) Landlord's Repairs. Except for repairs and replacements that
Tenant must make under paragraph 6.03(a), Landlord shall pay for
and make all other repairs and replacements to the Premises,
Common Areas and Building (including Building fixtures and
equipment). Landlord shall make the repairs and replacements to
maintain the Building in a condition consistent with other
comparable office buildings in the Raleigh, North Carolina area.
This maintenance shall include the roof, foundation, exterior
walls, interior structural walls, all structural components, and
all Building systems, such as mechanical, electrical, and plumbing
(but not separate systems installed and operated by Tenant that
serve the Premises only), as well as sidewalks and parking areas
and other Common Area improvements.
(c) Time for Repairs. Repairs or replacements required under Sections
6.03(a) or 6.03(b) shall be made within a reasonable time
(depending on the nature of the repair or replacement needed)
after receiving notice or having actual knowledge of the need for
a repair or replacement.
(d) Surrendering the Premises. Upon the Expiration Date or earlier
termination of this Lease, Tenant shall surrender the Premises to
Landlord in the same condition that the Premises were in on the
Commencement Date except for:
(i) ordinary wear and tear;
(ii) damage by the elements, fire, and other casualty unless
Tenant would be required to repair under paragraph 6.03(a);
(iii) condemnation;
(iv) damage arising from any cause not required to be repaired
or replaced by Tenant; and
<PAGE>
(v) alterations as permitted by this Lease unless consent was
conditioned on their removal or Tenant is entitled to and
elects to remove them pursuant to this Lease.
On surrender Tenant shall remove from the Premises its personal
property, trade fixtures, and any alterations required to be
removed under Section 7.01 and repair any damage to the Premises
caused by the removal. Any items not removed by Tenant as required
above shall be considered abandoned. Landlord may dispose of
abandoned items as Landlord chooses and bill Tenant for the cost
of their disposal, minus any revenues received by Landlord for
their disposal.
ARTICLE VII
NEGATIVE OBLIGATIONS
7.01 Alterations.
(a) Definitions. "Alterations" means alterations, additions,
substitutions, installations, changes, and improvements, but
excludes minor decorations and the Improvements Landlord is to
make under Section 4.02 and Exhibit D.
---------
(b) Consent. Tenant shall not make Alterations without the Landlord's
advance written consent. Landlord's consent shall not be
unreasonably withheld or conditioned or unduly delayed. Landlord's
review of Alterations that will be visible from the exterior of
the Building may include, without limitation, consideration of the
aesthetics of the Miami North Office Park. If Landlord fails to
approve or disapprove in writing within five (5) business days
after submission, the same shall be deemed approved by the
Landlord. Any disapproval shall specify the reasons for such
disapproval. With respect to Tenant's initial alterations, if
Landlord and Tenant are unable to agree upon the plans and
specifications, Tenant shall have the right to terminate the
Lease. At the time of plan approval, Landlord shall notify Tenant
which of the fixtures and equipment would be required to be
removed at the end of the term; however, Tenant shall have the
right to elect not to remove conduit, cabling, piping, electrical
conductors, walls or standard office improvements and Tenant shall
have the right to remove any or all of its equipment, including
generators, HVAC, batteries, UPS systems, etc. at any time during
the term.
(c) Conditions of Consent. Landlord may condition its consent in
Section 7.01(b) on all or any part of the following:
(i) Tenant shall furnish Landlord with reasonably detailed
plans and specifications of the alterations as requested by
Tenant.
(ii) The Alterations shall be performed and completed-
(1) in accord with the submitted plans and
specifications approved by Tenant and Landlord.
(2) in a workmanlike manner,
(3) in compliance with all applicable laws, regulations,
rules, ordinances, and other requirements of
governmental authorities,
(4) using new materials and installations at least equal
in quality to the original Building materials and
installations,
(5) by not unreasonably disturbing the quiet possession
of the other tenants,
(6) by not unreasonably interfering with the
construction, operation, or maintenance of the
Building, and
(7) with due diligence;
(iii) Tenant shall have the right to use contractors, architects,
engineers and other workers of its choice, subject to
Landlord's approval in writing, which approval shall not be
unreasonably withheld or unduly delayed.
(iv) Tenant shall have the right to modify plans and
specifications because of reasonable conditions set by
Landlord after reviewing the plans and specifications;
(v) Tenant's contractors shall carry builder's risk insurance
in an amount then customarily carried by prudent
contractors and workers' compensation insurance for its
employees in statutory limits, naming Landlord as an
additional insured, to the extent its interest may appear;
(vi) Tenant's workers or contractors shall work in harmony and
not unreasonably interfere with Landlord's workers or
contractors or other tenants and their workers or
contractors;
(vii) Tenant shall give Landlord at least fifteen (15) days
advance notice before beginning any alterations so that
Landlord may post or record notices of non-responsibility;
Tenant shall have the right to perform alterations 24 hours
per day, seven days per week, together with reasonable
access to Common Areas.
<PAGE>
(viii) Upon demand Tenant shall give Landlord evidence that it
complied with any condition set by Landlord;
(ix) If Tenant completes alterations, Tenant shall give Landlord
complete as-built mylar drawings of the Alterations after
they are finished; and
(x) Tenant shall remove any unusual additions, alterations and
repair any damage from their removal by the Expiration Date
to the extent such removal is required pursuant to Section
7.01(b) above.
(d) Payment and Ownership of the Alterations. Alterations made under
this paragraph shall be at Tenant's expense. The Alterations shall
belong to Landlord when this Lease ends except as provided in
Section 7.01(b). Nevertheless, Tenant may remove its trade
fixtures, furniture, equipment, and other personal property if
Tenant promptly repairs any damage caused by their removal.
Landlord shall not receive any profit from or change any
supervisory fees for Tenant's alterations.
7.02 Assignment and Subleasing.
(a) Consent Required. Tenant shall not transfer, mortgage, encumber,
assign, or sublease all or part of the Premises without Landlord's
advance written consent. Landlord's consent to any transfer,
mortgage, encumbrance, assignment or sublease shall not be
unreasonably withheld or conditioned or unduly delayed.
(b) Reasonableness. The Landlord's consent shall not be considered
unreasonably withheld if:
(i) the proposed subtenant's or assignee's financial
responsibility does not meet the same criteria Landlord
uses to select comparable Building tenants;
(ii) the proposed subtenant's or assignee's business is not
suitable for the Building considering the business of the
other tenants and the Building's prestige; or
(iii) the proposed use is inconsistent with the use permitted by
Article II.
(c) Procedure.
(i) Tenant must provide Landlord in writing:
(1) the name and address of the proposed subtenant or
assignee;
(2) the nature of the proposed subtenant's or assignee's
business it will operate in the Premises;
(3) the terms of the proposed sublease or assignment;
and
(4) reasonable financial information so that Landlord
can evaluate the proposed subtenant or assignee.
(ii) Landlord shall, within ten (10) business days after
receiving the information under Section 7.02(c)(i), give
notice to Tenant to permit or deny the proposed sublease or
assignment. If Landlord denies consent, it shall explain
the reasons for the denial. Landlord's failure to respond
within the 10 day period set forth above shall be deemed to
be Landlord's consent.
(d) Affiliates. Notwithstanding Section 7.02(a), (b), and (c), Tenant
may assign or sublease part or all of the Premises without
Landlord's consent to:
(i) any corporation or partnership or other entity that
controls, is controlled by, or is under common control
with, Tenant; or
(ii) any corporation or other entity resulting from the merger
or consolidation with Tenant or to any entity that acquires
all or substantially all of Tenant's assets or stock as a
going concern of the business that is being conducted on
the Premises, as long as the assignee or sublessee is a
bona fide entity and assumes the obligations of Tenant.
(e) Conditions. Any subleases and assignments by Tenant are also
subject to the following:
(i) The terms of this Lease;
(ii) The term of any sublease shall not extend beyond the Term,
including the extensions provided in Rider A;
(iii) Tenant shall remain liable for all Lease obligations;
(iv) Consent to one sublease or assignment does not waive the
consent requirements for future assignments or subleases;
and
"Excess Consideration" shall mean the consideration received by Tenant from an
assignment or sublease that exceeds the amount Tenant must pay Landlord, which
amount is to be prorated where a part of the Premises is subleased or assigned.
Excess Consideration shall be adjusted to exclude leasing commissions,
improvements made to the Premises by Tenant for
<PAGE>
its own use and also for the subtenant, the costs incurred by Tenant during any
period of vacancy, and other reasonable out-of-pocket costs paid by Tenant.
Tenant shall pay to Landlord a portion of the Excess Consideration, as follows:
with respect to any Excess Consideration collected during
the Term, fifty percent (50%);
with respect to any Excess Consideration collected during
the first Extension Term, seventy percent (70%)
with respect to any Excess Consideration collected during
the second Extension Term, ninety percent (90%).
Tenant shall pay such amounts to Landlord at the end of each calendar month
during which Tenant collects any Excess Consideration. Each payment shall be
sent with a detailed statement showing the total consideration paid by the
subtenant or assignee and any relevant exclusions. Landlord shall have the right
to audit Tenant's books and records to verify the accuracy of the detailed
statement
(f) Collocation. Tenant's business use of the Premises, including
provision of collocation space to customers, shall not be
considered transfer, assignment or sublet and, accordingly, does
not require Landlord's consent pursuant to this Section 7.02.
ARTICLE VIII
INSURANCE
8.01 Insurance.
(a) Landlord's Building Insurance. Landlord shall keep the Building,
including the Landlord Improvements insured against damage and
destruction by fire, earthquake, vandalism, and other perils in
the amount of the full replacement value of the Building, as the
value may exist from time to time.
(b) Property Insurance. Each party shall keep its personal property
and trade fixtures in the Premises and Building insured with "all
risks" insurance in an amount to cover one hundred percent (100%)
of the replacement cost of the property and fixtures. Tenant shall
also keep any non-Building-standard improvements (which term shall
include any improvements to the Premises beyond those set forth on
Exhibit D) made to the Premises by Tenant insured to the same
degree as Tenant's personal property. Tenant's property insurance
shall also provide for business interruption/extra expense
coverage in sufficient amounts.
(c) Liability Insurance. Each party shall maintain contractual and
comprehensive general liability insurance, including limits of no
less than $1,000,000 per occurrence/$2,000,000 aggregate per
location including contractual liability
Tenant's policy shall be endorsed to name Landlord as additional
insured. Definition of additional insured shall include all
Partners, Officers, Directors, Employees, agents and
representatives of the named entity including its managing agent.
Further, coverage for the additional insured shall apply on a
primary basis irrespective of any other insurance, whether
collectible or not.
(d) Workers Compensation and Employee Liability Insurance. Affording
coverage under the Workers Compensation laws of the State of North
Carolina and Employers liability coverage subject to a limit of no
less than $100,000 each employee, $100,000 each accident, $500,000
policy limit.
(e) Umbrella Liability Insurance. Each Party shall maintain umbrella
liability insurance to the extent necessary to provide coverage to
the limits and coverage noted in Sections 8.0l.c and 8.01.d above.
(f) Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant hereby waive and release each
other of and from any and all right of recovery, claim, action or
cause of action, against each other, their agents, officers and
employees, for any loss or damage that may occur to the Premises,
improvements to the Building, or personal property within the
Building, by reason of fire or the elements, regardless of cause
or origin, including negligence of Landlord or Tenant and their
agents, officers and employees. Landlord and Tenant agree
immediately to give their respective insurance companies which
have issued policies of insurance covering all risk of direct
physical loss, written notice of the terms of the mutual waivers
contained in this Section, and to have the insurance policies
properly endorsed, if necessary, to prevent the invalidation of
the insurance coverage by reason of the mutual waivers. The waiver
does not apply to claims caused by a party's willful misconduct.
If despite a party's best efforts it cannot find an insurance
company meeting the criteria in Section 8.01(h) that will give the
waiver at reasonable commercial rates, then it shall give notice
to the other party within thirty (30) days after the Commencement
Date. The other party shall then have thirty (30) days to find an
insurance company that will issue the waiver. If the other party
also cannot find such an insurance company, then both parties
shall be released from their obligations to obtain the waiver.
(i) Increase In Insurance. If due to Tenant's particular use of
the Premises, Landlord's insurance rates are increased,
Tenant shall pay the increase; provided, however, that
Landlord warrants that Tenant's use of the Premises as a
telecommunications and computer equipment room, including,
without limitation, the provision of colocation services to
customers, is a permitted use of the Building pursuant to
Landlord's insurance and Landlord agrees that it will not
require any payment from Tenant under the foregoing
sentence due to such use of the Premises by Tenant.
(h) Insurance Criteria. Insurance policies required by this Lease
shall:
<PAGE>
(i) be issued by insurance companies licensed to do business in
the state of North Carolina with general policyholders
ratings of at least A and a financial rating of at least
VIII in the most current Best's Insurance Reports available
on the date of this Lease;
(ii) name the non procuring party as an additional insured as its
interest may appear (other landlords or tenants or other
third parties may also be added as additional insureds in a
blanket policy);
(iii) provide that the insurance not be canceled or materially
changed in the scope or amount of coverage unless thirty
(30) days' advance notice is given to the non procuring
party;
(iv) be primary policies-not as contributing with, or in excess
of, the coverage that the other party may carry;
(v) be permitted to be carried through a "blanket policy" or
"umbrella" coverage;
(vi) have property deductibles not greater than $15,000; and
(vii) be maintained during the entire Term.
(i) Evidence of Insurance. By the Commencement Date and upon each renewal
of its insurance policies, Tenant shall give copies of certificates
of insurance to Landlord. The certificate shall specify amounts,
types of coverage, the waiver of subrogation, and the insurance
criteria listed in Section 8.01(h). The policies shall be renewed or
replaced and maintained by Tenant. If Tenant fails to give the
required certificate within thirty (30) days after the notice of
demand for it, Landlord may obtain and pay for that insurance, but is
not obligated to do so, and receive reimbursement from the party
required to have the insurance.
8.02 Indemnification.
(a) Tenant's Indemnity. Tenant indemnities, defends, and holds Landlord
harmless from claims:
(i) for personal injury, death, or property damage;
(ii) for incidents occurring in or about the Premises or
Building; and
(iii) caused by the negligence or willful misconduct of Tenant,
its agents, employees, or invitees.
When the claim is caused by the joint negligence or willful
misconduct of Tenant and Landlord or Tenant and a third party
unrelated to Tenant, except Tenant's agents, employees, or invitees,
Tenant's duty to defend, indemnify, and hold Landlord harmless shall
be in proportion to Tenant's allocable share of the joint negligence
or willful misconduct.
(b) Landlords Indemnity, Landlord indemnifies, defends, and holds Tenant
harmless from claims:
(i) for personal injury, death, or property damage;
(ii) for incidents occurring in or about the Premises or
Building; and
(iii) caused by the negligence or willful misconduct of Landlord,
its agents, employees, or invitees.
When the claim is caused by the joint negligence or willful
misconduct of Landlord and Tenant or Landlord and a third party
unrelated to Landlord, except Landlord's agents, employees, or
invitees, Landlord's duty to defend, indemnify, and hold Tenant
harmless shall be in proportion to Landlord's allocable share of the
joint negligence or willful misconduct.
(c) Release of Claims. Notwithstanding Section 8.02(a) and (b), the
parties release each other from any claims either party ("Injured
Party") has against the other to the extent the claim is covered by
the Injured Party's insurance or the insurance the Injured Party is
required to carry under this Lease, whichever is greater.
8.03 Limitation of Landlord's Liability.
(a) Transfer of Premises. If the Building is sold or transferred,
voluntarily or involuntarily, Landlord's Lease obligations and
liabilities accruing after the sale or transfer shall be the sole
responsibility of the new owner provided:
(i) The new owner expressly agrees in writing to assume
Landlord's obligations; and
(ii) Tenant's funds in the hands of Landlord, such as the
Security Deposit, shall be given to the new owner.
(b) Liability for Judgments. If Landlord, its employees, officers,
directors, partners, members or managers are ordered to pay Tenant a
monetary judgment because of Landlord's default, Tenant's sole remedy
to satisfy the judgment shall be to execute against Landlord's
interest in the Building and Land (including any insurance or
condemnation proceeds received with respect thereto and rental income
and any proceeds of sale). Under no circumstance will Landlord, or
its officers, directors, partners or employees be personally liable
for any monetary judgment beyond such amounts.
<PAGE>
ARTICLE IX
LOSS OF PREMISES
9.01 Damages.
(a) Definition. "Relevant Space" means:
(i) the Premises, excluding Tenant's fixtures installed by
or at the request of Tenant;
(ii) access to the Premises; and
(iii) any part of the Building that provides essential
services to the Premises or is otherwise necessary for
the conduct of Tenant's business in the Premises.
(b) Repair of Damage. If the Relevant Space is damaged in part or
whole from any cause and the Relevant Space can be substantially
repaired and restored within ninety (90) days from the date of the
damage using standard working methods and procedures, Landlord
shall at its expense promptly and diligently repair and restore
the Relevant Space to substantially the same condition as existed
before the damage. This repair and restoration shall be made
within ninety (90) days from the date of the damage unless the
delay is due to causes beyond Landlord's reasonable control.
If any material damage to the Relevant Space cannot be repaired
and restored within the ninety (90) day period, then either party,
may, within thirty (30) days after determining that the repairs
and restoration cannot be made within ninety (90) days, cancel the
Lease by giving notice to the other party. Nevertheless, if the
Relevant Space is not repaired and restored within ninety (90)
days from the date of the damage, then Tenant may cancel the Lease
at any time after the ninetieth (90th) day and until ten (10) days
after Tenant receives notice that the Relevant Space is repaired
and restored. Tenant shall not be able to cancel this Lease if its
willful misconduct causes the damage unless Landlord is not
promptly and diligently repairing and restoring the Relevant
Space.
(c) Determining the Extent of Damage. If the parties cannot agree in
writing whether the repairs and restoration will take more than
ninety (90) days to make, then the determination will be made by
Landlord's architect and Tenant will receive notice from Landlord
of such determination on or prior to the fifteenth (15th) day
after the date of damage. Landlord's failure to give such notice
within ten (10) days after notice from Tenant of such failure will
entitle Tenant to cancel the Lease.
(d) Abatement. Unless the damage is caused by Tenant's willful
misconduct, the Gross Rent and Additional Rent shall abate in
proportion to that part of the Premises that is unfit for use in
Tenant's business. The abatement shall consider the nature and
extent of interference to Tenant's ability to conduct business in
the Premises and the need for access and essential services. The
abatement shall continue from the date the damage occurred until
ten (10) business days after Landlord completes the repairs and
restoration to the Relevant Space or the part rendered unusable
and notice to Tenant that the repairs and restoration are
completed, or until Tenant again uses the Premises or the part
rendered unusable, whichever is first.
(e) Tenants Property. Notwithstanding anything else in this Article
IX, Landlord is not obligated to repair or restore damage to
Tenant's trade fixtures, furniture, equipment, or other personal
property, or any Tenant improvements.
(f) Damage to Building. If:
(i) more than fifty percent (50%) of the Building is damaged
and the Landlord decides not to repair and restore the
Building;
(ii) any mortgagee of the Building shall not allow adequate
insurance proceeds for repair and restoration;
(iii) the damage is not covered by Landlord's insurance or the
insurance Landlord is required to carry under this
Lease, whichever is greater; or
(iv) the Lease is in the last twelve (12) months of its Term,
including all renewal options, then Landlord may cancel
this Lease. To cancel, Landlord must give notice to
Tenant within thirty (30) days after the Landlord knows
of the damage. The notice must specify the cancellation
date, which shall be at least thirty (30) but not more
than sixty (60) days after the date notice is given.
(g) Cancellation, If either party cancels this Lease as permitted
above, then this Lease shall end on the day specified in the
cancellation notice. The Gross Rent, Additional Rent, and other
charges shall be payable up to the cancellation date and shall
account for any abatement. Landlord shall promptly refund to
Tenant any prepaid, unaccrued Gross Rent and Additional Rent,
accounting for any abatement, plus Security Deposit, if any, less
any sum then owing by Tenant to Landlord.
9.02 Condemnation.
(a) Definitions. The terms "eminent domain," "condemnation," "taken,"
and the like in Section 9.02 include takings for public or
quasi-public use and private purchases in place of condemnation by
any authority authorized to exercise the power of eminent domain.
<PAGE>
(b) Entire Taking. Landlord shall give Tenant prompt notice following
Landlord's receipt of any notice from an authority authorized to
exercise the power of eminent domain that relates to any actual or
potential taking of any portion of the Building or the Land. If
the entire Premises or the portions of the Building required for
reasonable access to, or the reasonable use of, the Premises for
the conduct of Tenant's business therein are taken by eminent
domain, this Lease shall automatically end on the earlier of:
(i) the date title vests; or
(ii) the date Tenant is dispossessed by the condemning
authority.
(c) Partial Taking. If the taking of a part of the Premises or
Building materially interferes with Tenant's ability to continue
its business operations in substantially the same manner and space
then Tenant may terminate this Lease on the earlier of:
(i) the date when title vests, provided that Tenant had at
least thirty (30) days advance notice prior to such
date;
(ii) the date Tenant is dispossessed by the condemning
authority, provided that Tenant had at least thirty
(30) days advance notice prior to such date; or
(iii) sixty (60) days following notice to Tenant of the date
when vesting or dispossession is to occur.
If there is a partial taking and this Lease continues, then the
Lease shall end as to the part taken and the Gross Rent and
Additional Rent shall abate in proportion to the part of the
Premises taken and Tenant's pro rata share shall be equitably
reduced.
(d) Rent Adjustment. If the Lease is canceled as provided in Sections
9.02(b) or (c), then the Gross Rent, Additional Rent, and other
charges shall be payable up to the cancellation date, and shall
account for any abatement. Landlord, considering any abatement,
shall promptly refund to Tenant any prepaid, unaccrued Gross Rent
and Additional Rent plus Security Deposit, if any, less any sum
then owing by Tenant to Landlord.
(e) Repair. If the Lease is not canceled as provided for in Sections
9.02(b) or (c), then Landlord at its expense shall promptly repair
and restore the Premises and other portions of the building
necessary for the conduct of Tenant's business in the Premises to
the condition that existed immediately before the taking, except
for the part taken, to render the Premises a complete
architectural unit, but only to the extent of the:
(i) condemnation award received for the damage; and
(ii) the Landlord's original obligation under Section 4.02
and Exhibit D.
---------
(g) Awards and Damages. Landlord reserves all rights to damages paid
because of any partial or entire taking of the Premises. Tenant
assigns to Landlord any right Tenant may have to the damages or
award. Further, Tenant shall not make claims against Landlord or
the condemning authority for damages. Notwithstanding anything
else in this Paragraph 9.02(g). Tenant may claim and recover from
the condemning authority a separate award for Tenant's moving
expenses, business dislocation damages, Tenant's personal property
and fixtures, all improvements made by Tenant to the Premises as
part of the initial upfit or otherwise, (including without
limitation the unamortized costs of leasehold improvements paid
for by Tenant), but excluding the Landlord's Improvements, and any
other award that would not substantially reduce the award payable
to Landlord. Each party shall seek its own award, as limited by
this provision, at its own expense, and neither shall have any
right to the award made to the other.
ARTICLE X
DEFAULT
10.01 Tenant's Default.
(a) Defaults. Each of the following constitutes a default ("Default"):
(i) Tenant's failure to pay Gross Rent or Additional Rent
within five (5) business days after it is past due and
payable; provided, however, that Tenant shall not be in
Default under this provision the first time Tenant so
fails to timely pay in any calendar year unless Tenant
fails to pay within ten (10) days after Tenant receives
notice from Landlord that such amounts are past due and
payable;
(ii) Tenant's failure to pay Gross Rent or Additional Rent by
the due date, at any time during a calendar year in
which Tenant has already received two (2) notices of its
failure to pay Gross Rent or Additional Rent by the due
date;
(iii) Tenant's failure to perform or observe any other Tenant
obligation after a period of thirty (30) business days
or the additional time, if any, that is reasonably
necessary to promptly and diligently cure the failure,
after it receives notice from Landlord setting forth in
reasonable detail the nature and extent of the failure
and identifying the applicable Lease provision(s);
(iv) Tenant's failure to vacate or stay any of the following
within ninety (90) days after they occur:
(1) a petition in bankruptcy is filed by or
against Tenant;
<PAGE>
(2) Tenant is adjudicated as bankrupt or insolvent;
(3) a receiver, trustee, or liquidator is appointed for
all or a substantial part of Tenant's property; or
(4) Tenant makes an assignment for the benefit of
creditors.
10.02 Landlord's Remedies.
(a) Remedies. Landlord in addition to the remedies given in this Lease
or under the law, may do any one or more of the following if
Tenant commits a Default beyond any applicable grace period under
Section 10.01:
(i) end this Lease, and Tenant shall then surrender the
Premises to Landlord;
(ii) enter and take possession of the Premises either with
or without process of law and remove Tenant, with or
without having ended the Lease; and
(iii) alter locks and other security devices at the Premises.
(iv) terminate this Lease by providing written notice to
Tenant, take possession of the Premises, and re-let the
Premises to another tenant in Landlord's sole
discretion.
Tenant waives claims for damages by reason of Landlord's reentry,
repossession, or alteration of locks or other security devices and
for damages by reason of any legal process.
(b) No Surrender. Landlord's exercise of any of its remedies or its
receipt of Tenant's keys shall not be considered an acceptance or
surrender of the Premises by Tenant. A surrender must be agreed to
in writing signed by both parties.
(c) Rent. If Landlord terminates this Lease or Tenant's right to
possess the Premises because of a Default, Landlord may hold
Tenant liable for Gross Rent, Additional Rent, and other
indebtedness accrued to the date the Lease expires or is
terminated. Tenant shall also be liable for the Gross Rent,
Additional Rent and other indebtedness that otherwise would have
been payable by Tenant during the remainder of the Term had there
been no default, reduced by any sums Landlord receives by
reletting the Premises during the Term.
(d) Other Expenses. Tenant shall also be liable for that part of the
following sums paid by Landlord and attributable to that part of
the Term ended due to Tenant's Default:
(i) reasonable broker's fees incurred by Landlord for
reletting part or all of the Premises prorated for that
part of the reletting Term ending concurrently with the
then current Term of this Lease;
(ii) the cost of removing and storing Tenant's property;
(iii) the cost of repairs, alterations, and remodeling
necessary to put the Premises in a condition reasonably
acceptable to a new Tenant; and
(iv) other necessary and reasonable expenses incurred by
Landlord in enforcing its remedies, including, without
limitation, reasonable attorneys fees.
(e) Payment. Tenant shall pay the sums due in Sections 10.02(c) and
(d) within thirty (30) days of receiving Landlord's proper and
correct invoice for the amounts.
(f) Reletting. Landlord may reflect for a shorter or longer period of
time than the Lease Term and make any necessary repairs or
alterations. Landlord may relet on any reasonable terms including
a reasonable amount of free rent.
10.03 Self-Help. If Tenant defaults, Landlord may, without being obligated and
without waiving the Default, cure the Default, and may enter the Premises to do
so. Tenant shall pay Landlord, upon demand, as Additional Rent, all costs,
expenses and disbursements incurred by Landlord.
10.04 Survival. The remedies permitted by this Article X and the parties'
indemnities in Section 8.02 shall survive the Expiration Date or earlier
termination of this Lease.
ARTICLE XI
NON DISTURBANCE
11.01 Subordination.
(a) Mortgages. Subject to Section 11.01(b), this Lease is subordinate
to prior or subsequent mortgages covering the Building. Landlord
shall provide to Tenant non-disturbance agreements from all
existing and future mortgages, beneficiaries of deeds of trust and
ground lessors.
(b) Foreclosures. If any mortgage is foreclosed, then:
<PAGE>
(i) This Lease shall continue;
(ii) Tenant's quiet possession shall not be disturbed if
Tenant is not in Default;
(iii) Tenant will attorn to and recognize the mortgagee or
purchaser at foreclosure sale (Successor Landlord) as
Tenant's landlord for the remaining Term; and
(iv) The Successor Landlord shall not be bound by:
(1) any payment of Gross Rent or Additional Rent for
more than one month in advance, except the
Security Deposit and free rent, if any, specified
in the Lease,
(2) any amendment, modification, or ending of this
Lease without Successor Landlord's consent after
the Successor Landlord's name is given to Tenant
unless the amendment, modification, or ending is
specifically authorized by the original Lease and
does not require Landlord's prior agreement or
consent, and
(3) any liability for any act or omission of a prior
Landlord.
(c) Self-Operating. This Section 11.01 is self-operating. However,
Tenant shall promptly execute and deliver any documents needed to
confirm this arrangement.
11.02 Estoppel Certificate.
(a) Obligation, Tenant shall from time to time, within ten (10)
business days after receiving a written request from Landlord,
execute and deliver to Landlord a written statement which may be
relied upon by Landlord and any third party with whom the Landlord
is dealing and which shall certify:
(i) the accuracy of the Lease document;
(ii) the Commencement and Expiration Dates of the Lease;
(iii) that the Lease is unmodified and in full effect or in
full effect as modified, stating the date and nature of
the modification;
(iv) whether to the Tenant's knowledge the Landlord is in
default or whether the Tenant has any claims or demands
against Landlord, and, if so, specifying the Default,
claim, or demand; and
(v) to other correct and reasonably ascertainable facts that
are covered by the Lease terms.
(b) Remedy. The Tenant's failure to comply with its obligations in
Section 11.02(a) shall be a Default, except that the cure period
for this Default shall be five (5) business days after the Tenant
receives notice of the Default.
11.03 Quiet Possession. If Tenant is not in default, and subject to the Lease
terms, Landlord warrants that Tenant's peaceable and quiet enjoyment of the
Premises shall not be disturbed by anyone claiming by or through Landlord.
ARTICLE XII
LANDLORD'S RIGHTS
12.01 Rules.
(a) Rules, Tenant, its employees and invitees, shall comply with:
(i) the Rules attached as Exhibit F and
---------
(ii) reasonable modifications and additions to the Rules
adopted by Landlord provided that such rules are
applicable to all tenants of the Building and provided
further that such rules do not materially interfere with
the conduct of Tenant's business at the Premises as
permitted under this Lease.
(b) Conflict with Lease. If a Rule issued under Section 12.01(a)
conflicts with or is inconsistent with any Lease provision, the
Lease provision controls.
(c) Enforcement. Although Landlord is not responsible for another
tenant's failure to observe the Rules, Landlord shall not
unreasonably enforce the Rules against Tenant.
12.02 Mechanic's Liens.
(a) Discharge Lien. Tenant shall, within twenty (20) days after
receiving notice of any mechanic's lien for material or work
claimed to have been furnished to the Premises on Tenant's behalf
and at Tenant's request:
(i) discharge the lien; or
(ii) post a bond equal to the amount of the disputed claim
with companies reasonably satisfactory to Landlord.
<PAGE>
If Tenant posts a bond, it shall contest the validity of the lien.
Tenant shall indemnify, defend, and hold Landlord harmless from
losses incurred from these liens.
(b) Landlord's Discharge. If Tenant does not discharge the lien or
post the bond within the twenty (20) day period, Landlord may pay
any amounts, including interest and legal fees, to discharge the
lien. Tenant shall then be liable to Landlord for the amounts paid
by Landlord as Additional Rent.
(c) Consent not Implied. This Section 12.02 is not a consent to
subject Landlord's property to these liens.
12.03 Right to Enter.
(a) Permitted Entries. Landlord and its agents, servants, and
employees may enter the Premises at reasonable times, and at any
time if an emergency, without charge, liability, or abatement of
Gross Rent, to:
(i) examine the Premises;
(ii) make repairs, alterations, improvements, and additions
either required by the Lease or advisable to preserve
the integrity, safety, and good order of part or all of
the Premises or Building;
(iii) provide janitorial and other services required by the
Lease;
(iv) comply with Applicable Laws;
(v) show the Premises to prospective lenders or purchasers;
(vi) post notices of non responsibility;
(vii) remove any Alterations made by Tenant in violation of
Section 7.01; and
(viii) post "For Sale" signs and, during the one hundred twenty
(120) days immediately before this Lease ends, post "For
Lease" signs.
(b) Entry Conditions. Notwithstanding Section 12.03(a), entry is
conditioned upon Landlord:
(i) giving Tenant at least twenty-four (24) hours advance
notice, except in an emergency;
(ii) promptly finishing any work for which it entered; and
(iii) causing the least practical interference to Tenant's
business.
12.04 Holdover.
(a) Holdover Status. If Tenant continues occupying the Premises after
the Term ends ("Holdover") then:
(i) if the Holdover is with Landlord's written consent, it
shall be a month-to-month tenancy, terminable on thirty
(30) days advance notice by either party. Tenant shall
pay at the beginning of each month Gross Rent and
Additional Rent that is five percent (5%) higher than
the amount due in the last full month immediately
preceding the Holdover period unless Landlord specifies
a lower or higher Rent and Additional Rent in the
written consent;
(ii) if the Holdover is without Landlord's written consent,
then Tenant shall be a tenant-at-sufferance. Tenant
shall pay by the first day of each month 150% of the
amount of Gross Rent and Additional Rent due in the last
full month immediately preceding the Holdover period and
shall be liable for any damages suffered by Landlord
because of Tenant's Holdover, Landlord shall retain its
remedies against Tenant who holds over without written
consent.
(b) Holdover Terms. The Holdover shall be on the same terms and
conditions of the Lease except:
(i) the Term;
(ii) Gross Rent and Additional Rent;
(iii) the extension Term is deleted;
(iv) the Quiet Possession provision is deleted;
(v) Landlord's obligation for services and repairs is
deleted; and
(vi) consent to an assignment or sublease may be unreasonably
withheld and delayed.
12.05 Signs. Tenant shall not place or have placed any other signs, listings,
advertisements, or any other notices anywhere in the Building without Landlord's
prior written consent.
<PAGE>
ARTICLE XIII
MISCELLANEOUS
13.01 Broker's Warranty. The parties warrant that Anthony and Co., Liberty
Greenfield Advisors and Carter & Associates of the Carolinas, LLC are the only
broker they dealt with on this Lease. The party who breaches this warranty shall
defend, hold harmless, and indemnify the non breaching party from any claims or
liability arising from the breach. Landlord is solely responsible for paying the
commission of Anthony & Co., Liberty Greenfield Advisors and Carter & Associates
of the Carolinas, LLC.
13.02 Attorney's Fees. In any litigation or arbitration between the parties
regarding this Lease, the losing party shall pay to the prevailing party all
reasonable expenses and fees and court costs including attorneys' fees incurred
by the prevailing party. A party shall be considered the prevailing parry if:
(a) it initiated the litigation or arbitration and substantially
obtains the relief it sought, either through a judgment or
voluntary action before (after it is scheduled) trial or judgment;
(b) the other party withdraws its action without substantially
obtaining the relief it sought; or
(c) it did not initiate the litigation and judgment is entered for
either party, but without substantially granting the relief
sought.
13.03 Notices. All notices, requests, demands and other communications required
or permitted to be given under this Lease shall be in writing and sent to the
address or telecopy number set forth below. Each communication shall be deemed
duly given and received: (i) as of the date and time the same is personally
delivered with a receipted copy; (ii) if given by telecopy, when the telecopy is
transmitted to the recipient's telecopy number and confirmation of complete
receipt is received by the transmitting party during normal business hours for
the recipient, or the day after confirmation is received by the transmitting
part if not during normal business hours for the recipient; (iii) if delivered
by U.S. Mail, three (3) days after depositing with the United States Postal
Service, postage prepaid by certified mail, return receipt requested; or (iv) if
given by nationally recognized or reputable overnight delivery service, on the
next day after deposit with same. If any notice is sent by telecopy, the
transmitting party shall send a duplicate copy of the notice to the other party
by regular mail. In all event, however, any notice sent by telecopy transmission
shall govern all matters dealing with the delivery of the notice, including the
date on which the notice is deemed to have been received by the other party. The
parties may change their address or telecopy number as each may later specify
for that purpose by notice to the other party.
To Tenant: Inflow, Inc.
Art Zeile
================================================================================
1860 Lincoln St., Suite 305
================================================================================
Denver, CO 80295
(ph): 303-824-3005
(fax): 303-824-3001
and
To Landlord: Miami North, LLC
do Anthony & Co.
Post Office Box 10810
Raleigh, NC 27605
Attn: Property Management
(919) 832-1110
(919) 834-4488 FAX
Either party may change these persons or addresses by giving notice as provided
above. Tenant shall also give required notices to Landlord's mortgagee after
receiving notice from Landlord of the mortgagee's name and address.
13.04 Partial Invalidity. If any Lease provision is invalid or unenforceable to
any extent, then except that provision, the remainder of this Lease shall
continue in effect and be enforceable to the fullest extent permitted by law.
13.05 Waiver. The failure of either party to exercise any of its rights is not a
waiver of those rights. A party waives only those rights specified in writing
and signed by the party waiving its rights.
13.06 Binding on Successors. This Lease shall bind the parties' heirs,
successors, representatives, and permitted assigns.
13.07 Governing Law. This Lease shall be governed by the laws of the state in
which the Building is located.
13.08 Lease Not an Offer. Landlord gave this Lease to Tenant for review. It is
not an offer to lease. This Lease shall not be binding unless signed by both
parties.
13.09 Recording. Recording of this Lease is prohibited except as allowed in this
paragraph. At the request of either party, the parties shall promptly execute
and record, at the cost of the requesting party, a short form memorandum
describing the Premises and stating this Lease's Term, its Commencement and
Expiration Dates, and other information the parties agree to include.
<PAGE>
13.10 Survival of Remedies. The parties' remedies shall survive the expiration
or termination of this Lease when caused by the Default of the other party.
13.11 Authority of Parties. Each party warrants that it is authorized to enter
into the Lease, that the person signing on its behalf is duly authorized to
execute the Lease, and that no other signatures are necessary.
13.12 Business Days. Business day means Monday through Friday inclusive,
excluding holidays identified at Section 6.02(b). Throughout this Lease,
wherever "days" are used the term shall refer to calendar days. Wherever the
term "business days" is used the term shall refer to business days.
13.13 Entire Agreement. This Lease contains the entire agreement between the
parties about the Premises and Building. Except for the Rules for which Section
12.01(a) controls, this Lease shall be modified only by a writing signed by both
parties.
13.14 Definition of Lease. This Lease consists of the following:
(a) Title Page;
(b) Table of Contents;
(c) Articles I through XIII;
(d) Signature Page;
(e) Rider A containing Option To Extend and other provisions;
(f) Exhibits A through F.
13.15 Time is of the Essence. Time is of the essence in the performance of the
terms and conditions of this Lease.
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease
under seal the day and year first above written.
LANDLORD: Miami North Carolina Limited Liability Company (SEAL)
By: /s/ Gregg E. Sandreuter
-----------------------------------------
Gregg E. Sandreuter
Manager
DATE: 6/29/99
-----------------------------------------
WITNESS: Name: illegible
-----------------------------------------
Date: 6/29/99
-----------------------------------------
TENANT: Inflow, Inc., a Delaware Corporation
By /s/ Art Zeile
-----------------------------------------
Art Zeile
Title: President and Chief Executive Officer
--------------------------------------
Date: 6/28/99
-----------------------------------------
Attest: illegible
-------------------------
Secretary
-----------
(CORPORATE SEAL) Date: 6/28/99
---------------------
<PAGE>
RIDER A
THIS RIDER constitutes a part of the Lease to which it is attached. In
the event of a conflict between this Rider and the provisions of the Lease, the
Rider will govern and control.
1. Upfit Allowance for Tenant Improvements. Landlord shall provide Tenant at
- ---------------------------------------------
Landlord's sole expense an upfit allowance of eighteen dollars ($18.00) per
usable square foot for the completion of Tenant's improvements All costs
incurred as a result of architectural engineering design, construction
management, permitting, demolition and construction shall be paid by Tenant but
may be paid out of the Tenant improvement allowance.
2. Options to Extend. Tenant shall have two (2) five (5) year renewal
-----------------
options. ("Extension Term") beginning immediately after the Term upon the same
terms and conditions of the Lease, except that:
(i) the Term shall be modified as stated above;
(ii) the Rent and Additional Rent shall be calculated as
follows: First Renewal Term if applicable:
- --------------------------------------------------------------------------------
Oct. 1, 2009-Sept. 30, 2010 $20.30 rsf
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Oct. 1, 2010-Sept. 30, 2011 $20.80 rsf
- --------------------------------------------------------------------------------
Oct. 1, 2011-Sept. 30, 2012 $21.32 rsf
- --------------------------------------------------------------------------------
Oct. 1, 2012-Sept. 30, 2013 $21.86 rsf
- --------------------------------------------------------------------------------
Oct. 1, 2013-Sept. 30, 2014 $22.41 rsf
- --------------------------------------------------------------------------------
- -----------------------------------
Second Renewal term, if applicable:
- --------------------------------------------------------------------------------
Oct. 1, 2014-Sept. 30, 2015 $22.97 rsf
- --------------------------------------------------------------------------------
Oct. 1. 2015-Sept. 30, 2016 $23.53 rsf
- --------------------------------------------------------------------------------
Oct. 1, 2016-Sept. 30, 2017 $24.16 rsf
- --------------------------------------------------------------------------------
Oct. 1, 2017-Sept. 30, 2018 $24.78 rsf
- --------------------------------------------------------------------------------
Oct. 1, 2018-Sept. 30, 2019 $25.42 rsf
- --------------------------------------------------------------------------------
- -----------------------------------
(iv) Landlord shall have no obligation to further improve the
Premises.
(b) Conditions. To exercise this Option to Extend, Tenant must:
(i) not be in default beyond any applicable grace period at the
time it exercises the Option to Extend; and
(ii) give notice to Landlord that Tenant is exercising its
Option to Extend at least one hundred eighty (180) days
before the Term ends, which notice shall be binding. In the
event Landlord does not receive Tenant's notice within the
time frame described, this Option shall become null and
void and the Lease shall terminate on the Expiration Date.
3. Right of First Refusal Tenant shall be granted an ongoing right of first
----------------------
refusal on any space that is to be rented in the Building or becomes
vacant over the term of the lease. Landlord shall provide Tenant notice
of the availability of space not more than one hundred eighty (180) days
nor less than forty-five (45) days prior to the date such space will be
available for occupancy, which notice shall specify the date such space
will be available for occupancy, and Tenant shall provide notice within
ten (10) business days from the date it receives Landlord's notice to
accept or decline the space. If Tenant provides notice to accept the
space, which notice shall be binding, Tenant shall take possession of the
space when it is made available for occupancy, with a term to be
coterminous with Tenant's existing lease provided a minimum of
twenty-four (24) months remains on Tenant s existing lease. The rental
rate for such space shall be fixed at the Market Rate at the time Tenant
accepts the space. "Market Rate" shall mean the rent that third parties
are paying at the time for comparable space in the Raleigh area, and
which shall take into account improvements allowances, free rent, base
year expense stops, and other terms and incentives offered to such third
parties. If Landlord does not receive Tenant's notice within the ten (10)
day period or Tenant declines to accept the space, Tenant's right of
first refusal shall be null and void and Landlord may lease the space to
another tenant in Landlord's sole discretion, provided that if such space
again becomes available to be rented or vacant after six (6) months,
Tenant's right of first refusal shall again apply.
4. Lease Security: As security for the lease, Tenant shall provide a letter
of credit in accordance with the terms of Exhibit A-1 and Exhibit A-2
attached hereto
5. Accommodation Space: Tenant shall have the right, throughout the term, to
utilize or create additional space in, on, or adjacent to the Building
(at no additional rental) to accommodate Tenant's equipment and
facilities (e.g. the construction of a structural platform to support
HVAC cooling tower or an enclosure for an emergency backup generator)
Subject to Landlord's consent, which shall not be unreasonably withheld.
<PAGE>
6. Signage: At Tenant's request, Landlord shall provide signage on the
common building directory and the monument sign for the Building in the
standard font for the Miami North Office Park, per Durham code. Tenant
shall have the right to use its standard graphics on the entrance to its
space.
7. Environmental:. Landlord warrants to the best of its knowledge that
except as may be specifically identified in the Phase I Environmental
Report delivered to Tenant, there are no hazardous substances in the
Building or the Land, including, without limitation, asbestos and
lead-based paint.
8. Conduit/Riser Space: Tenant shall have the right, at no additional
charge, to all of the following: (a) to use existing fiber optic cabling
in the Building or, at Tenant's election, to construct additional
telecommunications entrances into the Building and into the Premises.
Landlord acknowledges that Tenant will require redundant entrances for
its data center operations; (b) to use existing riser space and available
conduit, at Tenant's option, to install any additional conduit and
facilities required in order to connect Tenant's power, HVAC equipment
and piping, antennas, grounding, and related equipment and for other
purposes not inconsistent with the design of such conduits or risers.
Upon Tenant's request, Landlord shall provide, for Tenant's use
throughout the lease term, easement or rights of way for up to ten
telecommunications cables from the Premises to exit the Building and to
the boundary of the land on which the Building is located. Tenant shall
take all reasonable, economically feasible measures, including, when
applicable, using directional boring, to avoid damage to existing
pavement or other improvements. Landlord shall have the right to approve
of installation plans for such cables, which approval shall not be
unreasonably withheld. Tenant shall repair any damage to pavement and
improvements and shall replace any damaged landscaping after installation
of any such cables.
9. Electricity: Tenant shall be permitted to use Building electricity, which
is not generator-protected, to serve the office portion of the Premises,
in reasonable amounts for normal office use, lighting, and HVAC. Tenant
shall separately meter and pay for its usage of such electricity. In
addition to the foregoing, Landlord and Tenant shall use their best
efforts to arrange with a local utility provider acceptable to Tenant for
the provision of up to 1400 amps of 480 volt, three-phase a/c power to
the Premises, substantially at such provider's expense, for the exclusive
use of Tenant. If such power is not available to the Premises by
September 1, 1999, Tenant shall have the right to terminate the Lease.
Landlord acknowledges that Tenant shall be entitled to use, at all times,
through the duration of the Lease, the 1400 amps of 480 volt a/c three
phase power delivered by a local utility provider. Tenant shall
separately meter and pay for its usage of such electricity. If Tenant
requires additional electric capacity, Tenant shall have the right, at
its expense, with Landlord's cooperation, to reconfigure switch equipment
and facilities and to make application directly to an electricity
provider serving the Building. Tenant shall have the right to make its
own arrangements for power.
10. Tenant UPS. Tenant shall have the right to install UPS systems and their
associated batteries within Tenant's within the Premises and to integrate
the Building utility power into such systems.
11. Grounding. Tenant shall have the right to install an electrical grounding
system for the Premises.
12. Tenant Generator. Tenant shall have the right to install and maintain
power generators to serve the Premises, together with associated fuel
storage tanks, and to integrate Building utility power into such
generators. Landlord shall provide, at no additional charge, easements
and if applicable, riser space to connect such generators. Landlord shall
provide a pad site for such generators at no additional charge, which
shall be located outside the Building, on the South side of the Building,
next to the existing retaining wall. The footprint required for Tenant's
generators and associated tanks and equipment shall not exceed 500 square
feet. Tenant shall have the right, at its option, to construct fencing or
use other appropriate security measures to protect its generators. Tenant
shall construct fencing walls or other measures to screen its generators
as reasonably required by Landlord.
13. HVAC & Humidity Control. Tenant shall have the right to tap into Building
water supply in order to operate a humidifier system in the Premises.
Tenant shall have the right to install coolant lines at Tenant's expense
to support AC systems in the Premises or on the roof or elsewhere serving
the Premises. Tenant shall have the right at no additional charge, to
install and operate a cooling system to serve the Premises on the roof of
the Building or at Tenant's option, at another location reasonably
acceptable to Tenant and Landlord. Landlord shall provide at no
additional charge, easements and riser space to connect such equipment.
Tenant shall have the right to vent through the roof of the Building or
through the Building ventilation system, if any, and to install drains
for the HVAC equipment and to discard any HVAC wastewater into the
Building's sewage system or otherwise as necessary. Tenant shall have the
right to remove or cap any heating system in its premises. Tenant shall
not be obligated to connect its cooling system to Landlord's energy
management system.
14. Fire System. Tenant shall have the right, in its discretion and at its
expense, to do any or all of the following: (a) convert any existing
sprinkler system within the Premises to dry-pipe, pre-action system or
install such a system. (b) relocate or encase any water mains or other
water pipes running through or adjacent to the Premises. (c) install an
FM 200 gas system in the Premises, and (d) install any other fire
suppression system approved by Landlord, not to be unreasonably withheld.
15. Structural. Tenant shall have the right, at its expense, to do any or all
of the following: (a) to cover or block up windows and/or exterior walls
in the Premises, provided that such measures are reasonably acceptable to
landlord with respect to external aesthetics of the Miami North Office
Park; (b) to install up to three manholes adjacent to the Building for
bringing telecommunications fiber into the Building; and (c) to fence in
any equipment or facilities located or installed outside the Premises.
16. Security of Premises. Tenant shall have the right to install its own
security systems for the Premises. Tenant shall be permitted to create a
special security area within the Premises to encompass Tenant's equipment
room. Landlord will cooperate with, but shall not be responsible to,
Tenant in maintaining the security for such area. Tenant shall be
permitted to install security for such area with non-building-standard
locks and other access
<PAGE>
controls which restrict access to Tenant and its customers, provided that
Landlord shall be provided with keys or other entry mechanisms which may
be used in accordance with the terms of this Lease. Landlord shall not
enter such area or permit any janitorial, maintenance, repair or other
service to such area except as approved and supervised by Tenant.
Landlord or its agents shall enter such area only after at least
twenty-four (24) hours notice to Tenant and when accompanied by Tenant,
except when failure to comply with the foregoing will cause imminent
danger to the Premises or other portions of the Building or any person.
Any entry by Landlord will be conducted with reasonable caution under the
circumstances to prevent damage to or interference with any of the
equipment in the Area.
17. Roof Rights. Tenant shall have the right to install HVAC equipment,
dishes, antennas and other telecommunications equipment and other
equipment on the roof of the building, at no charge during the term of
the Lease, including any renewals. The square footage available for
Tenant's use shall not be less than 50% of the total useable square
footage available on the roof as of the date hereof. Tenant shall be
responsible for expenses associated with installation, maintenance,
operation, repair and removal of said items.
18. Landlord's Remedies. Notwithstanding anything to the contrary in the
Lease, in no event shall Landlord be entitled to enter the Premises and
remove or interfere with Tenant's property or the property of Tenant's
customers without judicial process.
19. Confidentiality. Landlord acknowledges that it may have access to certain
confidential information of Tenant concerning Tenant's business,
facilities, operations, plans, customers, proprietary software,
technology, and products ("Confidential Information"). Landlord agrees
that it will not use in any way, for its own account or the account of
any third party, except as expressly permitted by this Lease, nor
disclose to any third party (except as required by law or to its
attorneys, accountants, and other advisors and mortgagees and prospective
purchasers of the Premises as reasonably necessary and subject to the
confidentiality provisions hereof), any of Tenant's Confidential
Information and will take reasonable precautions to protect the
confidentiality of such information.
20. Tenant's Equipment. Tenant shall have the right to install, maintain,
repair and replace computer, telecommunication, and other equipment in
the equipment room of the Premises, so long as the average load of such
equipment does not exceed 50 pounds per square foot, and so long as the
load of any individual item does not exceed 200 pounds per square foot.
Landlord hereby acknowledges that such weights are not excessive loads
for the structure and hereby consents thereto. Tenant shall have the
right to install fixed telephony and HVAC systems in the Premises, and
Landlord hereby consents thereto. Tenant shall have the right to move
computer, telecommunication, and other equipment in and out of the
Premises from time to time in the course of its business, and locate the
same within the Premises at its discretion, and Landlord hereby consents
thereto.
21. Arbitration. Any controversy or claim arising out of or relating to this
Lease which involves less than $100,000 or which relates to a denial of
any consent or approval shall be settled by arbitration administered by
the American Arbitration Association under its Commercial Arbitration
Rules, including the Expedited Procedures, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction.
22. Condition of the Premises. Landlord shall deliver the Premises to Tenant
on the Commencement Date, at Landlord's sole cost and expense, broom
clean and free of all non-structural, non-core interior walls. Landlord
represents and warrants, and shall deliver evidence to Tenant prior to
the Commencement Date which confirms, that the floor loading capability
of the Premises is not less than 100 lbs./usable square foot. Landlord
shall provide Tenant with any existing as-built drawings of the Building
in CAD format and any other existing CAD drawings with respect to the
Building. Landlord, at its expense, shall provide Tenant with one-line
drawings of the Building's mechanical and electrical systems. All
documentation shall be provided in electronic format if available.
23. Parking. Landlord shall provide 68 unreserved parking spaces to Tenant in
the lot adjacent to the Building at no charge during the Lease term,
including any renewals.
24. Access. Tenant and its customers and vendors shall have 24 hours per day,
7 days per week; 52 weeks per year access to Tenant's premises in the
Building, common areas, and any of Tenant's equipment in the Building or
otherwise within Landlord's control, power and the telephone closets
serving the premises, and the parking area without the requirement of
prior notice.
25. Colocation/Interconnection. Tenant shall have the right to do any or all
of the following, at no additional charge, subject to Landlord's prior
approval, which shall not be unreasonably withheld, conditioned or
delayed, of any property modifications of any kind: (a) to co-locate
customer equipment in the Premises without Landlord's consent, (b) to
provide rights to use portions of the Premises to its customers and
vendors without Landlord's consent, and (c) to connect Tenant's equipment
and customer equipment to telecommunications facilities in any buildings
within the office park owned by Landlord, subject to Tenant's receiving
the consent of any third party owner of such facilities and subject
further to Tenant's installation of such interconnections along routes
reasonably acceptable to Landlord, using existing conduit whenever
feasible.
26. Matters with Respect to Rules and Regulations. In addition to other
provisions of the Rules and Regulations that are overridden by the
express terms of the Lease, the following items in the Rules and
Regulations attached as Exhibit F shall not apply to Tenant's operations
in the Premises: Rule 11, Rule 15 (a) through (f), and Rule 17. Tenant's
use of the Premises as office space and a computer and telecommunications
equipment room, including the use of HVAC and UPS and similar systems in
support thereof, in compliance with all laws regarding the use of
hazardous substances, shall not be deemed to violate Rule 7.
27. Representations and Warranties. Landlord represents and warrants to
Tenant: (i) Landlord has good and marketable fee simple title to the
Building, including without limitation the Premises, (ii) the Building
and the Premises, as of the date hereof, are not subject to any ground
lease, mortgage or deed of trust except the Deed of
<PAGE>
Trust in favor of Wachovia Bank of North Carolina N.A. recorded June 18,
1997 in Book 2326 at Page 759; and (iii) no other party has any right to
use or occupy the Premises from and after the Commencement Date.
28. Rent Credit. Tenant shall receive a credit against the amounts of Gross
Rent first coming due under this Lease in the amount of $3.80 per useable
square foot of the Premises, which credit reflects the parties agreement
regarding the value of standard Building improvements that are not
included in Exhibit D and not provided by Landlord under this Lease.
29. SW Corner Space. The "SW Corner Space" shall mean that portion of the
Building, in the southwest corner thereof, that is not currently occupied
by the existing tenant of the building and is not included in the
Premises, and which is outlined on Exhibit E attached hereto (the "SW
---------
Corner Space"). From and after the Commencement Date, Landlord shall use
good faith efforts to lease the SW Corner Space and to negotiate
favorable terms and conditions for the same.
(a) If Landlord enters into a lease for the SW Corner Space
prior to July 1, 2001 at a rental rate equal to or greater
than the Desired Rent, as defined below, then Landlord
shall give notice to Tenant thereof and this Section 29
shall be of no further force and effect. The "Desired
Rent" shall mean a rental rate of $17.50 per rentable
square foot for a full service gross lease in the first
year, with increases of 3% for each subsequent year.
(b) If the SW Corner Space remains vacant for two (2) years
following the Commencement Date, then on July 1, 2001, the
SW Corner Space shall become part of the Premises under
this Lease in accordance with the SW Corner Terms, as
defined below.
(c) If Landlord proposes to lease the SW Corner Space prior to
July 1, 2001, but at a rental rate less than the Desired
Rent, then Tenant shall have an additional right of first
refusal to rent the SW Corner Space in accordance with the
following. Landlord shall give notice to Tenant of the
terms agreed to for the SW Corner Space, in writing, by
Landlord and a third party tenant, which notice shall
include the identity of the proposed tenant and shall
specify the proposed rental rate per rentable square foot
of the SW Corner Space and any appropriate adjustments
thereto with respect to services not provided (the "SW
Corner Rent"), the proposed date for commencement of
payment of rent (the "SW Corner Rent Commencement Date"),
the proposed expiration date of the lease (the "SW Corner
Expiration Date") and other material terms and conditions.
Tenant shall have a period of ten (10) business days after
its receipt of Landlord's notice to elect to exercise its
right of first refusal by giving notice of such election
to Landlord. If Tenant exercises its right of first
refusal, then thirty (30) days after Tenant's receipt of
Landlord's notice, the SW Corner Space will become part of
the Premises in accordance with the SW Corner Terms,
provided that Tenant shall have no obligation to pay Gross
Rent or additional rent with respect to the SW Corner
Space until the later of sixty (60) days after Tenant's
receipt of Landlord's notice or the SW Corner Rent
Commencement Date. If Landlord does not receive Tenant's
notice within the ten (10) day period or Tenant declines
to accept the SW Corner Space, then Tenant's right of
first refusal under this section shall be waived and
Landlord shall have the right to lease the SW Corner Space
to the proposed tenant at the SW Corner Rent and on the
other terms and conditions specified in its notice to
Tenant. If Tenant waives its right of first refusal and
Landlord leases the SW Corner Space to such proposed
tenant at the SW Corner Rent and on such other terms and
conditions, then from and after the SW Corner Rent
Commencement Date and until the SW Corner Expiration Date,
or, if earlier, the end of the Term or earlier termination
of this Lease, Tenant shall pay to Landlord, as additional
rent, the lesser of (1) $3.00 per rentable square foot of
the SW Corner Space, or (2) the difference between the
Desired Rent and the SW Corner Rent. Tenant shall make
such payments monthly in accordance with the payment
provisions of Article V. If Landlord does not lease the SW
Corner Space to such proposed tenant at the SW Corner Rent
and on such other terms and conditions, Tenant's right of
first refusal under this section shall continue in full
force and effect.
(d) The "SW Corner Terms" shall mean: (i) Tenant shall pay
Gross Rent for the SW Corner Space at the rates set forth
in Article V of this Lease, (ii) Tenant's Share shall be
increased to reflect the additional rentable square
footage of the SW Corner Space, (iii) Tenant shall receive
an upfit allowance from Landlord of eighteen dollars
($18.00) per useable square foot of the SW Corner Space,
(iv) Tenant shall receive a credit against the amount of
Gross Rent first coming due thereafter in the amount of
$3.80 per useable square foot of the SW Corner Space, and
(v) if Tenant subleases or assigns the SW Corner Space,
Tenant shall have no obligation to pay to Landlord any
Excess Consideration with respect to the SW Corner Space.
<PAGE>
EXHIBIT A-1
LETTER OF CREDIT REQUIREMENTS
1. Tenant shall deposit with Landlord, on or prior to the Commencement
Date, as security for the full and prompt performance by Tenant of the terms and
covenants of this Lease, a clean, unconditional, stand-by, irrevocable Letter of
Credit in favor of Landlord in the initial amount of $200,000 substantially in
the form attached hereto as Exhibit A-2, issued by Silicon Valley Bank or any
-----------
other federally insured national banking association reasonably acceptable to
Landlord.
2. The Letter of Credit shall: (a) have an expiration date no earlier
than December 31, 2001 (the "Expiration Date"), or (b) have an original
---------------
expiration date at least one year after issued, and shall be renewed annually
and automatically through said Expiration Date, in which event, if but only if
required in order to effectuate such extension, Tenant shall submit to Landlord
original amendments extending the expiration date (or replacement letters of
credit with extended expiration dates), on an annual basis no later than the
date that is thirty (30) days prior to the expiration date of the Letter of
Credit then in effect. Failure to so extend the expiration date of the Letter of
Credit through said Expiration Date in the foregoing manner shall constitute a
Default under this Lease entitling Landlord, in addition to all other remedies,
after ten (10) days notice to Tenant, to draw down the Letter of Credit and to
hold or apply the proceeds thereof as a cash security deposit ("Cash Security
Deposit"), as security for the full and prompt performance by Tenant of the
terms and covenants of this Lease and apply the same as provided herein with
respect to the Letter of Credit.
3. If Tenant commits a Default under this Lease, Landlord may, but shall
not be obligated to, draw upon the Letter of Credit (but only to the extent
necessary to cure the Default) and use or apply the whole or any part of the
proceeds of the Letter of Credit so drawn for the payment of Tenant's
obligations hereunder. If Landlord draws upon the Letter of Credit and any
portion of the proceeds thereof is not required for such purposes, Landlord
shall hold such unused proceeds as a Cash Security Deposit. The use or
application of the proceeds of the Letter of Credit or any portion thereof shall
not prevent Landlord from exercising any other right or remedy provided
hereunder or under any Law and shall not be construed as liquidated damages.
4. The parties agree that, to the extent that Landlord has not applied
the Letter of Credit or Cash Security Deposit as described herein, the amount of
the Letter of Credit shall be reduced as follows (and any Cash Security Deposit
shall be returned to Tenant to accomplish the same reduction in the total amount
of security provided hereunder): (a) On January 1, 2000, to $150,000; (b) on
July 1, 2000, to $100,000; (c) on December 31, 2001, to zero (0). If the
foregoing reductions are not accomplished automatically pursuant to the terms of
the Letter of Credit, Tenant shall have the right to substitute a new Letter of
Credit to accomplish such reduction and Landlord shall cooperate with Tenant in
coordinating such substitution. Notwithstanding the foregoing, if at any time
prior to December 31, 2001, Tenant delivers to Landlord financial statements,
prepared in accordance with generally accepted accounting principles "GAAP" and
accompanied by a letter from an independent accounting firm stating that such
statements fairly represent Tenant's operations, which indicate that earnings
before interest, taxes, depreciation and amortization (EBITDA) from Tenant's
operations attributable solely from the Premises has reached break-even or
better for the preceding six (6) month period, then the Letter of Credit and any
Cash Security Deposit shall be reduced to zero (0) and Landlord shall return the
same to Tenant within five (5) business days thereafter. Tenant shall not
assign, pledge or otherwise transfer any interest in the Letter of Credit except
as part of an assignment of this Lease approved by Landlord under Section 7.02,
and any attempt to do so shall be null and void.
<PAGE>
EXHIBIT A-2
FORM OF LETTER OF CREDIT FOR SECURITY DEPOSIT
(Letterhead and Address of Bank)
Irrevocable Standby Letter of Credit No. ________________________
Date: ______________
Beneficiary: Miami North, LLC
702 Oberlin Road
Suite 100
Raleigh, North Carolina 27605
as "Landlord"
Applicant: INFLOW, Inc
1860 Lincoln Street, Suite 305
Denver, Colorado 80295
as "Tenant".
Amount: Two Hundred Thousand Dollars (USD 200,000.00)
Expiry Date: ______________
Location: At our counter in ________________
Dear Sir/Mam:
We hereby establish our Irrevocable Standby Letter of Credit
No. _________________ in your favor. Available by payment with _________________
Bank, ____________________________, Attention: ___________________ of
Beneficiary's draft at sight drawn on us, and accompanied by the following
documents:
1. The original of this letter of credit and amendment if any.
2. A signed and dated certification from the Beneficiary stating the
following:
(a) . "A Default (as defined in the Lease) has occurred by Inflow,
Inc. under that certain Office Lease Agreement between Inflow,
Inc. and Miami North LLC (the "Lease") and Tenant has failed to
cure its default after the expiration of any applicable cure
period, and therefore the undersigned is entitled to the amount
set forth in the draft.
It is a condition of this Letter of Credit that it will be deemed
automatically renewed without an amendment for a period of one (1) one year from
the present or each future expiration date unless at least thirty 30) days prior
to such expiry date we notify you in writing sent by overnight mail that we
elect not to renew this Letter of Credit for such additional period. In no event
shall this letter of credit be automatically extended beyond December 31, 2001.
This Letter of Credit is transferrable by the issuing bank in whole but not
in part and only once upon our receipt of the attached Exhibit "A" (Transfer
Form) duly completed and executed by the beneficiary together with this original
letter of credit and all amendments if any accompanying our transfer charges
(i.e. 1/4 of 1 percent minimum USD 250.00).
[The amount of this letter of credit shall be decreased on the following
dates, provided that the available amount exceeds the following aggregate
amount(s):
Effective Date Aggregate Amount(s)
January 1, 2000 $150,000
July 1, 2000 $100,000]
All documents including the draft(s) must indicate the number and date of
this credit.
27
<PAGE>
Each draft presented hereunder must be accompanied by this original letter of
credit for our endorsement thereon of the amount of such draft(s).
Documents must be sent to use via overnight courier (i.e. Federal Express, UPS,
DHL or other Express Courier) at our address: ________________________________.
We hereby engage with drawers and/or bonafide holders that draft(s) drawn under
and negotiated in conformance with the terms and conditions of the subject
credit will be duly honored on presentation.
This credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication 500
- ------------------------------------ -------------------------------------
Authorized Signature Authorized Signature
28
<PAGE>
EXHIBIT A
FLOOR PLAN
29
<PAGE>
EXHIBIT A
FLOOR PLAN
[DIAGRAM]
Floorplan is subject to final approval by Landlord and Tenant.
<PAGE>
EXHIBIT B
BUILDING
30
<PAGE>
EXHIBIT B
BUILDING
MIAMI NORTH OFFICE PARK
4426-4518 Miami Boulevard,
Research Triangle Park, North Carolina 27703
[PHOTO]
Leasing By:
[LOGO]
ANTHONY & CO.
COMMERCIAL REAL ESTATE
(919)832-1110
<PAGE>
EXHIBIT C
LAND
BEING all of Lot 1 containing 6.431 acres as shown on plat entitled "Final Plat
for Hamilton Merritt, Inc.," dated February 24, 1997, prepared by A.R. Barnes,
RLS and recorded in Plat Book 137, Page 136, Durham County Registry
31
<PAGE>
EXHIBIT D
BASE BUILDING FEATURES
The base building features are listed below:
* 800 amp/208 volt three phase electrical service, 20x20 overhead grid in
tenant spaces
* Electric power rooftop package HVAC units with digital controls and zoned
to one (1) vav box per 1,500 sf
* Granite accents on exterior perimeter of building at glass line
* 9' high finished ceiling in all tenant spaces, with 2'8" plenum
* High quality reflective glass with miniblinds
* Janitor's closet with mop sink and roof ladder with hatch
* Electrical closet with two (2) spare 4" pvc conduits to fiber optic
telecommunications in Miami Blvd (GTE, FiberSouth, ICI)
* Upgraded lobby area with granite floor tile, wood chairrail and base,
polymix wall covering, 2x2 tegular ceiling tile, 2x4 18-cell parabolic lens
lights
* Solid core stained oak doors in metal frames
* Automatic fire detection system
* Irrigated landscaping
* Exterior accent light for evening illumination
* Monument signage for tenant name listings
* Computer-controlled 24-hour security access system
* Tenant space:
* miniblinds installed
* Main distribution duct as installed prior to the date of execution of
this Lease
*
32
<PAGE>
EXHIBIT E
SW Corner Space
33
<PAGE>
EXHIBIT F
RULES AND REGULATIONS
(1) Access to Common Areas of the Property. Landlord may from time to time
establish security controls for the purpose of regulating access to the
common areas of the property. Tenant shall abide by all such security
regulations so established and agrees to always leave clear access for
vehicular traffic through all parking lots, loading areas and driveways.
(2) Protecting Demised Premises. Before leaving the Demised Premises
unattended, Tenant shall close and securely lock all doors or other means
of entry to the Demised Premises.
(3) Building Directories. The directories of the building shall be used
exclusively for the display of the name and location of tenants only and
will be provided at the expense of Landlord. Any company names and/or name
changes requested by Tenant to be displayed in the directories must be
approved by Landlord and, if approved, will be provided at the sole expense
of Tenant.
(4) Large Articles. Furniture, freight and other large or heavy articles may be
brought into the building in a manner so as to not damage the property and
always at Tenant's sole responsibility. All damage done to the building,
its furnishings, fixtures or equipment by moving or maintaining such
furniture, freight or articles shall be repaired at the expense of Tenant.
(5) Signs. Tenant shall not paint, display, inscribe, maintain or affix any
sign, placard, picture, advertisement, name, notice, lettering or direction
on any part of the outside or inside of the building, or on any part of the
inside of the Demised Premises which can be seen from the outside of the
Demised Premises, without the written consent of Landlord, and then only
such name or names or matter and in such color, size, style, character and
material as shall be first approved by Landlord in writing. Landlord
reserves the right to remove at Tenant's expense all matter other than that
above provided for without notice to Tenant.
(6) Compliance with Laws. Tenant shall comply with all applicable laws,
ordinances, governmental orders or regulations and applicable orders or
directions from any public office or body having jurisdiction, whether now
existing or hereinafter enacted with respect to the Demised Premises and
the use or occupancy thereof. Tenant shall not make or permit any use of
the Demised Premises which directly or indirectly is forbidden by law,
ordinance, governmental regulations or order or direction of applicable
public authority, or which may be dangerous to person or property.
(7) Hazardous Materials. Tenant shall not use or permit to be brought into the
Demised Premises or the building any flammable oils or fluids, or any
explosive or other articles deemed hazardous to persons or property, or do
or permit to be done any act or thing which will invalidate or which if
brought in would be in conflict with any insurance policy covering the
building or its operation, or the Demised Premises, or any part of either,
and will not do or permit to be done anything in or upon the Demised
Premises, or bring or keep anything therein, which shall not comply with
all rules, orders, regulations or requirements of any organization,
bureaus, department or body having jurisdiction with respect thereto (and
Tenant shall at all times comply with all such rules, orders, regulations
or requirements), or which shall increase the rate of insurance on the
building, its appurtenances, contents or operation.
(8) Defacing Demised Premises and Overloading. Tenant shall not place anything
or allow anything to be placed in the Demised Premises near the glass or
any door, partition, wall or window which may be unsightly from outside the
Demised Premises. Tenant shall not place or permit to be placed any article
of any kind on any window ledge or on the exterior walls; blinds, shades,
awnings or other forms of inside or outside window ventilators or similar
devices shall not be placed in or about the outside windows in the Demised
Premises except to the extent that the character, shape, color material and
make thereof is approved by Landlord. Tenant shall not do any painting or
decorating in the Demised Premises or install any floor coverings in the
Demised Premises or make, paint, cut or drill into, or in any way deface
any part of the Demised Premises or building without in each instance
obtaining the prior written consent of Landlord. Tenant shall not overload
any floor or part thereof in the Demised Premises, or any facility in the
building or any public corridors or elevators therein by bringing in or
removing any large or heavy articles and, Landlord may direct and control
the location of safes, files, and all other heavy articles and, if
considered necessary by Landlord, require supplementary supports at
Tenant's expense of such material and dimensions necessary to properly
distribute the weight.
(9) Obstruction of Public Areas. Tenant shall not, whether temporarily,
accidentally or otherwise, allow anything to remain in, place or store
anything in, or obstruct in any way, any sidewalk, court, passageway,
entrance, or shipping area. Tenant shall lend its full cooperation to keep
such areas free from all obstruction and in a clean and sightly condition,
and move all supplies, furniture and equipment as soon as received directly
to the Demised Premises, and shall move all such items and waste (other
than waste customarily removed by building employees) that are at any time
being taken from the Demised Premises directly to the areas designated for
disposal. All courts, passageways, entrances, exits, elevators, escalators,
stairways, corridors, halls and roofs 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 shall be prejudicial to the safety, character, reputation and
interest of the building and its tenants provided, however, that nothing
herein contained shall be construed to prevent such access to persons with
whom Tenant deals within the normal course of Tenant's business unless such
persons are engaged in illegal activities.
(10) Additional Locks. Tenant shall not attach or permit to be attached
additional locks or similar devices to any door or window, change any
existing locks or the mechanism thereof, or make or permit to be made any
keys for any door other than those provided by Landlord. Upon termination
of this lease or of Tenant's possession, Tenant shall surrender all keys to
the Demised Premises. Tenant shall be solely responsible for the costs of
all locks and keys other than the original set in the premises as of the
date of occupancy.
(11) Communications or Utility Connections. If Tenant desires signal, alarm or
other utility or similar service connections installed or changed, Tenant
may install or change the same without the approval of Landlord, but at
Tenant's expense.
34
<PAGE>
Tenant shall not install in the Demised Premises any equipment which
requires a substantial amount of electrical current without the advance
written consent of Landlord. Tenant shall ascertain from Landlord the
maximum amount of load or demand for or use of electrical current which can
safely be permitted in the Demised Premises, taking into account the
capacity of the electric wiring in the building and the Demised Premises,
taking into account the capacity of the electric wiring in the building and
the Demised Premises and the needs of other tenants in the building, and
shall not in any event connect a greater load than that which is safe.
(12) Office of the Building. Service requirements of Tenant will be attended to
only upon application at the office of Anthony & Co. Employees of Landlord
shall not perform any work outside of their duties unless under special
instructions from Landlord.
(13) Restrooms. The restrooms, toilets, urinals, vanities and the other
apparatus shall not be used for any purpose other than that for which they
were constructed and no foreign substance of any kind whatsoever shall be
thrown therein and the expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by Tenant who, or
whose employees or invitees, shall have caused it.
(14) Intoxication. Landlord reserves the right to exclude or expel from the
building any person who, in the judgment of Landlord, is intoxicated or
under the influence of liquor or drugs, or who shall in any manner do any
act in violation of any of the rules and regulations of the building.
(15) Nuisances and Certain Other Prohibited Uses. Tenant shall not (a) install
or operate any internal combustion engine, boiler, machinery,
refrigerating, heating or air conditioning apparatus in or about the
Demised Premises; (b) engage in any mechanical business, utilize any
article or thing, or engage in any service in or about the Demised Premises
or building, except those ordinarily embraced within the permitted use of
the Demised Premises specified in Article 7; (c) use the Demised Premises
for housing, lodging, or sleeping purposes; (d) place any antennae on the
roof or on or in any part of the inside or outside of the building other
than the inside of the Demised Premises, or place a musical or sound
producing instrument or device inside or outside the Demised Premises which
may be heard outside the Demised Premises; (e) use any illumination or
power for the operation of any equipment or device other than electricity;
(f) 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; (g) bring or permit to be
in the building complex any bicycle or other vehicle, or dog (except in the
company of a blind person) or other animal or bird; (h) make or permit any
objectionable noise or odor to emanate from the Demised Premises; (i)
disturb, solicit or canvass any occupant of the building; 6) do anything in
or about the Demised Premises tending to create or maintain a nuisance or
do any act tending to injure the reputation of the building.
(16) Solicitation. Tenant shall not make any room-to-room canvass to solicit
business from other tenants in the building and shall not exhibit, sell or
offer to sell, use, rent or exchange any products or services in or from
the Demised Premises unless ordinarily embraced within the Tenant's use of
the Demised Premises specified herein and specific authority granted in the
lease agreement.
(17) Energy Conservation. Tenant shall not waste electricity, water, heat or air
conditioning and agrees to cooperate fully with Landlord to assure the most
effective operation of the building's heating and air conditioning, and
shall not allow the adjustment (except by Landlord's authorized building
personnel) or any controls.
(18) Building Security. Upon entry to or exit from the building the exterior
building doors and suite entry door(s) should be kept locked at all times
to assist in security. The janitorial service (if any) shall, upon
completion of its duties, lock all building doors. Problems in building and
suite security should be directed to Anthony & Co.
(19) Parking. Parking is in designated parking areas only. There should be no
vehicles in "no parking" zones or at curbs. Handicapped spaces are for
handicapped persons and the Police Department will ticket unauthorized
(unidentified) cars in handicapped spaces. No vehicles may be abandoned or
repaired on the property, and vehicles requiring extended parking should be
identified to Landlord.
(20) Janitorial Service. Tenants will remove excessive trash from inside and
outside their premises and shall deposit same in the dumpsters provided by
Landlord. Any large volume of trash resulting from delivery of furniture,
equipment, etc., should be removed by the delivery company, Tenant, or
Landlord at Tenant's expense. Any requests for extraordinary trash removal
should be directed to Anthony & Co. at 832-1110.
(21) Amendment to Rules. Landlord reserves the right to make such other
reasonable Rules and Regulations which apply to all Tenants as in its
judgment may from time to time be needed for the safety, care and
cleanliness of the Building and the Land, and for the preservation of good
order therein.
35
<PAGE>
EXHIBIT E
SW Corner Space
[DIAGRAM]
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE is made by and between Miami North, LLC, as
"Landlord," and Inflow, Inc., as "Tenant," respectively.
WHEREAS, Landlord and Tenant entered into a Lease dated June 29, 1999 (the
"Lease"), covering that certain office building commonly referred to as Building
4 at 4518 S. Miami Boulevard in the Miami North Office Park in Durham, North
Carolina.
WHEREAS, Landlord and Tenant have agreed that the rentable space and usable
space is different than as set forth in the Lease, and have agreed to modify the
Lease as set forth herein to adjust the rental over the term to conform to the
correct areas.
NOW, THEREFORE, Landlord and Tenant hereby desire to amend the Lease as follows:
1. PREMISES (Paragraph 1.01):
The Premises shall be changed as follows:
From: 14,443 rentable square feet
13,130 usable square feet
To: 14,870 rentable square feet
13,518 usable square feet
All references in the Lease to Premises shall be deemed to refer to the
latter square footage areas for usable and rentable square feet.
2. GROSS RENT (Paragraph 5.01):
The table of Base Rent and Total Monthly Rent set forth in paragraph
5.01 of the lease shall be changed as follows:
<TABLE>
<CAPTION>
From:
DATE BASE RENTAL TOTAL MONTHLY RENT
RENT
<S> <C> <C>
July 1, 1999-Sept. 30, 1999 $00.00 rsf $0.00
Oct. 1, 1999-Sept. 30, 2000 $16.00 rsf $19,257.33
Oct. 1, 2000-Sept. 30, 2001 $16.38 rsf $19,714.70
Oct. 1, 2001-Sept. 30, 2002 $16.76 rsf $20,172.06
Oct. 1, 2002-Sept. 30, 2003 $17.16 rsf $20,653.49
Oct. 1, 2003-Sept. 30, 2004 $17.57 rsf $21,146.96
Oct. 1, 2004-Sept. 30, 2005 $17.99 rsf $21,652.46
Oct. 1, 2005-Sept. 30, 2006 $18.43 rsf $22,182.04
Oct. 1, 2006-Sept. 30, 2007 $18.87 rsf $22,711.62
Oct. 1, 2007-Sept. 30, 2008 $19.33 rsf $23,265.27
Oct. 1, 2008-Sept. 30, 2009 $19.81 rsf $23,842.99
<CAPTION>
To:
DATE BASE RENTAL TOTAL MONTHLY RENT
RENT
<S> <C> <C>
July 1, 1999-Sept. 30, 1999 $00.00 rsf $0.00
Oct. 1, 1999-Sept. 30, 2000 $16.00 rsf $19,826.67
Oct. 1, 2000-Sept. 30, 2001 $16.38 rsf $20,297.55
Oct. 1, 2001-Sept. 30, 2002 $16.76 rsf $20,768.43
Oct. 1, 2002-Sept. 30, 2003 $17.16 rsf $21,264.10
Oct. 1, 2003-Sept. 30, 2004 $17.57 rsf $21,772.16
Oct. 1, 2004-Sept. 30, 2005 $17.99 rsf $22,292.61
Oct. 1, 2005-Sept. 30, 2006 $18.43 rsf $22,837.84
Oct. 1, 2006-Sept. 30, 2007 $18.87 rsf $23,383.08
Oct. 1, 2007-Sept. 30, 2008 $19.33 rsf $23,953.09
Oct. 1, 2008-Sept. 30, 2009 $19.81 rsf $24,547.89
</TABLE>
3. Except as modified herein, all other terms and conditions of the Lease
shall remain in full force and effect.
<PAGE>
IN WITNESS THEREOF, the Parties hereto have executed this First Amendment To
Lease on the year and date as indicated below.
LANDLORD: Miami North, LLC TENANT: Inflow, Inc.
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------ -------------------------
Its: Member Its: President & CEO
----------------------- ------------------------
Date: 11/28/99 Date: 12 November 1999
---------------------- -----------------------
<PAGE>
Exhibit 10.16
SAN DIEGO TECH CENTER
OFFICE BUILDING LEASE BETWEEN
SAN DIEGO TECH CENTER, LLC
AND
INFLOW INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. Definitions............................................................ 3
1.1 Location of Definitions............................................ 3
2. Premises
2.1 Premises/Building/Building Real Property Defined.................. 3
2.2 Building Common Area Defined...................................... 3
2.3 Project Defined................................................... 4
2.4 Project Common Area and Project Real Property Defined............. 4
2.5 Rentable Area Defined............................................. 4
2.6 Building Rentable Area Defined.................................... 4
2.7 Project Rentable Area Defined..................................... 4
2.8 Determination of Rentable Area.................................... 4
3. Term................................................................... 4
4. Rent; Additional Charges............................................... 4
4.1 Rent.............................................................. 4
4.2 Additional Charges................................................ 5
4.3 Manner of Payment................................................. 5
4.4 Abatement Periods................................................. 5
5. Additional Charges for Expenses........................................ 5
5.1 Definitions....................................................... 5
5.2 Special Allocations............................................... 8
5.3 Payment of Tenant's Building Share and Tenant's Project Share
of Building Expenses and Project Expenses....................... 8
5.4 Partial Year Adjustments.......................................... 9
5.5 Tenant's Right to Audit Landlord's Records........................ 9
5.6 Objections to Statements.......................................... 9
6. Security Deposit....................................................... 9
6.1 Landlord's Obligations............................................ 10
7. Acceptance of Premises................................................. 10
7.1 Construction of Tenant Improvements............................... 10
7.2 Condition at Delivery............................................. 10
8. Common Areas........................................................... 11
8.1 Right to Use Common Areas......................................... 11
8.2 Alteration of Building or Project Common Areas.................... 11
9. Use.................................................................... 11
9.1 Permitted Use..................................................... 11
9.2 No Nuisance....................................................... 11
9.3 Compliance with Laws.............................................. 11
9.4 Hazardous Materials............................................... 11
10. Alterations and Tenant's Property...................................... 12
10.1 Alterations Defined.............................................. 12
10.2 Removal of Property.............................................. 13
11. Repairs and Other Work................................................. 13
11.1 Tenant's Obligations............................................. 13
11.2 Conditions Applicable to Repairs and Other Work.................. 13
11.3 Landlord's Obligations........................................... 13
12. Liens.................................................................. 14
13. Subordination.......................................................... 14
14. Inability to Perform................................................... 14
15. Destruction............................................................ 14
15.1 Repair........................................................... 14
15.2 Tenant's Right to Terminate...................................... 15
15.3 Landlord's Right to Terminate.................................... 15
15.4 Extent of Repair Obligations..................................... 15
15.5 Arbitration...................................................... 15
15.6 Non-Application of Certain Statutes.............................. 15
</TABLE>
-i-
<PAGE>
<TABLE>
<C> <S> <C>
16. Insurance.............................................................. 15
16.1 Insurance on Tenant's Property................................... 15
16.2 Tenant's Liability Insurance..................................... 16
16.3 Form of Policies................................................. 16
16.4 Compliance with Insurance Requirements........................... 16
16.5 Landlord's Insurance............................................. 16
17. Eminent Domain......................................................... 16
17.1 Effect of Taking................................................. 16
17.2 Award............................................................ 17
17.3 Abatement of Rent................................................ 17
17.4 Temporary Taking................................................. 17
18. Assignment............................................................. 17
18.1 Consent Required................................................. 17
18.2 Notice........................................................... 17
18.3 No Release....................................................... 17
18.4 Cost of Processing Request....................................... 18
18.5 Corporation or Partnership Transfers............................. 18
18.6 Assumption of Obligations........................................ 18
18.7 No Signs......................................................... 18
18.8 Upon Termination................................................. 18
19. Utilities and Services................................................. 18
19.1 Landlord to Furnish.............................................. 18
19.2 Excess Usage..................................................... 19
19.3 Interruption of Service.......................................... 19
19.4 Security Systems and Programs.................................... 19
19.5 No Liability..................................................... 19
19.6 Communication Installation....................................... 19
19.7 Riser Access..................................................... 20
19.8 Generator Equipment.............................................. 20
19.9 HVAC Equipment................................................... 20
19.10 Other Equipment Installation..................................... 21
19.11 Special Electrical Services...................................... 21
19.12 Transmission and Operations Interference......................... 21
19.13 Structural Alterations........................................... 21
19.14 Equipment and Floor Loads........................................ 22
19.15 Co-location / Interconnection.................................... 22
20. Default................................................................ 22
20.1 Events Constituting Default...................................... 22
20.2 Remedies......................................................... 22
20.3 Remedies Cumulative.............................................. 23
20.4 Recovery Against Landlord........................................ 23
20.5 Events of Default by Landlord.................................... 23
21. Insolvency or Bankruptcy............................................... 24
22. Fees and Expenses; Indemnity: Payment.................................. 24
22.1 Landlord's Right to Remedy Defaults.............................. 24
22.2 Indemnity........................................................ 24
22.3 Assumption of Risk............................................... 25
22.4 Payment of Sums Due.............................................. 25
22.5 Interest On Past Due Obligations; Service Charge................. 25
23. Access to Premises..................................................... 25
23.1 Landlord's Right to Enter........................................ 25
23.2 Means of Entry................................................... 25
24. Notices................................................................ 25
25. No Waiver.............................................................. 26
26. Tenant's Certificates.................................................. 26
27. Rules and Regulations.................................................. 26
28. Tenant's Taxes......................................................... 26
29. Corporate Authority.................................................... 26
30. Miscellaneous.......................................................... 26
30.1 Asbestos Disclosure.............................................. 26
30.2 Financial Statements............................................. 27
</TABLE>
-ii-
<PAGE>
<TABLE>
<C> <S> <C>
30.3 References 27
30.4 Successors and Assigns 27
30.5 Severability 27
30.6 Construction 27
30.7 Integration 27
30.8 Surrender 27
30.9 Quiet Enjoyment 28
30.10 Holding Over 28
30.11 Time of Essence 28
30.12 Broker's Commissions 28
30.13 No Merger 28
30.14 Consents 28
30.15 Survival 28
30.16 Amendments 28
30.17 Attorneys' Fees 28
30.18 Arbitration of Disputes 28
30.19 Relocation of Tenant 29
30.20 Business Days 29
31. Design and Construction Process 29
31.1 Tenant's Design Development Documents 29
31.2 Tenant's Construction Documents 30
31.3 Applicable Law; Budgetary Constraints 30
31.4 Requirements of Tenant's Documents 30
31.5 Contractors/Bidding Procedures 30
31.6 Construction 30
31.7 Disbursement of T.I. Allowance 30
31.8 Access/Landlord's Approval 30
31.9 Construction 31
32. Extension Option 31
32.1 Tenant Option 31
32.2 Extension Rent 31
32.3 Rent Notice by Landlord 31
32.4 Fair Market Value Rent 31
32.5 Effect of Default 31
33. Right of First Offer Space 32
34. Signage 32
35. Landlord's Warranties and Representations 32
36. Access 33
37. Confidentiality 33
</TABLE>
EXHIBIT A Floor Plan
EXHIBIT B Site Plan
EXHIBIT C Rules and Regulations
EXHIBIT D Generator Equipment
EXHIBIT E First Offer Space
-i-
<PAGE>
BASIC LEASE TERMS OF OFFICE BUILDING LEASE
BETWEEN
SAN DIEGO TECH CENTER, LLC
AND
INFLOW, INC.
The following Basic Lease Terms constitute a general summary of the San
Diego Tech Center Office Building Lease to which they are attached. This summary
is for convenience only; the terms and provisions of the Lease attached hereto
are controlling.
1. Landlord: San Diego Tech Center, LLC, a Delaware
limited liability company.
2. Tenant: Inflow, Inc., a Delaware corporation.
3. Premises: Approximately 20,180 rentable square feet
in the building located at 9645 Scranton
Road, San Diego, California 92121,
commonly known as Suite 100 of Building 2
of the San Diego Tech Center.
4. Lease Term: One hundred twenty-three (123) months,
with two five (5) year options to extend
subject to the terms of Article 32.
5. Commencement Date: October 1,1999.
6. Rent:
(a) Rent: $1.40 per rentable square foot per month, subject to
annual increases pursuant to the terms of Section 4.1
(b) Abatement of Rent:
Provided Tenant is not in default under the Lease,
pursuant to the terms of Section 4.4, Rent will be
fully abated from the Commencement Date through
December 31, 1999, will be abated as to 10,180
rentable square feet of the Premises from January 1,
2000 through June 30, 2000, and will be abated as to
2,180 rentable square feet of the Premises from July
1, 2000 through December 31, 2000.
(c) Additional Charges:
Tenant's Share of Building Expenses = 13.04%.
Tenant's Share of Project Expenses = 3.17%.
(See Section 5.3 for provisions regarding Additional
Charges.)
7. Security Deposit: Thirty-Six Thousand Three Hundred Twenty-Four Dollars
($36,324).
8. Permitted Use: General office purposes, computer and data center,
and co-location and telecommunication services.
9. T.I. Allowance: Four Hundred Three Thousand Six Hundred Dollars
($403,600) (i.e., $20 per rentable square foot of the
Premises), subject to the provisions of Articles 7
and 31.
10. Insurance: Tenant to obtain insurance as described in Article 16
of the Lease.
11. Address for Payments and Notices to Landlord:
c/o SENTRE Partners, Inc.
9605 Scranton Road, Suite 102
San Diego, California 92121.
12. Address for Notices to Tenant:
Inflow, Inc.
9645 Scranton Road, Suite 100
San Diego, California 92121
Attn: General Manager
-1-
<PAGE>
with a copy to:
Inflow, Inc.
1860 Lincoln, Suite 305
Denver, CO 80295
Attn: Legal Department.
13. Broker(s): Node Coin, Inc.
14. Parking: One (1) unreserved parking space per three hundred
(300) rentable square feet of the Premises, subject
to the terms of the Rules and Regulations attached
hereto as Exhibit "C".
-2-
<PAGE>
SAN DIEGO TECH CENTER
OFFICE BUILDING LEASE BETWEEN
SAN DIEGO TECH CENTER, LLC
AND INFLOW, INC.
THIS LEASE, dated as of September 10, 1999, for purposes of reference only,
is made and entered into by and between SAN DIEGO TECH CENTER, LLC, a Delaware
limited liability company ("Landlord"), and INFLOW, INC., a Delaware corporation
("Tenant").
Landlord and Tenant hereby covenant and agree as follows:
1. Definitions.
-----------
1.1 Location of Definitions. For convenience of reference only, the
-----------------------
following terms are defined in the Section indicated:
(a) AAA - 30.18(a)
(b) Additional Charges - 4.2
(c) Alterations - 10.1
(d) Asbestos Reports - 30.1
(e) Assignment - 18.1
(f) Building - 2.1
(g) Buildings - 2.3
(h) Building Common Area(s) - 2.2
(i) Building Expenses - 5.1(c)
(j) Building Real Property - 2.1
(k) Building Rentable Area - 2.6
(l) Business Day - 30.20
(m) Commencement Date - 3
(n) Damaged Property - 15.1
(o) Expiration Date - 3
(p) Extension Term - 32.1
(q) First Offer Space - 33
(r) Hazardous Material - 9.4
(s) Landlord's Agents - 9.4
(t) Landlord's Expense Statement - 5.3
(u) Partial Year - 5.4
(v) Premises - 2.1
(w) Project - 2.3
(x) Project Common Area(s) - 2.4
(y) Project Expenses - 5.1(d)
(z) Project Real Property - 2.4
(aa) Project Rentable Area - 2.7
(bb) Real Estate Taxes - 5.1(a)
(cc) Related Entities - 22.2
(dd) Rent - 4.1
(ee) Rentable Area - 2.5
(ff) Security Deposit - 6
(gg) Sublease - 18.1
(hh) Substitute Premises - 30.19
(ii) T.I. Allowance - 7.1
(jj) Tenant Improvements - 7.1
(kk) Tenant Owned Property - 10.2
(II) Tenant's Agents - 22.2
(mm) Tenant's Building Share - 5.1(e)
(nn) Tenant's Project Share - 5.1(f)
(00) Term - 3
(pp) The worth at the time of award - 20.2(f)
2. Premises.
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2.1 Premises/Building/Building Real Property Defined. Subject to the
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terms, covenants and conditions hereinafter set forth, Landlord hereby leases to
Tenant and Tenant hereby hires from Landlord those premises (the "Premises")
consisting of the area shown on the floor plan(s) attached hereto as Exhibit "A"
located in the building located at 9645 Scranton Road, San Diego, California
92121, commonly known as Building 2 of the San Diego Tech Center (the
"Building"). The Building and the real property upon which the Building is
located, together with the utilities, facilities, drives, walkways and other
amenities directly appurtenant to and servicing the Building are herein
sometimes collectively called the "Building Real Property". The exact boundary
of the Premises shall be as constructed, and shall extend to the unfinished
surface of all floors and the underside of the structural concrete slab forming
the ceiling of the Premises. Landlord shall have the right at Landlord's sole
discretion to lease portions of the Building for retail and other uses from time
to time, and Landlord makes no representations or warranties
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as to the character or nature of any of the tenancies in the Building. Landlord
shall have the exclusive right to determine the nature, location, and mix of
tenants of the Building and of the Project and all matters relating to the
operation thereof, subject to the terms and conditions of this Lease and
provided that the Project shall at all times be used, maintained and operated
consistent with a professional business environment.
2.2 Building Common Area Defined. The terms "Building Common Area" and
----------------------------
"Building Common Areas" shall mean spaces, facilities, and installations such as
toilets, janitor, telephone, electrical, and mechanical rooms and closets, trash
facilities, stairs, public lobbies, corridors and other circulation areas,
wherever located in the Building. Building Common Areas shall also include all
other areas of the Building not leased or intended by Landlord to be leased to
tenants, as may be designated by Landlord from time to time.
2.3 Project Defined. The Building is part of a real estate project
---------------
commonly known as the San Diego Tech Center (the "Project"). For purposes of
this Lease, the Project shall be deemed to consist of the Building, Buildings 1,
3, 3D, 4, 5, 5A, 5B and 5C, a free-standing restaurant, a free-standing athletic
club, an aerobic center, a racquetball court, two tennis courts, two volleyball
courts, walking/running paths, landscape, sidewalks and adjacent parking areas
and all appurtenances to the foregoing, all as shown on the site plan attached
hereto as Exhibit "B". The Building and Buildings 1, 3, 3D, 4, 5, 5A, 5B and 5C
(including common areas within said Buildings) are sometimes herein collectively
called the "Buildings").
2.4 Project Common Area and Project Real Property Defined. The term
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"Project Common Area" and "Project Common Areas" shall mean all portions of the
Project other than (i) the Buildings (but including the aerobic center and
racquetball court if they are located in any of the Buildings), and (ii) the
Building Common Areas. The real property upon which the Project Common Areas are
located, together with the utilities, facilities, drives, walkways and other
amenities appurtenant to or servicing the Project Common Areas, are herein
sometimes collectively called the "Project Real Property." Tenant acknowledges
and agrees that Landlord, in its sole discretion, may relocate, eliminate, alter
or otherwise make such decisions with respect to the various components of
Project Common Areas as Landlord in good faith deems appropriate, provided that
to do so would not have a materially adverse affect on Tenant's rights under the
Lease or on Tenant's business operations.
2.5 Rentable Area Defined. For purposes of this Lease, the "Rentable
---------------------
Area" of the Premises shall be 20,180 rentable square feet; provided, however,
that Landlord makes no representations or warranties as to the exact square
footage in the Premises.
2.6 Building Rentable Area Defined. For purposes of this Lease, the
------------------------------
"Building Rentable Area" shall be 154,773 rentable square feet, consisting of
rentable square feet in the Building; provided, however, that Landlord makes no
representations or warranties as to the exact square footage in the Building.
2.7 Project Rentable Area Defined. For purposes of this Lease, the
-----------------------------
"Project Rentable Area" shall be 635,984 square feet, consisting of rentable
square feet contained in the Buildings; provided, however, that Landlord makes
no representations or warranties as to the exact square footage in the Project.
2.8 Determination of Rentable Area. Rentable Area for the Premises has
------------------------------
been calculated pursuant to the BOMA's Standard Method of Measuring Floor Area
in Office Buildings, ANSI/BOMA Z65.1-1996. Tenant's architect shall have the
right to verify the calculation of the rentable area for the Premises within
thirty (30) days after the Commencement Date, after which thirty (30) day period
the rentable area of the Premises as set forth herein shall be deemed to be
mutually agreed upon by the parties and shall be conclusive and binding upon
them. Rentable Area for the Building and the Project has been or will be
calculated in a manner consistent with all other leases in the Project.
3. Term. The term (the "Term") of this Lease shall commence on October 1,
----
1999 (the "Commencement Date"), and shall expire on December 31, 2010 (the
"Expiration Date"), unless sooner terminated pursuant to the terms of this Lease
or extended pursuant to Article 32 below. Prior to the Commencement Date for the
Premises, Landlord will allow Tenant access to the Premises in order to install
tenant improvements, fixtures, furnishings and equipment and to otherwise
prepare the Premises for Tenant's occupancy; provided that such early entry will
be subject to all the terms and provisions of this Lease as though the
Commencement Date had occurred, except for the payment of Rent and Additional
Charges which commence as set forth in this Lease.
4. Rent; Additional Charges.
------------------------
4.1 Rent. Tenant shall pay to Landlord during the initial Term $1.40 per
----
month per rentable square foot of the Premises; provided, however, that if
Tenant is not in default under the Lease, Tenant's obligation to pay Rent will
be abated as provided in Section 4.4 below. The Rent for the Premises shall be
increased by three percent (3%) on January 1, 2003 and by three percent (3%)
every one (1) year anniversary thereafter, on a cumulative basis. Rent shall be
payable by Tenant monthly beginning on the Commencement Date and thereafter in
advance on or before the first day of each calendar month of the Term. If the
Commencement Date should occur on a day other than the first day
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of a calendar month, or the Expiration Date should occur on a day other than the
last day of a calendar month, then the Rent for such fractional month shall be
prorated upon a daily basis based upon a thirty (30) day calendar month, and
based upon the rate for the immediately following or preceding month. The rent
payable for the first full calendar month of the Term shall be payable upon
execution of this Lease by Tenant.
4.2 Additional Charges. Commencing on the Commencement Date, subject to
------------------
abatement pursuant to Section 4.4 below, Tenant shall pay to Landlord in equal
monthly installments on or before the first day of each month, in advance and at
the place where the Rent is payable, all charges, fees and expenses and other
amounts whatsoever as provided in or due under this Lease ("Additional
Charges"), including without limitation all amounts due pursuant to the
provisions of Article 5 and the Exhibits hereto, in accordance with Section 5.3
below or any other Section of this Lease applicable to the particular Additional
Charges. Landlord shall have the same remedies for Tenant's failure to pay any
item of Additional Charges when due as for failure to pay any installment of
Rent when due. For purposes of determining Landlord's remedies in the event of
Tenant's default and calculating amounts due thereunder, Additional Charges
shall be deemed to be Rent. Tenant shall be responsible for payment of any
applicable Additional Charges throughout the Term, except as provided in Section
4.4 below.
4.3 Manner of Payment. All payments of Rent and Additional Charges shall
-----------------
be made without prior demand and without offset, deduction or counterclaim, in
lawful money of the United States of America. Such payments shall be made at the
address for Landlord specified herein or at such other place as Landlord shall
designate from time to time.
4.4 Abatement Periods. Notwithstanding anything to the contrary
-----------------
contained herein, and provided Tenant is not in default under the terms of this
Lease, the Rent, Tenant's Building Share of Building Expenses, and Tenant's
Project Share of Project Expenses shall be abated as follows:
(a) Rent will be abated as to the entire Premises (the "First Abatement
Space") during the period commencing on the Commencement Date and extending
through December 31, 1999 (the "First Abatement Period").
(b) On January 1, 2000, Tenant shall begin paying Rent, Tenant's
Building Share of Building Expenses, and Tenant's Project Share of Project
Expenses for 10,000 rentable square feet of the Premises in accordance with the
terms of this Lease, and Rent will be abated for a portion of the Premises
consisting of approximately 10,180 rentable square feet (the "Second Abatement
Space") during the period commencing on January 1, 2000 and extending through
June 30, 2000 (the "Second Abatement Period").
(c) On July 1, 2000, Tenant shall begin paying Rent, Tenant's Building
Share of Building Expenses, and Tenant's Project Share of Project Expenses for
18,000 rentable square feet of the Premises in accordance with the terms of this
Lease, and Rent will be abated for a portion of the Premises consisting of
approximately 2,180 rentable square feet (the "Third Abatement Space") during
the period commencing on July 1, 2000 and extending through December 31, 2000
(the "Third Abatement Period").
On January 1, 2001, Tenant shall begin paying Rent, Tenant's Building Share of
Building Expenses, and Tenant's Project Share of Project Expenses for the entire
Premises. All other terms and provisions of this Lease shall apply to the First
Abatement Space, Second Abatement Space and Third Abatement Space during the
First Abatement Period, Second Abatement Period and Third Abatement Period and
thereafter, including without limitation, Tenant's payment of those utilities
and services required to be paid directly by Tenant and Tenant's reimbursement
for electrical service as set forth in this Lease.
5. Additional Charges for Expenses.
-------------------------------
5.1 Definitions. For purposes of this Article 5, the following terms
-----------
shall have the following meanings:
(a) "Real Estate Taxes" shall mean all general real property taxes and
general and special assessments, transit charges or fees, fees or assessments,
housing fund assessments, payments in lieu of taxes, and any tax, fee or excise
levied or assessed (whether at the date of this Lease or thereafter) (i) on the
Building Real Property or Project Real Property, any portion thereof or
Landlord's interest therein, or Landlord's personal property used in the
operation of the Building or the Project Common Areas, (ii) on the use or
occupancy of the Building Real Property or the Project Real Property or any
portion thereof, including any tax or levy made against Rent, Additional
Charges, or gross receipts from the Building or the Project Common Areas, (iii)
in connection with the business of renting space in the Building or the Project
Common Areas, or (iv) as a result of the transfer of any interest in the
Building Real Property or Project Real Property or any portion thereof or
interest therein, that are now or hereafter levied or assessed by the United
States of America, the State of California, or any political subdivision, public
corporation, district or other political or public entity. Real Estate Taxes
shall also include any other tax, fee or other excise, however described, that
may be levied or assessed as a substitute for, in whole or in part, any other
Real Estate Taxes. Real Estate Taxes shall not include income, franchise,
inheritance or capital stock taxes, unless, resulting from a change in the
method of taxation, any of such
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taxes is levied or assessed against Landlord as a substitute for, in whole or in
part, any other tax, assessment or charge that would otherwise constitute a Real
Estate Tax. Real Estate Taxes shall not include those amounts payable by Tenant
pursuant to Article 28, or similar amounts attributable to other tenants of the
Building. Real Estate Taxes for any period in which the Building is not one
hundred percent (100%) occupied and assessed on that basis shall be adjusted
according to Landlord's reasonable estimate to reflect the Real Estate Taxes
which would be payable if the Building were one hundred percent (100%) occupied
and assessed on that basis.
(b) Notwithstanding anything to the contrary contained herein, Real
Estate Taxes shall not include income tax, excess profits or revenue tax, excise
---
tax, inheritance tax, gift tax, gains tax, franchise tax, transfer tax (as
opposed to increases in Real Estate Taxes resulting from a transfer of any
interest in the Building Real Property or Project Real Property), corporation
tax, capital levy, estate, succession or other similar tax or charge that may be
payable by or chargeable to Landlord under any present or future laws.
(c) "Building Expenses" shall mean the costs and expenses directly and
reasonably paid or incurred by Landlord in connection with the management,
operation, maintenance and repair of the Building, including without,
limitation, (i) Real Estate Taxes related to the Building Real Property, (ii)
the cost of heating, ventilation, air conditioning, steam, electricity, gas,
domestic water, sewer services, mechanical, elevator and other systems and all
other utilities, and the cost of supplies and equipment and maintenance and
service contracts in connection therewith, (iii) the cost of repairs,
replacements, general maintenance and cleaning, including the cost of janitorial
and other service agreements and trash removal, (iv) the cost of such fire,
extended coverage, boiler, sprinkler, apparatus, public liability, property
damage, rent, earthquake and other insurance as Landlord is required to carry
under this Lease or reasonably deems it appropriate to carry or is required to
carry by any mortgagee under any mortgage against the Building Real Property or
any portion thereof or interest therein with respect to the Building or any of
Landlord's or a property manager's personal property used primarily in the
operation of the Building, (v) the cost of any capital improvements made to the
Building after the date of this Lease as a labor-saving measure or to effect
other economies in the operation or maintenance of the Building but only to the
extent such improvements result in a reduction of Building Expenses (amortized
over such reasonable period as Landlord shall determine), or made to the
Building after the date of this Lease that are required under any governmental
law or regulation that was not applicable to the Building at the date of this
Lease (amortized over the useful life of the improvement), together with
interest on the unamortized balance(s) at the rate often percent (10%) per annum
or such higher market rate as may have been paid by Landlord on funds borrowed
for the purpose of constructing such capital improvements, (vi) costs of
maintenance, repair and replacement of the roof of the Building (amortized over
the useful life of the roof), (vii) all supplies, materials, equipment and tools
to the extent used in the management, operation and maintenance of the Building,
including any rental fees, (viii) all costs and fees for licenses, inspections
or permits that Landlord may be required to obtain with respect to the Building,
(ix) exterior and interior landscaping for the Building, and (x) any other
reasonable expenses of any other kind whatsoever reasonably incurred in
managing, operating, maintaining and repairing the Building. Expenses for any
period in which the Building is not one hundred percent (100%) occupied shall be
adjusted according to Landlord's reasonable estimate to reflect the Building
Expenses which would be payable if the Building were one hundred percent (100%)
occupied. Building Expenses shall not include any of the following: (a) legal
fees, brokerage commissions, advertising costs or other related expenses
incurred in connection with the marketing or leasing of the Building; (b)
repairs, alterations, additions, improvements or replacements made to rectify or
correct any defect in the design, materials or workmanship of the Building or
Building Common Areas; (c) costs incurred in connection with damage or repairs
which are covered under any insurance policy carried by Landlord (or would have
been covered had Landlord carried the insurance required to be carried by
Landlord under this Lease) in connection with the Building or Building Common
Areas; (d) costs associated with damage or repairs to the Building or Building
Common Areas necessitated by the gross negligence or willful misconduct of
Landlord or Landlord's agents; (e) executive salaries or salaries of service
personnel to the extent that such salaries are payable in connection with
services other than in connection with the management, operation, repair or
maintenance of the Building or Building Common Areas; (f) the cost of off-site
service personnel to the extent that such personnel are not engaged in the
management, operation, repair or maintenance of the Building or Building Common
Areas; (g) Landlord's general overhead and administrative expenses; (h) payments
of principal or interest on, points or other fees, charges and expenses related
to any mortgage or other encumbrance; (i) legal fees, accountant fees, and
expenses incurred in connection with disputes with tenants or occupants of the
Building or associated with the enforcement of any leases or defense of
Landlord's title to or interest in the Building or any part thereof, including,
without limitation, bad debts arising from any tenant default; (j) costs
(including permit, license and inspection fees) incurred in renovating or
otherwise improving, decorating, painting or altering space for other tenants or
other occupants or of vacant space in the Building; (k) costs incurred due to a
violation by Landlord or any other tenant in the Building of the terms and
conditions of any lease, including without limitation the Lease, or of any legal
requirement; (l) services or installations furnished to any tenant in the
Building which are not furnished to Tenant or quantities of such services
furnished to any tenant in the Building which are also furnished to Tenant but
are furnished to other tenants in an amount materially in excess of that which
would represent a fair proportion of such services; (m) the cost of any service
provided to Tenant or other occupants of the Building for which Landlord is
entitled to be reimbursed; (n) capital expenses other than as provided above;
(o) depreciation, amortization and other non-cash items; (p) ground rents; (q)
costs and expenses of remediation and clean-up of Hazardous Materials that,
prior to the Commencement Date, fell within the definition of "Hazardous
Material" set forth in Section 9.4 below; (r) costs of goods
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and services customarily provided by property managers of buildings in the
Sorrento Valley / Sorrento Mesa area of San Diego that are similar to the
Building and which property managers are charging a fee similar to the
management fee being charged as part of Building Expenses, if the Landlord
charges a management fee as part of Building Expenses; (s) costs incurred for
repairs or other items to the extent Landlord is reimbursed by insurance
proceeds or any third party; (t) costs for new acquisitions of sculptures,
paintings or other objects of art; and (u) the costs of any goods or services
obtained from any affiliated or other related party of Landlord or of any of its
managers or members, to the extent such costs exceed the amount that would be
paid in an arm's-length purchase from an unaffiliated or unrelated party.
Landlord shall not collect in excess of one hundred percent (100%) of all
Building Expenses. No item of Building Expenses shall be included more than
once.
(d) "Project Expenses" shall mean the costs and expenses directly and
reasonably paid or incurred by Landlord in connection with the management,
operation, maintenance and repair of the Project Common Areas, including,
without limitation (i) Real Estate Taxes related to the Project Real Property,
(ii) the cost of heating, ventilation, air conditioning, steam, electricity,
gas, domestic water, sewer services, mechanical, elevator and other systems and
all other utilities, and the costs of supplies and equipment and maintenance and
service contracts in connection therewith, (iii) the cost of repairs,
replacements, general maintenance and cleaning, including the cost of janitorial
and other service agreements and trash removal, (iv) the cost of such fire,
extended coverage, boiler, sprinkler, apparatus, public liability, property
damage, rent, earthquake and other insurance as Landlord reasonably deems it
appropriate to carry or is required to carry by any mortgagee under any mortgage
against the Project Common Areas or any portion thereof or interest therein with
respect to the Project Common Areas or any of Landlord's or a property manager's
personal property used in the operation of the Project Common Areas, (v) wages,
salaries and other labor costs of all on-site employees, and all off-site
employees to the extent engaged in the operation, management, maintenance and
security of the Project, including taxes, insurance, retirement, medical and
other employee benefits, but excluding leasing commission, (vi) fees, charges
and other costs, including property management fees, consulting fees, attorneys'
fees and accounting fees of all independent contractors engaged by Landlord, and
all such fees reasonably charged by Landlord if Landlord performs management
services in connection with the Project, provided, however, that management fees
and costs shall not unreasonably exceed market rates customary for projects in
the Sorrento Valley / Sorrento Mesa area of San Diego that are comparable to the
Project, (vii) the cost of supplying, replacing and cleaning employee uniforms,
(viii) the fair market rental value of Landlord's or the property manager's
offices in the Project (which shall be of reasonable size), to the extent
utilized for the management or operation of the Project, (ix) the costs of any
capital improvements made to the Project Common Areas after the date of this
Lease as a labor-saving measure or to effect other economies in the operation or
maintenance of the Project Common Areas but only to the extent such improvements
result in a reduction of Project Expenses (amortized over such reasonable period
as Landlord shall determine), or made to the Project Common Areas after the date
of this Lease that are required under any governmental law or regulation that
was not applicable to the Project Common Areas at the date of this Lease
(amortized over the useful life of the improvement), together with interest on
the unamortized balance(s) at the rate of ten percent (10%) per annum or such
higher market rate as may have been paid by Landlord on funds borrowed for the
purpose of constructing such capital improvements, (x) costs of maintenance
repair and replacement of the roof of any portion of the Project Common Areas
(amortized over the useful life of the roof), (xi) all supplies, materials,
equipment and tools to the extent used in the management, operation and
maintenance of the Project Common Areas, including any rental fees, (xii) all
costs and fees for licenses, inspections or permits that Landlord may be
required to obtain in connection with the Project Common Areas, (xiii) expenses
incurred for the maintenance of art work, streetscaping and similar enhancements
of the Project which in Landlord's judgment, exercised in a commercially
reasonable manner, will benefit the Project, and (xiv) any other reasonable
expenses of any other kind whatsoever reasonably incurred in managing,
operating, maintaining and repairing the Project Common Areas. Expenses for any
period in which the Project is not 100% occupied shall be adjusted according to
Landlord's reasonable estimate to reflect the Project Expenses which would be
payable if the Project were 100% occupied. Project Expenses shall not include
any of the following: (a) legal fees, brokerage commissions, advertising costs
or other related expenses in connection with the marketing or leasing of the
Project; (b) repairs, alterations, additions, improvements or replacements made
to rectify or correct any defect in the design, materials or workmanship of the
Project of Project Common Areas; (c) costs incurred in connection with damage or
repairs which are covered under any insurance policy carried by Landlord (or
would have been covered had Landlord carried the insurance required to be
carried by Landlord under this Lease) in connection with the Project or Project
Common Areas; (d) costs associated with damage or repairs to the Project or the
Project Common Areas necessitated by the gross negligence or willful misconduct
of Landlord or Landlord's agents; (3) executive salaries or salaries of service
personnel to the extent that such salaries are payable in connection with
services other than in connection with the management, operation, repair or
maintenance of the Project or Project Common Areas; (f) the cost of off-site
service personnel to the extent that such personnel are not engaged in the
management, operation, repair or maintenance of the Project or Project Common
Areas; (g) Landlord's general overhead and administrative expenses; (h) payments
of principal or interest on, points or other fees, charges and expenses related
to any mortgage or other encumbrance; (i) legal fees, accountant fees and
expenses incurred in disputes with tenants or occupants of the Project or
associated with the enforcement of any leases or defense of Landlord's title to
or interest in the Project or any part thereof, including, without limitation,
bad debts arising from any tenant default; (j) costs (including permit, license
and inspection fees) incurred in renovating or otherwise improving, decorating,
painting or altering space for tenants or other occupants or of vacant space in
the Project; (k) costs incurred due to a violation by Landlord or any other
tenant in the Project of the terms
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and conditions of any lease, including without limitation the Lease, or of any
legal requirement; (l) services or installations furnished to any tenant in the
Project which are not furnished to Tenant or quantities of such services
furnished to any tenant in the Project which are also furnished to Tenant but
are furnished to other tenants in an amount materially in excess of that which
would represent a fair proportion of such services; (m) the cost of any service
provided to Tenant or other occupants of the Project for which Landlord is
entitled to be reimbursed; (n) capital expenses other than as provided above;
(o) depreciation, amortization and other non-cash items; (p) ground rents; (q)
costs and expenses of remediation and clean-up of Hazardous Materials that,
prior to the Commencement Date, fell within the definition of "Hazardous
Material" set forth in Section 9.4 below; (r) costs of goods and services
customarily provided by property managers of projects in the Sorrento Valley /
Sorrento Mesa area of San Diego that are similar to the Project and which
property managers are charging a fee similar to the management fee being charged
as part of Project Expenses, if the Landlord charges a management fee as part of
Project Expenses; (s) costs incurred for repairs or other items to the extent
Landlord is reimbursed by insurance proceeds or any third party; (t) costs for
new acquisitions of sculptures, paintings or other objects of art; and (u) the
costs of any goods or services obtained from any affiliated or other related
party of Landlord or of any of its managers or members, to the extent such costs
exceed the amount that would be paid in an arm's-length purchase from an
unaffiliated or unrelated party. Landlord shall not collect in excess of one
hundred percent (100%) of all Project Expenses. No item of Project Expenses
shall be included more than once.
(e) Subject to adjustment prior to January 1, 2001 based on the terms of
Section 4.4, "Tenant's Building Share" shall mean 13.04% (calculated by dividing
the Rentable Area of the Premises (20,180) by the Building Rentable Area
(154,773)). Tenant's Building Share of Building Expenses shall normally be
computed by multiplying such percentage by Building Expenses, but shall be
subject to adjustment as a result of special allocations made pursuant to
Section 5.2 and the provisions of Section 5.3. If the Rentable Area of the
Premises is changed for any reason, Tenant's Building Share shall be modified by
multiplying the percentage specified in this Paragraph (e) by a fraction, the
numerator of which shall be the rentable area of the Premises after such change
and the denominator of which shall be the rentable area of the Premises
immediately before such change. If the rentable area of the Building is changed
as a result of any cause not within Landlord's reasonable control (for instance,
as a result of a reduction in area due to reconstruction following fire or the
exercise or threatened exercise of the right of eminent domain), then Tenant's
Building Share shall be recalculated by dividing the rentable area of the
Premises after such occurrence by the rentable area of the entire Building after
such occurrence.
(f) Subject to adjustment prior to January 1,2001 based on the terms of
Section 4.4, "Tenant's Project Share" shall mean 3.17% (calculated by dividing
Rentable Area in the Premises (20,180) by the Project Rentable Area (635,984)).
Tenant's Project Share of Project Expenses shall normally be computed by
multiplying such percentage by Project Expenses, but shall be subject to
adjustment as a result of special allocations made pursuant to Section 5.2 and
the provisions of Section 5.3. If the rentable area of the Premises is changed
for any reason, Tenant's Project Share shall be modified by multiplying the
percentage specified in this Paragraph (f) by a fraction, the numerator of which
shall be the rentable area of the Premises after such change and the denominator
of which shall be the rentable area of the Premises immediately before such
change. If the rentable area of the Project is changed as a result of any cause
not within Landlord's reasonable control (for instance, as a result of a
reduction in area due to reconstruction following fire or the exercise or
threatened exercise of the right of eminent domain), then Tenant's Project Share
shall be recalculated by dividing the rentable area of the Premises after such
occurrence by the rentable area of the entire Project after such occurrence.
5.2 Special Allocations. Building Expenses and Project Expenses which
-------------------
are, in Landlord's reasonable discretion, exercised in good faith, properly
chargeable solely to a single tenant or to a group of tenants shall be so
allocated. Landlord shall endeavor to make all such allocations fairly. Any
amount so allocated to Tenant shall be paid by Tenant as Additional Charges,
provided that if Tenant disputes such allocation the same shall be resolved by
arbitration pursuant to the terms of this Lease.
5.3 Payment of Tenant's Building Share and Tenant's Project Share of
----------------------------------------------------------------
Building Expenses and Project Expenses. Commencing on the Commencement Date for
- --------------------------------------
the Premises, subject to abatement pursuant to Section 4.4 above, Tenant shall
pay to Landlord as Additional Charges one twelfth (1/12th) of Tenant's Building
Share of Building Expenses and one twelfth (1/12th) of Tenant's Project Share of
Project Expenses, respectively on or before the first day of each month of the
Term, in advance, in an amount reasonably estimated by Landlord and billed by
Landlord to Tenant; provided that Landlord shall have the right to revise such
estimate at anytime. Within one hundred twenty (120) days after the end of each
calendar year, Landlord shall furnish Tenant with a statement ("Landlord's
Expense Statement"), certified as true and correct by an accounting or auditing
officer of Landlord or a property manager, setting forth in reasonable detail
the actual amount of Building Expenses and Project Expenses for such year, and
Tenant's Building Share of Building Expenses and Tenant's Project Share of
Project Expenses, respectively. If the actual amount of Tenant's Building Share
or Tenant's Project Share of Building Expenses or Project Expenses,
respectively, due for such year differs from the estimated amount of Tenant's
Building Share or Tenant's Project Share of Building Expenses or Project
Expenses, respectively, paid by Tenant for such year, the difference shall be
paid by Tenant within thirty (30) days after the receipt of Landlord's Expense
Statement, or refunded in cash to Tenant within thirty (30) days after
determination thereof, as the case may be; provided, however, that in no event
shall Building Expenses or Project Expenses actually payable for a given
calendar year be less than zero.
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5.4 Partial Year Adjustments. For the purpose of calculating Tenant's
------------------------
Building Share of Building Expenses and Tenant's Project Share of Project
Expenses, respectively, for the period between the Expiration Date or date of
early termination and the immediately preceding January 1 (each such period
being a "Partial Year"), Building Expenses and Project Expenses for the calendar
year in which the Partial Year occurs shall be reduced by multiplying such
amounts by a fraction, the numerator of which is the number of days in the
applicable Partial Year and the denominator of which is three hundred and sixty-
five (365), and such reduced amounts shall be the amounts payable during such
Partial Year, and monthly payments of Tenant's Building Share of estimated
Building Expenses and of Tenant's Project Share of Project Expenses shall be
based on the number of months in the applicable Partial Year.
5.5 Tenant's Right to Audit Landlord's Records. Within thirty (30) days
------------------------------------------
after Tenant's request, but not more than once per year, Landlord shall provide
Tenant with copies of Landlord's records relating to Building Expenses and
Project Expenses; provided, however, that Tenant shall reimburse Landlord for
the reasonable cost thereof except as otherwise provided herein. In the event of
any dispute or uncertainty as to said amounts Tenant shall be entitled to review
legible copies of all of Landlord's tax bills, invoices, files and records with
respect to the disputed items at the place where such materials are normally
maintained, but not more often than once per year. If, after its inspection and
review, Tenant has a good faith belief that it has reason to dispute the amount
of such Additional Charges, Tenant shall be entitled to retain a national,
independent certified public accountant to audit such materials. If Landlord
desires to contest such audit results, Landlord may do so by requesting
arbitration of the dispute as set forth below within fifteen (15) days of
receipt of the results of the audit, and the arbitration shall be final and
binding upon Landlord and Tenant. If it is determined from the audit, or the
arbitration if applicable, that Tenant was overcharged by more than five percent
(5%) of the correct amount payable, such overcharge shall entitle Tenant to
credit against its next payment of Additional Charges the amount of the
overcharge and the costs associated with the audit, and the arbitration if
applicable (and, if such credit occurs following the expiration of the Term,
Landlord shall promptly pay the amount of such credit to Tenant). If the audit,
or arbitration if applicable, determines that the Tenant was overcharged less
than five percent (5%) of the correct amount payable, such overcharge shall
entitle Tenant to credit against its next payment of Additional Charges the
amount of the overcharge (or, if such determination occurs following the
expiration of the Term and any Extension Term, then Landlord shall promptly pay
the amount of the overcharge directly to Tenant) and Tenant shall pay for all
costs associated with the audit, and the arbitration if applicable. If the
audit, or arbitration if applicable, determines that Tenant was charged the
correct amount, Tenant shall pay for all costs associated with the audit, and
the arbitration if applicable. If the audit, or arbitration if applicable,
determines that Tenant was undercharged, Tenant shall promptly pay the amount of
such undercharge to Landlord and Tenant shall pay for all costs associated with
the audit, and the arbitration if applicable.
Within fifteen (15) days of Landlord's request for arbitration, Landlord
and Tenant shall each appoint one arbitrator who shall be a real estate
professional (including, without limitation, real estate lawyers and brokers
(who may specialize in either landlord or tenant representation, or both)) who
shall have been active over the five (5) year period ending on the date of such
appointment in the leasing of comparable commercial properties in the San Diego,
California area, exclusive of any broker from any brokerage firm currently
representing (or who had previously represented within the preceding three (3)
year period) either party, or any affiliate thereof. The two arbitrators so
appointed shall within fifteen (15) days of the date of the appointment of the
last appointed arbitrator agree upon and appoint a third arbitrator who shall be
qualified under the same criteria as set forth above. The three arbitrators
shall within thirty (30) days of the appointment of the third arbitrator reach a
determination of Tenant's Share of Building Expenses and Project Expenses. The
decision of the majority of the three arbitrators shall be final and binding
upon Landlord and Tenant.
5.6 Objections to Statements. Tenant acknowledges that Landlord's
------------------------
ability to budget and incur expenses depends on the finality of Landlord's
Expense Statements and agrees that Tenant shall have one hundred twenty (120)
days following receipt of such Statements within which to raise any objection to
the calculations contained therein. Failure of Tenant to object within such one
hundred twenty (120) day period shall be deemed a waiver of any such objection,
absent fraud or manifest errors. Tenant shall continue to make all payments
required hereunder pending resolution of any such objection. No delay by
Landlord in providing any Statement shall be deemed a default by Landlord or a
waiver of Landlord's right to require payment of Tenant's obligations for actual
or estimated Building Expenses or Project Expenses.
6. Security Deposit. This Lease shall be of no effect unless and until
----------------
Tenant deposits with Landlord Thirty-Six Thousand Three Hundred Twenty-Four
Dollars ($36,324) in immediately available funds (the "Security Deposit") as
security for the full performance of Tenant's obligations under this Lease. Upon
default by Tenant with respect to the payment of any item of Rent or Additional
Charges or any other obligation contained herein, and following ten (10) days
prior written notice to Tenant of its intent to do so, Landlord may use or
retain all or any portion of the Security Deposit for the payment of any Rent
or Additional Charges or other such sum in default or for the payment of any
amount Landlord may spend or may become obligated to spend by reason of Tenant's
default. In the event any portion of the Security Deposit is applied or used,
Tenant shall, within ten (10) days after written notice thereof, deposit an
additional amount with Landlord sufficient to restore the Security Deposit to
its original amount as specified in this Section and Tenant's failure to do so
shall constitute a material breach of this Lease. If Tenant is not in default
under this Lease at the termination hereof, Landlord shall return the Security
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Deposit to Tenant within thirty (30) days after such termination, minus any
amounts required to restore the Premises to good condition and repair, including
damage resulting from the removal by Tenant of its trade fixtures or equipment.
6.1 Landlord's Obligations. Landlord's obligation with respect to any
----------------------
Security Deposit is that of a debtor and not as a trustee, consequently such
sums may be commingled with rental receipts or dissipated and no interest shall
accrue thereon. In the event of the sale of the real property of which the
Premises constitute a part, Landlord or its agent shall transfer to Landlord's
successor in interest the sums held as Security Deposit and notify Tenant in
writing of such transfer and the name and address of Landlord's successor in
interest. Upon such written notification, Tenant shall have no further claim
against Landlord with respect to the Security Deposit, provided that Landlord's
successor in interest specifically assumes or by operation of law is deemed to
have assumed Landlord's obligations regarding the Security Deposit.
7. Acceptance of Premises:
----------------------
7.1 Construction of Tenant Improvements. Tenant shall construct but
-----------------------------------
Landlord will own (and to the extent set forth in this Section 7.1 will pay for)
certain improvements (the "Tenant Improvements") in the Premises. The Tenant
Improvements for the Premises shall be designed and completed in accordance with
this Article 7 and Article 31 below, the cost to Landlord of which shall not
exceed Four Hundred Three Thousand Six Hundred Dollars ($403,600) (i.e., $20 per
rentable square foot of the Premises) ("T.I. Allowance"). As part of the Tenant
Improvements, Tenant shall use the T.I. Allowance to pay for twenty-five percent
(25%) of the costs of the initial upgrade by Landlord of the Building's
electrical power system, such that the Premises will be served with 1400 amps of
277/480V 3 phase power in accordance with Section 19.1 below, however, in no
case shall such amount paid by Tenant exceed Fifty-five Thousand Dollars
($55,000). Any costs to construct the Tenant Improvements (including any
demolition of current improvements) in excess of the T.I. Allowance shall be
paid for by Tenant. The Tenant Improvements shall consist of all interior
demolition and improvements constructed in the Premises which are not part of
the Building's structure or shell and shall include by way of illustration,
floor coverings, interior partitions, doors, ceilings, lighting fixtures, wall
coverings, electrical and telephone outlets. The Tenant Improvements shall be
constructed in accordance with plans and specifications prepared by Tenant's
architect and approved by both Landlord and Tenant pursuant to Article 31 of
this Lease. Except as otherwise provided herein, the T.I. Allowance shall be
available towards the costs of the actual, incurred costs of the Tenant
Improvements, including the cost of all labor and materials for the construction
and installation of the Tenant Improvements; the cost of demolition work; the
cost of all permits, licenses, and fees; all amounts paid to Tenant's
contractors under and pursuant to contracts for the construction and
installation of the Tenant Improvements; all architectural, engineering, space
planning, and other consultant's fees; all amounts paid for mechanical drawings,
plans, specifications, shop drawings, designs, and layouts; and reasonable
incidental costs related to the foregoing. The foregoing notwithstanding,
Landlord shall cause to be constructed, at Landlord's cost, a demising wall
for the Premises as shown on Exhibit A attached hereto (the "Demising Wall"), on
or before October 15, 1999. Tenant acknowledges that Landlord has already
provided, at Landlord's cost, a primary lobby and entry door for the Premises.
7.2 Condition at Delivery. Landlord will cause all Building systems to
---------------------
be in good working order and condition, and the roof of the Building to be in
good condition, at the time the Premises are delivered to Tenant. Except as
aforesaid, Tenant shall receive the Premises broom clean in their "as is"
condition as of the date of this Lease without any demolition or other work
having been done and subject to reasonable wear and tear arising from any
current tenant's or occupant's occupancy and moving out of the Premises. Tenant
agrees to accept possession of the Premises in such condition, and Tenant shall
notify Landlord of any defects in the condition of the Premises within thirty
(30) days after Tenant takes possession of the Premises. By so accepting the
Premises and thereafter occupying the Premises for such thirty (30) days without
notifying Landlord of any defects, Tenant shall be deemed to have accepted the
same and to have acknowledged that the Premises fully comply with Landlord's
obligations under this Section. Notwithstanding the foregoing, the Demising Wall
to be constructed by Landlord pursuant to Section 7.1 above shall be constructed
in a good and workmanlike manner and without unreasonably interfering with any
construction of the Tenant Improvements, and if Tenant does not notify Landlord
of any defects of the Demising Wall within thirty (30) days after Landlord's
construction of the Demising Wall is completed, then Tenant shall be deemed to
have accepted the Demising Wall and to have acknowledged that the Demising Wall
fully complies with Landlord's obligations in regard thereto. Landlord makes no
representation or warranty as to the nature, quality, or suitability for
Tenant's business of the Tenant Improvements, the Project, the Building, or the
Premises, and Tenant shall have no rights against Landlord by reason of such
matters or any claimed deficiencies therein. Notwithstanding any contrary
provisions in this Lease, (a) Tenant shall be responsible for causing all
alterations, additions and improvements in or to the Premises (including without
limitation the Tenant Improvements) to comply with all laws, codes and
ordinances (including without limitation The Americans With Disabilities Act)
(collectively "Laws"), and for making any modifications to the Premises required
under any Law as a result of any change in use by Tenant or any change in Laws;
and (b) Landlord shall be responsible for causing the Project to comply with all
Laws as they exist and are interpreted prior to the Commencement Date, however
any costs incurred in connection with any Laws enacted on or after the
Commencement Date, or as a result of any new or different interpretations of
Laws as they currently exist, shall be costs which will constitute Building
Expenses or Project Expenses under this Lease.
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8. Common Areas.
------------
8.1 Right to Use Common Areas. Tenant and Tenant's Agents shall have the
-------------------------
right to use the Building Common Areas and Project Common Areas in common with
other persons, subject to Landlord's reasonable rules and regulations and the
provisions of this Lease.
8.2 Alteration of Building or Project Common Areas. Landlord hereby
----------------------------------------------
reserves the right, at any time and from time to time, without liability to
Tenant of any kind whatsoever (including without limitation liability for loss
of business or profits), to make alterations or additions to the Building, the
Building Common Areas or the Project Common Areas; to change, add to, eliminate
or reduce the extent, size, shape, number or configuration of any aspect of the
Building, the Building Common Areas or the Project Common Areas or their
operations; to close to the general public all or any portion of the Building,
the Building Common Areas or the Project Common Areas, to the extent and for the
period necessary to avoid any dedication to the public, to effect any repairs or
further construction, or in case of invasion, mob, riot, public excitement or
other circumstances rendering such action advisable in Landlord's reasonable
opinion; to change the arrangement, character, use or location of entrances or
passageways, doors and doorways, corridors, elevators, stairs, landscaping,
toilets, mechanical, plumbing, electrical or other operating systems or any
other portions of the Building, the Building Common Areas or the Project Common
Areas, to change common area to rental space and rental space to common area; to
utilize portions of the common area for entertainment, displays, product shows,
the leasing of temporary or permanent kiosks or other such uses as, in
Landlord's judgment, tend to attract the public; and to change the name, number
or designation by which the Building is commonly known. Except as otherwise
provided in this Lease, Landlord shall have the exclusive rights to the airspace
above and around, and the subsurface below, the Premises and other portions of
the Building. Except as otherwise provided in this Lease, Landlord shall have
the exclusive right to use all exterior walls, roofs and other portions of the
Building, including common areas for signs, notices, and other promotional
purposes. Landlord shall, to the extent reasonably possible under the
circumstances, provide Tenant with advance notice of any such alterations which
Landlord reasonably anticipates will impair Tenant's use of the Premises, and
shall perform any such alterations in a manner so as to cause as little
interference with Tenant's use of the Premises as is reasonably possible;
provided, however, that Landlord shall not be obligated to perform work during
other than normal business hours, unless doing so is reasonably possible and
Tenant so requests and Tenant agrees to pay all additional costs of doing so.
Tenant waives all rights to consequential damages (including without limitation
damages for lost profits and lost opportunities) arising in connection with
Landlord's exercise of its right under this Section, except to the extent
arising from the gross negligence or willful misconduct of Landlord or
Landlord's agents in connection therewith. Nothing in this Section 8.2 shall
permit Landlord to do any of the following, except in emergency situations: (a)
to alter the Premises or the mechanical, plumbing, electrical, HVAC or other
operating systems installed by or for Tenant for the operation of its business
in the Premises without Tenant's consent; (b) to prevent access to the Premises
by Tenant and Tenant's customers and vendors as provided in this Lease; (c) to
alter in a way that materially adversely affects, or eliminates, any of the
Building Common Areas and Project Common Areas reasonably necessary for the use
and enjoyment of the Premises in accordance with this Lease (such as utility
facilities, parking areas, drives, walkways, electrical and telephone closets,
risers and other areas used for utilities and other building systems); or (d) to
permit any activity reasonably inconsistent with a first class office park or
that otherwise would unreasonably interfere with Tenant's use and enjoyment of
the Premises or the conduct of Tenant's business as provided in this Lease.
9. Use.
---
9.1 Permitted Use. The Premises shall be used only for general office
-------------
purposes, computer and data center, and co-location and telecommunication
services. Tenant shall be responsible for compliance with all zoning laws and
ordinances and Tenant acknowledges that neither Landlord nor its agents has made
any representations or warranties with respect thereto. Landlord shall not apply
for or consent to any change in the zoning for the Building or the Project which
will make the conduct of all or any portion of Tenant's business unlawful.
9.2 No Nuisance. Tenant shall not allow, suffer or permit the Premises
-----------
or any use thereof to constitute a nuisance or unreasonably interfere with the
safety, comfort or enjoyment of the Project by Landlord or any other occupants
of the Project or their customers, invitees or any others lawfully in, upon or
about the Project or its environs.
9.3 Compliance with Laws. Tenant, at Tenant's expense, shall comply with
--------------------
and cause all of Tenant's Agents to comply with all applicable laws, ordinances,
rules and regulations of governmental authorities applicable to the Premises and
the use and occupancy thereof, and Tenant shall not violate any applicable laws,
ordinances, rules and regulations of governmental authorities applicable to the
remainder of the Project or the use or occupancy thereof.
9.4 Hazardous Materials. Tenant shall not cause or suffer or permit any
-------------------
Hazardous Materials to be brought upon, kept, used, discharged, deposited or
leaked in or about the Premises or any other portion of the Project by Tenant or
any of Tenant's Agents or by anyone in the Premises (other than Landlord or
Landlord's contractors, subcontractors, agents, servants or employees
(collectively, "Landlord's Agents")), except to the extent such Hazardous
Materials are customarily kept or used by typical office tenants and in
connection with data center uses and are kept, used and disposed of in strict
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compliance with all laws, ordinances and regulations relating to Hazardous
Materials. If Tenant breaches the obligations stated in the preceding sentence,
or if the presence of any Hazardous Material on the Premises or any other
portion of the Project caused or suffered or permitted by Tenant or any of
Tenant's Agents or by anyone in the Premises (other than Landlord or Landlord's
Agents) results in contamination of the Premises or any other portion of the
Project, or if contamination of the Premises or any other portion of the Project
by any Hazardous Material otherwise occurs for which Tenant is legally liable,
then Tenant shall indemnify, defend and hold Landlord harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities, expenses and
losses (including without limitation diminution in value of the Project, damages
for the loss of restriction on use of leasable space or of any amenity of the
Building or the Project, damages arising from any adverse impact on marketing of
space and sums paid in settlement of claims, attorneys' fees, consultant fees
and expert fees) which arise during or after the Term of this Lease as a result
of such contamination. This indemnification shall include, without limitation,
costs incurred in connection with any investigation of site conditions or any
clean-up, remedial, removal or restoration work required by any federal, state
or local governmental agency or political subdivision because of any Hazardous
Material present in the soil or groundwater on or under the Premises or any
other portion of the Project. Without limiting the foregoing, if the presence of
any Hazardous Material on the Premises or any other portion of the Project
caused or suffered or permitted by Tenant or any of Tenant's Agents or by anyone
in the Premises (other than Landlord or Landlord's Agents) results in any
contamination of the Premises or any other portion of the Project, Tenant shall,
at its sole cost and expense, promptly take all actions necessary to return the
Premises and all other portions of the Project affected to the condition
existing prior to the introduction of any such Hazardous Material to the
Premises or other portions of the Project, provided that Landlord's approval of
such actions shall first be obtained, which approval shall not be unreasonably
withheld if such actions would not potentially have any material adverse effect
on the Premises or any other portion of the Project. Nothing in this Section 9.4
shall impose any obligation or liability upon Tenant whatsoever with respect to
Hazardous Materials except to the extent introduced to the Project or any part
thereof by Tenant, any of Tenant's Agents or any of Tenant's customers, vendors
or other invitees.
"Hazardous Material" means any hazardous or toxic substance, material
or waste which is or becomes regulated by any local governmental authority, the
State of California or the United States Government. The term "Hazardous
Material" includes, without limitation, any 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 (Hazardous Waste Control
Law), (ii) defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code (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
(Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety
Code (Underground Storage of Hazardous Substances), (v) listed under Article 9,
or defined as hazardous or extremely hazardous pursuant to Article 11, of Title
22 of the California Code of Regulations, Division 4, Chapter 30, (vi)
designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. Section 1317), (vii) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C. Section 6903), (viii)
defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq. (42 U.S.C. Section 9601), (ix) petroleum or (x) asbestos or asbestos-
containing materials.
Landlord shall protect, defend, indemnify, and hold Tenant, its agents
and employees harmless from and against any and all losses, liabilities,
injuries, costs, expenses, claims of any and every kind whatsoever (including,
without limitation, court costs and attorneys' fees) which at any time or from
time to time may be paid, incurred, or suffered by or asserted against Tenant,
with respect to the presence in the Premises of any Hazardous Material but only
to the extent such Hazardous Material was installed or deposited in the Building
by Landlord, or any agent, employee, or contractor of Landlord.
Landlord shall not cause or permit any Hazardous Materials to be
brought upon, kept, used, discharged, deposited or leaked in or about the
Premises or the Building by Landlord or Landlord's Agents, except to the extent
such Hazardous Materials are customarily kept or used in the operation and
maintenance of buildings similar to the Building and are kept, used and disposed
of in strict compliance with all laws, ordinances and regulations relating to
Hazardous Materials. Landlord shall indemnify, defend and hold Tenant harmless
from any and all claims, judgments, damages, penalties, fines costs,
liabilities, expenses and losses (including without limitation damages for the
loss of or restriction on use of the Premises or of any amenity or of the
Building or the Project, and sums paid in settlement of claims, attorney's fees,
consultant fees and expert fees) which arise during or after the Term of this
Lease as a result of (i) any Hazardous Materials introduced on, under or within
the Premises or the Project by Landlord or any of Landlord's Agents, or (ii) the
violation of any laws, rules or regulations or the provisions of this Lease
related to Hazardous Materials by Landlord or any of Landlord's Agents.
10. Alterations and Tenant's Property.
---------------------------------
10.1 Alterations Defined. Tenant shall not make or suffer or allow to
-------------------
be made any alterations, additions or improvements in or to the Premises (herein
collectively called "Alterations") without first obtaining Landlord's written
consent based on detailed plans and specifications submitted by Tenant (where
reasonably necessary). Landlord's consent may be withheld in Landlord's sole
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discretion if Alterations may affect any portions of the Project containing
asbestos or may affect the structure or life safety systems of the Building;
otherwise Landlord's consent shall not be unreasonably withheld.
10.2 Removal of Property. All Alterations shall become the property
-------------------
of Landlord, and shall be surrendered to Landlord, upon the expiration or
earlier termination of this Lease; provided, however, that this provision shall
not apply to movable equipment, trade fixtures, personal property or furniture
owned by Tenant ("Tenant Owned Property"), including the Generator Equipment,
the HVAC Equipment and the Other Equipment (which terms are defined in Article
19). At Landlord's sole election, any or all Alterations made by or on behalf of
Tenant shall be removed from the Premises at Tenant's sole cost and expense at
the expiration or sooner termination of this Lease (provided that, if Landlord's
consent was required for any Alteration, such removal shall be required only if
Landlord expressly conditioned its consent upon the requirement that Tenant
remove such Alteration upon expiration or earlier termination of this Lease),
and the Premises shall be restored, at Tenant's sole cost and expense, to their
condition before the making of such Alterations. Notwithstanding the foregoing,
Tenant shall have the right to elect not to remove conduit, cabling, piping,
electrical conductors or standard office equipment. Tenant shall repair at its
sole cost and expenses all damage caused to the Premises or the Building by
removal of any Alterations or Tenant Owned Property. Any Tenant Owned Property
not removed from the Premises before the expiration or earlier termination this
Lease shall, at Landlord's option, become the property of Landlord, or Landlord
may remove them and Tenant shall pay to Landlord the cost of removal. Tenant
waives and releases its rights under Section 1019 of the California Civil Code,
or any similar law now or hereafter in effect, to the extent inconsistent with
the provisions of this Lease.
11. Repairs and Other Work.
----------------------
11.1 Tenant's Obligations. Tenant shall at all times maintain the
--------------------
Premises (including without limitation, to the extent located in the Premises or
installed by Tenant, utility systems, all signs, metal work, doors, and windows,
except as is otherwise provided in this Lease) in good, clean and sanitary
condition and, at Tenant's cost and expense, shall make all repairs and
replacements as and when necessary to preserve the Premises in good working
order and condition. Notwithstanding the foregoing, if any portion of the
plumbing (including condenser water lines), mechanical, electrical, HVAC, life
safety or structural systems of the Premises (other than the portions of any
such systems installed by Tenant to the extent that other tenants and the
Project are not affected) requires maintenance or repair which Tenant is
otherwise obligated to perform under this Lease, Landlord shall have the option
to repair and maintain such portion on Tenant's behalf. If Landlord performs any
work on Tenant's behalf pursuant to this Section, Tenant shall pay the
reasonable costs of such work upon completion. Landlord shall not be liable for,
and there shall be no abatement of Rent or Additional Charges with respect to,
any injury to or interference with Tenant's business arising from any repairs,
maintenance, alteration or improvement in or to any portion of the Building,
including the Premises, or in or to the fixtures, appurtenances and equipment
therein. Tenant hereby waives and releases its rights under Sections 1941,
1941.1 and 1942 of the California Civil Code or under any similar law now or
hereafter in effect, except to the extent expressly provided herein. Tenant
specifically waives all rights to consequential damages (including without
limitation damages for lost profits and lost opportunities) arising in
connection with any repairs, maintenance, alteration or improvement in or to any
portion of the Building, except to the extent arising from the gross negligence
or willful misconduct of Landlord or Landlord's Agents. Notwithstanding the
foregoing provisions of this Section 11.1, the Landlord shall, to the extent
reasonably possible under the circumstances, provide Tenant with advance notice
of any such activities, and shall perform such activities in a manner so as to
cause as little interference with Tenant's use of the Premises or the conduct of
its business as reasonably possible; provided, however, that Landlord shall not
be obligated to perform work during other than normal business hours, unless
doing so is reasonable possible, Tenant so requests and Tenant agrees to pay any
additional cost of doing so.
11.2 Conditions Applicable to Repairs and Other Work. All repairs,
-----------------------------------------------
replacements, and reconstruction (including without limitation all Alterations)
made by or on behalf of Tenant or any of Tenant's Agents (as defined below)
shall be made and performed (a) at Tenant's cost and expense and at such time
and in such manner as Landlord may reasonably designate, (b) by contractors or
mechanics reasonably approved by Landlord, (c) at least equal in quality of
materials and workmanship to the original work or installation, (d) in
accordance with such reasonable requirements as Landlord may impose with respect
to insurance and bonds to be obtained by Tenant in connection with the proposed
work, (e) in accordance with the Rules and Regulations for the Building adopted
by Landlord from time to time and in accordance with all applicable laws and
regulations of governmental authorities having jurisdiction over the Premises,
(f) so as not to interfere with the use and enjoyment of the Building by
Landlord, other tenants of the Building or any other persons, and (g) in
compliance with such other requirements as Landlord may reasonably impose
(including without limitation a requirement that Tenant furnish Landlord with
as-built drawings upon completion of the work).
11.3 Landlord's Obligations. Landlord shall at all times maintain the
----------------------
Building Common Areas and Project Common Areas in good, clean and sanitary
condition and shall make all repairs and replacements as and when necessary to
preserve the Building Common Areas and Project Common Areas in good working
order and condition, and Tenant shall not be responsible for any costs of
causing the Project to comply with Laws (defined in Section 7.2 above) as they
exist and are interpreted prior to the Commencement Date.
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<PAGE>
12. Liens.
-----
12.1 Tenant shall keep the Premises and the Building Real Property
free from any liens arising out of any (a) work performed or material furnished
to or for the Premises between the time Tenant has been provided access to the
Premises and the time Tenant surrenders possession of the Premises (at or after
expiration or earlier termination of the Lease), or (b) obligations incurred by
or for Tenant or any of Tenants' Agents before or during the Term of this Lease.
In the event that Tenant shall not, within fifteen (15) days following notice of
the imposition of any such lien, cause the same to be released of record by
payment or posting of a bond reasonably satisfactory to Landlord in form and
substance, Landlord shall have, in addition to all other remedies provided
herein and by law, the right (but not the obligation) to cause the lien to be
released by such means as Landlord shall reasonably deem proper, including
payment of the claim giving rise to such lien. All such sums reasonably paid by
Landlord and all expenses incurred by it in connection therewith shall be
considered Additional Charges and shall be payable by Tenant within thirty (30)
days after demand. Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or that
Landlord shall deem proper for the protection of Landlord, the Premises, the
Building Real Property and any other party having an interest therein, from
mechanics', materialmen's and other liens. In addition to all other requirements
contained in this Lease, Tenant shall give to Landlord at least ten (10)
Business Days prior written notice of commencement of any construction on the
Premises.
13. Subordination.
-------------
13.1 Tenant agrees that this Lease shall be subject and subordinate
at all times to (a) all ground leases or underlying leases that may now exist or
hereafter be executed affecting the Building Real Property or any portion
thereof, (b) the lien of any mortgage or other security instrument (and any
advances thereunder) that may now exist or hereafter be executed in any amount
for which the Building Real Property or any portion thereof, any ground leases
or underlying leases, or Landlord's interest or estate therein is specified as
security; and (c) all modifications, renewals, supplements, consolidations and
replacements thereof. Notwithstanding the foregoing, Landlord shall have the
right to subordinate or cause to be subordinated to this Lease any such ground
leases, underlying leases or liens, provided that so long as Tenant is not in
default under this Lease, Tenant's right of possession to the Premises and
Tenant's other rights arising out of this Lease shall not be disturbed. If any
ground lease or underlying lease terminates for any reason or any mortgage or
other security instrument is foreclosed or a conveyance in lieu of foreclosure
is made for any reason, Tenant shall, notwithstanding any subordination, attorn
to and become the tenant of the successor in interest to Landlord at the option
of such successor in interest. Tenant covenants and agrees to execute and
deliver, within ten (10) calendar days after demand by Landlord and in the form
reasonably requested by Landlord, any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground leases,
underlying leases, mortgages, or other security instruments. Landlord shall use
commercially reasonable efforts to provide Tenant with a subordination, non-
disturbance and attornment agreement in a form reasonably acceptable to
Landlord, Tenant and Landlord's lender.
14. Inability to Perform.
--------------------
14.1 Except to the extent expressly provided herein, if, by reason of
acts of God, governmental restrictions, strikes, labor disturbances, shortages
of materials or supplies or any other cause or event beyond Landlord's
reasonable control, Landlord is (i) unable to furnish or is delayed in
furnishing any utility or service required to be furnished by Landlord under the
provisions of Article 19, any other Article of this Lease, or any collateral
instrument, (ii) unable to perform or make or is delayed in performing or making
any installations, decorations, repairs, alterations, additions or improvements,
required to be performed or made under this Lease or under any collateral
instrument, or (iii) unable to fulfill or is delayed in fulfilling any of
Landlord's other obligations under this Lease or any collateral instrument, no
such inability or delay shall (a) constitute an actual or constructive eviction,
in whole or in part, (b) entitle Tenant to any abatement or diminution of Rent
or Additional Charges, (c) relieve Tenant from any of its obligations under this
Lease, or (d) impose any liability upon Landlord or its agents by reason of
inconvenience or annoyance to Tenant or by reason of injury to or interruption
of Tenant's business, or otherwise. Tenant hereby waives and releases its right
to terminate this Lease under Section 1932(1) of the California Civil Code or
under any similar law, statue or ordinance now or hereafter in effect, except to
the extent expressly provided herein.
14.2 Except to the extent expressly provided herein, to the extent
that acts of God, governmental restrictions, strikes, labor disturbances,
shortages of materials or supplies or any other cause or event beyond Tenant's
reasonable control, cause Tenant to be unable to fulfill or to be delayed in
fulfilling any of Tenant's obligations under this Lease other than the payment
of Rent or any Additional Charge, no such inability or delay shall (a) relieve
Landlord from any of its obligations under this Lease, or (b) impose any
liability upon Tenant or its agents.
15. Destruction.
-----------
15.1 Repair. If any portion of the Building is damaged by fire,
earthquake, flood or other casualty (the "Damaged Property") to the extent that
such portion is rendered unusable by Tenant or renders a portion of the Premises
unusable and the Damaged Property can, in Landlord's reasonable
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<PAGE>
opinion, be repaired within one hundred twenty (120) days after the date of
damage (under a normal construction schedule not requiring the payment of
overtime or premium), Landlord shall proceed immediately to make such repairs in
accordance with Section 15.4 below (unless this Lease is terminated pursuant to
this Article 15). Landlord's opinion shall be delivered to Tenant within thirty
(30) days after the date of the damage. Landlord shall consider and include as
part of its evaluation, the period of time necessary to obtain the required
approvals of the mortgagee and insurer and governmental entities, to order and
obtain materials, and to engage contractors. Notwithstanding anything to the
contrary herein, the total destruction of the Building shall automatically
terminate this Lease as of the date of destruction.
15.2 Tenant's Right to Terminate. If such damage causes all or any
---------------------------
material portion of the Premises to be unusable by Tenant and (i) in Landlord's
reasonable opinion damage to the Damaged Property cannot be repaired and
restored to substantially the condition existing prior to the damage within one
hundred twenty (120) days from the date of the damage (under a normal
construction schedule not requiring the payment of overtime or premium), or (ii)
the Lease will expire within one (1) year from the date of any material damage
to or destruction of the Premises, or (iii) the Damaged Property is not in fact
substantially repaired and restored to its condition as it existed before the
damage within one hundred twenty (120) days from the date of the damage (subject
to extension under Article 14) Tenant may terminate this Lease by delivery of
written notice to Landlord within thirty (30) days after the date on which
Landlord's opinion is delivered to Tenant. Upon termination, Rent and Additional
Charges pursuant to Article 4 shall be apportioned as of the date of the damage
and all prepaid Rent and Additional Charges pursuant to Article 4 shall be
repaid.
15.3 Landlord's Right to Terminate. In the event (i) the uninsured
-----------------------------
portion of any damage to or destruction of the Building equals or exceeds
twenty-five percent (25%) of the replacement cost of the Building; or (ii) the
Lease will expire within one (1) year from the date of any material damage to or
destruction of the Premises and Tenant fails to extend the Term in accordance
with any right expressly granted in this Lease within thirty (30) days after the
date of damage, Landlord may elect to terminate this Lease as hereinafter
provided. Landlord may terminate this Lease for the reason stated in clause (i)
of this Section, by delivery of written notice to Tenant within thirty (30) days
after the date of damage or destruction; and for the reason stated in clause
(ii) of this Section, by delivery of written notice to Tenant within forty-five
(45) days after the date of the damage or destruction. For purposes of the
foregoing, the uninsured portion shall not include a deficiency in insurance
proceeds to the extent caused by (i) Landlord's failure to carry insurance
required by this Lease; (ii) Landlord's election to carry required insurance in
an amount less than 100% of the replacement costs; or (iii) Landlord's election
to obtain insurance with a deductible amount or coinsurance obligations.
15.4 Extent of Repair Obligations. If this Lease is not terminated as
----------------------------
a result of any damage to the Premises covered by Section 15.1 above, Landlord's
repair obligation shall extend to the structure of the Building and all
improvements (except those constructed or installed by Tenant, including the
Tenant Improvements) in the Premises at the completion of construction of the
Tenant Improvements, and Tenant shall repair all other portions of the Premises
(including without limitation the Tenant Improvements, Alterations, and Tenant's
trade fixtures, equipment, furnishings and other personal property). All such
repairs shall be performed in a good and workmanlike manner, with due diligence,
and shall restore the items repaired to substantially the same usefulness,
design and construction as existed immediately before the damage. All work by
Tenant shall be performed in accordance with the requirements of Section 11.2
above. In the event of any termination of this Lease, the proceeds from any
insurance paid by reason of damage to or destruction of the Building Real
Property or any portion thereof, or any other element, component or property
insured by Landlord shall belong to and be paid to Landlord, except for proceeds
payable under Tenant's insurance policies. In the event of a casualty covered by
insurance which Landlord is required to carry under this Lease, Rent and
Additional charges under Article 4 above shall abate commencing on the date of
the casualty and ending when the Damaged Property is repaired as aforesaid by
Landlord and the Premises are delivered to Tenant. The extent of the abatement
shall be based upon the portion of the Premises rendered untenantable,
inaccessible or unfit for use in a reasonable business manner for the purposes
stated in this Lease.
15.5 Arbitration. If the parties are unable to agree upon the
-----------
appropriate abatement of Rent and Additional Charges pursuant to this Article 15
within thirty (30) days after repairs are completed, either party may submit the
dispute to arbitration in accordance with Section 30.18.
15.6 Non-Application of Certain Statutes. The provisions of this
-----------------------------------
Lease, including this Article 15, constitute an express agreement between
Landlord and Tenant with respect to any and all damage to, or destruction of,
all or any part of the Premises, or any other portion of the Building. Any
statute or regulation of the State of California or any other governmental
authority or body, including, without limitation, Sections 1932(2) and 1933(4)
of the California Civil Code, with respect to any rights or obligations
concerning any such damage or destruction in the absence of an express agreement
between the parties, and any other statute or regulation relating to damage or
destruction of leased premises, now or hereafter in effect, shall have no
application to this Lease or any damage or destruction to all or any part of the
Premises or any other portion of the Building.
16. Insurance.
---------
16.1 Insurance on Tenant's Property. Tenant shall provide insurance
------------------------------
coverage for all risks of physical loss or damage insuring the full replacement
value of the Tenant Improvements and
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<PAGE>
Alterations, and, to the extent desired by Tenant (Landlord having no obligation
to provide insurance coverage for), Tenant's trade fixtures, furnishings,
equipment, signs and all other items of personal property of Tenant.
16.2 Tenant's Liability Insurance. Tenant shall procure at its cost
----------------------------
and expense and keep in effect during the Term of this Lease broad form
commercial general liability insurance with a minimum combined single limit of
liability of at least Two Million Dollars ($2,000,000), and statutory workers
compensation insurance with a One Million Dollars ($1,000,000) limit covering
all of Tenant's employees. Such broad form commercial general liability
insurance shall include, without limitation, products and completed operations
liability insurance, fire legal liability insurance (subject to applicable
sublimits), contractual liability insurance, and such other reasonable and
customary coverage as Landlord may reasonably require from time to time. At
Landlord's request, Tenant shall increase such insurance coverage to a level
that is reasonable and customary. If the parties are unable to agree on the
coverage and amount that is reasonable and customary, the matter shall be
determined by arbitration pursuant to Section 30.18 below.
16.3 Form of Policies. All insurance policies required to be carried
----------------
by Tenant under this Lease shall (i) be written by companies rated A8 or better
in "Best's Insurance Guide" and authorized to do business in California, (ii)
name Landlord, SENTRE Partners, Inc. and any other parties designated by
Landlord as additional insureds, (iii) as to liability coverages, be written on
an "occurrences" basis, and (iv) provide that Landlord shall receive at least
thirty (30) days notice from the insurer before any cancellation or change in
coverage. Each such policy shall contain a provision that such policy and the
coverage evidenced thereby shall be primary and non-contributing with respect to
any policies carried by Landlord and that any coverage carried by Landlord shall
be excess insurance. Any deductible amounts under any insurance policies
required hereunder shall be subject to Landlord's prior written approval (which
shall not be unreasonably withheld) and in any event Tenant shall be liable for
payment of same in the event of any casualty. Tenant shall deliver reasonably
satisfactory evidence of such insurance to Landlord on or before the
Commencement Date, and thereafter at least thirty (30) days before the
expiration dates of expiring policies; and, in the event Tenant shall fail to
procure such insurance or to deliver reasonably satisfactory evidence thereof
within five (5) Business Days after written notice from Landlord of such
failure, Landlord may, at its option and in addition to Landlord's other
remedies in the event of a default by Tenant hereunder, procure such insurance
for the account of Tenant, and the cost thereof shall be paid to Landlord as
Additional Charges. Notwithstanding the foregoing, if any such insurance expires
without having been renewed by Tenant, Landlord shall have the option in
addition to Landlord's other remedies to procure such insurance for the account
of Tenant immediately and without notice to Tenant, and the cost thereof shall
be paid to Landlord as Additional Charges. The limits of the insurance required
under this Lease shall not limit the liability of Tenant.
16.4 Compliance with Insurance Requirements. Tenant shall not do
--------------------------------------
anything, or suffer or permit anything to be done, in or about the Premises that
shall invalidate or be in conflict with the provisions of any fire or other
insurance policies covering the Building or any property located therein.
Tenant, at Tenant's expense, shall comply with, and shall cause all occupants of
the Premises to comply with, all applicable customary rules, orders, regulations
or requirements of any board of fire underwriters or other similar body.
Landlord acknowledges that Tenant's permitted use of the Premises does not
conflict with Landlord's insurance policies covering the Building or any
property located therein.
16.5 Landlord's Insurance. Landlord shall purchase and keep in full
--------------------
force and effect "special perils coverage" insurance covering the Project in an
amount equal to 100% of the full replacement value of the Project improvements
at the time of the loss, and at least Three Million Dollars ($3,000,000.00) in
liability insurance with respect to the Project, including coverage for Project
Common areas.
17. Eminent Domain. For the purposes of this Article 17, the phrase
------- ------
"usable by Tenant" shall mean reasonably usable by Tenant for the conduct of its
business in the Premises materially in the manner conducted prior to the taking.
17.1 Effect of Taking. If all of the Premises is condemned or taken
----------------
in any manner for public or quasi-public use, or any transfer of the Premises is
made in avoidance of an exercise of the power of eminent domain (each of which
events shall be referred to as a "taking"), this Lease shall automatically
terminate as of the date of the vesting of title as a result of such taking. If
a part of the Premises is so taken, this Lease shall automatically terminate as
to the portion of the Premises so taken as of the date of the vesting of title
as a result of such taking. If such portion of the Real Property is taken as to
render the Building incapable of economically feasible operation, this Lease may
be terminated by Landlord, as of the date of the vesting of title as a result of
such taking, by written notice to Tenant within sixty (60) days following notice
to Landlord of the date on which said vesting will occur. If such portion of the
Premises or the Building or the Project is taken as to render the Premises or
the remaining portion thereof unusable by Tenant, this Lease may be terminated
by Tenant as of the date of the vesting of title as a result of such taking, by
written notice to Landlord within sixty (60) days following notice to Tenant of
the date on which said vesting will occur. If this Lease is not terminated as a
result of any taking, Landlord shall restore the Building to an architecturally
whole unit; provided, however, that Landlord shall not be obligated to expend on
such restoration more than the amount of condemnation proceeds actually received
by Landlord, unless Tenant pays to Landlord in advance the difference between
the cost of such restoration and the amount of the condemnation proceeds
received by Landlord.
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<PAGE>
17.2 Award. Landlord shall be entitled to the entire award for any
------
taking, including, without limitation, any award made for the value of the
leasehold estate created by this Lease. No award for any partial or entire
taking shall be apportioned, and Tenant hereby assigns to Landlord any award
that may be made in any taking, together with any and all rights of Tenant now
or hereafter arising in or to such award or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any separate award made to Tenant for
its relocation expenses, the taking of personal property and fixtures belonging
to Tenant, the unamortized value of improvements made or paid for by Tenant or
the interruption of or damage to Tenant's business.
17.3 Abatement of Rent. In the event of a partial taking that does
-----------------
not result in a termination of this Lease as to the entire Premises, the Rent
shall abate in proportion to the portion of the Premises taken or rendered
untenantable by such taking. Tenant hereby waives and releases its rights under
Section 1265.130 of the California Code of Civil Procedure or any similar
statute now or hereafter in effect.
17.4 Temporary Taking. If all or any portion of the Premises is taken
----------------
for a limited period of time, this Lease shall remain in full force and effect;
provided, however, that the Rent and Additional Charges payable pursuant to
Article 4 above shall abate during such limited period in proportion to the
portion of the Premises taken by such taking. Landlord shall be entitled to
receive the entire award made in connection with any such temporary taking. Any
temporary taking of all or a portion of the Premises which continues for four
(4) months shall be deemed a permanent taking of the Premises or such portion.
18. Assignment.
----------
18.1 Consent Required. Notwithstanding the provisions of Section 30.4
----------------
below, neither Tenant nor any sublessee or assignee of Tenant shall, directly or
indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge
or otherwise transfer or hypothecate all or any part of the Premises or Tenant's
leasehold estate hereunder (each such act is herein referred to as an
"Assignment"), or sublet the Premises or any portion thereof or permit the
Premises to be occupied by anyone other than Tenant (each such act is herein
referred to as a "Sublease"), without Landlord's prior written consent in each
instance, which consent shall not be unreasonably withheld or delayed. Any
Assignment or Sublease that is not in compliance with this Article 18 shall be
void and, at the option of Landlord, shall constitute a material default by
Tenant under this Lease. The acceptance of Rent or Additional Charges by
Landlord from a proposed assignee, sublessee or occupant of the Premises shall
not constitute consent to such Assignment or Sublease by Landlord. Fifty percent
(50%) of any and all amounts paid to Tenant as consideration for any Assignment,
and fifty percent (50%) of the excess of the total amount of rent and other
consideration paid under or in consideration for any Sublease over the Rent and
Additional Charges payable hereunder, shall be payable to Landlord as Additional
Charges. The right to such amounts is expressly reserved from the grant of
Tenant's leasehold estate for the benefit of Landlord. Tenant shall use
reasonable diligent efforts to collect all such amounts. Landlord shall have the
right from time to time, upon reasonable advance notice, to review Tenant's
records relating to any such amounts payable to or received by Tenant.
Notwithstanding the foregoing, (a) the co-location of equipment owned by
Tenant's customers in the Premises shall not require the prior written consent
of Landlord, provided that the agreement entered into by Tenant and Tenant's
customers for such co-location of equipment shall provide that the customer
acquires no possessory, leasehold or other real property right in the Premises
or any other portion of the Project and does not obtain any of Tenant's rights
under this Lease; and (b) any Assignment or Sublease of the Premises to any
entity that (i) controls or is controlled by Tenant, (ii) is under common
control with Tenant, or (iii) acquires all or substantially all of Tenant's
assets by merger, purchase, consolidation or reorganization with satisfaction of
the net worth requirement set forth in Section 18.5 below (provided that Tenant
shall notify Landlord of such merger, purchase, consolidation or reorganization
in accordance with Section 18.5 below), shall not require Landlord's prior
approval.
18.2 Notice. Any request by Tenant for Landlord's consent to a
------
specific Assignment or Sublease shall include (a) the name of the proposed
assignee, sublessee or occupant, (b) the nature of the proposed assignee's
sublessee's or occupant's business to be carried on in the Premises, (c) a copy
of the proposed Assignment or Sublease, and (d) such financial information (in
the event of an Assignment) and such other information as Landlord may
reasonably request concerning the proposed assignee, sublessee or occupant or
its business. Landlord shall respond in writing, stating the reasons for any
disapproval, within fifteen (15) Business Days after receipt of all information
reasonably necessary to evaluate the proposed Assignment or Sublease. If
Landlord fails to respond in writing within such fifteen (15) Business Day
period, and further fails to respond within five (5) Business Days after
Landlord's actual receipt of written notice from Tenant of Landlord's failure to
respond within such period, Tenant's request shall be deemed approved.
18.3 No Release. No consent by Landlord to any Assignment or Sublease
----------
by Tenant, and no specification in this Lease of a right of Tenant's to make any
Assignment or Sublease, shall relieve Tenant of any obligation to be performed
by Tenant under this Lease, whether arising before or after (a) the Assignment
or Sublease or (b) any extension of the Term (pursuant to exercise of an option
granted in this Lease). The consent by Landlord to any Assignment or Sublease
shall not relieve Tenant or any successor of Tenant from the obligation to
obtain Landlord's express written consent to any other Assignment or Sublease.
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<PAGE>
18.4 Cost of Processing Request. Tenant shall pay to Landlord the
--------------------------
reasonable amount of Landlord's cost of reviewing and processing every proposed
Assignment or Sublease (including, without limitation, reasonable accountants'
and attorneys' fees) and the reasonable amount of all direct and indirect
expenses incurred by Landlord arising from any assignee, occupant or sublessee
taking occupancy (including, without limitation, freight elevator operation for
moving of furnishings and trade fixtures, security service, janitorial and
cleaning service, and rubbish removal of service), not to exceed $2,500 per
Assignment or Sublease.
18.5 Corporation or Partnership Transfers. Any sale or other
------------------------------------
transfer, including without limitation by consolidation, merger or
reorganization, but excluding transfer of stock of Tenant over a recognized
securities exchange if Tenant is a publicly held corporation, of a majority of
the voting stock of Tenant or any beneficial interest therein, if Tenant is a
corporation, or any sale or other transfer of a majority of the general
partnership interests in Tenant or any beneficial interest therein, if Tenant is
a partnership, shall be an Assignment for purposes of this Lease, unless the
corresponding purchaser, transferee or successor, as applicable, has a net worth
equal to or greater than Tenant's net worth as represented by Tenant to Landlord
prior to the Commencement Date. Tenant shall provide Landlord with notice of
such sale or other transfer, either prior to such sale or transfer or within a
reasonable time thereafter.
18.6 Assumption of Obligations. Each assignee or other transferee of
-------------------------
Tenant's interest hereunder, other than Landlord, shall assume, as provided in
this Section, all obligations of Tenant under this Lease and shall be and remain
liable jointly and severally with Tenant for the payment of Rent and Additional
Charges, and for the performance of all the terms, covenants, conditions and
agreements herein contained on Tenant's part to be performed for the Term. Each
sublessee of all or any portion of the Premises shall agree in writing for the
benefit of Landlord (a) to comply with and agree to those provisions of this
Lease as are reasonably designated by Landlord, and (b) that such sublease (and
all further subleases of any portion of the Premises) shall terminate upon any
termination of this Lease, regardless of whether or not such termination is
voluntary. No Assignment or Sublease shall be valid or effective unless the
assignee or sublessee or Tenant shall deliver to Landlord a fully-executed
counterpart of the Assignment or Sublease and an instrument that contains a
covenant of assumption by the assignee or agreement to perform Tenant's
obligations, reasonably satisfactory in substance and form to Landlord,
consistent with the requirements of this Section. The failure or refusal of the
assignee to execute such instrument of assumption shall not release or discharge
the assignee from its liability as set forth above. The foregoing
notwithstanding, such assumption shall not be required prior to foreclosure by a
lender holding a leasehold trust deed encumbering Tenant's interest in the Lease
(provided that Landlord previously consented to such trust deed).
18.7 No Signs. Tenant shall not place or allow to be placed in, on or
--------
about the Building or any other portion of the Project any sign or other notice
indicating Tenant's desire to assign this Lease or sublet the Premises.
18.8 Upon Termination. In the event of a termination of this Lease by
----------------
reason of Tenant's default or in the event of a mutually agreed termination, at
Landlord's option, each sublessee of any portion of the Premises shall attorn to
Landlord. Each such sublessee shall be deemed to have agreed to the provisions
of this Section and any such Assignment or Sublease shall specifically provide
as such.
19. Utilities and Services.
----------------------
19.1 Landlord to Furnish. Landlord shall furnish, subject to
-------------------
reimbursement pursuant to Article 5 above, (a) heating, ventilation and air
conditioning to the Premises during the hours of 7:00 a.m. until 6:00 p.m.
Monday through Friday and, upon request, 8:00 a.m. to 1:00 p.m. on Saturday
(excluding holidays), (b) automatic elevator service to the floor or floors
where the Premises are located at all times, and (c) water for drinking,
cleaning and washroom purposes only at those points of supply shown on the
approved plans for the Premises. Tenant shall be solely responsible for and
shall promptly pay all other utilities and services supplied to the Premises.
Tenant acknowledges and agrees that if the Premises currently share electrical
house meters with other tenants, Tenant shall reimburse Landlord, along with its
Monthly Basic Rent and Additional Charges, for Tenant's prorata share of the
costs of such electrical service (calculated by dividing the Rentable Area of
the Premises by the total rentable area covered by each such house meter), until
the Premises are separately metered. When the electricity being supplied to the
Premises is separately metered, Tenant shall be responsible for all costs of
electrical service to the Premises, as shown on the separate meter serving the
Premises. Tenant shall have the right to make its own arrangements for
electrical service. Tenant shall, at its cost, be responsible for all janitorial
service for the Premises. The electrical power supplied to the Premises (the
cost for the use of which shall be paid by Tenant) shall be 600 amps of 277/480V
3 phase power beginning on the Commencement Date, and Landlord shall increase
such electrical power supplied to the Premises to 1400 amps of 277/480 3 phase
power as of January 31, 2000, and such increase shall be at Landlord's cost and
expense except for the portion to be paid by Tenant pursuant to Section 7.1
above. If after Tenant has paid such portion pursuant to Section 7.1, Landlord
receives any rebate or reimbursement from the utility provider as a direct
result of Landlord's electrical upgrade (thereby reducing the cost to Landlord
of such upgrade), then Landlord shall pay to Tenant a fraction of such rebate or
reimbursement, which fraction shall be determined by dividing the amount paid by
Tenant towards the cost of Landlord's upgrade by the total cost of the upgrade.
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19.2 Excess Usage. Whenever heat generating machines or equipment or
------------
lighting are used in the Premises by Tenant which materially affect the
temperature otherwise maintained by the air conditioning system, Landlord shall
have the right to install supplementary air conditioning facilities in the
Premises or otherwise modify the ventilating and airconditioning system serving
the Premises (other than the HVAC Equipment installed by Tenant), and the
reasonable cost of such facilities and modifications shall be borne by Tenant.
Tenant also shall pay the cost of providing all heating or cooling energy to the
Premises during hours other than those specified in clause (a) of Section 19.1
above (if such heating or cooling was requested by Tenant or Tenant's Agents);
such cost to be charged at Landlord's actual cost (currently $25.00 per hour,
which rate is subject to change). Landlord shall furnish such after-hours
heating or cooling energy upon at least twenty-four (24) hours advance notice
from Tenant. Tenant shall pay in advance Landlord's reasonable estimate of any
and all costs for additional facilities and modifications which may be
constructed by Landlord under this Section (including without limitation the
costs of labor, materials, equipment, supervision and management fee), subject
to adjustment of final costs upon completion.
19.3 Interruption of Service. Landlord reserves the right to stop the
-----------------------
service of the heating, ventilating, air conditioning, elevator, plumbing,
electrical or other mechanical systems or facilities in the Premises or Building
when necessary by reason of accident or emergency, or for repairs, alterations,
replacements or improvements that, in the reasonable judgment of Landlord, are
desirable or necessary, until such accident or emergency shall have been
corrected or such repairs, alterations, replacements or improvements shall have
been completed. Landlord shall give Tenant advance notice of any such
interruption of services when reasonably possible, and shall restore such
services as soon as reasonably possible and in a manner so as to cause as little
interference with Tenant's use of the Premises as is reasonably possible;
provided, however, that Landlord shall not be obligated to perform work during
other than normal business hours, unless doing so is reasonably possible and
Tenant so requests and Tenant agrees to pay all additional costs of doing so. In
addition, Landlord reserves the right to limit, restrict or ration the use of
water, electricity, gas or any other form of energy or any other service or
utility serving the Premises or the Building, if required to do so by the
specific mandate of any federal, state or local governmental agency.
19.4 Security Systems and Programs. The parties acknowledge that
-----------------------------
safety and security devices, services and programs provided by Landlord, if any,
while intended to deter crime and safety, may not in given instances prevent
theft or other criminal acts, or insure safety of persons or property. The risk
that any safety or security device; service or program may not be effective, or
may malfunction or be circumvented, is assumed by Tenant with respect to
Tenant's property and interests, and Tenant shall obtain insurance coverage to
the extent Tenant desires protection against criminal acts and other losses.
Tenant agrees to cooperate with any reasonable safety or security program
developed by Landlord or required by law.
Tenant shall have the right, at Tenant's sole cost and expense, to
install its own security system in the Premises (subject to Section 19.10 below
regarding Other Equipment), and to create a special security area within the
Premises to encompass Tenant's equipment room. Tenant shall be permitted to
install non-building-standard locks and other access controls which restrict
access to Tenant and its customers, provided that Landlord shall be provided
with keys or other entry mechanisms which may be used in accordance with the
terms of this Lease. Landlord shall not enter Tenant's secured equipment area or
permit any janitorial, maintenance, repair or other service to such area except
as provided below or approved by Tenant. Landlord shall use reasonable efforts
to notify Tenant prior to entering Tenant's secured equipment area, and only if
Tenant is unable to respond quickly enough to avoid material adverse harm to the
Project or any portion thereof then Landlord shall have the right to enter such
area without the accompaniment or consent of Tenant. Any entry by Landlord will
be conducted with reasonable caution under the circumstances to prevent damage
to or interference with any of the equipment in the area.
19.5 No Liability. Landlord shall not be liable or responsible for
------------
any interruption in the services to be provided under this Article 19, or for
any interruptions of services occurring in connection with the making of
repairs, replacements or improvements to the Premises or the Building, however
Landlord shall use commercially reasonable efforts in non-emergency situations
to provide to Tenant prior notice of any such action that may impact any of
Tenant's utility services.
19.6 Communication Installation. Provided Tenant is not in default
--------------------------
under the terms of this Lease, during the Term, Tenant shall have a non-
exclusive license to install and maintain on a portion of the roof of the
Building not to exceed two hundred (200) square feet, at Tenant's sole cost and
expense, certain communications equipment including satellite/microwave dishes
and related equipment ("Communication Equipment") on the terms and conditions
set forth herein. Prior to the installation of the Communication Equipment on
the roof(s), Tenant shall provide in writing to Landlord the Communication
Equipment specifications, including the total square footage, location, and
design of the Communication Equipment for approval by Landlord, in Landlord's
sole and absolute discretion. If required by Landlord, the Communication
Equipment, at Tenant's cost and expense, shall be screened with a material
similar to the exterior of the Building so as to cause the screening to appear
to be part of the Building. If any repairs or replacement of material on the
roof(s) are required, Tenant shall pay the cost and expense for Landlord to
remove or relocate the Communication Equipment for such reasonable time as may
be necessary for Landlord and its contractors and agents to conduct such repair
or
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<PAGE>
replacement. Tenant shall be solely responsible for any damage to or loss of the
Communication Equipment and shall carry loss and casualty insurance with full
replacement value coverage. Landlord, at its option, shall remove or require
Tenant to remove the Communication Equipment upon the termination of this Lease,
and Tenant shall promptly reimburse Landlord the cost and expense to repair any
and all damage caused to the Building(s) in connection with such removal. Tenant
shall not be entitled to modify or add to the Communication Equipment without
Landlord's prior written consent. The placement of the Communication Equipment
shall not interfere with any existing facilities, including but not limited to
existing equipment of other tenants of the Buildings, located in or on the roof
of the Building or located elsewhere in the Project. Tenant shall be responsible
for obtaining (prior to installation of the Communications Equipment) any and
all approvals, permits or licenses that may be required by any governmental
authorities in connection with the Communication Equipment. Provided the
foregoing conditions are satisfied there shall be no charge to Tenant for such
license, and such license shall expire at the end of the Term of this Lease.
19.7 Riser Access. Tenant agrees and acknowledges that Landlord has
------------
no obligation to ensure or guaranty that Tenant will be able to obtain the
necessary connections to public streets, utilities or other property as
necessary for the operation of Tenant's telecommunications equipment in the
Building and that it shall be solely the responsibility of Tenant to negotiate
agreements with public utilities and/or third parties to provide these
connections. Notwithstanding the foregoing, (a) at the request of Tenant,
Landlord shall provide Tenant with the right to run up to ten (10)
telecommunications cables from the Premises, through the Building and to the
boundary of the real property on which the Building is located, and (b) subject
to the availability of space as determined by Landlord in Landlord's sole
discretion, during the Term, Tenant shall have a non-exclusive license for
reasonable access to vertical and horizontal shafts within the Building and to
the existing underground conduits located between the Buildings of the Project
in order for Tenant to connect the Communication Equipment, the Generator
Equipment and the HVAC Equipment to the Premises, and (c) Tenant shall have the
right, at no additional charge, subject to the provisions of Section 10.1 above,
to install additional conduit to connect the Communication Equipment, the
Generator Equipment and the HVAC Equipment to the Premises and to provide
Tenant's telecommunication services to Tenant's customers. In connection with
such access and use Tenant agrees not to interrupt or interfere with any
existing tenant's business or other telecommunications provider operating within
the Building or the Project. Without limiting the foregoing, such license shall
include Tenant's right to use or construct and maintain one (1) four (4) inch
conduit with diverse routing with one (1) inch or smaller interducts as
determined by Landlord in its sole discretion in the risers of the Building and
within the existing underground conduits located between the Buildings of the
Project. Except as specifically provided herein, all of the work as set forth
herein shall be at the sole cost and expense of Tenant and shall be subject to
prior written approval in coordination with Landlord, as further described and
provided in the other provisions of this Lease. Landlord agrees that provided
the foregoing conditions are satisfied there shall be no charge to Tenant for
such license, and such license shall expire at the end of the Term of this
Lease.
19.8 Generator Equipment. Tenant shall have the right, at Tenant's
-------------------
sole cost and expense, to install and maintain on a pad site provided by
Landlord at no cost to Tenant in an area adjacent to the Building as determined
by Landlord, a generator, fuel storage tank(s), and related equipment and piping
(collectively, the "Generator Equipment"), and to integrate the Premises power
into such generator. The specifications, location and design of the Generator
Equipment shall be approved by Landlord in writing prior to installation and the
Generator Equipment shall be in the location within the area depicted on Exhibit
"D" attached hereto. Prior to the installation of the Generator Equipment,
Tenant shall provide to Landlord a written description of the Generator
Equipment, which shall be in detail reasonably satisfactory to Landlord. Tenant,
at Tenant's sole cost and expense, shall screen all sides, including the top, of
the Generator Equipment and install any other improvements reasonably required
by Landlord in connection with installation of the Generator Equipment. If
required by Landlord, the sides of the Generator Equipment, at Tenant's cost and
expense, shall be screened with a material similar to the exterior of the
Building so as to cause the screening to appear to be part of the Building.
Tenant shall be solely responsible for any damage to or loss of the Generator
Equipment and shall carry loss and casualty insurance with full replacement
value coverage. Tenant shall have the right to remove the Generator Equipment at
any time during the Term or at the end of the Term, and Tenant shall repair at
its sole cost and expenses all damage caused to the Premises or the Building by
such removal. Landlord, at its option, shall remove or require Tenant to remove
the Generator Equipment upon the termination of the initial Term of this Lease,
and Tenant shall promptly reimburse Landlord the cost and expense to repair any
and all damage caused in connection with such removal. Tenant shall not be
entitled to modify or add to the Generator Equipment without Landlord's prior
written consent. The placement of the Generator Equipment shall not interfere
with any existing facilities located in the Building or the Project. Tenant
shall be responsible for obtaining (prior to installation of the Generator
Equipment) any and all permits or licenses that may be required by any
governmental authorities in connection with the Generator Equipment. Landlord
agrees that provided the foregoing conditions are satisfied there shall be no
charge to Tenant for such space for the Generator Equipment, and Tenant's right
to such space set forth herein shall expire at the end of the Term of this
Lease.
19.9 HVAC Equipment. Provided Tenant is not in default under the
--------------
terms of this Lease, during the Term, Tenant shall have a non-exclusive license
to install and maintain on a portion of the roof of the Building not to exceed
twelve hundred (1200) square feet and located above Tenant's data center, at
Tenant's sole cost and expense, certain heating, ventilation and air
conditioning equipment ("HVAC Equipment") on the terms and conditions set forth
herein. Prior to the installation of the HVAC Equipment
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<PAGE>
on the roof(s), Tenant shall provide in writing to Landlord the HVAC Equipment
specifications, including the total square footage, location, and design of the
HVAC Equipment for approval by Landlord, in Landlord's reasonable discretion. If
required by Landlord, the HVAC Equipment, at Tenant's cost and expense, shall be
screened with a material similar to the exterior of the Building so as to cause
the screening to appear from a ground-level view to be part of the Building. If
any repairs or replacement of material on the roof(s) are required, Tenant shall
pay the cost and expense for Landlord to remove or relocate the HVAC Equipment
for such reasonable time as may be necessary for Landlord and its contractors
and agents to conduct such repair or replacement. Tenant shall be solely
responsible for any damage to or loss of the HVAC Equipment and shall carry loss
and casualty insurance with full replacement value coverage. Tenant shall have
the right to remove the HVAC Equipment at any time during the Term or at the end
of the Term, and Tenant shall repair at its sole cost and expenses all damage
caused to the Premises or the Building by such removal. Landlord, at its option,
shall remove or require Tenant to remove the HVAC Equipment upon the termination
of this Lease, and Tenant shall promptly reimburse Landlord the cost and expense
to repair any and all damage caused to the Building(s) in connection with such
removal. Tenant shall not be entitled to modify or add to the HVAC Equipment
without Landlord's prior written consent. The placement of the HVAC Equipment
shall not interfere with any existing facilities, including but not limited to
existing equipment of other tenants of the Buildings, located in or on the roof
of the Building or located elsewhere in the Project. Tenant shall be responsible
for obtaining (prior to installation of the HVAC Equipment) any and all
approvals, permits or licenses that may be required by any governmental
authorities in connection with the HVAC Equipment. Provided the foregoing
conditions are satisfied there shall be no charge to Tenant for such license,
and such license shall expire at the end of the Term of this Lease. Tenant shall
have the right to tap into the Building's domestic water supply to operate a
humidifier system in the Premises. Tenant shall have the right to install drains
for the HVAC Equipment and to discard HVAC wastewater into the Building's sewage
system. Tenant shall have the right to remove or cap any heating system in the
Premises.
19.10 Other Equipment Installation. Tenant, at Tenant's sole cost and
----------------------------
expense, shall have the right (a) to install UPS systems and their associated
batteries in the Premises, and to integrate the Building power into such
systems; (b) to convert the present sprinkler system within the Premises to a
dry-pipe, pre-action system, to reasonably relocate or encase any water mains or
other water pipes running through or adjacent to the Premises, to install an FM
200 gas system in the Premises, or to install any other fire suppression system
approved in advance by Landlord (which approval shall not be unreasonably
withheld); and (c) to install its own electrical grounding system or to tie into
the Building's existing grounding systems. All equipment installed by Tenant in
relation to the above rights, and any security system to be installed by Tenant
pursuant to Section 9.4 above, is collectively referred to herein as "Other
Equipment". The location of the Other Equipment shall be approved by Landlord in
writing prior to installation. Prior to the installation of Other Equipment,
Tenant shall provide to Landlord a written description of the Other Equipment,
which shall be in detail reasonably satisfactory to Landlord. Tenant shall be
solely responsible for any damage to or loss of the Other Equipment and shall
carry loss and casualty insurance with full replacement value coverage.
Landlord, at its option, shall remove the Other Equipment upon the termination
date of this Lease, and Tenant shall promptly reimburse Landlord the cost and
expense to repair any and all damage caused in connection with such removal.
Tenant shall not be entitled to modify or add to the Other Equipment without
Landlord's prior written consent. The placement of the Other Equipment shall not
interfere with any existing facilities located in the Building or the Project.
Tenant shall be responsible for obtaining (prior to the installation of the
Other Equipment) any and all permits or licenses that may be required by any
governmental authorities in connection with the Other Equipment.
19.11 Special Electrical Services. With respect to any special
---------------------------
electrical services installed by or on behalf of Tenant, the HVAC Equipment or
any supplemental air conditioning used by Tenant, the Generator Equipment or any
other generator installed by Tenant, the Communication Equipment, the Other
Equipment, and any other non-building standard or special requirements of Tenant
which are agreed to and accepted by Landlord under this Lease, Tenant agrees and
acknowledges that Landlord may from time to time establish reasonable rules and
regulations with respect to the testing of such items (such as requiring the
safety testing of any generator to be performed prior to 7:00 a.m.), providing
that such rules and regulations will not materially and adversely interfere with
Tenant's normal business operations as described hereunder.
19.12 Transmission and Operations Interference. Tenant has made or
----------------------------------------
will make prior to the date of this Lease such independent investigations as
Tenant deems necessary or appropriate concerning the suitability of the
Premises, Building and Project for Tenant's operations. Landlord shall not be
liable in any manner for claims for expenses, damages or loss resulting from any
transmission or operational interference.
19.13 Structural Alterations. Tenant shall have the right, at
----------------------
Tenant's sole cost and expense, to do any or all of the following, provided that
to the extent the following are not part of the initial Tenant Improvements
Article 10 above shall apply: (a) to reinforce floor load capacities; (b) to
cover or block up windows and/or exterior walls in the Premises, provided that
such measures are reasonably acceptable to Landlord with respect to the external
aesthetics of the Building; (c) to fence in any equipment or facilities located
or installed outside the Premises, provided that such fence is reasonably
acceptable to Landlord with respect to the external aesthetics of the Building;
and (d) to install up to three manholes adjacent to the Building for bringing
telecommunications fiber into the Building.
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<PAGE>
19.14 Equipment and Floor Loads. Tenant shall have the right, at
-------------------------
Tenant's sole cost and expense, to install, maintain, repair and replace
computer, telecommunication and other equipment in Tenant's equipment room
located within the Premises, so long as the average load of such equipment is
not excessive for the floor's load capacity. Tenant shall have the right to
install fixed telephony and HVAC systems in the Premises in accordance with the
terms of this Lease, and Landlord hereby consents thereto. Tenant shall have the
right to move computer, telecommunication and other equipment in and out of the
Premises from time to time in the course of its business, in accordance with the
Terms of this Lease, and Landlord hereby consents thereto.
19.15 Co-location/Interconnection. Tenant shall have the right, at
---------------------------
Tenant's sole cost and expense (but at no additional charge by Landlord), to do
any or all of the following: (a) to co-locate equipment owned by Tenant's
customers in the Premises, or to provide short-term rights to use portions of
the Premises to Tenant's customers and vendors, with the prior consent of
Landlord, or without the prior consent of Landlord if the agreement entered into
by Tenant and Tenant's customers for such co-location of equipment or short-term
rights provides that the customer acquires no possessory, leasehold or other
real property right in the Premises or any other portion of the Project and does
not obtain any of Tenant's rights under this Lease; (b) to connect customer
equipment to telecommunications facilities in the Building; and (d) to
interconnect Tenant's telecommunications facilities with, and/or to provide
telecommunications services to, other tenants of the Building.
20. Default.
20.1 Events Constituting Default. Except as otherwise provided
---------------------------
herein, the failure to perform or honor any covenant, condition or other
obligation of Tenant or the failure of any representation made by Tenant under
this Lease (including Exhibits hereto) shall constitute a default hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided, if
any. Tenant shall have a period of three (3) Business Days from the date of
written notice from Landlord within which to cure any default in the payment of
Rent. Tenant shall have a period of ten (10) days from the date of written
notice from Landlord within which to cure any default in the payment of
Additional Charges. Tenant shall have a period of thirty (30) days from the date
of written notice from Landlord within which to cure any other default under
this Lease; provided, however, that with respect to any default (other than a
default which can be cured by the payment of money) that cannot reasonably be
cured within thirty (30) days, the default shall not be deemed to be uncured if
Tenant commences to cure within thirty (30) days from Landlord's notice,
continues to prosecute diligently the curing of such default and actually cures
such default within sixty (60) days after Landlord's notice.
20.2 Remedies. Upon the occurrence of a default by Tenant that is not
--------
cured by Tenant within the grace periods specified in Section 20.1, Landlord
shall have the following rights and remedies in addition to all other rights and
remedies available to Landlord at the law or in equity:
(a) The rights and remedies provided by California Civil Code
Section 1951.2, including, but not limited to, the right to terminate Tenant's
right to possession of the Premises and to recover (i) "the worth at the time of
award" (as defined in Section 20.2(f) below) of the unpaid Rent and Additional
Charges which shall have been earned at the time of termination; plus (ii) the
worth at the time of award of the amount by which the unpaid Rent and Additional
Charges which would have been earned after termination until the time of award
shall exceed the amount of loss of such Rent and Additional Charges that Tenant
proves could have been reasonably avoided; plus (iii) the worth at the time of
award of the amount by which the unpaid Rent and Additional Charges for the
balance of the Term of this Lease after the time of award shall exceed the
amount of loss of such Rent and Additional Charges that Tenant proves could be
reasonably avoided; plus (iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which would be likely to result therefrom
(including, without limitation, attorneys' and accountants' fees, costs of
alterations of the Premises, interest costs and brokers' fees incurred upon any
reletting of the Premises);
(b) The rights and remedies provided by California Civil Code
Section 1951.4 (Landlord may continue the Lease in effect after Tenant's breach
and abandonment and recover Rent and Additional Charges as they become due).
Acts of maintenance or preservation, efforts to relet the Premises or the
appointment of a receiver upon Landlord's initiative to protect its interest
under this Lease shall not of themselves constitute a termination of Tenant's
right to possession;
(c) The right and power to enter the Premises and remove therefrom
all persons and property, to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to sell such
property and apply the proceeds therefrom pursuant to applicable California law.
In such event, Landlord may from time to time sublet the Premises or any part
thereof for such term or terms (which may extend beyond the Term) and at such
rent and such other terms as Landlord in its sole discretion may deem advisable,
with the right to make alterations and repairs to the Premises. Upon each such
subletting, rents received from such subletting shall be applied by Landlord,
first, to payment of any indebtedness other than Rent and Additional Charges due
hereunder from Tenant to Landlord; second, to the payment of any costs of such
subletting (including with limitation attorneys' and accountants' fees, costs of
alterations of the Premises, interests costs, and brokers' fees) and of any such
alterations and repairs; third, to payment of Rent and Additional Charges due
and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future Rent and Additional
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<PAGE>
Charges as they become due hereunder. If any rental or other charges due under
such sublease shall not be promptly paid to Landlord by the sublessee(s), or if
such rentals received from such subletting during any month are less than Rent
and Additional Charges to be paid during that month by Tenant hereunder, Tenant
shall pay any such deficiency to Landlord as well as any unpaid indebtedness
other than Rent and Additional Charges due hereunder from Tenant to Landlord and
the costs of such subletting (including without limitation attorneys' and
accountants' fees, costs of alterations of the Premises, interests costs and
brokers' fees), and any other amounts due Landlord under this Section. Such
deficiency shall be calculated and paid monthly. For all purposes set forth in
this Section, Landlord is hereby irrevocably appointed attorney-in-fact for
Tenant, with power of substitution. No taking possession of the Premises by
Landlord shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention is given to Tenant. Landlord's
subletting the Premises without termination shall not constitute a waiver of
Landlord's right to elect to terminate this Lease for such previous breach;
(d) The right to have a court appointed receiver appointed for the
Premises, upon application by Landlord, to take possession of the Premises, to
apply any rental collected from the Premises and to exercise all other rights
and remedies granted to Landlord pursuant to Section 20.2(c); and
(e) The right to specific performance of any or all of Tenant's
obligations hereunder, and to damages for delay in or failure to such
performance.
(f) For purposes of Section 20.2(a) the "worth at the time of
award" of the amounts referred to in subparagraphs (i) and (ii) shall be
computed with interest at the annual rate of two (2) percentage points per annum
above the rate of interest then most recently announced by Citibank, N.A., New
York, New York, or its successor, as its prime rate of interest or the maximum
rate allowed by law; the "worth at the time of award" of the amount referred to
in subparagraph (iii) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award plus one percent (1%); and "Rent and Additional Charges" with respect to
each month shall be calculated by adding (a) one twelfth (1/12th) of the Rent
payable for a full lease year at the time of default, plus (b) the monthly
average of the Additional Charges payable by Tenant hereunder for the year
immediately before the year in which the default occurred, or if the default
occurs in the first year of the Term, Landlord's estimate of Additional Charges
which would have been payable monthly by Tenant during that year. For purposes
of computing amounts that would have accrued after the time of award, increases
in Rent and Additional Charges shall be projected based upon the average rate of
inflation from the Commencement Date through the time of award; provided,
however, that in no event shall Rent be deemed to decrease after the time of
award, nor shall Additional Charges under Article 5 be deemed to be less than
zero.
Notwithstanding any contrary provisions in this Lease, (i) in no
event shall Landlord have a lien on any of Tenant's property or the property of
any of Tenant's customers, and (ii) in no event shall Landlord be entitled to
remove or interfere with Tenant's property or the property of Tenant's customers
without judicial or statutory process.
20.3 Remedies Cumulative. The exercise of any remedy provided by law
-------------------
or the provisions of this Lease shall not exclude other remedies unless they are
expressly excluded by this Lease or result in duplication of recovery. Tenant
hereby waives any right of redemption or relief from forfeiture following the
termination of, or exercise of any remedy by Landlord with respect to, this
Lease.
20.4 Recovery Against Landlord. Tenant shall look solely to
-------------------------
Landlord's interest in the Building Real Property (including any proceeds of
sale of the Building Real Property and insurance proceeds received by Landlord
with respect to the Building Real Property) for the recovery as provided under
applicable law of any judgment against Landlord; provided, however, that Tenant
shall not be entitled to recover out of any insurance proceeds received by
Landlord which Landlord is applying or has a good faith intention to apply to
work on the Building and actually applies to work on the Building in accordance
with this Lease. Landlord, or if Landlord is a partnership, its partners whether
general or limited, or if Landlord or any constituent partner or Landlord is a
corporation, its directors, officers and shareholders, shall never be personally
liable for any such judgment.
20.5 Events of Default by Landlord. The failure by Landlord to
-----------------------------
observe or perform any of the covenants, conditions, or provisions of this Lease
to be observed or performed by Landlord, where such failure shall continue for a
period of thirty (30) days after written notice thereof by Tenant to Landlord,
shall be deemed to be a default by Landlord under this Lease, provided, however,
that if the nature of Landlord's default is such that more than thirty (30) days
are reasonably required for its cure, then Landlord shall not be deemed to be in
default if Landlord commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion, provided that the
default shall actually be cured within sixty (60) days after notice.
Notwithstanding the foregoing, Tenant shall give written notice of any default
by Landlord to all mortgagees under mortgages encumbering all or any portion of
the Building Real Property or any interest therein of which Tenant has received
written notice, and Landlord shall not be deemed to be in default unless
Landlord and no mortgagee have commenced to cure such default or commenced
foreclosure proceedings within thirty (30) days (or such longer period as is
reasonably required, but not to exceed one sixty (60) days) after such mortgagee
has received such notice.
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21. Insolvency or Bankruptcy.
------------------------
21.1 The occurrence of any of the following shall, at Landlord's
option, constitute a breach of this Lease by Tenant: (i) the appointment of a
receiver to take possession of all or substantially all of the assets of Tenant
or the Premises, (ii) an assignment by Tenant for the benefit of creditors,
(iii) any action taken or suffered by Tenant under any insolvency, bankruptcy,
reorganization, moratorium or other debtor relief act or statute, whether now
existing or hereafter amended or enacted, (iv) the filing of any voluntary
petition in bankruptcy by Tenant, or the filing of any involuntary petition by
Tenant's creditors, which involuntary petition remains undischarged for a period
of sixty (60) days, (v) the attachment, execution or other judicial seizure of
all or substantially all of Tenant's assets or the Premises, if such attachment
or other seizure remains undismissed or undischarged for a period of ten (10)
Business Days after the levy thereof, (vi) the admission by Tenant in writing of
its inability to pay its debts as they become due, (vii) the filing by Tenant of
any answer admitting or failing timely to contest a material allegation of a
petition filed against Tenant in any proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation or dissolution of Tenant or
similar relief, or (viii) if within sixty (60) days after the commencement of
any proceeding against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statue, law or regulation, such proceeding shall not have been
dismissed. Upon the occurrence of any such event or at any time thereafter, this
Lease shall terminate five (5) days after written notice of termination from
Landlord to Tenant. In no event shall this Lease be assigned or assignable by
operation of law or by voluntary or involuntary bankruptcy proceedings or
otherwise, and in no event shall this Lease or any right or privileges hereunder
be an asset of Tenant under any bankruptcy, insolvency or reorganization
proceedings. If, upon the occurrence of any of the events enumerated above,
under applicable law Tenant or the trustee in bankruptcy has the right to affirm
this Lease and continue to perform the obligations of Tenant hereunder, Tenant
or such trustee shall, in such time period as may be permitted by the bankruptcy
court having jurisdiction, cure all defaults of Tenant outstanding hereunder as
of the date of the affirmance of this Lease and provide to Landlord such
adequate assurances as may be necessary to ensure Landlord of the continued
performance of Tenant's obligations under this Lease. Notwithstanding the
provisions of Section 20.1, there shall be no cure periods for any breach or
default under this Article 21.
22. Fees and Expenses; Indemnity: Payment.
-------------------------------------
22.1 Landlord's Right to Remedy Defaults. If Tenant shall default in
-----------------------------------
the performance of any of its obligations under this Lease after notice of
expiration of the applicable cure period, if any, Landlord, at any time
thereafter and without additional notice, may remedy such default for Tenant's
account and at Tenant's expense, without thereby waiving any other rights or
remedies of Landlord with respect to such default. Notwithstanding the
foregoing, Landlord shall have the right to cure any failure by Tenant to
perform any of its obligations under this Lease without notice to Tenant if such
failure results in an immediate threat to life or safety of any person, or with
telephonic notice if such failure impairs the Building or its efficient
operation.
22.2 Indemnity. Subject to the provisions of Section 15.6 and except
---------
to the extent caused by the gross negligence or wilful misconduct of the party
seeking indemnification, Tenant shall indemnify Landlord, all partners of any
partnership constituting Landlord, and their respective officers, directors,
shareholders, employees, servants and agents, all mortgagees of Landlord's
interest in all or any portion of the Building Real Property, and the lessor or
lessors under all ground or underlying leases (sometimes collectively referred
to herein as "Related Entities") against and save Landlord and Related Entities
harmless from and defend Landlord and Related Entities through attorneys
reasonably satisfactory to Landlord and Tenant which may include in-house
attorneys) from and against any and all claims, loss, cost, liability, damage
and expense including, without limitation, penalties, fines and reasonable
attorneys' fees, to the extent incurred in connection with or arising from (a)
any default by Tenant in the observance or performance of any of the terms,
covenants, conditions or other obligations of this Lease to be observed or
performed by Tenant, or the failure of any representation made by Tenant in this
Lease, (b) the use or occupancy or manner of use or occupancy of the Premises by
Tenant or any person occupying the Premises, (c) any occurrence or happening on
the Premises between the Commencement Date and the time Tenant is no longer in
possession of the Premises, (d) any negligence or wilful misconduct of Tenant or
any person claiming through or under Tenant, or of the contractors,
subcontractors, agents, servants, employees, or licensees of Tenant or any
person claiming through or under Tenant (collectively "Tenant's Agents") in the
Premises or anyone in the Premises (other than Landlord or Landlord's agents,
employees or contractors), including without limitation, any negligence or
wilful misconduct in the making or performing of any Alterations, (e) any
negligence or wilful misconduct of Tenant or any subtenant of the Premises or
any of their respective employees while on the Building Real Property, (f)
Landlord's inability to obtain access to any portion of the Premises with
respect to which Landlord has not been furnished a key (if locked) or access has
been otherwise restricted (including without limitation Tenant's data
center/secured equipment area), (g) the use by Tenant or any of Tenant's Agents
of any Project Common Area or Building Common Area, (h) the use of the Premises
by any of Tenant's customers or the lack of notice to Landlord by Tenant of the
identity of any party to or the terms of any co-location agreement or any other
agreement regarding the use of any portion of the Premises, or (i) Tenant's (or
Tenant's customers' or vendors') access to any area of the Project other than
the Premises that is not generally open to tenants of the Project at the time of
access without the accompaniment or consent of a security agent of Landlord.
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<PAGE>
22.3 Assumption of Risk. Except to the extent arising out of the gross
------------------
negligence or willful misconduct of Landlord or Landlord's Agents, neither
Landlord nor any Related Entities shall be liable for any damage or damages of
any nature whatsoever to persons or property caused by explosion, fire, theft or
breakage, vandalism, falling plaster, by sprinkler, drainage or plumbing
systems, or air conditioning equipment, by failure for may cause to supply
adequate drainage, by the interruption of any public utility or service, by
steam, gas, electricity, water, rain or other substances leaking, issuing or
flowing into any part of the Premises, by natural occurrence, acts of the public
enemy, riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority, or by anything done or omitted to be done by any
tenant, occupant or person in the Building, it being agreed that Tenant shall be
responsible for obtaining appropriate insurance to protect its interests.
22.4 Payment of Sums Due. Except as otherwise provided, Tenant shall pay to
-------------------
Landlord, within thirty (30) days after delivery by Landlord to Tenant of bills
or statements therefor, all Additional Charges and reasonable expenditures made
and reasonable monetary obligations incurred by Landlord in collecting or
attempting to collect the Rent, any Additional Charges or any other sum actually
due under this Lease or in enforcing or attempting to enforce any rights of
Landlord under this Lease or pursuant to law, including without limitation
reasonable attorneys' fees; and Landlord shall pay to Tenant, within thirty (30)
days after delivery by Tenant to Landlord of bills or statements therefor, any
sum actually due Tenant under this Lease or in enforcing or attempting to
enforce any rights of Tenant under this Lease or pursuant to law, including
without limitation reasonable attorneys' fees.
22.5 Interest On Past Due Obligations; Service Charge. Unless otherwise
------------------------------------------------
specifically provided herein, any amount due from Tenant to Landlord under this
Lease which is not paid within three (3) Business Days from the date when due
shall bear interest from the due date until paid at the lesser of the highest
rate then permitted by law or a rate per annum which is equal to four percent
(4%) plus the highest rate identified by Bank of America NT&SA as its "reference
rate" between the date such amount was due and the date such payment was
received. In addition, Tenant shall pay a service charge equal to five percent
(5%) of any amount which is not paid within the applicable grace period
specified in Section 20.1, to compensate Landlord for additional bookkeeping and
administrative expenses and lost investment opportunities which are likely to
result from such late payment. The payment of such interest or service charge
(or both) shall not alone excuse or cure any default under the Lease.
23. Access to Premises.
------------------
23.1 Landlord's Right to Enter. Landlord reserves for itself and its
-------------------------
agents, employees and independent contractors the right to enter the Premises at
all reasonable times (upon reasonable telephonic notice, if possible) to inspect
the Premises, to supply any service to be provided by Landlord to Tenant
hereunder, to show the Premises to prospective purchasers, mortgagees or (during
the last twelve (12) months of the Lease only) tenants, to post notices of
nonresponsibility, to determine whether Tenant is complying with its obligations
under this Lease, and to alter, improve or repair the Premises or any other
portion of the Building. Landlord's right to enter the Premises shall include
the right to grant access to the Premises to governmental or utility employees.
Landlord may erect, use and maintain scaffolding, pipes, conduits, and other
necessary structures in and through the Premises or any other portion of the
Building where reasonably required by the character of the work to be performed
in making repairs or improvements, provided that the entrance to the Premises
shall not be blocked thereby, and that there is no unreasonable interference
with the business of Tenant. In the event of an emergency Landlord shall have
the right to enter the Premises at any time without notice. Tenant hereby waives
any claim for damages for any injury or inconvenience to or interference with
Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, any
right to abatement or Rent or Additional Charges, or any other loss occasioned
by Landlord's exercise of any of its rights under this Article 23. Any entry to
the Premises or portions thereof obtained by Landlord in accordance with this
Article 23 shall not be construed or deemed to be a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction, actual or constructive, of
Tenant from the Premises or any portion thereof. Landlord shall perform all work
pursuant to this Section as quickly as is reasonably possible and in a manner
designed to cause as little interference with Tenant's use of the Premises as is
reasonably possible; provided, however, that Landlord shall not be obligated to
perform work during other than normal business hours. Tenant waives all rights
to consequential damages (including without limitation damages for lost profits
and lost opportunities) arising in connection with Landlord's exercise of its
right under this Section. Notwithstanding the foregoing, Landlord shall have the
right to enter Tenant's secured equipment area (sometimes referred to in this
Lease as Tenant's data center) within the Premises only in accordance with
Section 19.4 above.
23.2 Means of Entry. Landlord shall have the right to use any and all
--------------
means that Landlord may deem necessary or proper to open doors in an emergency,
in order to obtain entry to any portion of the Premises.
24. Notices. Except as otherwise provided in this Lease, any payment
-------
required to be made and any bills, statements, notices, demands, requests or
other communications given or required to be given under this Lease shall be
effective only if rendered or given in writing, sent by personal delivery or
registered or certified mail, return receipt requested, or by overnight courier
service, addressed (a) to Tenant at the Premises (Attention: General Manager)
with a copy of any notice, other than an unlawful detainer notice, 3-day notice
or any other statutory notice, to Inflow, Inc., 1860 Lincoln, Suite 305, Denver
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<PAGE>
Colorado 80295 (Attention: Legal Department), (b) to Landlord c/o SENTRE
Partners, Inc., 9605 Scranton Road, Suite 102, San Diego, California 92121, or
(c) to such other address as either Landlord or Tenant may designate as its new
address in California for such purpose by notice given to the other in
accordance with the provisions of this Section. Any such bill, statement,
notice, demand, request or other communication shall be deemed to have been
rendered or given on the date of receipt or refusal to accept delivery.
25. No Waiver. Neither this Lease nor any term or provision hereof may be
---------
waived, and no breach thereof shall be waived, except by a written instrument
signed by the party against which the enforcement of the waiver is sought. No
failure by Landlord to insist upon the strict performance of any obligation of
Tenant under this Lease or to exercise any right, power or remedy consequent
upon a breach thereof, no acceptance of full or partial Rent or Additional
Charges during the continuance of any such breach, no course of conduct between
Landlord and Tenant, and no acceptance of the keys to or possession of the
Premises before the termination of the Term by Landlord or any employee of
Landlord shall constitute a waiver of any such breach or a waiver or
modification of any term, covenant or condition of this Lease or operate as a
surrender of this Lease. No waiver of any breach shall affect or alter this
Lease, but each and every term, covenant and condition of this Lease shall
continue in full force and effect with respect to any other then-existing or
subsequent breach thereof. No payment by Tenant or receipt by Landlord of a
lesser amount than the aggregate of all Rent and Additional Charges then due
under this Lease shall be deemed to be other than on account of the first items
of such Rent and Additional Charges then accruing or becoming due, unless
Landlord elects otherwise. No endorsement or statement on any check and no
letter accompanying any check of other payment of Rent or Additional Charges in
any such lesser amount and no acceptance by Landlord of any such check or other
payment shall constitute an accord and satisfaction. Landlord may accept such
check or payment without prejudice to Landlord's right to recover the balance of
such Rent or Additional Charges or to pursue any other legal remedy.
26. Tenant's Certificates. Tenant and Landlord, at any time during the Term
---------------------
of this Lease and from time to time, within ten (10) days after written request,
shall execute, acknowledge and deliver to the other party, addressed (at such
other party's request) to any prospective purchaser, ground or underlying
lessor, mortgagee, investor or similar interested party, an estoppel certificate
in reasonable and customary form and substance. The failure of either party to
do so within such ten (10) day period shall be conclusive upon such party that
all facts set forth in the other party's proposed certificate are true and
correct. It is intended that any such certificate may be relied upon by any
prospective purchaser, ground or underlying lessor, mortgagee, investor or
similar interested party.
27. Rules and Regulations. Tenant shall faithfully observe and comply with,
---------------------
and shall cause all occupants of the Premises and Tenant's Agents to observe and
comply with, the rules and regulations, attached to this Lease as Exhibit "C"
relating to the Building and the Project Common Areas and all reasonable
modifications thereof and additions thereto from time to time put into effect by
Landlord. Landlord shall not be responsible for the nonperformance by any other
tenant or occupant of the Project of any of such rules and regulations. In the
event of any conflict between any such rule or regulation and this Lease, this
Lease shall govern. No such rule or regulation shall materially interfere with
the conduct of Tenant's business or the exercise of any right of Tenant
expressly provided in this Lease. The rules and regulations shall be subject to
a standard of commercial reasonableness and exercised only in good faith.
Landlord shall not initiate or consent to any amendments to the covenant,
conditions and restrictions of the Lusk/Mira Industrial Park which would impair
any of the rights of Tenant under this Lease or interfere with the use and
occupancy of the Premises or the conduct of Tenant's business.
28. Tenant's Taxes. In addition to all other sums to be paid by Tenant
--------------
under this Lease, Tenant shall pay, before delinquency, any and all taxes levied
or assessed during the Term of this Lease, whether now customary or within the
contemplation of the parties hereto, upon, measured by or reasonably
attributable to the Tenant Improvements, equipment, furniture, fixtures and
other personal property located in the Premises, including without limitation
any Alterations. Tenant shall reimburse Landlord upon demand for any and all
such taxes paid or payable by Landlord (other than state and federal, personal
or corporate income taxes measured by the net income of Landlord from all
sources).
29. Corporate Authority. If either party signs as a corporation or
-------------------
partnership or other entity, each of the persons executing this Lease on behalf
of such party does hereby covenant and warrant that such party is a duly
authorized and existing entity, that such party has and is (or within thirty
(30) days after the Commencement Date will be) qualified to do business in
California, that the entity has full right and authority to enter into this
Lease, and that each and both of the persons signing on behalf of the entity is
and are authorized to do so. Tenant shall deliver to Landlord a copy of their
certificate of qualification to do business in California upon receipt of the
same.
30. Miscellaneous.
-------------
30.1 Asbestos Disclosure. Tenant acknowledges that it has been
-------------------
furnished with and has reviewed a copy of the two reports prepared by the Szaras
Company, dated September 12, 1991 and January 20, 1992, respectively, regarding
the presence of asbestos in the Project (the "Asbestos Reports"); provided
however, Landlord has no current actual knowledge, without any independent
investigation or inquiry, of any inaccuracy or incompleteness of the contents of
such report. The Asbestos Reports are hereby accepted and approved by Tenant.
Tenant acknowledges that Landlord
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<PAGE>
has not made any representations or warranties as to the content, accuracy or
completeness of the Asbestos Reports, and that Landlord has merely provided the
Asbestos Reports for the information of Tenant. Notwithstanding the foregoing,
Landlord represents and warrants that to Landlord's current actual knowledge,
without any independent investigation or inquiry, the asbestos located in the
"xerox/storage room" within the Building, as referred to in the Asbestos
Reports, has been removed; provided, however, that if such asbestos has not in
fact been removed and is discovered in the Premises, then Landlord shall, at
Landlord's cost, promptly cause such asbestos to be removed, and such removal
shall be performed in a manner so as to cause as little interference with
Tenant's use of the Premises as is reasonably possible. Tenant shall not
maintain any physical contact with the affected area described in the Asbestos
Reports and shall prohibit Tenant's Agents from doing the same. Tenant shall
notify Tenant's Agents of the presence of asbestos and shall share copies of the
Asbestos Reports with all Tenant's Agents and shall comply with all governmental
laws and regulations relating to disclosure, notification and warnings with
respect to the contents of the Asbestos Reports.
30.2 Financial Statements. Upon Landlord's written request from time to
--------------------
time (not more frequently than once per year), Tenant shall promptly furnish
Landlord with certified financial statements reflecting Tenant's then-current
financial condition, in such form and detail as Landlord may reasonably request;
provided, however, that so long as the stock of Tenant is traded on a national
exchange, Tenant may furnish an annual report instead of financial statements.
30.3 References. All personal pronouns used in this Lease, whether used in
----------
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and vice versa. The use herein of the words
"including" or "include" when following any general statement, term or matter
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not nonlimiting language (such as "without limitation",
or "but not limited to", or words of similar import) is used with reference
thereto. All references to "mortgage" and "mortgagee" shall include deeds of
trust and beneficiaries under deeds of trust, respectively. All Exhibits
referenced herein and attached to this Lease are hereby incorporated in this
Lease by this reference. The captions preceding the Sections and Articles of
this Lease have been inserted solely as a matter of convenience and such
captions in no way define or limit the scope or intent of any provision of this
Lease.
30.4 Successors and Assigns. The terms, covenants and conditions contained
----------------------
in this Lease shall bind and inure to the benefit of Landlord and Tenant and
except as otherwise provided herein, their respective personal representatives
and successors and assigns; provided, however, that upon the sale, assignment or
transfer by Landlord (or by any subsequent Landlord) of its interest in the
Building as owner or lessee, including any transfer upon or in lieu of
foreclosure or by operation of law, Landlord (or subsequent Landlord) shall be
relieved from all subsequent obligations or liabilities under this Lease, and
all obligations subsequent to such sale, assignment or transfer (but not any
obligations or liabilities that have accrued prior to the date of such sale,
assignment or transfer) shall be binding upon the grantee, assignee or other
transferee of such interest. Any such grantee, assignee or transferee, by
accepting such interest, shall be deemed to have assumed such subsequent
obligations and liabilities.
30.5 Severability. If any provision of this Lease or the application
------------
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall remain in effect and shall be enforceable to the full extent permitted by
law.
30.6 Construction. This Lease shall be governed by the and construed in
------------
accordance with the laws of the State of California applicable to leases of real
property made and entirely performed in California. Any actions or proceedings
brought under this Lease, or with respect to any matter arising under or out of
this Lease, shall be brought and tried only in courts located in the City and
County of San Diego, California (excepting appellate courts).
30.7 Integration. The terms of this Lease (including the Exhibits hereto)
-----------
are intended by the parties as a final expression of their agreement with
respect to such terms as are included in this Lease and may not be contradicted
by evidence of any prior or contemporaneous agreement, arrangement,
understanding or negotiation (whether oral or written). The parties further
intend that this Lease constitutes the complete and exclusive statement of its
terms, and no extrinsic evidence whatsoever may be introduced in any judicial
proceeding involving this Lease. Neither Landlord nor Landlord's agents have
made any representations or warranties with respect to the Premises, the
Building, the Building Real Property, or any other portion of the Project or
this Lease except as expressly set forth herein. The language in all parts of
this Lease shall in all cases be construed as a whole and in accordance with its
fair meaning and not restricted for or against any party.
30.8 Surrender. Upon the expiration or sooner termination of the Term,
---------
Tenant will quietly and peacefully surrender to Landlord the Premises in the
condition in which they are required to be kept as provided in Articles 10 and
11, ordinary wear and tear excepted. Upon expiration or earlier termination of
this Lease, Tenant shall, immediately upon request of Landlord, execute,
acknowledge and deliver to Landlord a recordable deed quitclaiming to Landlord
any interest of Tenant in the Premises, the Building Real Property and this
Lease.
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<PAGE>
30.9 Quiet Enjoyment. Upon Tenant paying the Rent and Additional Charges
---------------
and performing all of Tenant's obligations under this Lease, Tenant may
peacefully and quietly enjoy the Premises during the Term; subject, however, to
the provisions of this Lease and to any mortgages or ground or underlying leases
referred to in Article 13.
30.10 Holding Over. If Tenant shall hold over after the expiration of the
------------
Term, Tenant shall pay Rent equal to one hundred fifty percent (150%) of the
Rent payable during the final full lease year (exclusive of abatements, if any),
together with an amount reasonably estimated by Landlord for the monthly
Additional Charges payable under this Lease, and shall otherwise be on the terms
and conditions herein specified so far as applicable (but expressly excluding
all renewal or extension rights). No holding over by Tenant after the Term shall
operate to extend the Term. In the event of any holding over without Landlord's
prior written consent, Tenant shall indemnify Landlord against all claims for
damages by any other tenant to whom Landlord may have leased all or any part of
the Premises commencing upon or after the expiration of the Term. Any holding
over with Landlord's written consent shall be construed as a tenancy at
sufferance or from month to month, at Landlord's option. Any holding over
without Landlord's written consent shall entitle Landlord to reenter the
Premises as provided in Article 20, and to enforce all rights and remedies
provided by law or this Lease.
30.11 Time of Essence. Time is of the essence of each and every provision
---------------
of this Lease.
30.12 Broker's Commissions. Each party represents and warrants to the
--------------------
other that it has not entered into any agreement or incurred or created any
obligation which might require the other party to pay any broker's commission,
finder's fee or other commission or fee relating to the leasing of the Premises,
except for an agreement by Landlord to pay Node Com, Inc. a commission of four
percent (4%) of the net aggregate rent for the first five (5) years of the Term
and two percent (2%) of the net aggregate rent for years six (6) through ten
(10) of the Term, with fifty percent (50%) of such commission payable upon
Landlord's approval of Tenant's Construction Documents pursuant to Section 31.2
above and the other fifty percent (50%) payable on or before January 1, 2000.
Each party shall indemnify, defend and hold harmless the other and the other's
constituent partners and their respective officers, directors, agents and
employees from and against all claims for any such commissions or fees made by
anyone claiming by or through the indemnifying party, except for the broker
named above in this Section 30.12.
30.13 No Merger. The voluntary or other surrender or termination of this
---------
Lease by Tenant, or mutual cancellation thereof shall not work a merger, but,
at Landlord's sole option, shall either terminate all existing subleases or
subtenancies or shall operate as an assignment to Landlord or all such
subleases or subtenancies. Tenant agrees that in the event Tenant becomes the
owner of the Building Real Property, Tenant's leasehold hereunder shall not then
or thereafter merge with the fee estate and Tenant hereby irrevocably surrenders
any right to effect such merger and this Lease shall continue in full force and
effect.
30.14 Consents. Unless otherwise expressly provided in this Lease, all
--------
consents and approvals to be given by Landlord or Tenant shall not be
unreasonably withheld, conditioned or delayed.
30.15 Survival. All of Tenant's and Landlord's covenants and obligations
--------
contained in this Lease which by their nature might not be fully performed or
capable of performance before the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. No provision of this
Lease providing for termination in certain events shall be construed as a
limitation or restriction of Landlord's or Tenant's rights and remedies at law
or in equity available upon a breach by the other party of this Lease.
30.16 Amendments. No amendments or modifications of this Lease or any
----------
agreements in connection therewith shall be valid unless in writing duly
executed by both Landlord and Tenant. No amendment to this Lease shall be
binding on any mortgagee of Landlord (or purchaser at any foreclosure sale)
unless such mortgagee shall have consented thereto in writing.
30.17 Attorneys' Fees. If Landlord becomes a party to any litigation not
---------------
initiated by Tenant concerning this Lease, the Premises or the Building Real
Property by reason of any act or omission of Tenant or its authorized
representatives, and not by reason of Landlord's own act or omission or any act
or omission of Landlord's authorized representatives, Tenant shall be liable to
Landlord for reasonable attorneys' fees and court costs incurred by Landlord in
the litigation.
If either party commences an action against the other party arising out of
or in connection with this Lease, or institutes any proceeding in a bankruptcy
or similar court which has jurisdiction over the other party or any or all of
its property or assets, the prevailing party shall be entitled to have and
recover from the losing party reasonable attorneys' fees and court costs.
30.18 Arbitration of Disputes.
-----------------------
(a) If arbitration is expressly provided for in this Lease as a dispute
resolution procedure, the arbitration shall be conducted as provided in this
Article, except as otherwise provided in this Lease. All proceedings shall be
conducted according to the Commercial Arbitration Rules of the
<PAGE>
American Arbitration Association (the "AAA"), or its successor organization,
except as hereinafter provided. No action at law or in equity in connection with
any such dispute shall be brought until arbitration hereunder shall have been
waived, either expressly or pursuant to this Article. The judgment upon the
award rendered in any arbitration hereunder shall be final and binding on both
parties hereto and may be entered in any court having jurisdiction thereof.
(b) During an arbitration proceeding pursuant to this Article, the
parties shall continue to perform and discharge all of their respective
obligations under this Lease, except as otherwise provided in this Lease.
(c) Unless arbitration is specified as a dispute resolution procedure
as to a particular dispute hereunder, disputes under this Lease shall not be
resolved by arbitration unless both parties agree in writing to do so, and
disputes shall be resolved as otherwise provided by law. Any controversy or
claim arising out of or relating to this Lease which involves less than $50,000
or which relates to a denial of any consent or approval shall be resolved by
arbitration, upon the request of either party.
(d) All disputes that may be arbitrated in accordance with this
Article shall be raised by notice to the other party, which notice shall state
with particularity the nature of the dispute and the demand for relief, making
specific reference by article number and title of the provisions of this Lease
alleged to have given rise to the dispute. The notice shall also refer to this
Article and shall state whether or not the party giving the notice demands
arbitration under this Article. If no such demand is contained in the notice,
the other party against whom relief is sought shall have the right to demand
arbitration under this Article within ten (10) Business Days after such notice
is received. Unless one of the parties demands arbitration, the provisions of
this Article shall be deemed to have been waived with respect to the dispute in
question.
(e) The notice specified in Paragraph (d) above shall identify the
arbitrator to act on the notifying party's behalf. The arbitrator shall be a
person who has demonstrated at least ten (10) years of experience in commercial
real estate matters and, in particular, the subject matter of the dispute in
question. Within ten (10) Business Days after receipt of the notice of
arbitration, the other party shall notify the first party of the identity of the
arbitrator to act on such other party's behalf, which arbitrator shall be
similarly qualified. If such party fails to identify its arbitrator within ten
(10) Business Day period, the arbitrator named by the notifying party shall be
the only arbitrator to resolve the dispute. If two (2) arbitrators are chosen
pursuant to the foregoing, they shall meet within ten (10) Business Days after
the second arbitrator is appointed and, if within ten (10) Business Days after
such first meeting the two arbitrators shall be unable to agree promptly upon a
resolution of the dispute, they shall appoint a third arbitrator, who shall be
similarly qualified. In the event they are unable to agree upon such appointment
within five (5) Business Days after expiration of such ten (10) day period, the
third arbitrator shall be selected by the parties themselves, if they can agree
thereon, within a further period of ten (10) Business Days. If the parties do
not so agree, either party, on behalf of both, may request appointment of such a
qualified person by the AAA. If the AAA shall refuse or be unable to provide
such selection, the arbitrator shall be appointed by any successor organization
providing substantially the same services, and in the absence of such an
organization, by the Presiding Judge of the California Superior Court for the
City and County of San Diego. The arbitrator(s) so selected shall resolve the
dispute. The arbitration proceedings shall take place at a mutually acceptable
location in the City and County of San Diego.
(f) When resolving any dispute, the arbitrators shall apply the
pertinent provisions of this Lease without departure therefrom in any respect.
The arbitrators shall not have the power to change any of the provisions of this
Lease, but this Article shall not prevent in any appropriate case the
interpretation, construction and determination by the arbitrators of the
applicable provisions of this Lease to the extent necessary in applying the same
to the matters to be determined by arbitration.
(g) Except as otherwise expressly provided in this Lease, the cost of
the arbitration, including reasonable attorneys' and expert witness fees, shall
be borne by the unsuccessful party (as determined by the arbitrators).
30.19 Relocation of Tenant. [Intentionally deleted].
--------------------
30.20 Business Days. For purposes of this Lease, the term "Business
-------------
Day" shall mean any day that is not a Saturday or Sunday and is not any of the
following days: New Year's Day, President's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, the day after Thanksgiving, or Christmas Day.
31. Design and Construction Process for Initial Tenant Improvements.
---------------------------------------------------------------
31.1 Tenant's Design Development Documents. Landlord will provide
-------------------------------------
Tenant with base building plans and drawings for the Building and any other
plans in Landlord's possession, including any CAD drawings of the Building and
drawings of the Building's mechanical and electrical systems. Tenant will
prepare for review by Landlord two complete sets of Tenant's Design Development
Documents consisting of drawings, details, outlines, specifications and other
documents to fix and describe the size and character of the Premises with
respect to architectural, structural, mechanical, electrical and fire safety
systems, materials and such other components as may be appropriate; such
documents shall
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<PAGE>
indicate material finishes, heat load requirements of Tenant-supplied equipment
and such other specialty systems and components as Landlord reasonably will
request.
31.2 Tenant's Construction Documents. Within ten (10) business days of
-------------------------------
Landlord's receipt of Tenant's Design Development Documents, Landlord will
review those documents. Based upon such review Landlord may order reasonable
modifications to any of Tenant's Design Development Documents, which
modifications will be made by Tenant in accordance with Landlord's direction and
will be incorporated in Tenant's Construction Documents to be prepared by
Tenant; except that if Tenant reasonably cannot make any such modification
regarding a reasonable improvement included by Tenant in Tenant's Documents in
good faith, and if such modification would have a material adverse impact on the
operation of Tenant's business or Tenant's costs for the initial build out of
the Premises, then Tenant shall have the right to terminate this Lease effective
upon fifteen (15) days prior written notice to Landlord, unless Landlord
withdraws the modification order by delivering notice of such withdrawal to
Tenant prior to such termination date. Tenant will prepare for review by
Landlord two complete sets of Tenant's Construction Documents consisting of
drawings and specifications setting forth in complete detail the final
requirements for the construction of the Premises. Landlord will complete its
review of Tenant's Construction Documents within ten (10) business days of
receipt of those documents. Based upon such review Landlord may order reasonable
modifications to any of Tenant's Construction Documents and the modifications
will be made by Tenant in accordance with Landlord's direction within fifteen
(15) business days of request by Landlord; except that if Tenant reasonably
cannot make any such modification regarding a reasonable improvement included by
Tenant in Tenant's Documents in good faith, and if such modification would have
a material adverse impact on the operation of Tenant's business or Tenant's
costs for the initial build out of the Premises, then Tenant shall have the
right to terminate this Lease effective upon fifteen (15) days prior written
notice to Landlord, unless Landlord withdraws the modification order by
delivering notice of such withdrawal to Tenant prior to such termination date.
31.3 Applicable Law: Budgetary Constraints. Tenant's Design Development
--------------
Documents and Tenant's Construction Documents are herein occasionally
collectively called "Tenant's Documents." All Tenant's Documents will conform
with applicable federal, state and local law (including without limitation The
Americans With Disabilities Act of 1990 and its implementing regulations, as
amended or supplemented from time to time) and with Building and Project plans
and specifications. It will be the responsibility of Tenant to prepare and
submit Tenant's Documents that fall within Tenant's budgetary constraints (if
any). Any redesign made necessary by the failure of Tenant's documentation to
fall within Tenant's budgetary constraints, and any resulting delay therefrom,
will be the sole responsibility of Tenant. Landlord will not be responsible for
any failure of bidder's estimates to fall within Tenant's budgetary constraints.
31.4 Requirements of Tenant's Documents. Tenant's Documents will be
----------------------------------
completely and fully coordinated. Tenant's Documents will also Illustrate all
relevant existing site conditions and will include all work necessary to achieve
a Certificate or Statement of Occupancy for the Premises. Tenant's Documents
will be signed and sealed by an architect or professional engineer (where
applicable), licensed and registered in the State of California. All costs and
expenses incurred by Tenant in connection with Tenant's Documents may be paid
from the T.I. Allowance.
31.5 Contractors/Bidding Procedures. Landlord and Tenant will agree on a
------------------------------
list of mutually acceptable contractors who will be asked to submit bids for the
demolition of the existing tenant improvements (as may be necessary) and
construction of the Tenant Improvements. Upon receipt of the bids, Tenant will
select the contractor from the agreed upon list. The selected bid need not be
the low bid.
31.6 Construction. Tenant's contractor will comply with reasonable
------------
construction rules made by Landlord and will coordinate its work with any other
work being undertaken at the Project. The Tenant Improvements will be
constructed in accordance with Tenant's Documents. Tenant diligently will pursue
the demolition of the existing tenant improvements (as may be necessary) and the
construction of the Tenant Improvements in a lien free, good and workmanlike
manner in accordance with generally accepted construction practices until all of
the work has been completed, subject to Section 31.9.
31.7 Disbursement of T.I. Allowance. Landlord will disburse the T.I.
------------------------------
Allowance within thirty (30) days after receipt of invoices that have been
approved by Tenant for work that has been completed, less a ten percent (10%)
retention (the aggregate amount of such retentions referred to herein as the
"Final Retention"). Subject to the terms of this Lease, Landlord shall deliver
to Tenant the Final Retention within five (5) Business Days following the
substantial completion of construction of the Tenant Improvements in the
Premises, provided that (i) Landlord has no reasonable basis to believe that the
Tenant Improvements have not been constructed in accordance with the terms of
this Lease, and (ii) Tenant's architect delivers to Landlord a certificate, in a
form acceptable to Landlord, certifying that the construction of the Tenant
Improvements in the Premises has been substantially completed and the Premises
are ready for occupancy in accordance with Tenant's Documents. If the cost of
the Tenant Improvements is less than the T.I. Allowance, the difference shall be
retained by Landlord.
31.8 Access/Landlord's Approval. Landlord will be entitled (but will not be
--------------------------
obligated) to inspect the Tenant Improvements for the Premises under
construction and upon completion, at reasonable times and intervals, for the
purpose of determining that the work is being constructed in
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<PAGE>
accordance with Tenant's Documents and the provisions of this Lease. No approval
by Landlord or Landlord's architect or engineer of any drawings, plans or
specifications which are prepared in connection with construction of
improvements in the Premdises will constitute a representation or warranty by
Landlord as to the adequacy or sufficiency of such drawings, plans or
specifications, or the improvements to which they relate, for any use, purpose
or condition, but such approval will merely be the consent of Landlord to the
construction or installation of improvements in the Premises according to such
drawings, plans or specifications.
31.9 Construction. Tenant may commence construction of the Tenant
------------
Improvements for the Premises at any time on or after Landlord allows Tenant
access to the Premises in accordance with Article 3 above.
32. Extension Option.
----------------
32.1 Tenant Option. Tenant shall have two (2) options to extend the
-------------
Term of this Lease each for an additional period of five (5) years
(individually, an "Extension Term," and collectively, "Extension Terms") which
will commence on the day following the last day of the Term, or the last day of
the first Extension Term, if exercised. The option for each Extension Term may
be exercised by Tenant only by written notice (the "Extension Exercise Notice")
given to Landlord not earlier than the date which is twelve (12) months prior
and not later than the date which is at least nine (9) months prior to the
expiration of the period of the Term, or the expiration of the period of the
first Extension Term, if exercised (the "Extension Exercise Date"). Except as
stated below in this Article, all of the terms and conditions of this Lease in
effect immediately prior to the commencement of an Extension Term shall equally
pertain in all respects to that Extension Term.
32.2 Extension Rent. The Rent and Additional Charges during each
--------------
extension period will be the Market Rental Value of the Premises (as defined and
determined pursuant to Section 32.3) for that period.
32.3 Rent Notice by Landlord. The Market Rental Value as determined by
-----------------------
Landlord will be designated by notice to Tenant ("Landlord's Notice") pursuant
and subject to Section 32.4 no later than eight (8) months prior to expiration
of the period of the Term or the expiration of the period of the first Extension
Term, if exercised.
32.4 Fair Market Value Rent. The Market Rental Value of the Premises
----------------------
will be the fair market rent and all additional charges and additional rent for
the Premises determined as of the date of Landlord's Notice, taking into
consideration the rental rates then being obtained by Landlord for comparable
space in the Project and the rates being obtained by other landlords in other
projects in the Sorrento Valley / Sorrento Mesa area of San Diego, California of
the same approximate age, quality, condition and level of amenities, as adjusted
on account of pertinent differences such as the heights of the floors in
question, incentives for initial occupancy such as free rent, existing lease
takeover and assumption costs, interruption in occupancy, brokerage commissions
and demolition and improvement costs and allowances (or the inapplicability of
such incentives in the case of renewals or extensions), size of space, length of
term and anticipated commencement date with respect to such renewal and any
other economic concessions; provided, however, that in no event shall the Market
Rental Value be less than the Rent in effect under this Lease immediately prior
to the commencement of the applicable Extension Term. Landlord's determination
of Market Rental Value shall be final and binding unless Tenant, within thirty
(30) calendar days and by notice to Landlord, withdraws its exercise of the
extension option or gives notice to Landlord that it will, and promptly
thereafter does submit such determination of Market Rental Value to arbitration
pursuant to Section 30.18 of this Lease. In the event of such submission, the
Market Rental Value shall be determined by the arbitrators, whose determination
shall be based upon the same factors set forth in this Section.
32.5 Effect of Default. If Tenant is in default during the time period
-----------------
when it may otherwise exercise an option, then any attempt to exercise such
option while such default is continuing shall be null, void, and of no force or
effect. If Tenant exercises an option and if Tenant is in default at any time
after exercise of such option or on the first day for commencement of the
applicable Extension Term, then the exercise of such option by Tenant shall be
null, void, and of no force or effect. If Tenant has been in default in payment
of any sum required by this Lease where a late charge has become due under this
Lease for more than three times during the prior twelve-month period, then the
options to extend the Term set forth in this Article shall be canceled and shall
be of no force or effect. No condition of the Premises, including, without
limitation, any alteration or improvement made by Tenant, oral intention
expressed by Tenant or detrimental reliance by Tenant on any statement, act, or
omission by Landlord shall vest any rights in Tenant for exercise of the options
set forth herein or to possess the Premises during any period set for extension
of the Term in such options, or stop Landlord from eviction of Tenant after the
end of the Term of this Lease then in effect, or give rise to any equitable
defense to such eviction. Tenant hereby waives any and all equitable remedies
with respect to the options set forth herein unless Tenant has complied in all
respect with the written notice requirements set forth herein. The sole and
exclusive method for exercise of the options set forth herein shall be delivery
of the written notice called for herein by Tenant to Landlord on a timely basis.
Landlord and Tenant hereby agree that time is of the essence with respect to
delivery of any notice of exercise by Tenant to Landlord. The date for delivery
of any notice required or permitted in the options set forth herein shall be
determined by the provisions for delivery of notice contained in this Lease. In
the event the Tenant has multiple options to
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<PAGE>
extend or renew this Lease, a later option cannot be exercised unless the prior
option to extend has been exercised.
33. Right of First Offer Space. During the Term, but not during any
--------------------------
Extension Term, if any space on the ground floor of the Building or directly
above the Premises on the second floor of the Building as depicted on Exhibit
"E" attached hereto ("First Offer Space") becomes vacant and available, Landlord
may first offer such First Offer Space to any other tenants currently in the
Building as of the Commencement Date, and if there are no such tenants or if
such tenants do not agree to lease the First Offer Space, Landlord shall notify
Tenant in writing and shall offer the First Offer Space to Tenant at the rent
described below, subject to the terms set forth herein. Tenant's right to lease
the First Offer Space shall be an ongoing right and shall be subordinate to any
existing rights, including without limitation, any extension rights, to lease
such space currently held by existing tenants in the Project. If Tenant, within
five (5) Business Days after receipt of Landlord's notice, indicates in writing
its agreement to lease all (but not a part) of the First Offer Space specified
in Landlord's notice, and Tenant is not in default under the Lease, such First
Offer Space shall be included within the Premises and leased to Tenant pursuant
to the provisions of this Lease. If Tenant does not indicate within five (5)
Business Days its agreement to lease such First Offer Space, Landlord shall
thereafter have the right to lease such First Offer Space or part of it to a
third party upon such terms as Landlord, in its sole discretion, shall deem
appropriate and Tenant's right of first offer as to such First Offer Space (but
not any other First Offer Space that may become available during the initial
Term) shall terminate and be of no further force or effect. Tenant acknowledges
that this Article permits Landlord to hold open and offer for rent the First
Offer Space to a third party, subject to the limitations of this Article, and
that this Article does not grant to Tenant an option. If Tenant elects in
writing to exercise its right to lease any First Offer Space, this Lease shall
become applicable to such First Offer Space upon the date Landlord delivers
possession of the First Offer Space to Tenant. The date on which the First Offer
Space becomes part of the Premises under the terms of this Article shall be
referred to herein as the "First Offer Space Commencement Date." The rent and
additional charges for the First Offer Space shall commence to accrue on the
First Offer Space Commencement Date and shall be the fair market rent and
additional charges determined as of the estimated First Offer Space Commencement
Date then being obtained by Landlord for comparable space in the Project;
provided, however, that in no event shall the rent for the First Offer Space be
less than the then current Rent applicable with respect to the Premises. The
additional rentable square feet within the First Offer Space shall be added to
the Premises in determining Tenant's Building Share and Tenant's Project Share.
Following the First Offer Space Commencement Date, the requirements and
conditions of this Lease, including the Expiration Date, shall apply to the
First Offer Space. Any termination of this Lease terminates all rights under
this Article. Tenant's rights under this Article are personal to the original
Tenant and may be exercised only by the original Tenant while occupying all of
the Premises. Any assignment or subletting by Tenant of this Lease or of all or
a portion of the Premises (even if such assignment or subletting does not
require the consent of Landlord or is approved by Landlord) terminates Tenant's
rights under this Article, unless Landlord consents to the contrary in writing
at the time of such subletting or assignment.
34. Signage. Tenant shall not erect or maintain any temporary or permanent
-------
sign on or about the Premises, the Building, or the Project, or visible from the
Common Areas or exterior, without obtaining prior written approval from
Landlord, which may be granted or withheld in Landlord's sole and absolute
discretion. Any request for approval of a sign shall be made in such detail as
Landlord shall reasonably request. Landlord shall, upon the request of Tenant
and at Tenant's expense, identify Tenant's business name on the monument sign
located outside the Building, and Landlord shall, at Landlord expense, identify
Tenant's business name at the interior suite entrance to the Premises and on the
directory board for the Building. All signs, whether erected by Landlord or
Tenant, shall conform to Landlord's building standard signage (except as
otherwise approved in writing by Landlord) and to all laws, ordinances, rules,
regulations, permits, covenants, conditions, restrictions, and easements
pertaining to signs. In the event of a violation of the foregoing by Tenant,
Landlord may remove same without any liability, and may charge the expense
incurred in such removal to Tenant. Tenant shall remove all approved signs which
it has erected upon the termination of the Lease and repair all damage caused by
such removal. Tenant shall have the right to use its standard graphic on the
sign provided at the entrance to the Premises.
35. Landlord's Warranties and Representations. Landlord warrants and
-----------------------------------------
represents to Tenant that: (a) Landlord is a duly formed and validly existing
limited liability company in good standing under the laws of the State of
Delaware and is qualified to do business and in good standing in the State of
California; (b) the Lease has been duly authorized, executed and delivered by
Landlord and is the legal, valid and binding obligation of the Landlord; (c) no
consent is required for the execution and delivery of the Lease and the leasing
of the Premises by Landlord to Tenant that has not been obtained; (d) there are
no ground leases, mortgages or deeds of trust affecting the Project or any part
thereof other than such mortgages and deeds of trust of which Landlord has
informed Tenant prior to the Commencement Date; (e) to Landlord's current actual
knowledge, without any independent investigation or inquiry, there are no
Hazardous Materials located within the Premises or the Building as of the date
of the Lease other than those which have been disclosed to Tenant in writing;
and (f) to Landlord's current actual knowledge, without any independent
investigation or inquiry, the building and its systems are designed or have been
modified to operate prior to, during and after the year 2000 without error
relating to or arising out of date data.
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<PAGE>
36. Access. Tenant and Tenant's customers and vendors shall have access to
------
the Premises 24 hours per day, 7 days per week, and 365 days per year. Tenant,
and to the extent applicable Tenant's customers and vendors, shall have access
24 hours per day, 7 days per week, and 365 days per year to the Building Common
Areas, the Project Common Areas and all of Tenant's equipment (including without
limitation, the Generator Equipment, the HVAC Equipment, conduits and antennas
and power and telephone closets serving the Premises, and the parking area at
the Project) without prior notice to Landlord; except that Tenant shall use
reasonable efforts to notify a security agent of Landlord prior to accessing any
area other than the Premises that is not generally open to tenants of the
Building at the time of access, and only if such security agent is unable to
respond quickly enough to avoid material adverse harm to Tenant's business
operations then Tenant shall have the right to enter such area without the
accompaniment or consent of the security agent.
37. Confidentiality. If Landlord obtains access to any confidential
---------------
information of Tenant concerning Tenant's business, finances, facilities,
operations, plans, customers, proprietary software, technology and products,
which Landlord understands or reasonably should understand to be such
("Confidential Information"), Landlord shall not use in any way, for its own
account or the account of any third party, except as expressly permitted by this
Lease, nor disclose to any third party (except as required by law or to its
attorneys, accountants and other advisors and mortgagees and prospective
purchasers of the Premises as reasonably necessary and who are notified of this
confidentiality restriction), any such Confidential Information.
IN WITNESS WHEREOF, Landlord and Tenant have each caused their duly
authorized representative to execute this Lease on their behalf as of the date
first above written.
LANDLORD: TENANT:
- --------- ------
SAN DIEGO TECH CENTER, LLC, INFLOW, INC., a Delaware corporation
a Delaware limited liability company
By: /s/ Arthur H. Zeile
By: San Diego Realty Fund 5, LLC, -----------------------------
a California limited liability
company, Its Administrate Member Arthur H. Zeile, President & C.E.O.
------------------------------------
[Printed Name Title]
By: /s/ Nancy B. Printe
---------------------------- ------------------------------------
Its: Manager Nancy B. Printe, Assistant Secretary
------------------------------------
[Printed name and Title]
<PAGE>
EXHIBIT A
Floor Plan
<PAGE>
EXHIBIT B
Site Plan
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
ATTACHED TO AND MADE A PART OF OFFICE BUILDING LEASE
(Capitalized terms shall have the meaning set forth in the Lease.)
1. Parking-General. Subject to compliance with the rules and regulations
---------------
set forth below in paragraph 2, so long as the Lease to which this Exhibit D is
attached remains in effect, Tenant or persons designated by Tenant shall be
entitled to non-exclusive use of unreserved surface parking areas located at the
Project. All persons utilizing the Project parking facilities shall comply with
the rules and regulations set forth below. Landlord reserves the right to modify
and/or adopt such other reasonable and non-discriminatory rules and regulations
for the Project parking as it deems necessary. Landlord may refuse to permit any
person who violates the rules and regulations to park in the Project parking
facilities. Any violation of this Parking Agreement shall subject the violator's
car to removal from the Project parking facilities at the violator's expense.
2. Parking-Rules and Regulations.
-----------------------------
(a) Cars must be parked entirely within the stall lines painted on
the floor.
(b) All directional signs and arrows must be observed.
(c) The speed limit shall be 5 miles per hour.
(d) Parking is prohibited:
(1) In areas not striped for parking;
(2) In fire lanes;
(3) Where "no parking" signs are posted;
(4) In cross-hatched areas; and
(5) In such other areas as may be designated by Landlord.
(e) Every parker is required to park and lock his or her own car. All
responsibility for theft and/or damage to cars, other personal property or
persons is assumed by the parker.
(f) No more than one vehicle may be parked in any one parking space.
Washing, waxing, cleaning or servicing of any vehicle by a parker and/or his
agents is prohibited.
(g) Tenant shall acquaint all its officers and employees with these
rules and regulations.
3. Asbestos.
--------
(a) Tenant has been provided with the Asbestos Reports described in Section
30.1 of the Lease. The reports contain a management plan and procedures.
(b) It is important to the health and safety of everyone in the Project
that the procedures described in the management plan and in the Asbestos Reports
be strictly followed. If Tenant has reason to believe that anyone is not
following these procedures, that there is asbestos in any area of the Building
or Project not indicated in the Asbestos Reports, or that any asbestos
containing materials have been damaged, Tenant shall immediately contact
Landlord or its property manager. Tenant shall not fail to follow the attached
procedures in any way and must obtain the property manager's approval as to any
work to be done by Tenant or any of Tenant's Agents if the work involves any
procedures to be done in any area containing asbestos. The property manager may
withhold consent to any such work if the property manager is of the opinion that
the work may create a danger to the employee, or others in the Building or
Project. Stoppage of work shall occur only for imminent dangers and work shall
recommence only when Tenant adopts procedures appropriate to mitigate such
dangers in accordance with the Asbestos Reports.
4. Miscellaneous.
-------------
(a) No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the Building
(other than the Premises, if not visible from the exterior of the Building)
without the written consent of Landlord, first had and obtained, and Landlord
shall have the right to remove any such sign, placard, picture, advertisement,
name or notice without notice to and at the expense of Tenant. All signs or
lettering on doors shall conform to Landlord's sign criteria for the Building.
Tenant shall not place anything or allow anything to be placed near the glass of
any window, door, partition or wall which may appear unsightly from outside the
Premises.
Exhibit C-1
<PAGE>
(b) Tenant shall not alter any lock or install any new or additional locks
or any bolts on any door of the Premises without obtaining the prior express
written consent of Landlord which consent shall not be unreasonably withheld.
(c) Toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein, and the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant or those employees or invitees of Tenant who shall have caused
it.
(d) Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought in or kept in or about the Premises or the
Building.
(e) Except as provided in the Lease, Tenant shall not use or keep in the
Premises any flammable or combustible fluid or material, including, but not
limited to, kerosene or gasoline and shall not use any method of heating or air
conditioning other than that supplied or installed by Landlord.
(f) Upon the termination of its tenancy, Tenant shall deliver to Landlord
the keys for all offices, rooms and toilet rooms which shall have been furnished
to Tenant or which Tenant shall have had made, and in the event of loss of any
keys so furnished, shall pay Landlord therefor.
(g) Tenant shall not lay linoleum, tile, carpet or any other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner, without obtaining the prior express written consent of Landlord which
consent shall not be unreasonably withheld. The expense of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by Tenant, or by the contractors, employees or invitees of Tenant who
caused the damage.
(h) Landlord reserves the right to exclude or expel from the Buildings any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
the rules and regulations of the Project.
(i) Landlord shall have the right, after prior notice to Tenant, to change
the name and the street address of the Building of which the Premises are a
part.
(j) Tenant shall not disturb, solicit, or canvas any occupant of the
Building or Project and shall cooperate to prevent same.
(k) Without the written consent of Landlord, Tenant shall not use the name
of the Building or the Project in connection with or in promotion or advertising
of the business of Tenant except as Tenant's address.
(l) All exterior window coverings, whether curtains, blinds or otherwise,
used by Tenant shall be approved in writing by Landlord. Landlord intends that
all window coverings in the Project be uniform and standard in color, texture
and appearance and Tenant shall have no right to deviate from or change the
exterior window coverings approved by Landlord.
(m) Tenant shall comply with all documents, instruments and covenants
recording against the Project, including, without limitation, the covenants,
conditions and restrictions of the Lusk/Mira Mesa Industrial Park, a copy of
which has been received and reviewed by Tenant.
Exhibit C-2
<PAGE>
EXHIBIT D
Generator Equipment
-------------------
<PAGE>
EXHIBIT E
First Offer Space
-----------------
<PAGE>
EXHIBIT 10.17
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT, made and entered into by and between 1052 WEST
PEACHTREE, LLC, a Georgia limited liability company (hereinafter referred to as
"Landlord"), and INFLOW, INC., a Delaware corporation (hereinafter referred to
as "Tenant"):
WITNESSETH:
1. PREMISES. For and in consideration of the obligation of Tenant to pay rent
--------
as herein provided, and in consideration of the other terms, provisions and
covenants hereof, Landlord hereby demises and leases to Tenant, and Tenant
hereby leases from Landlord certain premises situated within the County of
Fulton, State of Georgia, known as approximately 35,191 usable square feet (as
determined by ANSI/BOMA Standard Z64.1-1 996) of office space as shown on the
site plan attached hereto as Exhibit "B" and incorporated herein by reference
-----------
(hereinafter referred to as the "Premises"), and located in a 35,191 square foot
facility known as 1052 West Peachtree Street, Atlanta, Georgia (hereinafter
referred to as the "Building", which is located on the real property described
in Exhibit "A" attached hereto and incorporated herein by reference (herein
-----------
referred to as the "Land"). Within ten (10) days after the date of this Lease,
Landlord shall provide Tenant with a certification from a certified engineer
stating the usable square footage of the Premises and the Building. Tenant and
its employees, agents, customers and invitees shall also have the right to the
free use of the common areas of the Building and the Land, and Tenant shall have
the exclusive right to use the parking area indicated on Exhibit "B," which
----------
parking area Landlord warrants contains adequate parking for at least forty-six
(46) standard sized automobiles (subject, however, to the provisions of
paragraph 28). Tenant shall also have the exclusive right to use, at no
additional charge, the portion of the Land indicated on Exhibit "B" for
-----------
installation of Tenant's generators, HVAC equipment and other equipment.
TO HAVE AND TO HOLD the Premises for the Demised Term, as hereinafter
defined.
2. TERM. The term of this Lease (hereinafter referred to as the "Demised
----
Term") shall be for a period commencing on the Commencement Date, as hereinafter
defined, and ending one hundred twenty (120) months thereafter, unless sooner
terminated or extended as provided in this Lease; provided, however, that, in
the event the Commencement Date is not the first day of a calendar month, the
Demised Term shall extend for the remainder of the calendar month in which the
Commencement Date occurs plus said number of months.
The "Commencement Date" shall be June 15, 2000; provided, however, that such
June 15 date shall be extended for one day for each day beyond February 15, 2000
(the "Delivery Date") until Tenant is permitted to take possession of the
Premises for purposes of commencing Tenant's improvements. Landlord shall
deliver possession of the Premises to Tenant no later than the Delivery Date in
order for Tenant to commence construction of Tenant's initial improvements. The
initial Tenant improvements shall be constructed by Tenant pursuant to plans and
specifications referenced on Exhibit "C".
-----------
3. BASE RENT Tenant agrees to pay Landlord rent for the Premises, in advance,
---------
without demand, deduction or set off, on or before the first (1st) day of each
calendar month during the Demised Term at the following rates:
<PAGE>
Months: Monthly Rental: Annual Rent:
-------- --------------- ------------
1-12 $39,590.00 $475,080.00
13-24 $40,777.70 $489,332.40
25-36 $42,001.03 $504,012.37
37-48 $43,261.06 $519,132.74
49-60 $44,558.89 $534,706.73
61-72 $45,895.66 $550,747.93
73-84 $47,272.53 $567,270.37
85-96 $48,690.71 $584,288.48
97-108 $50,151.43 $601,817.13
109-120 $51,655.97 $619,871.64
One monthly rent installment in the sum of $39,590.00 shall be due and
payable on the date hereof, with the second (2nd) full monthly rent installment
being due on the first day of the second (2nd) full calendar month of the
Demised Term. The rental payment for any fractional calendar month at the
commencement or end of the Demised Term shall be prorated on the basis of a
thirty-day month.
In the event any monthly installment of rent is not paid to Landlord by the
fifth (5th) day of a respective month, without in any way implying Landlord's
consent to such late payment, Tenant agrees to pay, in addition to said
installment, a late payment charge equal to five percent (5%) of such
installment.
4. USE. The Premises shall be used only for general office purposes,
---
computer and telecommunications equipment room (including, without limitation,
collocation services to Tenant's customers) and for no other use or purpose
without the prior written consent of Landlord. Except as otherwise permitted in
this Lease, outside storage, including without limitation, trucks and other
vehicles, is prohibited without Landlord's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Tenant shall at its
own cost and expense obtain any and all other licenses and permits necessary for
any such use. Landlord represents to the best of its knowledge and belief that
applicable governmental laws, ordinances and regulations permit the use of the
Premises for general offices and computer and telecommunications equipment room,
and that the Premises is in compliance with all such applicable laws, ordinances
and regulations. During the Demised Term, Landlord shall comply with all such
applicable governmental laws, ordinances and regulations regarding the Premises,
the Building and the Land except to the extent Tenant must comply under this
Paragraph. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to its specific use of the Premises, and shall promptly
comply with all governmental orders and directives for the correction,
prevention and abatement of nuisances caused by Tenant or its agents, employees,
customers or invitees in or upon, or connected with, the Premises, all at
Tenant's sole expense. Tenant shall not permit any objectionable or unpleasant
odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor
take any other action which would constitute a nuisance. Without Landlord's
prior written consent, Tenant shall not receive, store or otherwise handle any
product, material or merchandise which is explosive or highly inflammable.
Tenant will not permit the Premises to be used for any purpose or in any manner
(including, without limitation, any method of storage) which would render the
insurance thereon void or the insurance risk more hazardous (unless Tenant
agrees to pay any increased premiums) or cause the State Board of Insurance or
other insurance authority to disallow any sprinkler credits. Tenant shall not
use the Premises for the generation, storage, transportation or disposal of
dangerous, toxic or hazardous materials, chemicals, wastes or similar
substances; provided, however,
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that Tenant may use materials or substances in small quantities as are typically
used in an office building and in a telecommunications and computer equipment
room, and materials required for cleaning and maintaining computer and
telecommunications equipment and batteries and fuel for Tenant's equipment and
fixtures.
5. TAXES.
-----
(a) Landlord agrees to pay before delinquency, all taxes, assessments and
governmental charges of any kind and nature whatsoever (hereinafter collectively
referred to as "taxes") lawfully levied or assessed against the Premises;
provided, however, that the amount of taxes to be paid by Landlord hereunder for
the Premises shall be proportionately reimbursed to it by Tenant, pursuant to
Paragraph 8.
(b) If at any time during the term of this Lease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any taxes,
assessments or governmental charged, levied, assessed or imposed on real estate
and the improvements thereon, there shall be charged, levied, assessed or
imposed on Landlord a capital levy or other tax directly on the rents received
therefrom and/or a franchise tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents for the present or any future
building or buildings on the Premises, then all such taxes, assessments, levies
or charges, or the part thereof so measured or based, shall be deemed to be
included within the term "taxes" for the purposes hereof.
(1) Landlord shall have the right (but no obligation unless Tenant
requests Landlord to do so) to employ a tax consulting firm to attempt to
assure a fair tax burden on the building or buildings in which the Premises
are located and grounds surrounding the Premises within the applicable tax
jurisdiction. Tenant shall pay to Landlord upon demand from time to time,
as additional rent, the amount of Tenant's "proportionate share" (as
defined in subparagraph 8(e) herein) of the cost of such service provided
that such firm is successful in reducing the taxes, but in no event shall
Tenant's share exceed the amount of the reduction in taxes attributable to
Tenant unless Tenant has requested Landlord to employ such services.
(2) Any payment to be made pursuant to this Paragraph 5 shall be
prorated in the event any portion of the Demised Term is not within a full
real estate tax year.
6. LANDLORD'S REPAIRS. Landlord shall at its expense maintain only the roof,
------------------
foundation, the structural soundness of the exterior walls of the Premises, the
Building and the Land in good and safe working order and repair, reasonable wear
and tear excepted, and in a condition at least comparable to other first class
office buildings in the Atlanta, Georgia metropolitan area. Tenant shall repair
and pay for any damage caused by the negligence of Tenant, or Tenant's
employees, agents or invitees, or caused by Tenant's default hereunder. The term
"walls" as used herein shall not include windows, glass or plate glass, doors,
special store fronts or office entries. Tenant shall within a reasonable amount
of time give Landlord written notice of defect or need for repairs, after which
Landlord shall have reasonable opportunity to repair same or cure such defect.
So long as Landlord proceeds' with reasonable diligence to cure any defect or
perform any repairs or maintenance, Landlord's liability with respect to any
defects, repairs or maintenance for which Landlord is responsible under any of
the provisions of this Lease shall be limited to the cost of such repairs or
maintenance or the curing of such defect, unless such defect is caused by
Landlord's negligence or intentional misconduct.
7. TENANT'S REPAIRS.
----------------
(a) Tenant shall at its own cost and expense keep and maintain all parts
of the Premises (except those for which Landlord is expressly responsible under
the terms of this Lease) in good condition, promptly making all necessary
repairs and replacements, including but not limited to, windows, glass and plate
glass, doors, any special office entry, interior walls and finish work, floors
and floor covering, heating and air conditioning systems, plumbing work and
fixtures within the Premises, interior termite and pest extermination within the
Premises. Tenant shall also be responsible for security within the Premises and
regular removal of trash and debris at and from the Premises.
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(b) Tenant shall provide Landlord with prior notice of any repair to be
undertaken by Tenant and such other information as Landlord may reasonably
request with respect to such repair, except such notice shall not be required if
immediate repair is necessary for security or safety reasons or to prevent the
disruption of services to the Premises.
8. COMMON AREA COSTS. Tenant shall pay, as additional rent, to Landlord
-----------------
Tenant's "proportionate share" of the reasonable cost and expense of all
"Operating Costs" (as hereinafter defined) for the Building and the care for
grounds around the Building (but specifically excluding all costs and expenses
related to any portion of the Land not used by Tenant, including, without
limitation, the parking area leased by Landlord to third parties), including,
but not limited to the mowing of grass, maintenance of parking areas, entrances
and driveways, security lighting, landscape maintenance and irrigation, water
and sewer charges. Payment shall be made on the first day of each month based on
the projected cost of such maintenance. At the end of each year, Landlord shall
determine the actual costs of such maintenance. Any additional costs due from
Tenant based on the actual costs shall be promptly paid by Tenant. Any savings
will be, at Tenant's option, either credited against the following years
payments or refunded to Tenant. Tenant shall also be responsible for all of its
janitorial and trash removal and all other expenses related directly to the
operation of Tenant's business. The books and records maintained reflecting
common area maintenance costs shall be made available for Tenant's inspection at
reasonable times.
a. "Operating Costs" shall mean any and all reasonable costs, expenses
and disbursements of every kind and character (subject to the limitations set
forth below) which Landlord shall actually incur or pay in connection with the
ownership of any estate or interest in the Project ["Project" shall mean the
Land and the Building and other structures, improvements, fixtures, and
appurtenances now or hereafter placed, constructed or erected thereon.] or the
operation, maintenance, repair, replacement and security of the Project
determined in accordance, with the generally accepted accounting principles
consistently applied, including, but not limited to, the following:
(i) Taxes and insurance appertaining to the Project.
(ii) Wages and salaries of all employees engaged in the operation,
repair, replacement, maintenance, and security of the Project,
including taxes, insurance and benefits relating thereto.
(iii) All supplies and materials used in the operation, maintenance,
repair, replacement, and security of the Project.
(iv) Cost of all common utilities including water and lighting for the
Project.
(v) Cost of all maintenance and service agreements on equipment,
including alarm service, window cleaning and elevator maintenance.
(vi) Cost of casualty, liability and other insurance applicable to the
Project or Landlord's personal property used in connection
therewith.
(vii) All taxes and assessments and governmental charges, whether federal,
state, county or municipal, and whether they be by taxing districts
or authorities presently taxing or by others, subsequently created
or otherwise, and any other taxes and assessments imposed upon or
attributable to the Project, its operation or the base rental or
additional rent without reference to other income of Landlord.
(viii) Cost of repairs, replacements, and general maintenance of the
Project.
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(ix) Cost of service or maintenance contracts with independent
contractors for the operation, maintenance, repair, replacement, or
security of the Project.
(x) Cost of maintaining accounting books and records.
(xi) Costs of contractual management or administration fees and other
costs directly related to the on-site management of the Project (but
not to exceed nine percent (9%) of Operating Costs).
(xii) Cost of trash removal, garbage, snow and ice removal; servicing,
replacing, equipping and maintenance of all electrical, security and
fire alarms, fire pumps, sprinkler systems and fire extinguishers
and hose cabinets; guard services, painting; window cleaning and
landscaping and gardening.
(xiii) The amortization (together with reasonable financing charges) of
capital expenditures (including labor and materials) required by any
governmental or regulatory authority as the result of changes in
applicable laws after the Commencement Date, and capital
expenditures (including labor and materials) for energy related
equipment (but only to the extent of reductions in Operating Costs).
Specifically excluded from the definition of the term "Operating Costs" are
expenses for repairs, replacements and general maintenance to the extent paid by
proceeds of insurance (or, if Landlord fails to maintain the insurance required
under this Lease, to the extent such items would be covered by the insurance
required to be maintained by Landlord under this Lease) or by Tenant or other
third parties, alterations attributable solely to tenants of the Building other
than Tenant; interest, amortization or other payments on loans to Landlord
whether secured or unsecured; depreciation of the Project, leasing commissions,
advertising and marketing costs; legal expenses; salaries of officers,
executives, employees and agents not directly involved in the on-site operation
of the Project; state, federal or local income taxes, excess profits or
franchise taxes or other such taxes imposed on or measured by or determined from
the gross income of Landlord; ground rents; except as permitted above, costs of
a capital nature, including capital improvements, capital repairs, capital
equipment, and capital tools, as determined under generally accepted accounting
principles consistently applied; costs incurred because Landlord violated the
terms of any lease or any other contract or obligation; overhead and profit paid
to subsidiaries or affiliates of Landlord for management or other services or
materials to the extent that such costs exceed the competitive costs for such
services or materials if provided by a third party; items and services for which
Tenant reimburses Landlord or pays third parties; costs for sculpture,
paintings, or other objects of art; costs incurred to remedy structural defects
in the original construction of the Building; any costs, fines, or penalties
incurred because Landlord or the Project violated any applicable law, regulation
or order; costs incurred to test, survey, cleanup, contain, abate, remove, or
otherwise remedy hazardous wastes or asbestos-containing materials unless the
same were in the Premises because of Tenant's negligence or intentional
misconduct; and other expenses that under generally accepted accounting
principles consistently applied would not be considered normal maintenance,
repair, management or operation expenses. Landlord shall use reasonable efforts
to keep Operating Costs at reasonable amounts while maintaining a high quality
Project.
b. The actual amount of additional rent payable shall be an amount
equal to the tenant's proportionate share of the Operating Costs for the
calendar year in question. "Calendar Year" shall mean any period during the
Demised Term of this Lease commencing on January 1 and ending on the next
following December 31.
c. At the commencement of the Demised Term and thereafter through the
end of the calendar year in which the Term commences, Tenant shall pay an
estimated amount of $2.06/sf per year or $6,041.12 per month as Tenant's
estimated additional rent. On or before December 31st of each Calendar Year
during the Demised Term, or as soon thereafter as practicable but in no event
later than March 1 of the next calendar year, Landlord shall give Tenant written
notice of its estimate of the additional rent for the next ensuing calendar
year. When the base rent shall be due and payable, Tenant
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shall also pay to Landlord one-twelfth (1/12) of such estimated additional rent,
provided that if such notice is not given in December, Tenant shall continue to
pay the monthly payment based on the additional rent computed for the previous
calendar year until the month after such notice is given.
d. As soon as practicable after the close of each calendar year, but in
no event later than March 1 of the following calendar year, Landlord shall
deliver to Tenant a final itemized statement in reasonable detail of the
additional rent for the immediately preceding calendar year and such statement
shall be final and binding upon Landlord and Tenant, except as hereinafter
provided. If such statement shows an amount owing by Tenant that is less than
the payments actually made by the Tenant for the immediately preceding calendar
year, Tenant, at Tenant's option, shall be credited for such excess against the
next monthly payments of additional rent, or Tenant shall be entitled to a
refund of such excess. If such statement shows an amount owing by Tenant that is
more than the payments actually made by the Tenant for the immediately preceding
calendar year, Tenant shall pay the deficiency to Landlord within thirty (30)
days after delivery of the statement. Landlord shall keep and maintain records,
of all Operating Costs for a period of not less than two (2) years, which
records shall be made available to Tenant at reasonable times at Landlord's
offices for inspection and copying by Tenant or its representatives, at Tenant's
cost. If Tenant disputes any item of Operating Costs, Tenant may engage its own
accountants to verify the accuracy of the statement or the reasonableness of the
estimated Operating Costs. If Tenant's accountants determine that an error has
been made, Landlord and Tenant shall endeavor to agree upon the matter, failing
which such matter shall be submitted to an independent certified public
accountant selected by Landlord with Tenant's approval, for a determination
which will be conclusive and binding upon Landlord and Tenant. All costs
incurred by Tenant for Tenant's accountants shall be paid for by Tenant unless
an error is determined to exist pursuant to the procedure outlined above of more
than two percent (2%) of the Operating Costs, in which event Landlord shall
reimburse Tenant for such costs. If it is determined that any portion of the
Operating Costs were not properly chargeable to Tenant, then Landlord shall
promptly credit or refund, at Tenant's option, the appropriate sum to Tenant,
and Tenant's share of the Operating Costs shall be adjusted, if required.
e. Tenant's "proportionate share", as used in this Lease, shall mean
one hundred percent (100%).
9. TENANT IMPROVEMENTS TO PREMISES. Tenant shall not make any alterations,
-------------------------------
additions or improvements to the Premises, exterior or interior, without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed, except for unattached movable fixtures which
may be installed without drilling, cutting or otherwise defacing, damaging or
overloading the Premises. Except as otherwise provided in this Lease or the
Addendum attached hereto, all alterations, additions or improvements erected by
Tenant shall be and remain the property of Tenant during the term of this Lease
and Tenant shall, unless Landlord otherwise elects as provided below, remove all
alterations, additions or improvements erected by Tenant and restore the
Premises to their original condition, reasonable wear and tear and loss by
casualty excepted, by the date of termination of this Lease; provided, however,
that if Landlord so elects prior to termination of this Lease, such alterations,
additions or improvements shall become the property of Landlord as of the date
of termination of this Lease (unless Landlord and Tenant have otherwise agreed).
All construction work done by Tenant in the Premises shall be performed in a
good and workmanlike manner and in compliance with all governmental
requirements.
10. SIGNAGE. Except as otherwise permitted in this Lease or the Addendum
-------
attached hereto, Tenant shall not install any signs (exterior or interior)
visible from outside the Premises except with the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Any permitted signs shall be maintained in compliance with applicable
governmental rules and regulations governing such signs. Tenant shall be
responsible to Landlord for any damage caused by the installation, use or
maintenance of said signs. Tenant agrees, upon removal of said signs, to repair
all damage (including discoloration) incidental thereto.
11. RIGHT OF ENTRY; INSPECTION. Upon advance notice to Tenant (except in case
--------------------------
of an emergency), and upon the terms and conditions contained in this Lease and
the Addendum attached
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hereto, Landlord and Landlord's agents and representatives shall have the right
to enter and inspect the Premises at any reasonable time during business hours,
to ascertain the condition of the Premises, to make such repairs as may be
required or permitted to be made by Landlord under the terms of this Lease, or
to show the Premises to prospective purchasers or within the last six (6) months
of the Demised Term, to prospective tenants. Landlord shall have the right to
place or erect on the Premises a suitable sign indicating the Premises are
available for rent during the last six (6) months of the Demised Term.
(a) Tenant shall give written notice to Landlord at least thirty (30) days
prior to vacating the Premises and shall arrange to meet with Landlord for a
joint inspection of the Premises prior to vacating. In the event of Tenant's
failure to give such notice or arrange joint inspection, Landlord's inspection
at or after Tenant's vacating the Premises shall, if reasonable, be conclusively
deemed correct for purposes of determining Tenant's responsibility for repairs
and restoration.
12. UTILITIES. Landlord represents to the best of its knowledge and belief that
---------
water, gas, electricity and telephone service connections are available to the
Premises in a quantity and quality at least equivalent to the services provided
by other first class office buildings in the Atlanta, Georgia metropolitan
area; but Tenant shall pay for all gas, heat, light, power, telephone, sprinkler
charges and other utilities and services used in or from the Premises, together
with any taxes, penalties, surcharges or the like pertaining thereto and any
maintenance charges for utilities and shall furnish all electric light bulbs and
tubes. If any such services are not separately metered to Tenant, Tenant shall
pay Tenant's proportionate share. Landlord agrees to cooperate, and not take any
action that might interfere, with Tenant's ability to obtain any utility
services. Landlord shall in no event be liable for any interruption or failure
of utility services on the Premises so long as such interruption or failure of
utility services is not caused by Landlord or its agents; provided, however,
that if any interruption or failure of utility services to the Premises occurs,
Landlord will cooperate in any efforts to restore services.
13. ASSIGNMENT AND SUBLETTING.
-------------------------
(a) Tenant shall not, directly or indirectly, have the right to assign this
Lease or to sublet the whole or any part of the Premises without the prior
written consent of Landlord, which shall not be unreasonably withheld,
conditioned or delayed. Consent to any assignment or sublease shall not be
deemed a waiver of the right of Landlord to approve or disapprove a further
assignment or subletting. Notwithstanding any permitted assignment or
subletting, except as otherwise agreed by Landlord in connection with a
permitted assignment or subletting, Tenant shall at all times remain directly,
primarily and fully responsible and liable for the payment of the rent herein
specified and for compliance with all of its other obligations under the terms,
provisions and covenants of this Lease. Upon the occurrence of an "event of
default," as hereinafter defined, if the Premises or any part thereof are then
assigned or sublet, Landlord, in addition to any other remedies herein provided,
or provided by law, may at its option collect directly from such assignee or
subtenant all rents becoming due to Tenant under such assignment or sublease and
apply such rent against any sums due to Landlord from Tenant hereunder, and no
such collection shall be construed to constitute a novation or a release of
Tenant from the further performance of Tenant's obligations hereunder.
(b) In the event that Tenant assigns this Lease or sublets the Premises or
any part thereof, as permitted herein, and at any time receives rent and/or
other consideration which exceeds that which Tenant would at that time be
obligated to pay Landlord, Tenant shall pay to Landlord fifty percent (50%) of
the net excess in such rent as such rent is received by Tenant and fifty percent
(50%) of any other net consideration received by Tenant from such assignee or
subtenant. In addition, should Landlord agree to an assignment or sublease
agreement, Tenant will pay to Landlord on demand a sum equal to all Landlord's
costs, including reasonable attorney's fees, incurred in connection with such
assignment or transfer, all such costs not to exceed $500.00 per assignment or
transfer. If an assignment or subletting is approved, Tenant shall be entitled
to deduct from any excess proceeds described in this subparagraph 13.b. its
reasonable expenses incurred in connection with such assignment or subletting
(including, without limitation, leasing commissions, improvements made to the
Premises by Tenant for its own use and also for the transferee, costs incurred
by Tenant during any period of vacancy and other reasonable out of pocket costs
paid by Tenant).
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14. INSURANCE.
---------
(a) Landlord agrees to maintain standard fire and extended coverage
insurance covering the buildings of which the Premises are a part in an amount
not less than one hundred percent (100%) of the "replacement cost" thereof as
such term is defined in the Replacement Cost Endorsement to be attached thereto,
insuring against the perils of Fire, Lightning and Extended Coverage, such
coverage and endorsements to be as defined, provided and limited in the standard
bureau forms prescribed by the insurance regulatory authority for the State in
which the Premises are situated for use by insurance companies admitted in such
state for the writing of such insurance on risks located within such state.
Subject to the provisions of Paragraph 15, such insurance shall be for the sole
benefit of Landlord and under its sole control. Landlord also agrees to maintain
comprehensive general public liability insurance with a combined single limit of
not less than $1,000,000.00.
(b) Notwithstanding, the foregoing, Tenant shall pay, as additional rent,
to Landlord, Tenant's proportionate share of the cost of such insurance
coverage, pursuant to Paragraph 8. Any payment to be made pursuant to this
subparagraph 14.a. shall be prorated for any portion of the Demised Term which
is not a full premium period under said insurance policy.
(c) Tenant shall, throughout the term of this Lease, at its cost and
expense, provide and keep in force a comprehensive general public liability
insurance policy with a combined single limit of not less than $1,000,000.00.
Tenant shall be solely responsible for keeping insured, to the extent Tenant
elects, its own personal property located on the Premises.
(d) All insurance provided by Tenant as required by this subparagraph 14.b.
shall name, as additional insured, Landlord and any mortgagees or deed to secure
debt holders of the Premises, and be carried by such responsible companies and
in such form reasonably satisfactory to Landlord.
(e) Tenant agrees to deliver to Landlord on or before the Commencement Date
the original policy of insurance required by this subparagraph 14.b. or
certificate thereof and evidence of payment of, premium. At least five (5) days
prior to the expiration of each such policy, Tenant shall deliver to Landlord
the new original policy or certificate for renewal insurance and evidence of
payment of premium.
(f) Tenant shall not violate or knowingly permit to be violated any of the
conditions or provisions of any policy required by this subparagraph 14.b.
(g) Each insurance policy (including renewal insurance) or certificates
thereof issued by the insurer shall contain an agreement by the insurer that
such policy shall not be canceled without at least thirty (30) days prior
written notice to Landlord, and in no event shall such policies be canceled by
Tenant without Landlord's prior written consent, unless such policies are being
replaced with new policies meeting the requirements of this paragraph 14.
(h) Tenant and Landlord, shall cooperate in connection with the collection
of any insurance monies that may be due in the event of loss. Tenant and
Landlord shall execute and deliver such proofs or loss and other instruments
which may be required for the purpose of obtaining the recovery of any such
insurance monies.
(i) Any insurance provided for in this Paragraph 14 may be effected by a
policy or policies of blanket insurance; provided, however, that the amount of
the total insurance allocated to the Premises shall be such as to furnish in
protection the equivalent of separate policies in the amount herein required,
and, provided further, that in all other respects, any such policy or policies
shall comply with the other provisions of this Lease. In any such case, it shall
not be necessary to deliver the original of any such blanket policy, but rather
a certified duplicate as such policy or certificate thereof.
(j) Landlord hereby waives all claims against Tenant covered by insurance
or, if Landlord fails to carry any insurance required by this Lease, claims that
would be covered by the insurance
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required to be carried under this Lease and agrees that each policy of insurance
carried by Landlord shall contain a waiver of subrogation under which Landlord's
insurers waive any claim they may have against Tenant or any person under
Tenant's control notwithstanding that the damage suffered is caused by the act,
omission, fault or want of skill of Tenant or such person.
(k) Tenant hereby waives all claims against Landlord covered by insurance
or, if Tenant fails to carry any insurance required by this Lease, claims that
would be covered by the insurance required to be carried under this Lease and
agrees that each policy of insurance carried by Tenant shall contain a waiver of
subrogation under which Tenant's insurers waive any claim they may have against
Landlord or any person under Landlord's control notwithstanding that the damage
suffered is caused by the act, omission, fault or want of skill of Landlord or
such person.
15. DAMAGE OR DESTRUCTION; SUBROGATION.
----------------------------------
(a) If the Premises should be damaged or destroyed by fire, tornado or
other casualty, Tenant shall give immediate written notice thereof to Landlord.
(b) If the Premises shall be totally destroyed by fire, tornado or other
casualty, or if they should be so damaged thereby that rebuilding or repairs
cannot, in Landlord's estimation, be completed within one hundred twenty (120)
days after the date upon which Landlord is notified by Tenant of such damage,
either Landlord or Tenant may terminate this Lease by written notice to the
other party whereupon all rights and obligations hereunder shall cease and
terminate, effective upon the date of the occurrence of such damage.
(c) Subject to the foregoing, if the Premises should be damaged or
destroyed by any peril covered by the insurance required to be provided by
Landlord under subparagraph 14.a, but only if neither Landlord or Tenant has
terminated this Lease as provided under subparagraph 15(b), this Lease shall not
be terminated, and Landlord shall, at its sole cost and expense thereupon,
proceed with reasonable diligence to rebuild and repair the Premises to
substantially the condition in which they existed prior to such damage, except
that Landlord shall not be required to rebuild, repair or replace any part of
the partitions, fixtures, additions and other improvements which may have been
placed in, on or about the Premises by Tenant. If the Tenant's use and enjoyment
of the Premises for its normal business operations are materially adversely
affected, in whole or in part, following such damage, the rent payable hereunder
during the period in which Tenant's use and enjoyment of the Premises for its
normal business operations are materially adversely affected shall be abated' to
such extent as may be fair and reasonable under all of the circumstances. In the
event that Landlord should fail to complete such repairs and rebuilding within
one hundred twenty (120) days after the date upon which Landlord is notified by
Tenant of such damage, Tenant may, at its option, terminate this Lease by
delivering, written notice of termination to Landlord as Tenant's exclusive
remedy (provided that Landlord proceeded with reasonable diligence to perform
such repairs and rebuilding), whereupon all rights and obligations hereunder
shall cease and terminate.
(d) Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed to secure debt covering
the Premises requires that the insurance proceeds be applied in such
indebtedness, then Landlord shall have the right to terminate this Lease unless
Tenant agrees to pay the cost of any repairs in excess of the available
insurance proceeds by delivering written notice of termination to Tenant within
fifteen (15) days after such requirement is made by any such holder, whereupon
all rights and obligations hereunder shall cease and terminate.
(e) Each of Landlord and Tenant hereby releases the other from any loss or
damage to property caused by fire or any other perils insured through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured in policies of insurance covering
such property or in the policies of insurance required under this Lease,
whichever is greater, even if such loss or damage shall have been caused by the
fault or negligence of the other party, or anyone for whom such party may be
responsible; provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such times
as the
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releasor's policies shall contain a clause or endorsement to the effect that any
such release shall not adversely affect or impair said policies or prejudice the
right of the releasor to recover thereunder and then only to the extent of the
insurance proceeds payable under such policies. Each of the Landlord and Tenant
agrees that it will use its best efforts to cause its insurance carriers to
include in its policies such a clause or endorsement. If extra costs in excess
of commercially reasonable rates shall be charged therefor, each party shall
advise the other thereof and of the amount of the extra costs, and the other
party, at its election, may pay the same, but shall not be obligated to do so.
If the other party declines to pay such extra costs, both parties shall be
released of their obligation to obtain the waiver.
16. LIABILITY. Landlord shall not be liable to Tenant or Tenant's employees,
---------
agents, invitees, patrons or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the Premises, resulting
from and/or caused in part or whole by, the negligence or misconduct of Tenant,
its employees, agents, invites, patrons or visitors, or caused by the buildings
and improvements located on the Premises becoming out of repair due to
activities of or arising at the instance of Tenant, its agents' or employees,
use, generation, storage or disposal of toxic or hazardous materials or
substances on or about the Premises due to activities of or arising at the
instance of Tenant, its agents or employees, or caused by leakage of gas, oil,
water or steam or by electricity emanating from the Premises, and Tenant hereby
covenants and agrees that it will at all times indemnify and hold safe and
harmless the Premises, Landlord and Landlord's agents and employees from any
loss, liability, claims, suits, costs, expenses, including without limitation,
reasonable attorney's fees and damages, both real and alleged, arising out of
any such damage or injury, except injury to persons or damage to property the
cause of which is the negligence or misconduct of Landlord or the failure of
Landlord to repair any part of the Premises which Landlord is obligated to
repair and maintain hereunder within a reasonable time after the receipt of
written notice from Tenant of needed repairs. Landlord hereby covenants and
agrees that it will at all times indemnify and hold safe and harmless Tenant and
Tenant's agents, employees, invitees and customers from any loss, liability,
claims, suits, costs, expenses, including without limitation, reasonable
attorney's fees and damages, both real and alleged, for any injury to person or
damage to property on or about the Premises resulting from and/or caused in part
or whole by, the negligence or misconduct of Landlord, its employees, agents,
invites, patrons or visitors, or caused by the buildings and improvements
located on the Premises becoming out of repair due to activities of or arising
at the instance of Landlord, its agents or employees, use, generation, storage
or disposal of toxic or hazardous materials or substances on or about the
Premises due to activities of or arising at the instance of Landlord, its agents
or employees, except injury to persons or damage to property the cause of which
is the negligence or misconduct of Tenant or the failure of Tenant to repair any
part of the Building which Tenant is obligated to repair and maintain hereunder
within a reasonable time after the receipt of written notice from Landlord of
needed repairs.
17. CONDEMNATION.
------------
(a) If eighty percent (80%) or more of the gross square footage of the
building in which the Premises are located should be taken for public or quasi-
public use under any governmental law, ordinance or regulation by right of
eminent domain, or by private purchase in lieu thereof, Landlord shall have the
right to terminate this Lease and the rent shall be abated effective on the date
of Landlord's election to so terminate. Additionally, if the whole or any part
of the Premises should be taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain, or by
private purchase in lieu thereof and the taking would prevent or materially
interfere with the use of the Premises for the purpose for which they are being
used, this Lease shall terminate, whereupon all rights and obligations
hereunder shall cease and terminate, effective on the date of the physical
taking of the Premises.
(b) If part of the Premises shall be taken for any public or quasi-public
use, under any governmental law, ordinance or regulation, or by right of eminent
domain, or by private purchase in lieu thereof, and this Lease is not terminated
as provided in subparagraph 17.a, this Lease shall not terminate but the rent
payable hereunder during the unexpired portion of this Lease shall be reduced to
such extent as may be fair and reasonable under all of the circumstances.
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(c) In the event of any such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive and retain such separate
awards and/or portion of lump sum awards as may be allocated to their respective
interests in any condemnation proceedings.
18. HOLDING OVER. Tenant shall, at the termination of this Lease by lapse of
------------
time or otherwise, deliver immediate possession of the Premises to Landlord. If
Landlord agrees in writing that Tenant may hold over after the expiration or
termination of this Lease, unless the parties hereto otherwise agree in writing
on the terms of such holding over, the hold over tenancy shall be subject to
termination by Landlord at any time upon not less than thirty (30) days advance
written notice, or by Tenant at any time upon not less than thirty (30) days
advance written notice, and all of the other terms and provisions of this Lease
shall be applicable during that period, except that Tenant shall pay Landlord,
from time to time, upon demand, as rental for the period of any such holding
over, an amount equal to one and one-fourth (1-1/4) of the rent in effect on the
termination date, computed on a daily basis for each day of the hold over
period. No holding over by Tenant, whether with or without consent of Landlord,
shall operate to extend this Lease except as otherwise expressly provided. The
preceding provisions of this Paragraph 18 shall not be construed as Landlord's
consent for Tenant to hold over.
19. QUIET ENJOYMENT. Landlord represents and warrants that it has full right
---------------
and authority to enter into this Lease and that Tenant, upon paying the rental
herein set forth and performing its other covenants and agreements herein set
forth and performing its other covenants and agreements herein set forth, shall
peaceably and quietly have, hold and enjoy the Premises for the term hereof,
subject to the terms and provisions of this Lease.
20. EVENTS OF DEFAULT. The following events shall each be deemed to be an event
-----------------
of default by Tenant under the Lease:
(a) Tenant shall fail to pay any installment of the rent herein required
within five (5) days after written notice thereof from Landlord to Tenant,
provided, however, that Landlord shall not be required to give such notice more
than twice in any calendar year.
(b) Tenant shall become insolvent, or shall make a transfer to defraud
creditors, or shall make an assignment for the benefit of creditors.
(c) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of the
United States or any State thereof, or Tenant shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant thereunder, and such petition or
proceeding is not vacated or stayed within ninety (90) days after it is filed.
(d) A receiver or trustee shall be appointed for all or substantially all
of the assets of Tenant and such appointment is not vacated or stayed within
ninety (90) days after it is made.
(e) Tenant shall desert, abandon or vacate the Premises and cease paying
rent hereunder.
(f) Tenant shall fail to comply with any term, provision or covenant of
this Lease (other than as set forth in clauses (a) through (e) in this Paragraph
20), and shall not cure such failure within thirty (30) days after written
notice thereof to Tenant, unless such failure takes longer than thirty (30) days
to cure and Tenant commences to cure within said thirty (30)-day period and
diligently pursues the cure to completion, but in no event shall the thirty
(30)-day cure period be extended by more than sixty (60) additional days.
21. REMEDIES. Upon the occurrence of any events of default described in
--------
Paragraph 20 hereof, Landlord shall have the option to pursue any one or more of
the following remedies without notice or demand whatsoever, but subject to the
provisions of the Addendum attached to this Lease:
(a) Terminate this Lease in which event Tenant shall immediately surrender
the Premises to Landlord, and if Tenant fails so to do, Landlord may, without
prejudice to any other remedy which it may
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have for possession or arrearage in rent, avail itself of dispossessory
proceedings against Tenant, and Tenant agrees to pay to Landlord on demand the
amount of all loss and damages which Landlord may suffer by reason of such
termination, whether through inability to relet the Premises on satisfactory
terms or otherwise.
(b) Enter upon and take possession of the Premises and expel or remove
Tenant and any other person who may be occupying the Premises or any part
thereof pursuant to any dispossessory proceeding against Tenant, without being
liable for prosecution or any claim for damages thereof, and relet the Premises
and receive the rent therefor; and Tenant agrees to pay to the Landlord on
demand any deficiency that may arise by reason of such reletting. In the event
Landlord is successful in reletting the Premises at a rental in excess of that
agreed to be paid by Tenant pursuant to the terms of this Lease, Landlord and
Tenant each mutually agree that Tenant shall not be entitled, under any
circumstances, to such excess rental, and Tenant does hereby specifically waive
any claim to such excess rental.
(c) Enter upon the Premises, without being liable for prosecution or any
claim for damages therefor, and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord on demand for any
reasonable expenses which Landlord may incur in thus effecting compliance with
Tenant's obligations under this Lease, and Tenant further agrees that Landlord
shall not be liable for any damages resulting to the Tenant from such action,
unless caused by the negligence of Landlord or performed in violation of this
Lease and the Addendum attached hereto.
(d) Landlord shall have all other rights and remedies provided by law or in
equity. In the event Tenant fails to pay any installment of rent hereunder
within five (5) days after such installment is due, to help defray the
additional cost to Landlord for processing such late payments, Tenant shall pay
to Landlord a late charge in an amount equal to five percent (5%) of such
installment; and the failure to pay such amount within ten (10) days shall be an
event of default hereunder after the expiration of five (5) days written notice
thereof from Landlord to Tenant and such late charge having not been paid by
Tenant. This provision for such late charge shall be in addition to all of
Landlord's other rights and remedies hereunder or at law and shall not be
construed as liquidated damages or as limiting Landlord's remedies in any
manner.
(e) Landlord shall mitigate its damages by making reasonable efforts to
relet the Premises on reasonable terms. If Landlord relets for a period of time
longer than the current Demised Term, then any expenses related to the new
lease, including, without limitation, leasing commissions, free rent and tenant
improvements, shall be allocated throughout the entire reletting term to not
unduly reduce the amount of consideration received by Landlord during the
remaining period of the Demised Term. Pursuit of any of the foregoing remedies
shall not preclude pursuit of any of the other remedies 'herein provided or any
other remedies provided by law, nor shall pursuit of any remedy herein provided
constitute a forfeiture or waiver of any rent due to Landlord hereunder or any
damages accruing to Landlord by reason of the violation of any of the terms,
provisions and covenants herein contained. No act or thing done by the Landlord
or its' agents during the Demised Term shall be deemed a termination of this
Lease or any acceptance of the surrender of the Premises, and no agreement to
terminate this Lease or accept a surrender of the Premises shall be valid unless
in writing signed by Landlord. No waiver by Landlord or Tenant of any violation
or breach of any of the terms, provisions and covenants herein contained shall
be deemed or construed to constitute a waiver of any other violation or breach
of any of the terms, provisions and covenants herein contained. Landlord's
acceptance of the payment of rental or other payments hereunder after the
occurrence of an event of default shall not be construed as a waiver of such
default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord
to enforce one or more of the remedies herein provided upon an event of default
shall, not be deemed or construed to constitute a waiver of such default or of
Landlord's right to enforce any such remedies with respect to such default or
any subsequent default.
(f) Tenant agrees to indemnify and hold Landlord harmless from any and all
losses, costs, expenses (including, without limitation, reasonable attorney's
fees), liabilities, causes of action, suits, claims and damages arising out of
or in connection with any violation or breach of, or failure of Tenant to
12
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fully and completely observe, satisfy, perform and comply with the terms and
conditions of this Lease, provided, however, that Tenant shall only be
responsible for Landlord's attorney's fee in the event that a judgment has been
rendered or a judicial decision or ruling has been issued against Tenant.
(g) Landlord agrees to indemnify and hold Tenant harmless from any and all
losses, costs, expenses (including, without limitation, reasonable attorney's
fees), liabilities, causes of action, suits, claims and damages arising out of
or in connection with any violation or breach of, or failure of Landlord to
fully and completely observe, satisfy, perform and comply with the terms and
conditions of this Lease, provided, however, that Landlord shall only be
responsible for Tenant's attorney's fee in the event that a judgment has been
rendered or a judicial decision or ruling has been issued against Landlord.
22. MORTGAGES. Tenant, hereby agrees and accepts that this Lease is and shall
---------
be subject and subordinate to any mortgage(s) and/or deeds to secure debt
(collectively referred to as the "Mortgage") now or any time hereafter
constituting a lien or charge upon the Premises or the improvements situated
thereon; provided, however, that, so long as Tenant fulfills all of its
obligations under this Lease, Tenant's possession of the Premises and Tenant's
other rights under this Lease shall not be disturbed or impaired by the holder
of any such Mortgage or any person claiming through or under Landlord.;
Notwithstanding the foregoing, if the holder of any such Mortgage elects to have
Tenant's interest in this Lease superior to any such instrument, then by notice
to Tenant from such holder, this Lease shall be deemed superior to such lien,
whether this Lease was executed before or after said Mortgage. Any documents
required to be executed to confirm such subordination, nondisturbance and
attornment shall be executed and delivered by the appropriate party within five
(5) business days after request in order to confirm the foregoing provisions.
(a) If, in connection with obtaining financing or refinancing for the
Premises, or a sale of the Premises, any lender or purchaser shall request
reasonable modifications in this Lease as a condition to such financing or
purchase, Tenant will not unreasonably withhold or delay or defer its consent
thereto, provided that such modifications do not increase the obligations of
Tenant hereunder or adversely affect Tenant's rights hereunder.
23. MECHANIC'S LIENS. Tenant shall have no authority, express or implied, to
----------------
create or place any lien or encumbrance of any kind or nature whatever upon or
in any matter to bind, the interest of Landlord in the Premises or to charge
the rental payable hereunder for any claim in favor of any person dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs and each such claim shall affect and each such lien
shall attached to, if at all, only the leasehold interest granted to Tenant by
this instrument. Tenant covenants and agrees that it will pay or cause to be
paid or have fully bonded within thirty (30) days after its receipt of notice
that a lien has been filed all sums legally due and payable by it on account of
any labor performed or materials furnished in connection with any work performed
by or at the request of Tenant on the Premises on which any lien is or can be
validly and legally asserted against its leasehold interest in the Premises or
the improvements thereon and that it will save and hold Landlord harmless from
any and all loss, cost or expense based on or arising out of asserted claims or
liens against the leasehold estate or against the right, title and interest of
Landlord in the Premises or under the terms of this Lease,
24. NOTICES. Any notices, demands, payments or other communications required or
-------
permitted to be delivered under this Lease shall be given by personal delivery,
nationally recognized overnight courier, confirmed facsimile transmission or by
deposit in the United States Mail, postage prepaid, Certified or Registered
Mail, addressed to the parties hereto at the respective addresses set forth
below, or at such other address as they have theretofore specified by written
notice delivered in accordance herewith:
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LANDLORD TENANT
-------- ------
Inflow, Inc.
1052 West Peachtree, LLC 1052 West Peachtree Street, NW
c/o McWhirter Realty Corp. Atlanta, Georgia 30308
5500 Interstate North Parkway Attn: General Manager
Suite 230 Telefax No. (___) ___-_______
Atlanta, Georgia 30328-4662
Attn: Barry E. McWhirter with a copy to:
Telefax No. (770) 933-2797
Inflow, Inc.
938 Bannock Street, Suite 300
Denver, Colorado 80204
Attn: Legal Department
Telefax No. (303) 824-3001
All notices shall be deemed given upon personal delivery, upon receipt if sent
by facsimile, the next business day after deposit with a nationally recognized
overnight courier or the third business day after deposit if sent by United
States Mail, except as otherwise specifically provided in this Lease and except
as to the payments of rent to Landlord which shall be effective upon receipt by
Landlord.
If and when included within the term "Landlord", as used in this instrument,
there are more than one person, firm or corporation, all shall jointly arrange
among themselves for their joint execution of such a notice specifying some
individual at some specific address for the receipt of notices and payments to
Landlord; if and when' included within the term "Tenant", as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Tenant. All parties
within the term "Landlord" and "Tenant", respectively, shall be bound by notices
given in accordance with the provisions of this Paragraph 24 to the same effect
as if each had received such notice.
25. SECURITY DEPOSIT. In addition, Tenant shall deposit monies in the amount of
----------------
$39,590.00 with Landlord as a security deposit which shall be held by Landlord,
without liability for interest thereon, as security for the full and faithful
performance by Tenant of each and every term, covenant and condition of this
Lease of Tenant. If any of the rents, or other charges or sums payable by Tenant
to Landlord shall be overdue and unpaid, or should Landlord make payments on
behalf of Tenant, or should fail to perform any of the terms of this Lease, then
Landlord may, at its option, appropriate and apply the security deposit, or so
much thereof as may be necessary to compensate Landlord toward the payment of
the rents, charges or other sums due from Tenant, or towards any loss, damage or
expense sustained by Landlord resulting from such default on the part of Tenant;
and in such event, Tenant shall, upon demand, restore the security deposit to
the original sum deposited. In the event Tenant performs all of Tenant's
obligations under this Lease, the security deposit shall be returned in full to
Tenant within thirty (30) days after the date of the expiration or sooner
termination of the term of this Lease and the surrender of the Premises by
Tenant in compliance with the provisions of this Lease.
26. REAL ESTATE BROKER. Tenant represents and warrants that the Tenant has
------------------
dealt with no broker, agent or finder in connection with this Lease other than
McWhirter Realty Corp. ("McWhirter"), Node Com, Inc. ("Node Com") and
Insignia/ESG ("Insignia") and insofar as the Tenant knows, no other broker,
agent or finder negotiated this Lease or is entitled to any commission or fee in
connection herewith. Except with respect to Node Com and Insignia representing
Tenant and McWhirter, Tenant agrees to indemnify, defend and hold Landlord free
and harmless from and against all claims for broker's or agent's commissions or
finder's fees by any person claiming to have been retained by Tenant in
connection with this transaction, or any other losses, costs, expenses
(including, without limitation, reasonable attorney's fees), liabilities,
damages, causes of action or suits arising out of the alleged employment or use
of a broker, agent or finder by Tenant. Landlord agrees to pay McWhirter, Node
Com and Insignia real estate commissions pursuant to a separate agreement, and
Landlord agrees to indemnify, defend and hold Tenant free and harmless from and
against all claims for broker's or agent's
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commissions or finder's fees by any person claiming to have been retained by
Landlord in connection with this transaction, or any other losses, costs,
expenses (including, without limitation, reasonable attorney's fees),
liabilities, damages, causes of action or suits arising out of the alleged
employment or use of a broker, agent or finder by Landlord.
27. LIMITATIONS AND LANDLORD'S LIABILITY. Any liability for damages or breach
------------------------------------
or nonperformance by Landlord, or arising out of the subject matter of this
Lease or the relationship created hereby, shall be limited to, and collectible
only out of, Landlord's interest in the Premises and in particular the proceeds
received by it for the sale of the building and no personal liability is assumed
by, or shall at any time be asserted against, Landlord or its affiliated
corporations, its and their partners, venturers, directors, shareholders,
officers, agents, servants and employees, or any of its or their successors or
assigns, all such liability, if any, being expressly waived and released by
Tenant. Landlord's review, supervision, commenting on or approval of any aspect
of work to be done by or for Tenant is solely for Landlord's protection, and
except as expressly provided, creates no warranties or duties to Tenant or to
third parties.
28. PARKING. Parking shall be available to Tenant on an exclusive basis for
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forty-six (46) parking places. Tenant agrees not to overburden the parking
facilities and agrees to cooperate with Landlord in the use of parking
facilities. "Parking" as used herein means the use of Tenant's employees, its
visitors, invitees, and customers for the parking of motor vehicles for such
periods of time as are reasonably necessary in connection with use of and/or
visits to the Premises. No vehicle may be repaired or serviced in the parking
area and any vehicle deemed abandoned by Landlord will be towed from the project
and all cost therein shall be borne by Tenant. All driveways, ingress and
egress, and all parking spaces are for the joint use of all tenants. Except as
otherwise provided in this Lease and the Addendum attached hereto, no area
outside of the Premises shall be used by Tenant for storage without Landlord's
prior written permission. There shall be no parking permitted on any of the
streets. Tenant shall pay to Landlord as Additional Rent simultaneously with the
payment of Base Rent a charge for each parking space (the "Parking Charge").
During the first Lease Year, the Parking Charge will be $35.00 per month per
parking space. Beginning with the second Lease Year, and on the first day of
each subsequent Lease Year, the Parking Charge shall be increased by three
percent (3%) over the Parking Charge for the previous Lease Year. As used
herein, the term "Lease Year" shall mean each twelve calendar month period
during the Demised Term; provided, however, that the first Lease Year shall also
include any partial month after the Commencement Date.
29. RULES AND REGULATIONS. This Lease is subject to such reasonable rules and
---------------------
regulations as may hereafter be adopted and promulgated by Landlord, provided
such rules and regulations (a) are not inconsistent with other rights granted to
Tenant under this Lease (and, in the event of any inconsistency between the
rules and regulations and this Lease, the terms and provisions of this Lease
shall govern), (b) do not unreasonably interfere with Tenant's normal business
operations or Tenant's use and enjoyment of the Premises, (c) do not require
payment of additional monies, and (d) are provided to Tenant at least thirty
(30) days prior to the effective date thereof. Landlord agrees to use reasonable
efforts to uniformly enforce all rules and regulations that are applicable to
all tenants in the Building.
30. MISCELLANEOUS.
-------------
(a) Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
(b) The terms, provisions and covenants and conditions contained in this
Lease shall apply to, inure to the benefit of, and be binding upon, the parties
hereto and upon their respective heirs, legal representatives, successors and
permitted assigns, except as otherwise herein expressly provided. Landlord shall
have the right to assign any of its rights and obligations under this Lease.
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(c) Each party agrees to furnish to the other promptly upon demand, a
corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization of such party to
enter into this Lease.
(d) The captions inserted in this Lease are for convenience only and in no
way define, limit or otherwise describe the scope or intent of this Lease, or
any provision hereof, or in any way affect the interpretation of this Lease.
(e) Time is of the essence of this Lease.
(f) Tenant agrees from time to time within ten (10) days after request of
Landlord, to deliver to Landlord, or Landlord's designee, a true and correct
estoppel certificate stating whether this Lease is in full force and effect, the
date of which rent has been paid, the unexpired term of this Lease and such
other matters pertaining to this Lease as may be reasonably requested by
Landlord. It is understood and agreed that Tenant's obligation to furnish such
true and correct estoppel certificates in a timely fashion is a material
inducement for Landlord's execution of this Lease. Landlord agrees from time to
time within ten (10) days after request of Tenant, to deliver to Tenant, or
Tenant's designee, a true and correct estoppel certificate stating whether this
Lease is in full force and effect, the date of which rent has been paid, the
unexpired term of this Lease and such other matters pertaining to this Lease as
may be reasonably requested by Tenant. It is understood and agreed that
Landlord's obligation to furnish such true and correct estoppel certificates in
a timely fashion is a material inducement for Tenant's execution of this Lease.
(g) This Lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
(h) All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the Demised Term shall survive the
expiration or earlier termination of the Demised Term, including without
limitation, all payment obligations with respect to taxes and insurance and all
obligations concerning the condition of the Premises. Upon the expiration or
earlier termination of the Demised Term, and prior to Tenant vacating the
Premises, Tenant shall pay to Landlord any amount reasonably estimated by
Landlord as necessary to put the Premises, including without limitation, all
heating and air conditioning systems and equipment therein, in good condition
and repair, reasonable wear and tear and loss by casualty excepted; however,
Tenant shall not be required to return the Premises in a condition any better
than the condition it was taken at the beginning of the Demised Term. Tenant
shall also, prior to vacating the Premises, pay to Landlord the amount, as
estimated by Landlord, of Tenant's obligation hereunder for real estate taxes
and insurance premiums for the year in which this Lease expires or terminates if
not previously paid as part bf the Operating Costs. All such amounts shall be
used and held by Landlord for payment of such obligations of Tenant hereunder,
with Tenant being liable for any additional costs therefor upon demand by
Landlord, or with any excess to be promptly returned to Tenant after all such
obligations have been determined and satisfied, as the case may be. Any security
deposit held by Landlord shall be credited against the amount payable by Tenant
under this subparagraph 30.h.
(i) If any clause, sentence, paragraph or provision of this Lease is
illegal, invalid or unenforceable under present or future laws effective during
the term of this Lease, then and in that event, it is the intention of the
parties hereto that the remainder of this Lease shall not be affected thereby,
and it is also the intention of the parties to this Lease that in lieu of each
clause, sentence, paragraph or provision of this Lease that is illegal, invalid
or unenforceable, there be added as a part of this Lease contract a clause,
sentence, paragraph or provision as similar in terms to such illegal, invalid or
unenforceable cause or provision as may be possible and be legal, valid and
enforceable.
(j) Provided Landlord is the prevailing party, Tenant agrees to pay
reasonable attorneys' fees and expenses Landlord incurs in enforcing any of the
obligations of Tenant under this Lease, or in any litigation or negotiation in
which Landlord shall, by virtue of this Lease or Landlord's ownership of the
Premises, become involved in, through or on account of this Lease. Provided
Tenant is the prevailing party, Landlord agrees to pay reasonable attorneys'
fees and expenses Tenant incurs in enforcing any of
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the obligations of Landlord under this Lease, or in any litigation or
negotiation in which Tenant shall, by virtue of this Lease, become involved in,
through or on account of this Lease.
(k) This Lease shall create the relationship of landlord and tenant
between Landlord and Tenant; no estate shall pass out of Landlord; Tenant has
only a usufruct, not subject to levy and sale.
(l) Neither this Lease, nor any memorandum, affidavit or other writing
with respect thereto, shall be recorded by Tenant or by anyone acting through,
under or on behalf of Tenant, and the recording thereof in violation of this
provision shall make this Lease voidable at Landlord's election.
(m) All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on which
all parties hereto have executed this Lease.
(n) This Lease may be executed in counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same Lease
Agreement.
(o) The Addendum attached hereto and incorporated herein by this
reference contains additional provisions which are incorporated into this Lease.
(Remainder of page intentionally left blank)
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EXECUTED BY LANDLORD, this 30th day of December, 1999.
1052 WEST PEACHTREE, LLC, a Georgia
limited liability company
By: /s/ Barry E. McWhirter
--------------------------
Barry E. McWhirter,
Manager
EXECUTED BY TENANT, this 29th day of December, 1999.
INFLOW, INC. a Delaware corporation
By: /s/ [ILLEGIBLE]
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Title: CEO, President
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Attest:/s/ [ILLEGIBLE]
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Title: Assistant Secretary
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18
<PAGE>
LEASE AGREEMENT
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Addendum
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This Addendum is incorporated into that certain Lease Agreement (the
"Lease") by and between 1052 WEST PEACHTREE, LLC, a Georgia limited liability
company ("Landlord") and INFLOW, INC., a Delaware corporation ("Tenant"), with
respect to approximately 35,191 usable square feet of space (the "Premises")
located at 1052 West Peachtree Street, Atlanta, Georgia (the "Building"). Terms
used and not defined in this Addendum have the meanings given them in the Lease.
ln the event of any conflict or inconsistency between the terms and provisions
of the Lease and the terms and provisions of this Addendum, the terms and
provisions of this Addendum shall control.
1. Access. Tenant and its customers and vendors shall have access 24
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hours per day, 7 days per week, 365 days per year to the Premises, common areas,
all of Tenant's equipment, including, without limitation, generators,
supplemental HVAC units, conduits and antennas, power and the telephone closets
serving the Premises, the parking area and loading areas, without the
requirement of prior notice.
2. Condition of Premises. The Premises shall be delivered in the
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following condition:
a. The Premises shall be delivered broom-clean, free of all non-
structural, non-core interior walls to the extent provided in
Exhibit D, Landlord's Work.
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b. The roof of the Building will be in new and in good condition,
suitable for the permitted use of the Premises and with a
warranty of no less than ten (10) years.
c. The Building shell shall be in compliance with all applicable
laws, codes and ordinances, including the Americans with
Disabilities Act (ADA).
d. Landlord shall, within five (5) days after execution of this
Lease by Tenant, provide evidence to Tenant that the floor
loading capability of the Premises is not less than 100
lbs./usable sq.ft.
e. Landlord shall provide Tenant, within five (5) days after
execution of this Lease by Tenant, with any existing plans and
specifications of the Building. Landlord shall provide Tenant,
within five (5) days after execution of this Lease by Tenant,
with any one-line drawings of the Building's mechanical and
electrical systems in Landlord's possession or control. All
documentation shall be provided in electronic format if
available.
f. Landlord shall provide documentation regarding Building systems,
including without limitation mechanical systems, electrical
systems, life-safety systems and HVAC, as reasonably requested by
Tenant and to the extent in Landlord's possession or control.
3. Landlord's Work. Landlord shall construct the improvements to the
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Premises set forth in Exhibit D to this Lease in a good and workmanlike manner
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and at Landlord's sole cost and expense. The Landlord's Work shall be completed
on or before February 15, 2000.
4. Alterations. Tenant shall have the right to perform alterations,
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including, without limitation, the initial tenant improvements, by selecting a
general contractor, construction manager, subcontractors, architects and
engineers of its choice, subject to Landlord's approval, which approval shall
not be unreasonably withheld, conditioned or delayed. Landlord shall not receive
any profit from or charge any supervisory fees for Tenant's alterations unless
Tenant requests Landlord to perform supervisory work. Tenant shall have the
right to perform alterations 24 hours per day, seven days per week, 365 days per
year throughout the Demised Term, and shall have reasonable access to the
parking areas, roof, loading docks and other common areas. Prior to commencing
any alterations, Tenant shall submit plans and specifications to Landlord for
approval, which approval shall not be unreasonably withheld, conditioned or
delayed. If
<PAGE>
Landlord fails to approve or disapprove such plans and specifications or any
modifications thereto within five (5) business days after submission, the same
shall be deemed approved by Landlord. If Landlord disapproves such plans and
specifications or any modifications thereto, Landlord shall, in the written
notice given to Tenant disapproving the same, specify the reasons for such
disapproval. With respect to Tenant's initial improvements, if Landlord and
Tenant are unable to agree upon the plans and specifications by February 15,
2000, Tenant shall have the right to terminate this Lease by notice to Landlord.
Landlord shall, in the written notice given to Tenant approving any plans and
specifications, notify Tenant which of the improvements, fixtures and equipment
must be removed at the end of the Demised Term, which of the improvements,
fixtures and equipment may (but do not have to) be removed at the end of the
Demised Term, and which of the improvements, fixtures and equipment may not be
removed at the end of the demised Term. If the plans and specification are
deemed approved by Landlord, Landlord shall, within three (3) business days
after receiving a written request therefor from Tenant, give a written notice to
Tenant specifying which of the improvements, fixtures and equipment must be
removed at the end of the Demised Term, which of the improvements, fixtures and
equipment may (but do not have to) be removed at the end of the Demised Term,
and which of the improvements, fixtures and equipment may not be removed at the
end of the Demised Term. In any event, Tenant shall have the right to elect not
to remove conduit, cabling, piping, electrical conductors or standard office
improvements and Tenant shall have the right to remove any or all of its
equipment, including generators, HVAC, batteries, UPS systems, etc. at any time
during the Demised Term.
5. Special Systems. Tenant shall have the right, at its option, to do any
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of the following twenty-four (24) hours per day, seven (7) days per week, 365
days per year and at any time during the Demised Term, at Tenant's expense and
at no additional charge, but with Landlord's cooperation to the extent required:
(a) To reconfigure switch equipment and facilities and to make
application directly to an electricity provider serving the
Building for power as desired by Tenant to service the Premises.
Tenant shall have the right to make its own arrangements for
power.
(b) To install interruptible power supply (UPS) systems and
associated batteries and equipment, transient voltage surge
suppressor (TVSS) equipment, DC power plant, ATS equipment, power
distribution cabinets and equipment and power panels, and to
integrate the Building power into such systems.
(c) To tie into any existing grounding systems in the Building, or,
at Tenant's option, to install its own electrical grounding
system.
(d) To install, maintain, repair and replace from time to time, at
the location outside the Building identified on Exhibit "B" to
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this Lease (the "Generator Pad") power generator(s) as required
by Tenant, together with associated equipment and fuel tanks, to
provide primary or backup power, or both, to Tenant's equipment,
and to integrate Building power into such generators. Landlord
shall provide, at no additional charge, easements and, if
applicable, riser space as necessary to connect the generators to
Tenant's equipment.
(e) To install, maintain, repair and replace from time to time an
independent cooling system. Tenant shall have the right to locate
its HVAC equipment outside the Building or, at Tenant's option,
on the roof of the Building (the "Air Conditioning Pad").
Landlord shall provide, at no additional charge, easements and,
if applicable, riser space as necessary to service the Premises
from the Air Conditioning Pad. Tenant shall have the right to
install coolant lines to support its air conditioning systems.
Tenant shall have the right to tap into Building domestic water
supply in order to operate a humidifier system in the Premises.
Tenant shall have the right to vent through the Building
ventilation system and to install drains for the Tenant's air
conditioning systems and to discard air conditioning wastewater
into the Building's sewage system. Tenant shall have the right to
remove or cap any heating system in the Premises provided that no
uncured event of default by Tenant then exists.
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<PAGE>
(f) To do any or all of the following: (i) convert the present
sprinkler system within the Premises to a dry-pipe, pre-action
system, (ii) relocate or encase any water mains or other water
pipes running through or adjacent to the Premises, (iii) install
an FM 200 gas system in the Premises, or (iv) install any other
fire suppression system approved by Landlord, which approval
shall not be unreasonably withheld, conditioned or delayed.
(g) TO do any or all of the following: (i) to reinforce floor load
capacities; (ii) to cover or block up windows and/or exterior
walls in the Premises, provided that such measures are
reasonably acceptable to Landlord with respect to the external
aesthetics of the Building; (iii) to fence in any equipment or
facilities located or installed outside the Premises, provided
that such fencing is reasonably acceptable to Landlord with
respect to the external aesthetics of the Building; and (iv) to
install manholes adjacent to the Building for bringing
telecommunications fiber into the Building.
(h) To all of the following: (i) to use existing fiber optic cabling
in the Building or, at Tenant's election, to construct additional
telecommunications entrances into the Building and into the
Premises (including, without limitation, multiple and redundant
entrances); (ii) to use existing riser space and available
conduit, or at Tenant's option, to install any additional conduit
and facilities required in order to connect Tenant's generator,
power, HVAC equipment and piping, antennas, grounding, and
related equipment and for other purposes not inconsistent with
the design of such conduits or risers. Upon Tenant's request,
Landlord shall provide, for Tenant's use throughout the Demised
Term, easements or rights of way for telecommunications cables
from the Premises to exit the Building and to the boundary of the
Land as requested by Tenant.
(i) (i) To co-locate customer equipment in the Premises without
Landlord's consent, (ii) to provide short-term rights to use
portions of the Premises to its customers and vendors without
Landlord's consent, (iii) to connect customer equipment to
telecommunications facilities in the Building, and (iv) to
interconnect its telecommunications facilities with, and/or
provide telecommunications services to, other tenants of the
Building, and none of the foregoing actions shall violate any
provisions of this Lease, including, without limitation, the use
and assignment and sublet provisions thereof.
(j) To install its own security system for the Premises, and to
create a special security area within the Premises to encompass
Tenant's equipment room. Landlord will cooperate with Tenant in
maintaining the security for such area. Tenant shall be permitted
to install security with non-building-standard locks and other
access controls which restrict access to Tenant and its
customers, provided that Landlord shall be provided with keys or
other entry mechanisms which may be used in accordance with the
terms of this Lease. Landlord shall not enter Tenant's secured
equipment area or permit any janitorial, maintenance, repair or
other service to such area except as approved and supervised by
Tenant. Landlord or its agents shall enter Tenant's secured
equipment area only after at least twenty-four (24) hours notice
to Tenant and when accompanied by Tenant, except when failure to
comply with the foregoing will cause imminent danger to the
Premises or other portions of the Building or any person. Any
entry by Landlord will be conducted with reasonable caution under
the circumstances to prevent damage to or interference with any
of the equipment in the area.
(k) To install dishes, antennas and other telecommunications
equipment on the roof of the Building.
(l) To use its standard graphics on the entrance to the Building,
subject to Landlord's approval, which approval shall not be
unreasonably withheld, conditioned or delayed. Tenant shall be
permitted, at its option and at its sole cost and expense, to
place
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<PAGE>
exterior signage on the Building. If Tenant so requests, Landlord
shall provide standard monument signage at the entrance to the
Project.
(m) To utilize or create additional space in, on or adjacent to the
Building to accommodate Tenant's equipment and facilities,
including, without limitation, Tenant's generator(s) and
supplemental cooling equipment.
(n) To install, maintain, repair and replace computer,
telecommunication, and other equipment in the equipment room of
the Premises, so long as the floor loading patterns of such
equipment do not exceed the floor load capacity. Landlord hereby
consents to such floor loading.
(o) To install fixed telephony and HVAC systems in the Premises.
(p) To move computer, telecommunication, and other equipment in and
out of the Premises from time to time in the course of its
business.
6. Nondisturbance. Landlord shall use its best efforts to provide to
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Tenant non-disturbance agreements from all existing and future mortgagees,
beneficiaries of deeds of trust, and ground lessors.
7. Confidentiality. Landlord acknowledges that it may have access to
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certain confidential information of Tenant concerning Tenant's business,
facilities, operations, plans, customers, proprietary software, technology, and
products ("Confidential Information"). Landlord agrees that it will not use in
any way, for its own account or the account of any third party, except as
expressly permitted by this Lease, nor disclose to any third party (except as
required by law or to its attorneys, accountants, and other advisors and
mortgagees and prospective purchasers of the Premises as reasonably necessary
and subject to the confidentiality provisions hereof), any of Tenant's
Confidential Information and will take reasonable precautions to protect the
confidentiality of such information.
8. Assignment and Subletting. Notwithstanding anything to the contrary in
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the Lease, Tenant shall have the right to sublet or assign all or part of the
Premises at any time with Landlord's consent, which shall not be unreasonably
withheld, conditioned or delayed. No consent shall be required for an assignment
or sublet to any subsidiary, affiliate, parent, or other related company, or in
connection with a merger or sale of substantially all of Tenant's assets.
Tenant's business, use of the space, including provision of co-location space to
customers, shall not be considered assignment or sublet.
9. Landlord's Remedies. Notwithstanding anything to the contrary in the
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Lease, (a) in no event shall Landlord have a lien on any of Tenant's equipment
or other property or the property of any of Tenant's customers; (b) in no event
shall Landlord be entitled to withhold services under this Lease as a remedy for
Tenant's default; and (c) in no event shall Landlord be entitled to enter the
Premises and remove or interfere with Tenant's property or the property of
Tenant's customers without judicial process.
10. Landlord's Warranties. Landlord represents and warrants to Tenant:
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(a) Landlord has good and marketable fee simple title to the Building,
including, without limitation, the Premises; (b) the Building and the Premises,
as of the date hereof, are not subject to any ground lease, mortgage or deed of
trust except the mortgage in favor of Premier Bank; (c) the party executing this
Lease Agreement on behalf of Landlord has full power and authority to enter into
this Lease Agreement on behalf of Landlord and to bind Landlord to the terms of
this Lease Agreement; (d) no other party has any right to use or occupy the
Premises from and after the Delivery Date, and (a) to the best of Landlord's
knowledge, there are no hazardous substances in the Building, including, without
limitation, asbestos or lead-based paint.
11. Arbitration. Any controversy or claim arising out of or relating to
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this Lease which involves less than $50,000 or which relates to a denial of any
consent or approval shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules, including the
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<PAGE>
Expedited Procedures, and judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction.
12. Letter of Credit. Tenant shall deposit with Landlord, on or prior to
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the date that is seven (7) business days after the date hereof, as security for
the performance by Tenant of its obligations under this Lease, a clean,
unconditional, irrevocable letter of credit in favor of Landlord in the initial
amount of $500,000 (the "Letter of Credit"), substantially in the form attached
to this Addendum as Schedule A, issued by Silicon Valley Bank or any other
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financial institution reasonably acceptable to Landlord. If Tenant commits a
default under this Lease that is not cured within any applicable cure period,
Landlord shall be entitled to draw upon the Letter of Credit (but only to the
extent necessary to cure the default) and use or apply the proceeds of the
Letter of Credit so drawn for the payment of Tenant's obligations under this
Lease. To the extent that Landlord has not applied the Letter of Credit as
described herein, the amount of the Letter of Credit shall be reduced as
follows: (a) on the first day of the thirteenth (l3th) month of the Demised
Term, to $333,000, and (b) on the first day of the thirty-seventh (37th) month
of the Demised Term, to $167,000. If the foregoing reductions are not
accomplished automatically pursuant to the terms of the Letter of Credit, Tenant
shall have the right to substitute a new letter of credit to accomplish such
reduction and Landlord shall cooperate with Tenant in coordinating such
substitution. If the issuing financial institution notifies Landlord of its
intention not to renew the Letter of Credit, Landlord shall so notify Tenant and
Landlord shall not draw under the Letter of Credit until five (5) days prior to
the expiration of the Letter of Credit in order to give Tenant time after such
notice from the issuing financial institution to replace the Letter of Credit.
Notwithstanding the foregoing, if at any time after the first twenty-four (24)
months of the Demised Term and prior to the expiration of the Demised Term,
Tenant delivers to Landlord (i) financial statements, prepared in accordance
with generally accepted accounting principles which indicate that Tenant has a
net worth of $200,000,000, or (ii) evidence that Tenant's stock is then publicly
traded and has a credit rating of BBB-, the Letter of Credit shall be returned
to Tenant within five (5) days, together with any amounts drawn thereunder and
not utilized by Landlord as provided above. Upon the termination or expiration
of this Lease, Landlord shall, within five (5) business days, redeliver to
Tenant the Letter of Credit and any unused portion of funds drawn thereunder.
1. Renewal Provision. At least six (6) months prior to the expiration of
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the Demised Term, Landlord shall notify Tenant whether Landlord intends to
continue to offer the Premises for lease at the end of the Demised Term, which
notice shall include the number of years for which Landlord intends to offer the
Premises for lease and Landlord's determination of the market rent for the
Premises. If Landlord intends to continue to offer the Premises for lease,
Tenant shall have the right to renew this Lease for the additional term set
forth in Landlord's notice at market rental rates for similar space (not taking
into consideration the tenant improvements, and giving a credit for any vacant
period and leasing commissions). If Tenant desires to renew this Lease, Tenant
shall so notify Landlord at least thirty (30) days after receipt of Landlord's
notice. If Landlord and Tenant cannot agree on the market rent, they agree to
submit the matter to arbitration as provided in this Lease.
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<PAGE>
Schedule A
FORM OF LETTER OF CREDIT FOR SECURITY DEPOSIT
(Letterhead and Address of Bank)
Irrevocable Standby Letter of Credit No. _______________________
Date: ___________
Beneficiary:
as "Landlord"
Applicant: INFLOW, Inc
938 Bannock Street, Suite 300
Denver, Colorado 80204
as "Tenant".
Amount:
Expiry Date: _______________
Location: At our counter in ______________
Dear Sir/Mam:
We hereby establish our Irrevocable Standby Letter of Credit No.
___________________ in your favor. Available by payment with ___________ Bank,
_________________________________, Attention:______________ of Beneficiary's
draft at sight drawn on us, and accompanied by the following documents:
1. The original of this letter of credit and amendment if any.
2. A signed and dated certification from the Beneficiary stating the
following:
(a) . "A Default (as defined in the Lease) has occurred by Inflow,
Inc. under that certain Lease Agreement between Inflow, Inc. and
(the "Lease") and Tenant has failed to cure its default after the
expiration of any applicable cure period and therefore the
<PAGE>
EXHIBIT "A"
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A-1
<PAGE>
EXHIBIT A
Land
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[DIAGRAM]
<PAGE>
EXHIBIT "B"
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Premises, including parking area and equipment area
B-1
<PAGE>
EXHIBIT B
Premises
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[DIAGRAM]
<PAGE>
EXHIBIT "C"
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Landlord and Tenant agree to attach the Plans and Specifications of the Premises
for the tenant improvements to be constructed by Tenant prior to the
Commencement Date. Tenant shall submit its Plans and Specifications for the
initial improvements on or before February 1, 2000. Landlord's review of such
Plans and Specifications shall be performed in accordance with the provisions of
the Addendum attached to this Lease.
C-1
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EXHIBIT "D"
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Landlord's Work:
D-1
<PAGE>
EXHIBIT D
Landlord's Work
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Landlord's Work shall consist of the scope of work described in this Exhibit D,
to be performed at Landlord's sole cost, by MarMac Construction Company, Inc.
(the "Contractor") in accordance with that certain Agreement between Contractor
and Landlord dated November 10, 1999 and in accordance with the following
Architectural Documents dated November 1, 1999 by Rosser International, Inc.,
Job No. 00002.00,
Sheets:
SHEET LISTS
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Architecture
GO.01 Cover Sheet & Architectural Information
A2.01 Demolition Plan
A3.01 Architectural Floor Plan
A3.02 Architectural Floor Plan
A3.03 Architectural Floor Plan
A3.50 Siteplan -- Demolition
A3.51 Siteplan
A4.02 Reflected Ceiling Plan
A4.03 Reflected Ceiling Plan
A5.01 Existing Elevations -- Demolition
A5.02 Elevations
A6.01 Building Sections
A6.02 Wall Sections
A6.03 Wall Sections
A10.01 Partial Plan/ Elevation/ Entry
A10.02 Partial Plan/Elevation/North
A10.03 Partial Plan/Elevation/North
A10.04 Partial Plan/Elevation/Spring Street
A10.05 Partial Plan/Elevation/South
<PAGE>
Scope of Work
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(1) Demolition
a. Scope will not change
(2) Partitions
a. 116 LF deck high walls restrooms
(3) Ceilings
a. 481 SF drywall ceilings @ restrooms
(4) Doors
a. 3 each doors, frames, hardware @ restrooms
(5) Millwork
a. 19 LF P.L. counter top
(6) Paint & Finishes
a. 2,101 SF walls & ceilings
b. 3 each doors & frames
c. 5 each steel canopy's
d. 1 LS paint railings
e. 270 LF paint coping
f. 1 LS paint entrance
g. 35,191 SF seal concrete
h. 25,240 SF seal bricks
(7) Electrical
a. All exterior lighting wired to junction box inside
b. All restroom fixtures, outlets & switches
(8) HVAC
a. Suite "A" -- One (1) 48TJD014-6-QA, 12.5 ton. Two (2) restroom exhaust
fans.
b. Suite "D" --Three (3) 48TJD014-5-QA, 12.5 ton rooftop units and two
(2) exhaust fans.
c. Above systems to be Carrier; Suite "A" will be 460/3/60 -- Suite "D"
will be 208/3/60.
d. Above systems to include the following items:
1. Gas heat/electric cooling
2. Factory curbs & economizers
3. Gas piping to meter
4. Programmable thermostats & smoke detectors
5. Restroom fans vented thru roof
6. Lined ductwork for supply and return to be stubbed through roof
for future connection
7. Drains to spill on roof
8. Units to be mounted over columns at beams
<PAGE>
(9) Flooring/Wall Tile
a. All restrooms to have 2" x 2" floor tile and 4" x 4" wall tile to a
height of 5'.
(10) Plumbing
a. Men's Room:
1. One (1) handicapped tank toilet
2. One (1) regular tank toilet
3. One (1) Urinal
4. One (1) 3" floor drain with primer
5. Two (2) self rim lavatories
6. One (1) 6 gallon water heater
7. One (1) 25" x 22" stainless steel sink
8. Two (2) 1/4" c.w. lines for coffee & refrigerator ice maker.
9. Saw cut concrete; no removal or patch
b. Women's Room:
1. One (1) handicapped tank toilet
2. Two (2) regular tank toilets
3. Two (2) self rim lavatories
4. One (1) 3" floor drain with primer
c. Unisex Room:
1. One (1) handicapped tank toilet
2. One (1) wall hung lavoratory
3. One (1) 6 gallon water heater
4. One (1) 3" floor drain with primer
(11) Concrete & Masonry
a. Scope will be expanded to include new concrete sidewalk along the
Spring Street frontage.
(12) Fire Suppression
a. 1052 West Peachtree Side
1. Demo existing system
2. Install backflow preventer
b. 1055 Spring Street system will not change, however, Landlord will
provide back flow preventer if necessary
(13) Glass/Glazing
a. Scope will not change
b. Mirrors in restrooms
(14) Life Safety
a. N/A
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(15) Roof Repair/Skylights
a. Skylight allowance -- ($10,000) Spring Street-any unused balance shall
be credited to Tenant
b. New roof over West Peachtree St. side of Building,
consisting of 1" perlite insulation & 4-ply built-up roof,
with a minimum ten (10) year warranty.
(16) Toilet Access & Partitions
a. P.L. partitions
b. Towel dispensers, paper holders, coat hooks
(17) Miscellaneous Carpentry
a. Scope will not change
(18) Landscaping
a. Allowance $13,500
(19) Canopy
a. Scope will not change
(20) Pipe Rails
a. Scope will stay the same -- but will provide opening
for unloading trucks
(21) Paving
a. Scope will not change
(22) Brick Cleaning
a. 25,145 SF inside and out
<PAGE>
EXHIBIT 10.18
TRIPLE NET LEASE
LANDLORD:
AGB NORWOOD PARK, L.P.
a Delaware limited partnership
TENANT:
INFLOW, INC.,
a Delaware corporation
8025 N. IH 35
Austin, Texas 78753
<PAGE>
SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS
THIS SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS (this "Summary") is
hereby incorporated into and made a part of the Triple Net Lease attached hereto
which pertains to the Premises described in Section 1.3 of this Summary. All
references in the Lease to the "Lease" shall include this Summary. All
references in the Lease to any term defined in this Summary shall have the
meaning set forth in this Summary for such term. Any initially capitalized terms
used in this Summary and any initially capitalized terms in the Lease which are
not otherwise defined in this Summary shall have the meaning given to such terms
in the Lease.
1.1 Landlord's Address: AGB Norwood Park, L.P.
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Attn: Ms. Dana Gottlieb
with a copy to: Provident Realty Advisors, Inc.
16775 Addison Road
Suite 520, LB 23
Dallas, Texas 75248
Attn: Mr. Leon Backes
1.2 Tenant's Address: Inflow, Inc.
8025 N. IR 35, Suite B
Austin, Texas 78753
Attn: General Manager
with a copy to: Inflow, Inc.
1860 Lincoln Street
Suite 305
Denver, Colorado 80295
Attn: Legal Department
1.3 Premises: An area which the parties hereto hereby stipulate and agree
consists of approximately 34,000 rentable square feet of space and is more
particularly described in the Exhibit A attached to the Lease (the "Initial
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Premises") located in that certain building (the "Building") having an address
of 8025 N. IR 35, Austin, Texas 78753, and which Building is located on the land
(the "Land") more particularly described in the Exhibit B attached to the Lease
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(the Land, the Building and all other improvements now or hereafter located on
the Land are herein collectively referred to as the "Project"). As used in the
Lease, the term "Premises" shall mean the Initial Premises together with any
other space in the Project hereafter leased to Tenant pursuant to the terms and
provisions of the Lease and the Exhibits attached thereto. The exact square
footage of the Initial Premises shall be calculated at the time Landlord
delivers possession of the same to Tenant. The square footage of the Initial
Premises shall be measured in accordance with BOMA standard "ANSI Z65. I -1996".
If, after such measurement, the actual square footage of the Initial Premises is
found to be different than the number of rentable square feet identified above
in this Section 1.3, Landlord and Tenant shall, within twenty (20) days after
Tenant's receipt of written notice of the results of such measurement, execute
and deliver an amendment to this Lease which amends this Lease as necessary due
to the change in the number of rentable square feet of space comprising the
Initial Premises (including, without limitation, the required increases or
decreases, as applicable, in the amounts of Annual Rent).
1.4 Commencement Date: December 15, 1999. Prior to December 15, 1999, Landlord
shall construct a four hour fire rated demising wall to the deck (the "Demising
Wall") within the Building to separate the Initial Premises from the remaining
leasable area of the Building in the location generally depicted on the Rider D.
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1.5 Lease Expiration Date: The last day of the one hundred twentieth (120th)
full calendar month after the Rent Commencement Date (as defined below).
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1.6 Annual Rent:
(a) For the period commencing on the earlier to occur of(x) the ninetieth
(90th) day after the Commencement Date, and (y) the date on which Tenant shall
occupy all or any part of the Initial Premises (the "Rent Commencement Date")
(Tenant's entry upon the Initial Premises to construct the Initial Improvements
[as defined in Section 5.(b) below] shall not constitute occupancy of the
Premises for the purposes of this sentence), through the last day of the
sixtieth (60th) full calendar month after the Rent Commencement Date, Annual
Rent shall be payable at the rate of $408,000.00 per annum (i.e., $12.00 per
rentable square foot on an annual basis for the Premises); and
(b) For the period from the first day of the sixty-first (6 1st) full
calendar month after the Rent Commencement Date through the last day of the one
hundred twentieth (120th) full calendar month after the Rent Commencement Date,
Annual Rent shall be payable at the rate of $442,000.00 per annum (i.e., $13.00
per rentable square foot on an annual basis for the Premises).
1.7 Security Deposit: None.
1.8 Permitted Use: The Premises may be used for general office use, network
operations center, and computer and telecommunications equipment rooms only.
1.9 Default Interest Rate: The lesser of the following: (a) the rate announced
from time to time by Citibank, N.A. or, if Citibank, N.A. ceases to exist or
ceases to publish such rate, then the rate announced from time to time by the
largest (as measured by deposits) chartered operating bank operating in New
York, as its "prime rate", "best rate", or "reference rate", plus three percent
(3%) (such rate is referred to herein as the "Interest Rate"); or (b) the
maximum rate permitted by law.
2.0 Tenant's Early Access to the Initial Premises. Except during such times as
the Demising Wall is actually being constructed by Landlord's contractor, Tenant
shall have the right to enter the Initial Premises or authorize its employees,
architects, space planners, consultants, contractors, engineers, suppliers and
other representatives (collectively, "Tenant's Contractors") to do so prior to
the Commencement Date for the purpose of space planning and construction of the
Initial Improvements in accordance with the Exhibit K attached to this Lease.
---------
Tenant shall protect, defend, indemnify and hold harmless Landlord and all
Landlord Indemnified Parties exempt and harmless from and against any and all
costs, expenses, claims, demands, judgements, losses, liabilities and causes of
action arising out of or in connection with work performed in any portion of the
Initial Premises by or on behalf of Tenant or otherwise arising out of or
connected with the activities of Tenant or its agents, servants, officers,
employees, contractors, suppliers or workmen in or about any portion of the
Initial Premises, the Building and/or the Project, SPECIFICALLY INCLUDING,
WITHOUT LIMITATION, SUCH LIABILITIES, COSTS, DAMAGES, FEES AND EXPENSES ARISING
OUT OF OR CONNECTED WITH THE NEGLIGENCE OF LANDLORD OR ANY LANDLORD INDEMNIFIED
PARTIES, but excluding any such liabilities, costs, damages, fees and expenses
caused by or resulting from the sole or gross negligence or willful misconduct
of Landlord or any Landlord Indemnified Parties. Such entry by Tenant and
Tenant's Contractors pursuant to this Section shall be deemed to be under all of
the terms, covenants, provisions and conditions of this Lease except the
covenant to pay Rent.
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TRIPLE NET LEASE
THIS TRIPLE NET LEASE (this "Lease"), which includes the preceding Summary
of Basic Lease Information and Definitions (the "Summary") attached hereto and
incorporated herein by this reference, is made as of the 12th day of November,
1999 (the "Effective Date"), by and between AGB NORWOOD PARK, L.P., a Delaware
limited partnership ("Landlord"), and INFLOW, INC., a Delaware corporation
("Tenant").
1. Lease of Premises.
-----------------
1.1 Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises upon and subject to the terms, covenants and conditions
contained in this Lease to be performed by each party. The Premises are demised
and let subject to (a) the state of title, (b) any state of facts which an
accurate survey or physical inspection of the Premises might show, and (c) all
applicable Laws (as hereinafter defined) (including, without limitation,
Environmental Laws [as defined in subsection 6.5(a) below]), all without
representation or warranty by Landlord (except as specifically set forth
otherwise in this Lease). As used herein, the term "Laws" shall mean all laws,
statutes, ordinances, resolutions, rules, codes, regulations, restrictions
(including, without limitation, public or private restrictive covenants or deed
restrictions), policies, orders, determinations or requirements of any
Governmental Authority (as hereinafter defined) from time to time in existence,
and the term "Governmental Authority" shall mean any federal, state, county,
municipal or other government or any governmental or quasi-governmental
subdivision, agency, department, commission, board, bureau, office or
instrumentality or any of them. The Initial Premises shall be delivered to
Tenant in a broom-clean condition, free of all non-structural, non-core interior
walls, except as otherwise provided in Section 1.4 of the Summary.
1.2. Net Lease; Non-Term inability.
(a) This is an absolutely net Lease to Landlord. It is the intent of the
parties hereto that the Annual Rent payable under this Lease shall be an
absolutely net return to the Landlord and that the Tenant shall pay all costs
and expenses relating to the use, operation, maintenance and repair of the
Premises and the business of Tenant carried on therein (including, without
limitation, taxes and insurance, utility and maintenance costs) unless otherwise
expressly provided in this Lease. Any amount or obligation herein relating to
the use and occupancy of the Premises which is not expressly declared to be an
obligation of Landlord shall be deemed to be an obligation of Tenant to be
performed by Tenant at Tenant's expense. Except as expressly provided in this
Lease, Annual Rent, additional rent and all other sums payable hereunder by
Tenant shall be paid without notice, demand, setoff, counterclaim, abatement,
suspension, deduction or defense.
(b) Except as expressly provided in this Lease, this Lease shall not
terminate, nor shall Tenant have any right to terminate this Lease, nor shall
Tenant be entitled to any abatement of Rent (as defined in Section 3.2 below),
nor shall the obligations of Tenant under this Lease be affected by reason of
(i) any damage to or destruction of all or any part of the Premises from
whatever cause; (ii) the taking of the Premises or any portion thereof by
condemnation, requisition or otherwise; (iii) the prohibition, limitation or
restriction of Tenant's use of all or any part of the Premises, or any
interference with such use other than by Landlord or any of Landlord's agents or
employees; (iv) Tenant's acquisition or ownership of all or any part of the
Premises; (v) any default on the part of Landlord under this Lease, or under any
other agreement to which Landlord and Tenant may be parties; (vi) the failure of
Landlord to deliver possession of the Premises on the Commencement Date; or
(vii) any other cause whether similar or dissimilar to the foregoing, any
present or future law to the contrary notwithstanding. It is the intention of
the parties hereto that the obligations of Tenant hereunder shall be separate
and independent covenants and agreements, that the Annual Rent, the additional
rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events and that the obligations of Tenant hereunder shall continue
unaffected, unless the requirements to pay or perform the same shall have been
suspended or terminated pursuant to an express provision of this Lease.
(c) Tenant agrees that it will remain obligated under this Lease in
accordance with its terms and that it will not (except as expressly permitted
herein) take any action to terminate, rescind or avoid this Lease,
notwithstanding (i) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, or winding-up or other proceeding
affecting Landlord or its successors in interest, or (ii) any action with
respect to this Lease which may be taken by any trustee or receiver of Landlord
or its successors in interest or by any court in any such proceeding.
(d) Except as otherwise permitted in this Lease, Tenant waives all rights
which may now or hereafter be conferred by law (i) to quit, terminate or
surrender this Lease or the Premises or any part thereof, or (ii) to any
abatement, suspension, deferment or reduction of the Annual Rent, additional
rent or any other sums payable under this Lease.
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2. Term.
----
2.1 Term. The initial term of this Lease (the "Initial Term") shall commence
upon the Commencement Date and shall expire on the Lease Expiration Date, unless
sooner terminated. As used in this Lease, the "Term" shall mean the Initial Term
together with any renewal thereof, whether pursuant to the terms of this Lease
or otherwise by a written agreement thereof executed by Landlord and Tenant.
2.2 Delivery of Possession. Landlord shall deliver possession of the Initial
Premises on the date on which the Demising Wall has been completed and notice of
such fact has been given to Tenant (the actual date on which Landlord delivers
possession of the Initial Premises to Tenant is herein referred to as the
"Premises Delivery Date"). If the Demising Wall has not been completed on or
before December 15, 1999, and Landlord fails to complete the construction of the
same within ten (10) business days after its receipt of written notice of such
failure, Tenant, by notice to Landlord, shall have the right to construct the
Demising Wall and deduct the cost therefor from the amounts of Rent first coming
due hereunder.
2.3 Option to Extend. Tenant shall have two (2) consecutive options (the
"Extension Options") to extend the Term and Lease Expiration Date for a period
(the "Option Periods") of five (5) years per option, each such period commencing
upon the then-current Lease Expiration Date upon the same terms and conditions
as are applicable for the Premises under the Lease for the Initial Term, except
for the amount of Annual Rent payable under this Lease (which amount shall be
determined as set forth below). An Extension Option may be validly exercised
only by notice in writing received by Landlord not later than twelve (12) months
prior to commencement of the applicable Option Period; provided, however, that
the applicable Extension Option may be validly exercised only if no uncured
Tenant default exists as of the date of exercise. If Tenant does not exercise an
Extension Option in strict accordance with the provisions hereof, such Extension
Option and all subsequent Extension Options shall forever terminate and be of no
further force or effect. Tenant's Extension Options shall be upon all of the
terms and conditions of this Lease, except that (i) the grant of any exercised
Extension Option shall no longer apply; (ii) Landlord shall not be obligated to
perform any work to the Premises or provide Tenant with any refurbishment or
similar allowances; and (iii) the Annual Rent during the first Option Period
shall be payable at the rate of $15.00 per rentable square foot per annum, and
the Annual Rent during the second Option Period shall be payable at the rate of
$17.00 per rentable square foot per annum. In the event the named Tenant herein
(i.e., Inflow, Inc.) or any Transferee (as defined in Section 14.4 below)
following a Permitted Transfer (as defined in Section 6.9 below) shall not be in
occupancy of, and conducting business in, all of the Premises, any rights
granted pursuant to this Section shall be null and void. Additionally, Tenant's
rights under this Section shall terminate following the occurrence of any of the
following events: to the extent lawful and not in violation of Tenant's rights
under this Lease, (a) a termination of Tenant's right to possess all or any
portion of the Premises; and/or (b) any termination of this Lease.
3. Rent.
----
3.1 Annual Rent. Tenant agrees to pay Landlord, as rent for the Premises, the
Annual Rent designated in Section 1.6 of the Summary. The Annual Rent shall be
paid by Tenant in twelve (12) equal monthly installments in advance on the first
day of each and every calendar month commencing upon the Commencement Date,
except that the first monthly installment of Annual Rent shall be paid upon
execution of this Lease by Tenant. Rent for any partial month shall be prorated
in the proportion that the number of days this Lease is in effect during such
month bears to the actual number of days in such month.
3.2 Additional Rent. All amounts and charges payable by Tenant under this Lease
in addition to the Annual Rent described in Section 3.1 above shall be
considered additional rent for the purposes of this Lease, and the word "Rent"
in this Lease shall include the Annual Rent and such additional rent unless the
context specifically or clearly implies that only the Annual Rent is referenced.
The Annual Rent and additional rent shall be paid to Landlord as provided in
Section 7, without any prior demand therefor and without any deduction or offset
except as specified elsewhere in this Lease.
4. Tenant's Expense Payment.
------------------------
(a) In addition to Annual Rent, Tenant shall pay as additional rent,
Tenant's Share (as defined in Section 4.(b) below) of Project Expenses (as
defined in Section 4.(c) below). Such payment shall hereafter be referred to as
"Tenant's Expense Payment". Landlord may, if it elects, either deliver to Tenant
periodic statements of Tenant's Expense Payment or Landlord may estimate the
amount of Tenant's Expense Payment payable by Tenant for any calendar year or
any portion thereof. In the event Landlord elects to estimate Tenant's Expense
Payment for any calendar year, Landlord
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shall provide written notice of the estimate of Tenant's Expense Payment for the
applicable calendar year and the monthly installment due for each month during
such calendar year at least thirty (30) days prior to the date such installments
become due and payable. Tenant shall pay to Landlord on the first day of each
calendar month during any calendar year Landlord elects to estimate Tenant's
Expense Payment, the amount of the applicable monthly installments, without
demand. Landlord shall, on or before the first day of July of each calendar
year, determine the actual Tenant's Expense Payment for the preceding calendar
year and provide Tenant with written notice thereof. If Tenant's actual payments
of estimated Tenant's Expense Payment are lesser than Tenant's share of actual
Tenant's Expense Payments for such year, then Tenant shall pay to Landlord the
amount of the deficiency within thirty (30) days from the date of Landlord's
notice of deficiency. Alternatively, if Tenant's actual payments of estimated
Tenant's Expense Payments are greater than the actual Tenant's Expense Payment
for such year, then Landlord shall credit the amount of the surplus against the
next accruing installments of Tenant's Expense Payment.
(b) For Project Expenses that are not reserved, allocated or dedicated to
Tenant or any other tenant of the Project, the term "Tenant's Share" shall mean
a fraction, the numerator of which is the rentable area of the Premises and the
denominator of which is the rentable area of the Project. For Project Expenses
that are specifically and exclusively attributable to the Premises or to those
portions of the Common Areas (as defined in Section 4.(d) below) that are
reserved or designated for exclusive use by Tenant (including, without
limitation, any parking areas over which Tenant shall have exclusive use), the
term "Tenant's Share" shall mean 100%.
(c) As used herein, the term "Project Expenses" shall mean all direct
costs and expenses of operation, security, protection, replacement, repair and
maintenance of the Project incurred by Landlord, as determined by sound, accrual
basis, accounting principles consistently applied, and shall include (i) all
costs incurred in connection with the ownership and operation of the Common
Areas; all property and liability insurance premiums, including without
limitation, rent loss insurance; accounting and legal fees; costs incurred in
the management of the Project; and dues, taxes and/or assessments imposed by any
applicable property owners' association if any, excluding however, any
assessments to the extent allocable to capital improvements; plus (ii) all real
property taxes and assessments, water and sewer rents and charges, utilities and
communications taxes and charges, any similar impositions in lieu of other
impositions now or previously within the definition of real property taxes or
assessments, all other government charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, which are, at any time, prior to or
during the Term, imposed upon or assessed against the Project (exclusive of
federal, state or other income taxes and franchise taxes, Rent Taxes [as defined
in Section 10.1 below] and change in ownership taxes and assessments); plus
(iii) all costs whatsoever incurred by Landlord in connection with the use,
operation, maintenance and repair of the Project, excepting only those specific
costs and expenses that Landlord has specifically agreed to bear with no
reimbursement from Tenant. Project Expenses shall not include any capital
expenditures except expenditures for capital improvements to the Project
(including, without limitation, professional fees, consultants' fees and
services contracted for in connection with such capital improvements) that are
(I) primarily for the purpose of reducing Project Expenses, (2) made in order to
prevent interruption of any of the services to be provided by Landlord to Tenant
pursuant to this Lease, or (3) made in order to comply with Laws enacted after
the Commencement Date that are applicable to the Project, the cost(s) of which
shall be amortized over the useful life of the improvement with interest at
twelve percent (12%) per annum on the unamortized amount; and (2) any capital
improvements to the Project that are minor in nature (i.e., cost less than
$10,000.00). Project Expenses do not include any costs or expenses that are
separately metered and payable solely by Tenant or by other tenants of the
Project. The total of Project Expenses charged to all tenants of the Project
will not exceed 100% of the costs and expenses for the Project included in the
Project Expenses, and no item will be included more than once in determining
Project Expenses. Project Expenses also will not include any of the following:
(a) costs incurred in marketing space in the Project or for specific tenants or
prospective tenants, including without limitation, building-out, renovating or
otherwise improving or decorating or redecorating space for tenants or other
occupants of the Project or vacant leasable space in the Project; (b)
depreciation of the Project and all equipment, fixtures, improvements and
facilities used in connection therewith or other non-cash items; (c) financing
costs, including, without limitation, interest and principal payments and fees
and points, on loans secured by mortgages or deeds of trust covering all or any
portion of the Project, and other debt costs, if any, and rental under any
ground lease or other underlying lease, if any, covering all or any portion of
the Project; (d) real estate brokers' leasing commissions or compensation,
attorneys' fees, costs and disbursements and other expenses incurred in
connection with negotiations for leases with tenants and/or prospective
occupants of the Project; (e) any cost or expenditure (or portion thereof) for
which Landlord is reimbursed, whether by insurance proceeds or otherwise
(Tenant's Expense Payment, and similar payments made under similar provisions in
other tenant leases, are not reimbursements); (t) any wages, salaries or other
compensation paid to any employee not employed at least in part for or on behalf
of the Project (provided that such costs for employees working in the Project
part-time must be allocated by Landlord on a pro rata basis to the Project); (g)
that portion of any cost or expense which is allocated by Landlord to, or is
performed solely for the benefit of, any property owned or operated by Landlord
other than the Project; (h) legal, accounting and similar or related costs paid
or incurred in
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connection with any sale, syndication, financing or refinancing involving the
Project and/or the Premises or any of Landlord's interest therein; (i) any fees,
fines, penalties and/or interest incurred by Landlord as a result of Landlord's
noncompliance with any applicable Laws; (j) any costs (including, without
limitation, legal fees and expenses), fees, fines, penalties and/or interest
incurred by Landlord as a result of Landlord's failure to timely pay any
obligations of Landlord (including, without limitation, Landlord's failure to
timely pay real property taxes and assessments); (k) costs of disputes between
Landlord and any third party regarding matters not related to the Project; (1)
costs associated with business dealings with, and any lawsuits involving,
partners or other persons holding equity, lenders or ground lessors of Landlord;
(in) any debt losses, rent losses or reserves for bad debt; (n) Landlord's
general corporate overhead and general and administrative expenses, including,
in any event, any costs and expenses associated with Landlord's internal
financing or business dealings and salaries of Landlord's executive officers or
any employee or agent above the grade of building manager; (o) any compensation
paid to clerks, attendants or other persons in commercial concessions operated
by Landlord or an affiliate of Landlord; (p) advertising and promotional
expenditures for leasing space in the Project; (q) costs arising from Landlord's
charitable or political contributions; (r) costs. for sculptures, paintings or
other objects of art; (s) Landlord's income taxes, excess profit taxes,
franchise taxes or similar taxes levied on Landlord's business and change in
ownership taxes and assessments; (t) costs of any goods or services acquired
from an Affiliate of Landlord or of the manager of the Project to the extent in
excess of the costs that would be paid to an unaffiliated, third-party provider
of such goods or services; (u) costs and expenses incurred (whenever incurred)
in repairing any latent defects in the Project or any portion thereof or in
removing any Hazardous Materials that are in, on, under, about or affect the
Project on or before the Commencement Date (regardless of when discovered) or
remediating damage to the extent therefrom; (v) any costs or expenses incurred
as the result of the gross negligence or willful misconduct of Landlord; (w) any
costs or expenses incurred (regardless of when incurred) to the extent necessary
to make the Project comply with Laws in effect on the Commencement Date; and (x)
costs allocable to future development of the Project or other real estate.
(d) The "Common Area" and the "Common Areas" are the part of the Project
designated by Landlord from time to time for the common use of all tenants,
including, among other facilities, parking areas, sidewalks, landscaping, curbs,
loading areas, private streets and alleys, lighting facilities, hallways,
restrooms, bike lockers, bike paths and pedestrian pathways, and other areas and
improvements provided by Landlord for the common use of all tenants, all of
which shall be subject to Landlord's sole management and control and shall be
operated and maintained in such manner as Landlord, in its discretion, shall
determine. Tenant and its employees, customers, subtenants, licensees and
concessionaires shall have the non-exclusive right and license to use the Common
Area as constituted from time to time, such use to be in common with Landlord,
other tenants of the Project and other persons permitted by Landlord to use the
same. Landlord may temporarily close any part of the Common Area for such
periods of time as may be necessary to prevent the public from obtaining
prescriptive rights thereto or to make repairs or alterations, provided that
Tenant shall have access to the Premises and its equipment supporting its
operations in the Premises at all times.
5. Electricity, Gas and Other Utilities.
------------------------------------
(a) Tenant shall be solely responsible for bringing electricity and gas
service to the Premises on a separately metered basis and for obtaining the same
from the supplying utility companies. Landlord shall cooperate therewith,
including, without limitation, furnishing such Landlord-approved easements,
Landlord-approved licenses and consents of Landlord as may be necessary for
Tenant to obtain such electricity and gas service.
(b) Tenant's use of electric current and gas service in the Premises
shall not at any time exceed the capacity of any of the electrical or gas
conductors, feeders or risers and equipment in the Building, the Project or
otherwise serving the Premises. In order to insure that such capacity is not
exceeded and to avert possible adverse effect upon the Project's electric and
gas service, Tenant shall not, without Landlord's prior written consent in each
instance, make any alteration or addition to the electric and gas systems of the
Premises existing upon the date on which Tenant completes the initial
improvements (the "Initial Improvements") to be made by Tenant to the Initial
Premises as contemplated by the Exhibit K attached to this Lease. To the extent
---------
not caused by the gross negligence or willful misconduct of Landlord or its
agents. Landlord shall not be liable in any way to Tenant for any failure or
defect in the supply or character of electric current or gas service furnished
to the Premises or for any loss or damage or expense which Tenant may sustain or
incur if either the said supply or character of electric current or gas service
either fails or changes or is no longer available for Tenant's requirements at
the Premises. Tenant shall furnish and install all lighting tubes, lamps, and
bulbs used in the Premises.
(c) Landlord shall furnish to the Premises domestic water and a sewage
service in amounts and in the capacity as is available at the Premises on the
Effective Date.
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(d) Tenant shall be solely responsible for obtaining, and shall promptly
pay directly to the supplying utility companies all charges for, any services
and/or utilities used, consumed or provided in, furnished to or attributable to
the Premises that Landlord has not expressly agreed to provide to Tenant
pursuant to this Lease (for example, telephone service which is not being
provided to Tenant by Landlord). Tenant shall reimburse Landlord within thirty
(30) days of billing for fixture charges and/or water tariffs attributable to
the Premises, if applicable, which are charged to Landlord by utility companies.
Landlord will notify Tenant of this charge as soon as practicable after Landlord
becomes aware of the same. This charge will increase or decrease with current
charges being levied against Landlord or the Premises by the local utility
company, and will be due as additional rent. In no event shall Rent abate or
shall Landlord be liable for any interruption or failure in the supply of any
utility services to the Premises.
6. Use.
---
6.1 General. Tenant shall use the Premises solely for the Permitted Use
specified in Section 1.8 of the Summary, and shall not use or permit the
Premises to be used for any other use or purpose whatsoever. No auction,
liquidation, going out of business, fire or bankruptcy sales may be conducted
in, on or about the Premises. Tenant shall not use or permit the use of any
portion of the Premises as sleeping apartments, lodging rooms or for any
unlawful purposes. Except as expressly provided in this Lease, in no event shall
Tenant use any area outside the Premises other than for pedestrian and vehicular
ingress and egress to and from the Premises, other than for parking in the areas
currently designated for parking (which shall be provided at no monthly parking
charge to Tenant, other than taxes and other costs as provided herein), and
other than to perform Tenant's repairs, maintenance and other obligations under
this Lease. Tenant and its employees shall have access to the Premises 24 hours
per day, 7 days per week throughout the Term.
6.2 Compliance With Laws.
(a) Tenant shall not use or allow the Premises to be used in violation of
any covenants, conditions and restrictions or other agreements affecting the
Premises, or of any insurance policy in effect with respect to the Premises, or
of any Laws or of any certificate of occupancy issued for the Premises. Tenant
shall, at its sole cost and expense, observe and comply with, and at all times
cause the Premises and Tenant's use thereof to comply with, all requirements of
any board of fire underwriters or similar body relating to the Premises, and all
Laws, contracts, insurance policies and restrictions now or hereafter in force
relating to or affecting the Premises and the condition, use, occupancy,
alteration and/or improvement thereof, including, without limitation, the
provisions of the Americans With Disabilities Act of 1990, 42 U.S.C.
(S)(S)12101-12213, as amended ("ADA"), and any other Disability Laws (as defined
in Section 12.1(b) below), as the same pertain to the Premises and Tenant's use,
occupancy, improvement and alteration of the Premises. The foregoing compliance
obligations of Tenant shall include any and all alterations, replacements,
improvements and changes, whether structural or non-structural, unforeseen
and/or extraordinary, whether or not the same are considered capital
expenditures under standard real estate accounting practices ("Capital Items"),
and regardless of the period of time then remaining in the Term, but shall not
include any alterations, replacements, improvements and changes to any of the
Base Building Components (as defined in Section 11.(b) below), the mechanical
systems of the Building or to any of the Common Areas. Landlord will not
initiate or consent to any change in Laws or enter into or consent to any
contracts, insurance policies and restrictions that would cause Tenant to
violate its obligations under this Section 6.2(a).
(b) Landlord represents and warrants to Tenant that Landlord has no
knowledge, nor has Landlord received written notice from any Governmental
Authority since Landlord acquired the Project, of any existing or threatened
violation of (i) any Laws of any Governmental Authority applicable to the
ownership, operation, use, maintenance or condition of the Project or any part
thereof (including, without limitation, ADA and other Disability Laws), or (ii)
any restrictive covenant or deed restriction affecting the Project. Landlord
represents and warrants to Tenant that, to Landlord's knowledge, the only
restrictive covenants and deed restrictions (including, without limitation, any
master development plan or property owners association requirements) affecting
the Project are identified on Rider E.
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(c) As used in this Lease and the Exhibits and Riders attached hereto,
the phrases "Landlord's knowledge" or "knowledge of Landlord" or any similar
phrase shall mean the current actual knowledge of Landlord as of the Effective
Date without any investigation or inquiry.
6.3 No Nuisance or Waste. Tenant shall not commit or suffer to be committed any
waste upon the Premises or any nuisance or other act or thing which may disturb
the quiet enjoyment of any other tenant in the Building or owners or tenants of
property adjacent to the Project. Tenant shall not use or permit to be used, any
medium that might constitute a nuisance, such as loud-speakers, sound
amplifiers, phonographs, radios, televisions, or any other sound producing
device which will carry sound outside the Premises. Tenant shall not permit
noise or odors in the Premises which are reasonably
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objected to by any owner or tenant of property adjacent to the Project. Upon
written notice from Landlord, Tenant shall immediately cease and desist from
causing such noise or odor.
6.4 Signs.
(a) Except as expressly provided in this Section 6.4, Tenant shall not
install any signs (including, without limitation, Tenant's Sign [as defined in
subparagraph 6.4(b) below]), awnings, canopies or advertisements in, on or about
the Premises (other than interior signs in the Premises which can not be seen
outside the Premises) unless Tenant complies with all Laws and all public and
private restrictive agreements affecting the Premises (including, without
limitation, any master development plan or property owners association
requirements) and obtains prior written approval therefor from all Governmental
Authorities having jurisdiction over the Premises, from such other parties as
may be required, and from Landlord. Tenant's installation and maintenance of
such signs (including, without limitation, Tenant's Sign), awnings, canopies or
advertisements need only be in compliance with those public and private
restrictive agreements that copies of which have theretofore been provided to
Tenant by Landlord or any other party prior to the installation of any such
signs, awnings, canopies or advertisements. Tenant agrees to maintain Tenant's
Sign and any other sign, awning, canopy or advertising matter as may be approved
in writing by Landlord in good condition and repair at all times. At the
expiration or earlier termination of this Lease, at Landlord's election, Tenant
shall (i) remove Tenant's Sign and all other signs, awnings, canopies and
advertising approved in writing by Landlord and installed by or at the direction
of Tenant, and (ii) repair any damage to the Premises resulting from such
removal all at Tenant's sole cost and expense. If Tenant fails to maintain
and/or remove Tenant's Sign and any other such approved sign, awning, canopy or
advertising and/or fails to repair any such damage, Landlord may do so and
Tenant shall reimburse Landlord for the actual costs incurred by Landlord in
performing such work. If, without Landlord's prior written approval or any other
required approvals, Tenant installs any sign, awning, canopy or advertising, or
fails to remove any such item(s) at the expiration or earlier termination of
this Lease, Landlord may have such item(s) removed and stored and may repair any
damage to the Premises at Tenant's expense. All removal, repair and/or storage
costs incurred by Landlord pursuant to the foregoing provisions of this Section
6.4 shall bear interest until paid at the Default Interest Rate specified in
Section 1.9 of the Summary.
(b) Tenant shall be permitted, at Tenant's sole cost and expense and
after satisfying all conditions precedent to the installation of the same set
forth in Section 6.4(a) above and below in this subparagraph, to install and
maintain during the Term, all in accordance with the terms and provisions of
this Lease, one (1) sign on the front of the Building facing either Norwood Park
Blvd. or Rutherford Lane (such sign is herein referred to as "Tenant's Sign").
The size, type, design, quality, construction and location of Tenant's Sign
shall comply in all respects with all applicable Laws. Landlord's approval of
Tenant's Sign and any plans and specifications related to the installation of
Tenant's Sign shall create no responsibility or liability on the part of
Landlord for the completeness, design or sufficiency of Tenant's Sign or such
plans and specifications, or the compliance of the same with any Laws applicable
thereto. Prior to installing Tenant's Sign, Tenant must satisfy the following
conditions precedent: (a) Tenant shall have obtained the written approval of
Landlord required by the preceding subparagraph; (b) Tenant shall have obtained
and be maintaining all permits and/or approvals required by applicable Laws with
respect to the installation and maintenance of Tenant's Sign and shall have
provided Landlord with sufficient evidence of the existence of such permits
and/or approvals and that the installation of Tenant's Sign planned by Tenant
will comply in all respects with all applicable Laws; and (c) Tenant shall have
furnished Landlord, in the form and content required by Section 20 of this
Lease, with evidence of the insurance that Tenant is obligated to furnish to
Landlord pursuant to Section 20 of this Lease. Tenant shall promptly pay to
Tenant's contractors, when due, the cost of all work performed in connection
with the installation of, and any removal of, Tenant's Sign and, upon completion
of such work, deliver to Landlord evidence of payment and waivers of all liens
for labor, services or materials. Tenant shall, at its risk and at its sole cost
and expense and within thirty (30) days after Tenant's receipt of Landlord's
written request for such removal, remove Tenant's Sign from the Project
following the occurrence of any of the following events and Tenant's receipt of
Landlord's written request for such removal: (1) a proper termination of
Tenant's right to possess all or any portion of the Premises; (2) Tenant assigns
any of its interest in this Lease or sublets any portion of the Premises (other
than to a Permitted Transferee [as defined in Section 6.9 below]) in
contravention of this Lease; (3) the expiration of the Term; or (4) a proper
termination of this Lease. After any removal of Tenant's Sign required by the
preceding sentence, (y) Tenant shall have no further signage rights at the
Building notwithstanding anything to the contrary contained in this Section 6.4,
and (z) if such removal is not done by Tenant or a contractor of Tenant within
such required period of time, then Landlord may, at Tenant's sole cost and
expense, dispose of Tenant's Sign in any manner Landlord deems appropriate.
Prior to any removal of Tenant's Sign by or on behalf of Tenant (but excluding
any removal of Tenant's Sign by Landlord or its contractor), Tenant shall (i)
obtain Landlord's written approval to the plans related to the same (Landlord's
approval of such plans shall create no responsibility or liability on the part
of Landlord for the completeness, design or sufficiency of such plans), (ii)
obtain and maintain all permits and/or approvals required by applicable Laws
with respect to the removal of Tenant's Sign and provide Landlord with
sufficient evidence of the
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existence of such permits and/or approvals and that the removal of Tenant's Sign
planned by Tenant will comply in all respects with all Laws applicable thereto,
and (iii) furnish Landlord with the written evidence of insurance that Tenant is
obligated to furnish to Landlord pursuant to Section 20 of this Lease. Tenant
shall repair all damage caused by the installation, maintenance, or removal of
Tenant's Sign and restore the Building to its condition existing before the
installation of Tenant's Sign. If Tenant fails to satisfy any of Tenant's
obligations under this Section 6.4, Landlord may, without compensation to
Tenant, use Tenant's Sign after removing Tenant's name and/or logo therefrom or,
at Tenant's sole cost and expense, remove Tenant's Sign and perform the related
restoration and/or repair work and dispose of Tenant's Sign in any manner
Landlord deems appropriate. Tenant shall protect, defend, indemnify and hold
harmless Landlord and all Landlord Indemnified Parties (as defined in Section
6.5(a) below) from all Claims (as defined in Section 6.5 below) resulting from
and/or arising in connection with or related to the construction, installation,
maintenance, use, or removal of Tenant's Sign by Tenant, its agents or
contractors or, if permitted by this Lease or any termination of Tenant's right
to possess the Premises, the removal of Tenant's Sign by Landlord, its agents or
contractors, INCLUDING THOSE ARISING FROM THE NEGLIGENCE OF LANDLORD OR ANY
LANDLORD INDEMNIFIED PARTIES, except to the extent the Claim in question was
caused by Landlord's or its agents' or contractors' sole or gross negligence or
willful misconduct. The rights granted to Tenant under this Section 6.4 may not
be assigned to any party other than a Permitted Transferee. As used in this
Section 6.4, the term "Tenant" shall include any Permitted Transferee following
an assignment of this Lease in its entirety from Tenant to such Permitted
Transferee.
6.5 Hazardous Materials.
(a) Tenant shall at its sole cost and expense, (i) obtain and maintain in
full force and effect all Environmental Permits (as defined below) that may be
required from time to time under any Environmental Laws applicable to Tenant's
use and occupancy of the Premises or Tenant's use of the Satellite Dish Area (as
defined in the Exhibit E attached hereto), the Telecommunications Cabling Area
---------
(as defined in the Exhibit G attached hereto) and/or the Generator Pad (as
---------
defined in the Exhibit J attached hereto), and (ii) be and remain in compliance
---------
with all terms and conditions of all such Environmental Permits and with all
Environmental Laws applicable to Tenant or the Premises. As used in this Lease,
the term "Environmental Law" means any past, present or future federal, state,
local or foreign statutory or common law, or any regulation, ordinance, code,
plan, order, permit, grant, franchise, concession, restriction or agreement
issued, entered, promulgated or approved thereunder, relating to (A) the
environment, human health or safety, including, without limitation, emissions,
discharges, releases or threatened releases of Hazardous Materials into the
environment (including, without limitation, air, surface water, groundwater or
land), or (B) the manufacture, generation, refining, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport, arranging for
transport, or handling of Hazardous Materials. "Environmental Permits" means,
collectively, any and all permits, consents, licenses, approvals and
registrations of any nature at any time required pursuant to, or in order to
comply with, any Environmental Law. Except for ordinary and general office
supplies, such as copier toner, liquid paper, glue, ink, customary cleaning
materials and materials required for cleaning and maintaining computer and
telecommunications equipment and batteries for Tenant's UPS system and fuel
tanks for Tenant's generator. Tenant agrees not to cause or permit any Hazardous
Materials to be brought upon, stored, used, handled, generated, released or
disposed of on, in, under or about the Premises, the Satellite Dish Area and/or
the Generator Pad (or cause any Hazardous Materials to be brought upon, stored,
used, handled, generated, released or disposed of on, in, under or about the
Telecommunications Cabling Area) by Tenant, its agents, employees, subtenants,
assignees, licensees, contractors or invitees (collectively, "Tenant's
Parties"), without the prior written consent of Landlord, which consent Landlord
may withhold in its sole and absolute discretion. Upon the expiration or earlier
termination of this Lease or any termination of Tenant's right to possess the
Premises, Tenant agrees to promptly remove from the Premises and/or the Project,
at its sole cost and expense, any and all Hazardous Materials, including any
equipment or systems containing Hazardous Materials, then present in, on, under
or about the Premises and/or the Project which were installed, brought upon,
stored, used, generated or released upon, in, under or about the Premises and/or
the Project by Tenant or any of Tenant's Parties. To the fullest extent
permitted by law, Tenant agrees to promptly indemnify, protect, defend and hold
harmless Landlord and Landlord's partners and members and their respective
partners, members, managers, officers, directors, employees, agents, Affiliates
(as defined in Section 14.5 below), mortgagees, successors and assigns
(collectively, "Landlord Indemnified Parties") from and against any and all
claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs (including, without limitation, clean-up,
removal, remediation and restoration costs, sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees and court costs, but excluding
indirect or consequential damages) which arise or result from (1) the presence
of Hazardous Materials in, on, under or about the Premises and/or the Project if
such Hazardous Materials were installed, brought upon, stored, used, generated
or released upon, in, under or about the Premises and/or the Project by Tenant
or any of Tenant's Parties, and/or (2) Tenant's breach of any of the provisions
of this Section 6.5. Tenant acknowledges that Tenant has inspected the Premises
and/or the Project and has thoroughly reviewed each of the environmental
reports, if any, supplied by Landlord to Tenant with respect to the Project
and/or the Premises, and that, except as provided in Section 6.5(b) below,
Landlord
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makes no representations or warranties of any kind or nature with respect to the
environmental condition of the Premises and/or the Project, including, but not
limited to, the accuracy of any such environmental reports, the existence or
nonexistence of any Hazardous Materials in, on, under or about the Premises
and/or the Project or the compliance of the Premises and/or the Project with
applicable Environmental Laws. As used in this Lease, the term "Hazardous
Materials" shall mean and include any hazardous or toxic materials, substances
or wastes as now or hereafter designated under any law, statute, ordinance,
rule, regulation, order or ruling of any agency of the State, the United States
Government or any other Governmental Authority, including, without limitation,
asbestos, petroleum, petroleum hydrocarbons and petroleum based products, urea
formaldehyde foam insulation, polychlorinated biphenyls, and freon and other
chlorofluorocarbons.
(b) Landlord hereby represents and warrants to Tenant that Landlord has
no knowledge, nor has Landlord received written notice from any Governmental
Authority since Landlord acquired the Project, of any existing or threatened
violation of any Environmental Law relating to the Premises.
(c) In no event will Tenant have any liability or obligation under this
Lease or with respect to the Premises for Hazardous Materials existing in, on,
under or about the Premises on the Commencement Date or any violation of
Environmental Laws prior to or existing on the Commencement Date.
(d) The provisions of this Section 6.5 will survive the expiration or
earlier termination of this Lease.
6.6 Cleaning, Refuse and Sewage. Tenant agrees not to keep any trash, garbage,
waste or other refuse at the Premises and/or the Project except in sanitary
containers and agrees to regularly and frequently clean the Premises and remove
any and all trash, garbage, waste or refuse from the Premises. Tenant shall keep
all containers or other equipment used for storage of such materials in a clean
and sanitary condition. Tenant shall, at Tenant's sole cost and expense,
properly dispose of all trash, garbage, waste and refuse and shall not use the
existing sewage disposal system for the disposal of anything except sanitary
sewage. Tenant shall contract directly for all trash disposal services at
Tenant's sole cost and expense. Tenant expressly acknowledges that pursuant to
the terms of this Lease, Landlord shall provide no cleaning or trash removal
services.
6.7 Landlord's Rights Regarding the Building and the Project. So long as such
construction does not (i) materially and adversely affect Tenant's use and
occupancy of the Premises or Tenant's use of the Satellite Dish Area, the
Generator Pad, the Telecommunications Cabling Area (as the same may be relocated
pursuant to the Exhibit G attached hereto) or any facilities of Tenant using,
constituting or dependent upon any portion of the Building not included within
the Premises or any Common Areas, as specified in this Lease, (ii) materially
and adversely affect Tenant's use of the Exclusive Parking Area, to the extent
of Tenant's right therein under this Lease, the Common Parking Area, (iii)
prevent Tenant's access to the Premises, or (iv) otherwise materially and
adversely diminish Tenant's rights under this Lease, Landlord shall have the
right, from time to time:
(a) to make changes to and/or to reconfigure the Building or the Project
and the Common Areas, including, without limitation, changes in the location,
size, shape, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, restrooms, driveways, entrances,
parking spaces, parking areas, loading and unloading areas, ingress, egress,
direction of traffic, decorative walls, landscaped areas and walkways;
(b) to temporarily close or deny access to any part of the Common Areas
for maintenance purposes or for safety reasons;
(c) to designate other land and improvements outside, but contiguous to,
the boundaries of the Building or the Project to be a part of the Common Areas,
provided that such other land and improvements have a reasonable and functional
relationship to the Building or the Project;
(d) to add additional buildings, improvements and leasable areas to the
Project and/or the Common Areas; and
(e) to temporarily close a portion of Common Areas to such extent
reasonably necessary, in the opinion of Landlord's counsel, to prevent a
dedication thereof or the acquisition of any rights therein by any person or by
the public.
In connection with any changes or reconfigurations described in Section 6.7(a)
above, Landlord shall use commercially reasonable efforts to minimize the
disruption caused to Tenant's use and occupancy of the Premises and its business
conducted in the Premises.
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6.8 Parking.
(a) Tenant and any Permitted Transferee and its and such Permitted
Transferee's officers (if any), employees, licensees and visitors may use the
uncovered parking area identified on the Exhibit B-1 attached hereto (such
-----------
uncovered parking area is herein called the "Common Parking Area") for temporary
-------------------
parking of their motor vehicles. Such use will begin on the Premises Delivery
Date and shall be (i) in common with other tenants of the Project and such
tenants' officers, employees, licensees and visitors, and (ii) subject to such
reasonable rules, regulations and restrictions as from time to time may be
imposed by Landlord in connection therewith including, without limitation, the
right of Landlord to (I) designate, except with respect to the Visitor Parking
Area (as defined in Section 6.8(b) below) and the Exclusive Parking Area (as
defined in Section 6.8(b) below), a particular area or areas within the Common
Parking Area to be used for such parking, and (2) reserve parking spaces in the
Common Parking Area (other than any parking spaces located in the Visitor
Parking Area or the Exclusive Parking Area) for the exclusive use of other
tenants of the Project and such tenants' officers, employees, licensees and/or
visitors. Tenant will furnish Landlord upon request a complete list of license
numbers of all automobiles operated by Tenant, its employees or licensees and
using the Common Parking Area on a regular basis. Neither Landlord nor any
parking operator shall have any liability or responsibility to Tenant or any
party parking in the Common Parking Area, the Exclusive Parking Area and/or the
Visitor Parking Area for any loss or damage that may be occasioned by or may
arise out of such parking, including, but not limited to, loss of property or
damage or injury to person or property from any cause whatsoever, and Tenant
hereby waives any and all claims of any kind or nature against Landlord by
reason of occurrences in the Common Parking Area, the Exclusive Parking Area,
the Visitor Parking Area and the driveway exits and entrances thereto unless
caused by the gross negligence or willful misconduct of Landlord.
(b) Parking in the Common Parking Area will be allocated by Landlord to
Tenant on a first come - first served basis in an amount equal to two (2) non-
reserved, non-exclusive and non-covered space per one thousand (1,000) rentable
square feet of the Premises (the "Initial Parking Ratio"). Initially, therefore,
Landlord will allocate to Tenant sixty-eight (68) uncovered parking spaces (the
"Initially Allocated Parking Spaces") in the Common Parking Area. There will be
no charge during the Term for the Initially Allocated Parking Spaces. At such
time as the net rentable square footage of the Premises increases or decreases,
the number of Initially Allocated Parking Spaces shall be increased or
decreased, as applicable, based on the Initial Parking Ratio. Subject to the
allocation provided above, all parking is subject to space availability and
Landlord shall designate the location of all reserved parking spaces.
Notwithstanding anything to the contrary contained in this Lease, Tenant and any
Permitted Transferee and its and such Permitted Transferee's visitors shall have
the right to use the twenty-four (24) uncovered parking spaces located within
the portion of the Common Parking Area (the "Visitor Parking Area") identified
on the Exhibit B-2 attached hereto as the "Visitor Parking Area" for temporary
-----------
parking of their motor vehicles. The parking rights in the immediately preceding
sentence shall be in common with visitors of other tenants of the Project but
shall be exclusive to the visitors of Tenant and such other tenants of the
Project. Additionally, Tenant and its officers and employees shall have the
exclusive right to use the parking spaces located within the area (the
"Exclusive Parking Area") identified on Exhibit B-2 as the "Exclusive Parking
-----------
Area" for temporary parking of their motor vehicles.
6.9 Abandonment. Except following a Permitted Transfer (as hereinafter
-----------
defined), if Tenant (or any Transferee or Permitted Transferee) shall, after the
Commencement Date, abandon (as hereinafter defined) or fail to occupy all of the
Premises for a period of six (6) consecutive months, Landlord may, at its
option, terminate this Lease with respect to all of the Premises to the extent
the same has been abandoned (as hereinafter defined) or is no longer occupied.
Such termination of this Lease shall be done by delivering written notice of
such termination to Tenant prior to the end of any such abandonment (as
hereinafter defined) or failure to occupy the Premises, and such written notice
of termination shall specify the date or dates on which such termination shall
be effective. As used in this Lease, the term "Permitted Transfer" shall mean
either (1) a Transfer (as defined in Section 14.2 below) after Tenant's receipt
of Landlord's prior written consent thereto, or (2) a Permitted Transfer Without
Landlord Consent (as defined in Section 14.6 below), and the term "Permitted
Transferee" shall mean any assignee or sublessee in connection with a Permitted
Transfer. Landlord may re-enter the Premises for purposes of marketing the same
and making the same ready for a new tenant at any time after abandonment or
failure to occupy, but Landlord shall in no event be deemed to have terminated
this Lease by taking any such actions. If Tenant (or any Transferee or Permitted
Transferee) shall (a) after the Commencement Date, abandon or fail to occupy the
entire Premises for a period of six (6) consecutive months, (b) surrender
(whether at the end of the Term or otherwise) the entire Premises, or (c) be
dispossessed by process of law, or otherwise, of all of the Premises, then any
personal property belonging to Tenant and left in the Premises shall, at
Landlord's option, be deemed abandoned. Such personal property may be
appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord
without notice to Tenant and without any obligation to account for such
property. As used in this Lease, the terms "abandon," "abandoned" and
"abandonment" shall mean to conduct, during the normal business hours of the
Building, Tenant's activities within the
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Premises such that the Premises is not being occupied by at least one (1) person
during such business hours. In addition, Tenant shall be deemed to have
abandoned one or more portion(s) of the Premises in the event that more than
ninety percent (90%) of Tenant's furniture, fixtures and/or equipment within the
Premises is removed by or on behalf of Tenant prior to the expiration or earlier
termination of this Lease. The provisions of this Section 6.9 shall survive the
expiration or earlier termination of this Lease.
7. Payments and Notices.
--------------------
7.1 Payments. All Rent and other sums payable by Tenant to Landlord hereunder
shall be paid in lawful money of
the United States of America, at c/o Provident Realty Advisors, Inc., 17440 N.
Dallas Parkway, Suite 230, Dallas, Texas
75287, or to such other persons and/or at such other places as Landlord may
hereafter designate by notice to Tenant.
7.2 Notices. Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery (including delivery by nationally
recognized overnight courier or express mailing service) or by registered or
certified mail, postage prepaid, return receipt requested, addressed to Tenant
at each of the addresses designated in Section 1.2 of the Summary, or to
Landlord at each of the addresses designated in Section 1.1 of the Summary.
Either party may, by written notice to the other, specify a different address or
addresses for notice purposes. Notices shall be deemed received (a) on the date
of delivery, with respect to personal deliveries made prior to 5:00 p.m. Central
Time, (b) the next business day, with respect to personal deliveries made after
5:00 p.m. Central Time and overnight courier or express mailing service
deliveries or (c) three (3) business days after delivery to the postal
authorities, with respect to registered or certified mail. Notwithstanding
anything to the contrary herein, payments of Rent and additional rent shall be
deemed given when actually received by Landlord.
8. Brokers.
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Each party represents and warrants to the other, that other than The Dupont
Group (Randy Beaman) and Node Com, Inc. (Joe Suppers) (collectively, the
"Brokers") and Liberty Greenfield, LLP and John Hanley & Associates
(collectively, the "Prior Brokers"), no broker, agent or finder (a) negotiated
or was instrumental in negotiating or consummating this Lease on its behalf, and
(b) is or might be entitled to a commission or compensation in connection with
this Lease. Any broker, agent or finder of Tenant whom Tenant has failed to
disclose herein shall be paid by Tenant. Tenant shall indemnify, protect, defend
(by counsel reasonably approved in writing by Landlord) and hold Landlord
harmless from and against any and all claims, damages, judgments, suits, causes
of action, losses, liabilities, penalties, fines, expenses and costs (including,
without limitation, sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees and court costs) (collectively, "Claims")
resulting from any and all claims or demands made upon Landlord for any
commissions, fees or other compensation by any broker, agent or salesman (other
than the Brokers but including, without limitation, the Prior Brokers) in
connection with this Lease claiming by or through Tenant. Landlord shall
indemnify, protect, defend (by counsel reasonably approved in writing by Tenant)
and hold Tenant harmless from and against any and all Claims resulting from any
and all claims or demands made upon Tenant for any commissions, fees or other
compensation by any broker, agent or salesman (including, without limitation,
the Brokers but excluding the Prior Brokers) in connection with this Lease
claiming by or through Landlord. The foregoing indemnities shall survive the
expiration or earlier termination of this Lease. Landlord shall pay each of the
Brokers pursuant to a separate written agreement with each of them.
9. Surrender; Holding Over.
-----------------------
9.1 Surrender of Premises. Upon the expiration or sooner termination of this
Lease or any proper termination of Tenant's right to possess the Premises,
Tenant shall surrender all keys for the Premises to Landlord, and Tenant shall
deliver exclusive possession of the Premises to Landlord broom clean and in the
same condition and repair, reasonable wear and tear and damage due to fire or
other casualty excepted, as delivered to Tenant by Landlord on the Commencement
Date with all of Tenant's personal property (and those items, if any, of Tenant
Changes identified by Landlord pursuant to Section 12.2 below) removed therefrom
and all damage caused by such removal repaired, as required pursuant to Sections
12.2 and 12.3 below. If, for any reason, Tenant fails to surrender the Premises
on the expiration or earlier termination of this Lease, with such removal and
repair obligations completed, then, in addition to Landlord's rights and
remedies under Section 12.4 and the other provisions of this Lease, Tenant shall
indemnify, protect, defend (by counsel reasonably approved in writing by
Landlord) and hold Landlord harmless from and against any and all Claims
resulting from such failure to surrender, including, without limitation, any
Claims made by any succeeding tenant based thereon.
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9.2 Holding Over. If Tenant holds over after the expiration or earlier
termination of the Term or after any termination of Tenant's right to possess
the Premises, then, without waiver of any right on the part of Landlord as a
result of Tenant's failure to timely surrender possession of the Premises to
Landlord, Tenant shall become a tenant at sufferance only, upon the terms and
conditions set forth in this Lease so far as applicable (including Tenant's
obligation to pay all costs, expenses and any other additional rent under this
Lease), but at a monthly Rent equal to one hundred twenty-five percent (125%) of
the greater of (x) the monthly Rent applicable to the Premises immediately prior
to the date of such expiration or earlier termination, increased as provided
below, or (y) the monthly fair market rental value of the Premises upon the
expiration or earlier termination of the Term, as reasonably determined by
Landlord. For the purposes of the immediately preceding sentence, the monthly
Rent referred to in subpart (x) shall be increased by a percentage equal to the
percentage increase, if any, in the Consumer Price Index (as defined in Section
9.3 below) published for the month immediately preceding the month in which such
expiration or termination of this Lease occurs, as compared to the Consumer
Price Index published for the month immediately preceding the most recent month
in which the Annual Rent payable hereunder was increased as provided in Section
1.6 of the Summary or during any Option Period; provided, however, in no event
shall such percentage increase exceed three and one-half percent per year.
Acceptance by Landlord of rent after any expiration or earlier termination of
this Lease shall not constitute a consent to a hold over hereunder or result in
an extension of this Lease. Tenant shall pay an entire month's monthly Rent
calculated in accordance with this Section 9.2 for any portion of a month it
holds over and remains in possession of the Premises pursuant to this
Section 9.2.
9.3 Consumer Price Index. As used in this Lease, the term "Consumer Price
Index" shall mean the Revised Consumer Price Index for All Urban Consumers, U.S.
City Average, "All Items" index (1982-1984 = 100) published by the Bureau of
Labor Statistics, United States Department of Labor (the "Bureau"). If the
Consumer Price Index is converted to a different standard reference base or
otherwise revised, the determination of the holdover rent due pursuant to
Section 9.2 above shall be made with the use of such conversion factor, formula,
or table for converting the Consumer Price Index as may be published by the
Bureau or, if the Bureau does not publish same, then with the use of such
conversion factor, formula, or table as is published by any nationally
recognized publisher of similar statistical information. If the Consumer Price
Index ceases to be published, then Landlord may substitute for the Consumer
Price Index any independently published index of similar type.
10. Taxes.
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10.1 Rent Taxes. In addition to the payment required to be made by Tenant under
Article 4 hereof, Tenant agrees to pay all other general and special taxes,
assessments (including, without limitation, real estate taxes and assessments),
liens, bond obligations, license fees or taxes, water and sewer rents and
charges, utilities and communications taxes and charges, any similar impositions
in-lieu of other impositions now or previously within the definition of real
property taxes or assessments, all other government charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, which are, at any
time, prior to or during the Term, imposed upon or assessed against (a) any Rent
or other sum payable hereunder, (b) this Lease, the leasehold estate created
hereby, or (c) the ownership, operation, occupancy, leasing, use or possession
of the Premises (including, without limitation, any gross receipts tax, gross
rental tax, sales tax, use tax or excise tax) and any and all assessments under
any covenants, conditions and restrictions affecting the Premises (collectively
"Rent Taxes") which may be now or hereafter levied or assessed against the
Premises or the Project (as the case may be), applicable to the period from the
Commencement Date until the expiration or sooner termination of this Lease.
Notwithstanding the foregoing, there shall be excluded from Rent Taxes all
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal, state and local income
taxes, change in ownership taxes or assessments and other taxes to the extent
applicable to Landlord's general or net income (as opposed to rents, receipts,
sales, excise, use or income attributable to operations at the Premises).
Notwithstanding anything to the contrary contained herein, in no event shall the
following constitute Rent Taxes: special assessments that have been made based
solely on capital improvements made by or on behalf of Landlord to the Project.
If at any time during the Term under the laws of the United States, or the
state, county, municipality, or any political subdivision thereof in which the
Premises is located, a tax or excise on rent or any other tax however described
is levied or assessed by any such political body against Landlord on account of
rent payable to Landlord hereunder or any tax based on or measured by
expenditures made by Tenant on behalf of Landlord, such tax or excise shall be
considered "Rent Taxes" for purposes of this Section 10.1, and shall be payable
in full by Tenant. Such taxes or excises shall be payable within thirty (30)
days after Tenant's receipt of the tax bill therefor from Landlord.
10.2 Personal Property Taxes. Tenant shall be liable for, and shall pay before
delinquency, all taxes and assessments, real and personal (but only to the
extent not included in Project Expenses or Rent Taxes), levied against (a) any
personal property or trade fixtures placed by Tenant in or about the Premises
(including any increase in the assessed value of the
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Premises based upon the value of any such personal property or trade fixtures);
and (b) any tenant improvements or alterations (including Tenant Changes) in or
about the Premises and/or the Building (whether installed and/or paid for by
Landlord or Tenant). If any such taxes or assessments are levied against
Landlord or Landlord's property, Landlord may, after written notice to Tenant
(and under proper protest if requested by Tenant) pay such taxes and
assessments, and Tenant shall reimburse Landlord therefor within thirty (30)
days after demand by Landlord; provided, however, Tenant, at its sole cost and
expense, shall have the right, with Landlord's cooperation, to bring suit in any
court of competent jurisdiction to recover the amount of any such taxes and
assessments so paid under protest.
11. Repairs.
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11.1 Landlord's Repair Rights and Obligations.
(a) If Tenant fails to promptly perform Tenant's obligations under Section
11.2 below, or under any other provision of this Lease, then Landlord shall have
the option (but not the obligation) to enter upon the Premises after ten (10)
days' prior written notice to Tenant, or in the case of an emergency immediately
without prior notice, to perform such obligations on Tenant's behalf necessary
to return the Premises to good order, condition and repair, whereupon the costs
incurred by Landlord shall become due and payable to Landlord, upon demand,
together with a fee of ten percent (10%) of the costs of such work for
Landlord's managing agent.
(b) Unless due to the acts or omissions of Tenant, its contractors, agents,
employees or invitees, and unless Tenant is otherwise expressly obligated under
the terms and conditions of this Lease, provided Tenant is not in default
hereunder beyond the expiration of any applicable grace period, Landlord, at its
sole cost and expense, subject to reimbursement in accordance with Section 4 of
this Lease, shall maintain and repair (i) the Project (excluding, however, those
portions of the Premises and/or Building to be maintained by Tenant as provided
in Section 11.2 below), (ii) the foundation, the roof (excluding, however, any
portions of the roof actually used by Tenant within the Satellite Dish Area) and
the structural walls of the Building (the "Base Building Components"), (iii) the
Common Areas, (iv) the Common Parking Area, the Exclusive Parking Area and the
Visitor Parking Area, and (v) the water and sewer systems of the Building.
Except as provided in Section 18.1 below, there shall be no abatement of Rent or
liability of Tenant on account of any injury or interference with Tenant's
business with respect to any improvements, alterations or repairs made by
Landlord to the Project or any part thereof. Tenant expressly waives the
benefits of any statute now or hereafter in effect which would otherwise afford
Tenant the right to make repairs at Landlord's expense or to terminate this
Lease because of Landlord's failure to repair or maintain the Project, any Base
Building Components, the Common Areas, the Common Parking Area, the Exclusive
Parking Area or the Visitor Parking Area.
11.2 Tenant's Repair Obligations. Except to the extent of the Landlord's
obligations under, and as otherwise provided in, Sections 18 and 19 of this
Lease, Tenant shall at all times and at Tenant's sole cost and expense keep the
Premises, the Generator Pad, the Satellite Dish Area and the Telecommunications
Cabling Area and all parts thereof and all improvements thereon (including,
without limitation, utility meters, plumbing, pipes and conduits located within
and serving the Premises, all heating, ventilating and air conditioning systems
located within or serving the Premises, all fixtures, furniture and equipment,
locks, closing devices, security devices, windows, window sashes, casements and
frames, floors and floor coverings, shelving, restrooms, ceilings, interior
walls, roof, skylights, interior and demising walls, doors, electrical and
lighting equipment, sprinkler systems, loading dock areas and doors, signs and
all other improvements [including any Tenant Changes or other alterations,
additions and other property and/or fixtures located within the Premises but
excluding any property located under or within the Telecommunications Cabling
Area not owned by Tenant]) in good condition and repair, reasonable wear and
tear and damage due to fire or other casualty excepted. Such maintenance and
repairs shall be performed with due diligence, lien-free and in a good and
workmanlike manner.
11.3 AS-IS.
(a) Tenant acknowledges and agrees that, except to the extent specifically
set forth in this Lease, Landlord has not made, does not make and specifically
negates and disclaims any representations, warranties, promises, covenants,
agreements or guarantees, express or implied, of any kind or character
whatsoever concerning or with respect to (i) the value, nature, quality or
condition (including, without limitation, the environmental condition) of the
Premises; (ii) the suitability of the Premises for any and all activities and
uses which Tenant may conduct thereon; (iii) the compliance of the Premises with
any Laws; (iv) the habitability, merchantability, marketability, profitability
or fitness for a particular purpose of the Premises; (v) the manner or quality
of the construction or materials incorporated into the Premises; (vi) the
manner, quality, state of repair or lack of repair of the Premises; (vii) the
lawfulness, either now or in the future, of the use of the Premises for the
Permitted Use set forth in Section 1.8 of the Summary; or (viii) any other
matter with respect to the
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Premises, it being agreed that all risks incident to all of these matters are to
be borne by Tenant. Tenant further acknowledges and agrees that Tenant has
inspected the Premises and Tenant has relied and shall rely solely on its own
investigation of the Premises and not on any information provided or to be
provided by Landlord. Tenant further acknowledges and agrees that any
information provided or to be provided by or on behalf of Landlord with respect
to the Premises, was obtained from a variety of sources and that Landlord has
not made any independent investigation or verification of such information and
makes no representations as to the accuracy or completeness of such information.
Tenant further acknowledges and agrees that, except to the extent specifically
set forth in this Lease, the leasing of the Premises as provided for herein is
made on an "AS-IS" condition and basis with all faults. In the event of any
defect or deficiency in any nature in the Premises, whether patent or latent,
Landlord shall have no responsibility or liability with respect thereto (except
as otherwise expressly provided in this Lease) or for any incidental or
consequential damages arising therefrom. Subject to Landlord's indemnity of
Tenant in Section 17.2(b) below, Tenant and anyone claiming by, through or under
Tenant hereby fully and irrevocably releases Landlord and the Landlord
Indemnified Parties from any and all damage to property and injury to persons
and all other Claims that it may now have or hereafter acquire against them
arising from or related to any construction defects, errors, omissions or other
conditions now or hereafter affecting the Premises, including, but not limited
to, environmental matters and Hazardous Materials, except to the extent that
Landlord has, pursuant to the terms of this Lease, expressly assumed an
obligation with respect to such conditions (including, without limitation,
Landlord's obligations in Sections 11.1(b), 18 and 19). This release includes
claims of which Tenant is presently unaware or which Tenant does not presently
suspect to exist in its favor which, if known by Tenant, would materially affect
Tenant's release of Landlord and the Landlord Indemnified Parties.
(b) Landlord represents and warrants that, to Landlord's knowledge, the
Base Building Components have been constructed in a good and workmanlike manner,
and that none of the same has been constructed in contravention of any
applicable Laws (including, without limitation, any Environmental Laws and/or
the ADA or other Disability Laws).
12. Alterations.
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12.1 Tenant Changes; Conditions.
(a) Tenant shall not make any alterations, additions or improvements to the
Premises (collectively, "Tenant Changes," and individually, a "Tenant Change")
unless Tenant first obtains Landlord's prior written approval thereof, which
approval Landlord shall not unreasonably withhold or delay; provided, however,
Landlord may withhold its consent, in its sole and absolute discretion with
respect to any such alterations, additions, improvements or decorations to or
affecting (i) the Base Building Components or any other structural components,
and/or utilities or systems of or serving the Premises or any portion thereof,
or (ii) any Common Areas. Landlord shall approve or disapprove of any Tenant
Change requiring Landlord's written consent thereto prior to the construction
thereof within ten (10) business days after Landlord's receipt of the last
of(A)Tenant's written request for Landlord's approval to a Tenant Change and the
plans, specifications and working drawings related to such Tenant Change, and
(B) such other information related to such Tenant Change as Landlord may
reasonably require in connection therewith after its receipt of the materials
identified in subpart (A). If Landlord fails to approve or disapprove of any
Tenant Change within the ten (10) business day period identified in the
immediately preceding sentence, and Landlord thereafter fails to approve or
disapprove of such Tenant Change within ten (10) business days after its receipt
of written notice of its failure to approve or disapprove of such Tenant Change
within such ten (10) business day period, Landlord shall be deemed to have
approved the applicable Tenant Change. If a Tenant Change (1) does not affect
(y) the Base Building Components or any other structural components, and (z)
utilities or systems of or serving the Premises or any portion thereof, and (2)
will cost less than $10,000.00, Tenant shall have the right to make such Tenant
Change without first obtaining Landlord's written approval thereof and without
the payment of any fee to Landlord in connection therewith provided that (aa)
Tenant provides Landlord with a written notice describing in reasonable detail
such Tenant Change, and (bb) on the date of Landlord's receipt of such written
notice no Event of Default has occurred and is continuing or any event which
with the giving of notice or the passage of time, or both, would constitute an
Event of Default. The preceding sentence shall not excuse Tenant from performing
such Tenant Change in accordance with the requirements set forth in Sections
12.1(b) and 12.1(c) below and all other applicable provisions of this Lease.
(b) All Tenant Changes shall be performed: (i) in accordance with plans,
specifications and working drawings approved by Landlord; (ii) lien-free and in
a good and workmanlike manner; (iii) in compliance with all Laws, including,
without limitation, the provisions of Title III of the ADA and all other
Disability Laws (as hereinafter defined); (iv) subject to such reasonable rules
and regulations as Landlord may from time to time designate, but in no event
shall Landlord be entitled to receive more than $250.00 as a fee for Landlord's
approval of the plans, specifications and/or working drawings relating to the
applicable Tenant Changes; and (v) in compliance with the requirements of any
insurance
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policy required to be maintained by Tenant under this Lease. Tenant shall
promptly pay when due all costs and expenses of any Tenant Changes. Tenant
Changes may be performed by a general contractor, construction manager,
subcontractors, architects and engineers of Tenant's choice, subject to
Landlord's approval, which will not be unreasonably withheld or delayed. As used
in this Lease, the term "Disability Laws" shall mean the provisions of (A) Tex.
Rev. Civ. Stat. Ann. art. 9102, as amended, (B) the ADA, as amended, and (C) any
other similar public accommodation Laws.
(c) Throughout the performance of the Tenant Changes, Tenant shall obtain,
or cause its contractors to obtain, workers compensation insurance and
commercial general liability insurance in compliance with the provisions of
Section 20 of this Lease.
12.2 Removal of Tenant Changes. All Tenant Changes shall become the property of
Landlord and shall remain upon and be surrendered with the Premises at the end
of the Term; provided, however, Landlord may, by written notice delivered to
Tenant at any time prior to the expiration or sooner termination of this Lease,
identify those items of the Tenant Changes which Landlord shall require Tenant
to remove at the end of the Term. In no event shall Tenant be required to remove
any of the improvements existing in the Building as of the date possession
thereof is delivered to Tenant. Additionally, Tenant shall only be required to
remove such Landlord approved Tenant Changes that, after (y) Landlord has
received Tenant's written request for Landlord's approval of such Tenant
Changes, and (z) Landlord has received sufficient information regarding the same
to enable Landlord to determine whether such Tenant Changes should remain in the
Premises or be removed by Tenant upon the expiration or earlier termination of
this Lease, Landlord has identified in a written notice to Tenant, given within
fifteen (15) days after the later of the date of Landlord's receipt of Tenant's
written request for Landlord's approval or the date of Landlord's receipt of the
information required by this sentence, which states that Landlord will require
that Tenant remove the identified Tenant Changes at the expiration or earlier
termination of this Lease. If Landlord requires Tenant to remove any such Tenant
Changes as described above, Tenant shall, at its sole cost, remove the
identified Tenant Changes on or before the expiration or sooner termination of
this Lease and repair any damage to the Premises caused by such removal (or, at
Landlord's option, shall pay to Landlord all of Landlord's costs of such removal
and repair).
12.3 Removal of Personal Property. All articles of personal property owned by
Tenant or installed by Tenant at its expense on the Premises, including, without
limitation, computer and telecommunications equipment, Switch Gear, Generator,
Uninterruptible Power Supply, AC Power Distribution System, HVAC Chiller Plant,
HVAC Stand Alone Units, Facility Monitoring Systems and Fire Suppression
systems, business and trade fixtures, furniture and movable partitions
(collectively, "Tenant's Property") shall be, and remain, the property of
Tenant, together with all personal property owned by Tenant's customers at any
time located on the Premises ("Tenant's Customer's Property") and shall be
removed by Tenant from the Premises, at Tenant's sole cost and expense, on or
before the expiration or sooner termination of this Lease or any termination of
Tenant's right to possess the Premises. Tenant shall repair any damage caused by
such removal.
12.4 Tenant's Failure to Remove. If, prior to the date of the expiration or
sooner termination of this Lease or any termination of Tenant's right to possess
the Premises, Tenant fails to remove all of Tenant's Property and Tenant's
Customer's Property, or any items of Tenant Changes identified by Landlord for
removal pursuant to Section 12.2 above, Landlord may, (without liability to
Tenant for loss thereof), at Tenant's sole cost and in addition to Landlord's
other rights and remedies under this Lease, at law or in equity: (a) remove and
store such items in accordance with applicable Laws; and/or (b) upon ten (10)
days' prior notice to Tenant sell all or any such items at private or public
sale for such price as Landlord may obtain as permitted under applicable Laws.
Landlord shall apply the proceeds of any such sale to any amounts due to
Landlord under this Lease from Tenant (including Landlord's attorneys' fees and
other costs incurred in the removal, storage and/or sale of such items), with
any remainder to be paid to Tenant.
13. Liens.
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Tenant shall not permit any mechanic's, materialmen's or other liens to be
filed against all or any part of the Premises, nor against Tenant's leasehold
interest in the Premises, by reason of or in connection with any repairs,
alterations, improvements or other work contracted for or undertaken by Tenant
or any other act or omission of Tenant or Tenant's agents, employees,
contractors, licensees or invitees. Tenant shall, at Landlord's request, provide
Landlord with enforceable, conditional and final lien releases (and other
reasonable evidence reasonably requested by Landlord to demonstrate protection
from liens) from all persons furnishing labor and/or materials with respect to
the Premises. Landlord shall have the right at all reasonable times to post on
the Premises and record any notices of non-responsibility which it deems
necessary for protection from such liens. If any such liens are filed, Tenant
shall, at its sole cost, within twenty (20) days after receipt of notice of the
filing thereof, cause each such lien to be released of record or bonded so that
it no longer affects title to the Premises. If Tenant fails to cause such lien
to be so released or bonded within such twenty
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(20) day period, Landlord may, without waiving its rights and remedies based on
such breach, and without releasing Tenant from any of its obligations, cause
such lien to be released by any means it shall deem proper, including payment in
satisfaction of the claim giving rise to such lien. Tenant shall pay to Landlord
within ten (10) business days after receipt of invoice from Landlord, any sum
paid by Landlord to remove such liens, together with interest at the Default
Interest Rate from the date of such payment by Landlord.
14. Assignment and Subletting.
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14.1 Restriction on Transfer. Tenant shall not assign or encumber this Lease in
whole or in part, nor sublet all or any part of the Premises, without the prior
written consent of Landlord, which consent will not be unreasonably withheld or
conditioned. The consent by Landlord to any assignment, encumbrance or
subletting shall not constitute a waiver of the necessity for such consent to
any subsequent assignment, encumbrance or subletting. This prohibition against
assigning or subletting shall be construed to include a prohibition against any
assignment or subletting by operation of law. Without limiting in any way
Landlord's right to withhold its consent on any reasonable grounds, it is agreed
that Landlord will not be acting unreasonably in refusing to consent to an
assignment or sublease if, in Landlord's opinion, (a) the proposed assignment or
sublease involves a change of use of the Premises from that specified herein,
(b) the proposed assignee or subtenant is not, in Landlord's reasonable opinion,
of reputable or good character or does not have a financial strength equal to a
tenant to whom Landlord would lease space in the Project, (c) a Mortgagee (as
defined in Section 18.1 below) or Ground Lessor (as defined in Section 18.1
below) does not approve such assignment or sublease after being requested to
approve the same, (d) there shall have been any advertisement relating to the
proposed assignment or subletting which mentions or refers to a rental rate
unless such advertisement has been approved in writing in advance by Landlord,
or (e) in the case of a subletting, the subletting shall not be expressly
subject to all of the provisions of this Lease and the obligations of Tenant
hereunder (other than Tenant's obligation to pay Rent and any other obligations
under this Lease that are in no way applicable to the proposed subleased
premises) and shall not further provide that if Landlord shall recover or come
into possession of the Premises before the expiration of this Lease, Landlord
shall have the right to take over the sublease and to have it become a direct
lease with Landlord, in which case Landlord shall succeed to all of the rights
of Tenant, as sublessor, thereunder and that in such case subtenant shall be
bound to Landlord for the balance of the term of the Sublease and shall attom to
and recognize Landlord as its landlord under the sublease under all of the then
executory terms of the sublease, except that Landlord will not (i) be liable for
any previous acts or omissions of Tenant, as sublessor, (ii) be subject to any
claims of subtenant not expressly set forth in the sublease, (iii) be bound by
any modification of the sublease for which Landlord shall have not expressly
consented, or (iv) be obligated to perform any repairs or other work beyond
Landlord's obligations under this Lease. Tenant acknowledges and agrees (again
without in any way limiting Landlord's right to withhold its consent on
reasonable grounds) that Landlord may also withhold its consent to a Transfer
based on any one or more of the following: (1) Tenant's failure to satisfy its
obligations in Section 14.2; (2) at the time thereof an Event of Default (as
defined in Section 22.1 below) has occurred and is continuing or an event has
occurred and is continuing which with the giving of notice or the passage of
time, or both, would constitute an Event of Default; (3) the portion(s) of the
Premises subject to the proposed Transfer will, in Landlord's sole discretion
reasonably exercised, cause the Premises to be excessively and/or unacceptably
"chopped-up"; (4) a lessor under any ground or underlying lease covering the
Project or any portion thereof has not approved the proposed Transfer and
Landlord has requested that such lessor approve the same; (5) the fact that the
Proposed Transferee is a governmental entity; (6) the Proposed Transferee's
primary business is prohibited by a non-compete or similar provision of another
lease of space at the Project; (7) the Proposed Transferee is a competitor of
Landlord; (8) the Proposed Transferee is then, or has within twelve months
immediately preceding Tenant's written request for Landlord's consent to such
Transfer been, a person or entity with whom Landlord is dealing or has dealt
regarding the possibility of leasing space in the Project and Landlord then has
space Available For Rent (as defined in Section 14.5 below) in the Project that
is Comparable in Size (as defined in Section 14.5 below) to the Premises or the
applicable portion thereof to be sublet; or (9) the fact that the instrument
effecting the proposed Transfer is not in form and content reasonably
satisfactory to Landlord.
14.2 Transfer Notice. If Tenant desires to effect an assignment, encumbrance or
subletting (a "Transfer"), then at least thirty (30) days prior to the date when
Tenant desires the Transfer to be effective (the "Transfer Date"), Tenant agrees
to give Landlord a notice (the "Transfer Notice"), stating the name, address and
business of the proposed assignee, sublessee or other transferee (sometimes
referred to as a "Proposed Transferee"), reasonable information (including
references) concerning the character, ownership, and financial condition of the
Proposed Transferee, the Transfer Date, any ownership or commercial relationship
between Tenant and the Proposed Transferee, and the consideration and all other
material terms and conditions of the proposed Transfer, all in such detail as
Landlord may reasonably require, together with copies of the Proposed Transfer
documentation and the following information about the Proposed Transferee: (1)
such Proposed Transferee's proposed use of the Premises; (2) banking, financial,
and other credit information (including, without limitation, a current balance
sheet and income statement of the Proposed Transferee); and (3) such other
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information as Landlord may reasonably request in writing within ten (10) days
after its receipt of the Transfer Notice and the information described in
clauses (1) and (2) of this Section 14.2. If Tenant effects a Transfer or
requests the consent of Landlord to any Transfer (whether or not such Transfer
is consummated), then, upon demand, and as a condition precedent to Landlord's
consideration of the proposed assignment or sublease, Tenant shall (a) pay to
Landlord a $500.00 administrative fee to compensate Landlord for evaluating
Tenant's request for consent to a Transfer, and (b) reimburse Landlord for its
attorneys' fees and other expenses incurred in connection with considering any
request for its consent to a Transfer.
14.3 Landlord's Options. Within twenty (20) days of Landlord's receipt of any
Transfer Notice and all of the information and materials required by the first
sentence in Section 14.2 above (including, without limitation, any and all
additional information requested by Landlord concerning the proposed
Transferee's financial responsibility), Landlord will notify Tenant of its
election to do one of the following: (a) consent to the proposed Transfer
subject to such reasonable conditions as Landlord may impose in providing such
consent; (b) refuse such consent, which refusal shall be on reasonable grounds,
subject to the terms herein, or (c) terminate this Lease (or, as to a partial
subletting or assignment, terminate this Lease as to the portion of the Premises
proposed to be sublet or assigned if the term of any such sublease or partial
assignment is co-terminous with the remaining term of this Lease), effective as
of the effective date of the Transfer Date. If Landlord terminates this Lease as
to any portion of the Premises and Tenant does not rescind in writing its
request for Landlord's consent to the applicable Transfer within ten (10)
business days after its receipt of written notice of such termination, then (i)
this Lease shall cease for such portion of the Premises, (ii) Tenant shall pay
to Landlord all Rent accrued through the termination date relating to the
portion of the Premises covered by the proposed Transfer, and (iii) Landlord and
Tenant shall, within fifteen (15) days after Tenant's receipt of Landlord's
written notice of termination, enter into an agreement amending this Lease to
reflect such partial termination (including, without limitation, Tenant's
acknowledgment and agreement that Landlord may lease such portion of the
Premises to the prospective transferee [or to any other person] without
liability to Tenant).
14.4 Additional Conditions. A condition to Landlord's consent to any Transfer
of this Lease will be the delivery to Landlord of a true copy of the fully
executed instrument of assignment, sublease, transfer or hypothecation, in form
and substance reasonably satisfactory to Landlord, which instrument shall, in
the case of an assignment, include an express assumption by the assignee of all
of Tenant's obligations under this Lease. Except as otherwise provided in this
Section 14.4, Tenant agrees to pay to Landlord, as additional rent, all sums and
other consideration payable to and for the benefit of Tenant by the assignee or
sublessee in excess of the rent payable under this Lease for the same period and
portion of the Premises (100% of such excess is herein referred to as "Transfer
Profits"). No Transfer will release Tenant of Tenant's obligations under this
Lease or alter the primary liability of Tenant to pay the Rent and to perform
all other obligations to be performed by Tenant hereunder. Landlord may require
that any Transferee remit directly to Landlord on a monthly basis, all monies
due Tenant by said Transferee (less any portion of the applicable Transfer
Profits Tenant is then entitled to receive pursuant to this Section 14.4), and
each sublease shall provide that if Landlord gives said sublessee written notice
that Tenant is in default under this Lease, said sublessee will thereafter make
all payments due under the sublease directly to or as directed by Landlord,
which payments (excluding any portion thereof comprising Transfer Profits which
shall be retained by Landlord) will be credited against any payments due under
this Lease. Tenant hereby irrevocably and unconditionally assigns to Landlord
all rents and other sums payable under any sublease of the Premises; provided,
however, that Landlord hereby grants Tenant a license to collect all such rents
and other sums so long as no Event of Default has occurred and is continuing and
to retain 50% of such Transfer Profits until the date on which an Event of
Default has occurred, after which date Tenant shall have no right to retain any
such Transfer Profits. This covenant and assignment shall run with the land and
shall bind Tenant and Tenant's heirs, executors, administrators, personal
representatives, successors and assigns. Any assignee or purchaser of Tenant's
interest in this Lease or any sublessee of all or any portion of the Premises
(each such assignee, purchaser or sublessee is herein referred to as a
"Transferee"), by occupying the Premises or any portion(s) thereof and/or
assuming Tenant's obligations hereunder, shall assume liability to Landlord for
all amounts paid to persons other than Landlord by such Transferee in connection
with any such assignment or sale of Tenant's interest in this Lease or
subletting of all or any portion of the Premises. No collection or receipt of
Rent by Landlord shall be deemed a waiver on the part of Landlord, or the
acceptance of the assignee, subtenant or occupant as Tenant, or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant
herein contained. Consent by Landlord to one Transfer will not be deemed consent
to any subsequent Transfer. In the event of default by any Transferee of Tenant
or any successor of Tenant in the performance of any of the terms hereof,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against such Transferee or successor. Notwithstanding any contrary
provision of this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent to a proposed Transfer
or otherwise has breached its obligations under this Section 14, Tenant's and
such Transferee's only remedy shall be to submit such claim for resolution by
binding arbitration in accordance with the terms, conditions and provisions of
the Exhibit F attached to this Lease, and Tenant, on behalf of itself and, to
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the extent
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permitted by law, such proposed Transferee waives all other remedies against
Landlord, including without limitation, the right to seek monetary damages or to
terminate this Lease.
14.5 Definitions. For the purposes of this Lease, space in the Project shall be
considered "Available For Rent" if(A) the applicable space is not then leased by
a tenant and is not then subject to any expansion options, rights of first offer
or other options or rights of other tenants or other third parties (or is
subject to any of the foregoing, but the party owning the same has waived, been
deemed to have waived, or failed to timely exercise the same with respect to the
leasing of the applicable space by Landlord), or (B) if the applicable space is
then leased and the applicable tenant's lease expires, or shall terminate
effective as of a date which is, 4 months or less from the date on which it is
being determined whether the applicable space is Available For Rent and such
space is not then subject to any expansion options, rights of first offer or
other options or rights of other tenants or other third parties (or is subject
to any of the foregoing, but the party owning the same has waived, been deemed
to have waived, or failed to timely exercise the same with respect to the
leasing of the applicable space by Landlord), and space in the Project shall be
considered "Comparable in Size" if it is between 75% and 125% of the amount of
net rentable square feet of space being compared to such space (by way of
example only, if Tenant is proposing to sublease 10,000 net rentable square feet
of the Premises, then any space containing at least 7,500 net rentable square
feet of space and not more than 12,500 net rentable square feet of space would
be considered Comparable in Size to such proposed subleased portion of the
Premises). For the purposes of this Lease, the term "Affiliate" shall mean a
person or entity directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with the party in question.
The term "control", as used in this Section 14.5, means, with respect to an
entity that is a corporation, the right to the exercise, directly or indirectly,
of more than 50% of the voting rights attributable to the shares of the
controlled corporation and, with respect to an entity that is not a corporation,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled entity. In determining
whether a person or entity is an Affiliate of an individual, the aggregate
voting rights or interests in other entities which are held by members of such
individual's immediate family members or by trusts for the benefit of such
individual's immediate family members shall be attributed to such individual.
14.6 Permitted Transfers. Notwithstanding anything to the contrary in this
Lease, Tenant may assign this Lease in its entirety or sublease all or any
portion of the Premises without the prior written consent of Landlord to (1) any
Affiliate of Tenant, (2) any partnership, corporation or other business entity
into or with which Tenant, or its permitted successors or assigns, shall be
merged, converted or consolidated in accordance with applicable statutory
provisions governing merger, conversion or consolidation of the applicable
business entity, or (3) a partnership, corporation or other business entity
which is a direct successor to Tenant owning all or substantially all of
Tenant's business and assets provided that, in connection with any assignment or
subletting described in clauses (1), (2) and (3) of this Section 14.6, (a)
Tenant shall have notified Landlord in writing prior to or promptly after such
assignment or subletting, (b) at the time thereof no Event of Default has
occurred and is continuing and no event has occurred which with the giving of
notice or the passage of time, or both, would constitute an Event of Default,
(c) the proposed transferee shall deliver to Landlord a written agreement
whereby it expressly assumes all of the Tenant's obligations under this Lease;
provided, however, that any sublessee of less than all of the space in the
Premises shall be liable only for obligations under this Lease that are properly
allocable to the space subject to the applicable Transfer (excluding, however,
any obligation to pay Rent due hereunder), (d) Tenant shall have paid to
Landlord a $500.00 administrative fee to compensate Landlord for evaluating
Tenant's compliance with this Section 14.6 and shall have reimbursed Landlord
for all costs and expenses incurred by Landlord (including, without limitation,
attorneys' fees) in connection with such assignment and/or subletting, and (e)
in the case of a Transfer described in clauses (2) and (3) of this Section 14.6,
Tenant shall have provided Landlord with evidence reasonably acceptable to
Landlord that the proposed assignee/sublessee has a demonstrable net worth not
less than the net worth of Tenant as of the date of such assignment or
subletting. Any assignment or subletting permitted without Landlord's prior
written consent as provided above (a "Permitted Transfer Without Landlord
Consent") shall not release Tenant from any of its obligations (including,
without limitation, its obligation to pay Rent) under this Lease. For the
purposes of this Section 14.6, the term "Tenant" shall also mean a permitted
assignee or sublessee of the initial Tenant named in this Lease.
15. Entry by Landlord.
-----------------
Landlord and its employees and agents shall at all reasonable times and
with reasonable notice (except in the case of an emergency) have the right to
enter the Premises to inspect the same, to show the Premises to prospective
lenders or purchasers (or during the last twelve (12) months of the Term, to
prospective tenants), to post notices of non-responsibility, and/or to alter,
improve or repair the Premises as contemplated by Section 11. In exercising such
entry rights, Landlord shall use best efforts to minimize, to the extent
practicable, the interference with Tenant's business, and shall provide Tenant
with reasonable advance notice of such entry (except in emergency situations)
and (except in emergency situations) shall be subject to such security
procedures, including without limitation, identification, sign-in and escorting
as Tenant
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may reasonably require. Landlord shall have reasonable means available to it to
open Tenant's doors in an emergency in order to obtain entry to the Premises.
Any entry to the Premises obtained by Landlord in accordance with this Section
15 shall not under any circumstances be construed or deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant
from the Premises or any portion thereof, or grounds for any abatement or
reduction of Rent and Landlord shall not have any liability to Tenant for any
damages or losses on account of any such entry by Landlord except to the extent
of Landlord's gross negligence or willful misconduct.
16. Heating and Air Conditioning.
----------------------------
(a) Landlord shall furnish on or before the Commencement Date the following
heating and air conditioning units located on the roof of the Building above the
Initial Premises (collectively, the "HVAC Units"): (i) six (6) warehouse heating
units; and (ii) four (4) of the 10 ton air conditioning units and two of the
7 1/2 ton air conditioning units. Landlord shall assign to Tenant all warranties
owned by Landlord with respect to the HVAC Units. On or before the date Tenant
begins to occupy any portion of the Initial Premises for the purpose of
conducting its business therein, Tenant shall notify Landlord in writing which
of the HVAC Units, if any, Tenant elects to accept and use during the Term (such
HVAC Units are herein collectively referred to as the "Accepted HVAC Units" and
the HVAC Units that Tenant does not elect to accept and use are herein
collectively referred to as the "Unaccepted HVAC Units"). If Tenant fails to
provide Landlord with such written notice on or before such date, all of the
HVAC Units shall be deemed to be Accepted HVAC Units. Tenant shall have no
rights in or to, or obligations with respect to, the Unaccepted HVAC Units.
(b) Tenant shall operate the Accepted HVAC Units at its sole cost and
expense in accordance with its design criteria unless otherwise required by
applicable Laws. The cost of electricity consumed by the Accepted HVAC Units
shall be measured by a separate electric meter as provided in Section 5 above.
(c) Tenant shall be responsible for the repair, replacement and maintenance
of the Accepted HVAC Units, and shall promptly notify Landlord of any damage to,
or malfunction of, the Accepted HVAC Units. Throughout the Term, Tenant shall
contract with a qualified and properly insured HVAC contractor reasonably
acceptable to Landlord to have the Accepted HVAC Units serviced at minimum of
once every six (6) months. Such service shall include, but not be limited to,
cleaning of the coil and condenser units on each unit; checking the electrical
connections, the oil and refrigerant for leaks, the safety-device, the blower
belt for wear, tension and alignment, the expansion valve, coil temperature, and
condensate drain; and maintaining the lubrication and addition of freon. Tenant
shall secure, at its sole cost and expense, and shall provide Landlord with a
copy of the service contract providing for the maintenance as described in this
subparagraph, within sixty (60) days following the Commencement Date, and
thereafter, Tenant shall renew or replace the service contract so the service
contract or a replacement thereof remains in full force and effect at all times
until the expiration or earlier termination of this Lease. Tenant shall provide
Landlord with written evidence of such renewal or replacement at least ten (10)
days prior to expiration of the then existing service contract.
(d) The Accepted HVAC Units shall be for the sole use of Tenant and the
Premises.
17. Indemnification and Exculnation.
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17.1 Tenant's Assumption of Risk and Waiver. Except to the extent such matter is
not covered by the insurance required to be maintained by Tenant under this
Lease and such matter is indemnified by Landlord pursuant to Section 17.2(b)
below, Landlord shall not be liable to Tenant, Tenant's employees, agents or
invitees for: (a) any loss (including loss by theft) or damage to property of
Tenant, or of others, located in, on or about the Premises, the Generator Pad,
the Satellite Dish Area or the Telecommunications Cabling Area, which property
shall be the sole risk of Tenant; (b) any injury to, or death of any, persons or
any loss of, or damage to, any property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water, rain or leaks from any part of the
Premises or from the pipes, appliance of plumbing works or from the roof, street
or subsurface or from any other places or by dampness or by any other cause of
whatsoever nature; or (c) any such damage caused by other persons in, on or
about the Premises, the Generator Pad or the Satellite Dish Area, occupants of
adjacent property, or the public, or caused by operations in construction of any
private, public or quasi-public work. Tenant, as a material part of the
consideration to be rendered to Landlord under this Lease and to the extent
permitted by law, hereby waives all claims, INCLUDING ANY CLAIMS CAUSED BY OR
RESULTING FROM THE NEGLIGENCE OF LANDLORD OR ANY LANDLORD INDEMINIFIED PARTIES,
except claims caused by or resulting from the gross negligence or willful
misconduct of Landlord or any Landlord Indemnified Parties, Tenant or Tenant's
successors or Transferees may have against Landlord or any Landlord Indemnified
Parties, for any of the matters described in subparts (a) through (c) of this
Section 17.1. Landlord shall in no event be liable for any consequential damages
or loss of business or profits and Tenant hereby waives any and all claims for
any such damages.
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17.2 Indemnification.
(a) Tenant shall be liable for, and shall indemnify, defend, protect and
hold Landlord and the Landlord Indemnified Parties harmless from and against,
any and all Claims (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS CAUSED BY OR
RESULTING FROM THE COMPARATIVE NEGLIGENCE OF LANDLORD OR ANY LANDLORD
INDEMNIFIED PARTIES) arising or resulting from (i) any injury to, or death of,
any person, or any loss of, or damage to, any property in or on the Premises,
the Satellite Dish Area or the Generator Pad, or on adjoining sidewalks, streets
or ways, or connected with the use, condition or occupancy of the Premises or
the use or condition of the Generator Pad, the Satellite Dish Area or the use of
the Telecommunications Cabling Area; (ii) any act, omission or negligence of
Tenant or any of the Tenant's Parties; (iii) the use of the Premises and conduct
of Tenant's business by Tenant or any Tenant Parties, or any other activity,
work or thing done, permitted or suffered by Tenant or any Tenant Parties, in,
on or about the Premises; and (iv) any breach, violation, or non-performance of
any obligation of Tenant hereunder; provided, however, such indemnification by
Tenant shall not include Claims waived by Landlord in Section 21 below, and
Tenant shall not be required to indemnify or hold Landlord or the Landlord
Indemnified Parties harmless from any Claims to the extent resulting from the
sole or gross negligence or willful misconduct of Landlord or any Landlord
Indemnified Parties. In case any action or proceeding is brought against
Landlord or any Landlord Indemnified Parties by reason of any such indemnified
Claims, Tenant, upon notice from Landlord, shall defend the same at Tenant's
expense by counsel approved in writing by Landlord, which approval shall not be
unreasonably withheld.
(b) Landlord shall be liable for, and shall indemnify, defend, protect and
hold Tenant and Tenant's partners and their respective officers, directors,
employees, agents, successors and assigns (collectively, the "Tenant Indemnified
Parties") harmless from and against any and all Claims (INCLUDING, WITHOUT
LIMITATION, ANY CLAIMS CAUSED BY OR RESULTING FROM THE COMPARATIVE NEGLIGENCE OF
TENANT OR ANY TENANT INDEMNIFIED PARTIES) which are suffered by, recovered from
or asserted against Tenant or any Tenant Indemnified Parties and which (i) are
not paid by proceeds of insurance carried by Landlord, Tenant or any Tenant
Indemnified Parties, and (ii) arise from or in connection with (A) the use of
the Common Areas by Tenant or any Tenant Indemnified Parties, or (B) the gross
negligence or willful misconduct of Landlord or any of the Landlord Indemnified
Parties; provided, however, such indemnification by Landlord shall not include
(1) Claims waived by Tenant in Section 17.1 above or in Section 21 below, (2)
any Claim to the extent caused by or resulting from the sole or gross negligence
or willful misconduct of Tenant or its assignees, sublessees, officers,
directors, employees, agents, servants, contractors, customers or invitees, or
(3) Claims arising in connection with Tenant's or any Tenant Indemnified
Parties' use of the Satellite Dish Area, the Generator Pad or the
Telecommunications Cabling Area. In case any action or proceeding is brought
against Tenant or any Tenant Indemnified Parties by reason of any such
indemnified Claims, Landlord, upon notice from Tenant, shall defend the same at
Landlord's expense by counsel approved in writing by Tenant, which approval
shall not be unreasonably withheld.
18. Damage or Destruction.
---------------------
18.1 Rights of Landlord and Tenant. In the event the Premises or the Project are
damaged by fire or other insured casualty and the insurance proceeds have been
made available therefor by the holder or holders of any mortgages or deeds of
trust covering the Project (each a "Mortgagee") or by any lessor under a ground
lease covering the Project (a "Ground Lessor"), the damage shall be repaired by
and at the expense of Landlord to the extent of such insurance proceeds
available therefor, provided such repairs can, in Landlord's sole opinion, be
made within one hundred twenty (120) days after the occurrence of such damage
without the payment of overtime or other premiums. Until such repairs are
completed, Rent shall be abated effective as of the date of such fire or other
casualty in proportion to the part of the Premises which is unusable by Tenant
in the conduct of its business. If repairs cannot, in Landlord's sole opinion,
be made within one hundred twenty (120) days after the occurrence of such damage
without the payment of overtime or other premiums, Landlord may, at its
option,make them within a reasonable time, and in such event, this Lease shall
continue in effect and Rent shall be abated in the manner provided in the
immediately preceding sentence. In the case of repairs which, in Landlord's
opinion, cannot be made within such one hundred twenty (120) day period, or in
the event that insurance proceeds for repairs have not been made available to
Landlord by a Mortgagee or Ground Lessor, Landlord shall notify Tenant within
sixty (60) days of the date of occurrence of such damage as to whether or not
Landlord will make such repairs. If Landlord elects not to make such repairs
which cannot be made within such one hundred twenty (120) day period, or for
which insurance proceeds have not been made available to Landlord by a Mortgagee
or Ground Lessor, then either party may, by written notice to the other,
terminate this Lease as of the date of the occurrence of such damage, and
Landlord shall have no liability to Tenant for failure to make such repairs
except for abatement of Rent. Except as provided in this Section 18.1, there
shall be no abatement of Rent and no liability of Landlord by reason of any
injury to or interference with Tenant's business or property arising from the
making of any repairs, alterations or improvements in or to
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any portion of the Project and/or the Premises, or in or to fixtures,
appurtenances and equipment located therein, and, in any event, there shall be
no liability of Landlord should repairs require more than one hundred twenty
(120) days for completion; provided, however, if Landlord makes repairs,
Landlord shall do so as quickly as possible without the payment of overtime or
premiums (unless Tenant agrees to bear the costs of such overtime or premiums).
In addition, Tenant shall have the right, at its sole cost and expense, to
install temporary facilities for the operation of any or all of its business, to
the extent appropriate facilities are available, during the rebuilding period at
a location at the Project proposed by Tenant and approved by Landlord, provided
that (i) such installation shall comply with all applicable Laws relating
thereto, (ii) Tenant obtains all necessary permits and/or approvals from the
City of Austin and all other Governmental Authorities having jurisdiction over
Tenant and/or the Project and provides Landlord with written evidence of the
same, (iii) Tenant shall remove all such installation upon completion of the
repair of the Premises, and (iv) Tenant shall have furnished Landlord, in the
form and content required by Section 20 below, with evidence of the insurance
that Tenant is obligated to furnish to Landlord pursuant to Section 20. If the
Premises is damaged so that Tenant cannot reasonably conduct its business
therein and such damage was not caused, in whole or in part, by any act,
omission or negligence of Tenant or any officers, employees, agents,
contractors, subcontractors, sublessees or licensees of Tenant, then immediately
following such damage, Tenant shall have the right, at its sole cost and
expense, to relocate the Premises for the balance of the Term to any other space
in the Project that is not then leased to another tenant; provided, however,
Tenant shall not have the foregoing right if at the time Tenant elects to
exercise the same an Event of Default has occurred and is continuing or an event
has occurred and is continuing which with the giving of notice or the passage of
time, or both, would constitute an Event of Default. Tenant must exercise the
forgoing relocation right by giving Landlord written notice thereof within
forty-five (45) days after the date of such damage. If Tenant timely exercises
this relocation right and is not then in default under this Lease, Landlord will
cooperate with Tenant in identifying space at the Project that is available for
lease and in connection with Tenant's relocation to the same and Landlord and
Tenant will enter into an amendment to this Lease to address the correct size
and location of the relocated Premises, which relocated Premises shall in no
event be less than 95% of the net rentable square footage of the Premises at the
time of such damage.
18.2 Agreements Regarding Landlord's Repairs. If Landlord is obligated to repair
damage to the Premises or the Project pursuant to Section 18.1 above, Landlord
shall use reasonable efforts to complete or cause the completion of the repairs
to the same on or before the expiration of the Casualty Repair Delivery Period
(as defined below in this Section 18.2). Notwithstanding anything else to the
contrary contained in this Lease, if Landlord, for any reason whatsoever, cannot
complete or cause the completion of the repair of the applicable damage to the
Premises such that the Premises are usable by Tenant for the purposes identified
in Section 1.8 of the Summary on or before the last day of the Casualty Repair
Delivery Period, then Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom, but Tenant shall, as its sole and exclusive remedy,
have the right to terminate this Lease by giving Landlord written notice thereof
within ten (10) days after the expiration of the Casualty Repair Delivery
Period; provided, however, if Tenant delivers such written termination notice to
Landlord and on the date of such delivery Landlord is continuing with
commercially reasonable diligence to cause such damage to the Premises to be
repaired as required hereby, then such termination shall not be effective;
provided further, however, if (a) Tenant's termination notice is not effective
due to the foregoing, and (b) thereafter Landlord fails to continue with
commercially reasonable diligence to cause such damage to the Premises to be
repaired as required hereby, then Tenant may terminate this Lease by giving
Landlord written notice thereof within ten (10) days after the date of such
failure. As used herein, the term "Casualty Repair Delivery Period" shall mean
the period of time beginning on the date the Premises and the Building have been
damaged by fire or other insured casualty and ending on the date which shall be
determined by adding to the 270th day after such damage date the number of days
that Landlord is delayed and/or prevented from completing or causing the
completion of the repair of the applicable damage to the Premises as a result of
Force Majeure Delays (as defined in Section 31.15 below). If (i) Tenant attempts
to terminate this Lease pursuant to this Section and delivers to Landlord
written notice of such termination, and (ii) Landlord in good faith disputes
such attempted termination, Landlord shall notify Tenant in writing of such
dispute (a "Lease Termination Dispute Notice") within ten (10) days after
Landlord's receipt of Tenant's written notice of termination, and Landlord and
Tenant shall thereafter proceed to diligently and in good faith attempt to
resolve such dispute and, if the parties are unable to resolve the same within
thirty (30) days after Tenant's receipt of the applicable Lease Termination
Dispute Notice, such dispute shall be submitted for resolution by binding
arbitration in accordance with the terms, conditions and provisions of the
Exhibit F attached to this Lease. If Landlord timely delivers a Lease
- ---------
Termination Dispute Notice to Tenant, the applicable written termination notice
of Tenant shall be of no force or effect until such time, if any, as either (y)
Landlord and Tenant agree otherwise in a writing signed by both parties, or (z)
a panel of arbitrators decides that Tenant's termination of this Lease was, in
fact, effective, If Landlord fails to dispute any such written termination
notice of Tenant within such ten (10) day period, Tenant's written termination
notice shall conclusively be deemed to be effective for the purposes of this
Section.
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18.3 Acknowledgements Regarding Repairs. Tenant acknowledges and agrees that (i)
Landlord will not carry insurance of any kind on (1) Tenant's furnishings or
furniture, (2) the leasehold improvements in the Premises, or (3) any fixtures
or equipment removable by Tenant under the provisions of this Lease, and (ii)
Landlord shall not be required to repair any injury or damage caused by fire or
other cause, or to make any repairs or replacements to or of improvements
installed in the Premises by or for Tenant, all of which shall be the sole
responsibility of Tenant.
19. Eminent Domain.
--------------
19.1 Total or Partial Taking. In the event (i) all of the Premises, or such
substantial part of the Premises or the Project as shall materially,
substantially and adversely interfere with Tenant's ability to conduct its
business upon the Premises, shall be taken for any public or quasi-public
purpose by any lawful power or authority by exercise of the right of
appropriation, condemnation or eminent domain, or sold in lieu of or to prevent
such taking, or (ii) so much of the Common Parking Area shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of
the right of appropriation, condemnation or eminent domain, or sold in lieu of
or to prevent such taking and, after such taking or sale in lieu thereof,
Landlord can no longer provide Tenant with Tenant's allocated parking spaces as
provided in Section 6.8 above (unless Tenant elects to reduce its parking rights
accordingly), either party shall have the right to terminate this Lease by
providing the other party (and, with respect to a termination by Tenant, any
Mortgagee or Ground Lessor) written notice thereof within thirty (30) days of
such party's receipt of a notice of such taking. Such termination shall be
effective as of the date possession is required to be surrendered to said
authority. Said termination of this Lease shall not release Landlord or Tenant
from any obligations or liabilities of such party under this Lease, actual or
contingent, which have accrued on or prior to said termination. Tenant shall not
assert any claim against Landlord or the taking authority for any compensation
because of such taking, and Landlord shall be entitled to receive the entire
amount of any award without deduction for any estate or interest of Tenant;
provided, however, in the event of such a taking, Tenant shall be entitled to
such share of the award as is equitably attributable to Tenant Changes and
Tenant's Property (if any), and Tenant shall have the right to recover from any
condemning authority, through a separate award which does not reduce Landlord's
award, any compensation as may be awarded Tenant on account of moving and
relocation expenses and depreciation to and removal of Tenant's physical
property from the Premises, including, without limitation, any of Tenant's
Property.
19.2 Temporary Taking. In the event of taking of the Premises or any part
thereof for temporary use, (a) this Lease shall be and remain unaffected thereby
and Rent shall not abate, and (b) Tenant shall be entitled to receive for itself
such portion or portions of any award made for such use with respect to the
period of the taking which is within the Term, provided such award is expressly
allocated to the Premises. Any temporary taking which continues for thirty (30)
consecutive days shall be deemed a permanent taking and shall be governed by
Section 19.1 above.
20. Tenant's Insurance; Landlord's Insurance.
----------------------------------------
20.1 Types of Insurance to be Maintained by Tenant. On or before the earlier of
the Commencement Date or the date Tenant commences or causes to be commenced any
work of any type in or on any portion of the Premises, and continuing during the
entire Term, Tenant shall obtain and keep in full force and effect respecting
the Premises, the following insurance:
(a) Special Form (formerly referred to as "All Risk") property insurance,
including fire and extended coverage, sprinkler leakage, vandalism, and
malicious mischief coverage, upon property and improvements owned by Tenant of
every description and kind located in the Premises or otherwise at the Project,
including, without limitation, furniture, equipment and any other personal
property, any Tenant Changes, the Satellite Dish (as defined in the Exhibit E
---------
attached hereto), any Additional Conduit (as defined in the Rider A attached
-------
hereto), Tenant's Power Generator (as defined in the Exhibit J attached hereto),
---------
and any other improvements in or to the Premises or located in the Satellite
Dish Area or the Generator Pad in an amount not less then the full replacement
cost thereof. This insurance shall be on an occurrence basis and shall be
primary and noncontributory to any other insurance carried by Landlord. Evidence
of this insurance shall be provided on ACORD Form 27.
(b) Commercial general liability insurance coverage, including personal
injury, bodily injury (including wrongful death), broad form property damage,
operations hazard, owner's protective coverage, contractual liability (including
Tenant's indemnification obligations under this Lease, including Section 17
hereof), liquor liability (if Tenant serves or stores alcohol on the Premises),
products and completed operations liability, and owned/non-owned auto liability,
with a general aggregate of not less than Five Million Dollars ($5,000,000). The
general aggregate amount of such commercial general liability insurance may be
increased every three (3) years during the Term to an amount reasonably required
by Landlord. Tenant's liability insurance shall (1) be written on an occurrence
basis on a form approved by
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Landlord (which approval will not be unreasonably withheld), and (2) be primary
and noncontributory to any other insurance carried by Landlord or any other
Landlord Parties (as defined in Section 20.2 below). All commercial general
liability insurance maintained by Tenant as required by this Lease (and any
commercial umbrella applicable thereto) shall be endorsed using a waiver of
subrogation form or forms approved by Landlord (which approval will not be
unreasonably withheld), and any such endorsements shall be unmodified and shall
be in favor of all Landlord Parties. Landlord's approval of the form of Tenant's
liability insurance may not be withheld if the form of such insurance is
identical in all material respects to either Insurance Services Office "ISO")
form CG 0001 1092 or CG 0001 0695 or any successor forms. Landlord's approval of
waiver of subrogation endorsement forms may not be withheld if the form of such
endorsement is identical in all material respects to ISO form CG 2404 1093 or
any successor form.
(c) Worker's compensation in statutory amounts and limits, and employer's
liability insurance in an amount not less than $1,000,000.00 or the amount
required by law, whichever is greater, covering all persons employed in
connection with any work done on or about the Premises for which claims for
death or bodily injury could be asserted against Landlord, Tenant or the
Premises. All employer's liability insurance maintained by Tenant as required by
this Lease (and any commercial umbrella applicable thereto) shall be endorsed
using an endorsement form approved by Landlord (which approval will not be
unreasonably withheld) (i.e., a waiver of subrogation endorsement), and such
endorsement shall be in favor of all Landlord Parties. Landlord's approval in
this subparagraph may not be withheld if the form of endorsement is identical in
all material respects to ISO endorsement form WC 429394 or any successor form of
endorsement.
(d) Business income and extra expense insurance (formerly known as
"business interruption insurance") in such amounts as will reimburse Tenant for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent tenants or attributable to prevention of access to the
Premises or to the Building as a result of such perils.
(e) Any other form or forms of insurance as Tenant or Landlord or any
Mortgagee or Ground Lessor may reasonably require from time to time, in form,
amounts and for insurance risks against which a prudent tenant would protect
itself, but only to the extent such risks and amounts are available in the
insurance market at commercially reasonable costs.
If Tenant or any contractor of Tenant performs any work on any portion or
portions of the Premises or, as expressly permitted by this Lease, on approved
areas of the roof of the Building and/or approved areas of the Project, prior to
the commencement of any such work, Tenant shall deliver to Landlord certificates
issued by insurance companies licensed to do business in the State of Texas, in
form and content reasonably acceptable to Landlord, evidencing that commercial
general liability, workers' compensation, employer's liability, automobile
liability and other insurance as required by Landlord and any Mortgagee or
Ground Lessor, in amounts and with companies reasonably satisfactory to
Landlord, are in force and effect and maintained by all contractors and
subcontractors engaged by Tenant or any contractor of Tenant to perform such
work, and name all Landlord Parties as additional insureds.
20.2 Requirements for Tenant's Insurance. Each policy required to be obtained by
Tenant hereunder shall: (a) be issued by insurers which are reasonably approved
by Landlord and/or Landlord's mortgagees and are authorized to do business in
the state in which the Premises is located and rated not less than financial
class X, and not less than policyholder rating A in the most recent version of
Best's Key Rating Guide; (b) be in form reasonably satisfactory from time to
time to Landlord; (c) name Tenant as named insured thereunder and name Landlord
and all Landlord Parties as additional insureds (and with respect to the
insurance described in Section 20.1(a) above, as loss-payees) thereunder, all as
their respective interests may appear; (d) not have a deductible amount
exceeding Ten Thousand Dollars ($10,000), (except for earthquake and flood
insurance, if any, which shall have a deductible amount not to exceed five
percent (5%) of the replacement cost); (e) specifically provide that the
insurance afforded by such policy for the benefit of Landlord and Landlord's
mortgagees and ground lessors shall be primary, and any insurance carried by
Landlord or Landlord's mortgagees and ground lessors shall be excess and non-
contributing; (f) except for worker's compensation insurance, contain an
endorsement that the insurer waives its right to subrogation as described in
Section 22 below; (g) contain a requirement by the insurer to notify (or be
endorsed to require that such insurer notify) Landlord (and the mortgagees and
ground lessors of Landlord who are named as additional insureds) in writing not
less than thirty (30) days prior to any change, reduction in coverage,
cancellation or other termination thereof (except that only ten (10) days notice
shall be required prior to cancellation for failure to pay premiums); and (h) be
in amounts sufficient at all times to satisfy any coinsurance requirements
thereof. Each such policy shall also provide that any loss otherwise payable
thereunder shall be payable notwithstanding (i) any act or omission of Landlord
or Tenant which might, absent such provision, result in a forfeiture of all or a
part of such insurance payment, (ii) the occupation or use of the Premises for
purposes more hazardous than permitted by the provisions of such policy, (iii)
any foreclosure or other action or proceeding taken by any Mortgagee pursuant to
any provision of the mortgage upon the happening of a default thereunder, or
(iv) any change in title or
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ownership of the Premises. Tenant agrees to deliver to Landlord, as soon as
practicable after the placing of the required insurance, but in no event later
than five (5) days prior to the date Tenant takes possession of all or any part
of the Premises, certificates from the insurance company evidencing the
existence of such insurance and Tenant's compliance with the foregoing
provisions of this Section 20. Tenant shall cause replacement certificates to be
delivered to Landlord not less than thirty (30) days prior to the expiration of
any such policy or policies. Copies of endorsements to the applicable insurance
policy must be attached to all certificates delivered by Tenant to Landlord as
required by this Lease. If any such initial or replacement certificates are not
furnished within the time(s) specified herein, or Tenant otherwise fails to
satisfy its obligations under this Section 20 and such failure continues for ten
(10) business days after Tenant's receipt of written notice of such failure,
shall constitute an Event of Default without the benefit of any additional
notice or cure period provided in Section 22.1 below, and Landlord shall have
the right, but not the obligation, to cure such default at Tenant's expense. As
used in this Section 20, the term "Landlord Parties" shall mean (i) Landlord,
(ii) any lender whose loan is secured by a lien against the Project, or any
portion thereof, that has been identified to Tenant in a writing sent by
Landlord or its agent or property manager, (iii) any ground lessor of all or any
portion of the Project that has been identified to Tenant in a writing sent by
Landlord or its agent or property manager, (iv) the Building manager and any
other parties which Landlord shall deem necessary, (v) their respective
shareholders, members, partners, affiliates and subsidiaries, and (vi) any
directors, officers, employees, agents or contractors of such persons or
entities.
20.3 Effect on Insurance. Tenant shall not do or permit to be done anything
which will violate or invalidate any insurance policy maintained by Tenant
hereunder. If Tenant's occupancy or conduct of its business in or on the
Premises results in any increase in premiums for any insurance carried by
Landlord, Tenant shall pay such increase as additional rent within ten (10) days
after being billed therefor by Landlord. Landlord represents that use of the
Premises for general office use, a network operations center and computer and
telecommunications equipment rooms will not increase the premiums for Landlord's
insurance. If any insurance coverage carried by Landlord shall be cancelled or
reduced (or cancellation or reduction thereof shall be threatened) by reason of
the use or occupancy of the Premises by Tenant or by anyone permitted by Tenant
to be upon the Premises, and if Tenant fails to remedy such condition within
five (5) days after written notice thereof, Tenant shall be deemed to be in
default under this Lease, without the benefit of any additional notice or cure
period specified in Section 22.1 below, and Landlord shall have all remedies
provided in this Lease, at law or in equity, including, without limitation, the
right (but not the obligation) to enter upon the Premises and attempt to remedy
such condition at Tenant's cost.
20.4 Types of Insurance to be Maintained by Landlord. Except as otherwise
provided in this Section 20.4, Landlord covenants and agrees that throughout the
Term it will maintain Special Form property insurance, including fire and
extended coverage, vandalism, and malicious mischief coverage upon the Building
(excluding excavation, foundation, footings and underground flues and drains)
and the machinery, boilers and equipment contained therein owned by Landlord
(excluding any property with respect to which Tenant is obligated to insure
pursuant to the provisions of Section 20.1 above), in an amount not less than
the full replacement cost thereof as reasonably determined by Landlord. Landlord
will also, throughout the Term, carry public liability and property damage
insurance with respect to the operation of the Project in reasonable amounts as
would be customarily carried by an owner of a similar property in the vicinity
of the Project. Landlord may, but shall not be obligated to, take out and carry
any other form or forms of insurance as Landlord or any Mortgagee or Ground
Lessor may reasonably determine to be advisable, and Landlord shall take out and
carry any other form or forms of insurance as any Mortgagee or Ground Lessor
shall require of Landlord. Notwithstanding any contribution by Tenant to the
cost of insurance premiums as provided herein, Tenant acknowledges that it has
no right to receive any proceeds from any such insurance policies carried by
Landlord and that such insurance will be for the sole benefit of Landlord with
no coverage for Tenant for any risk against which insurance has been obtained.
20.5 Delivery of Evidence of Landlord's Insurance. If requested in writing by
Tenant during the Term (but not more than once in any 12 month period), Landlord
shall provide Tenant with evidence that Landlord is maintaining the insurance
required pursuant to Section 20.4 above; provided, however, Landlord shall have
no obligation to furnish the foregoing evidence of Landlord's insurance at any
time in which an Event of Default has occurred and is continuing or an event has
occurred and is continuing which with the giving of notice or the passage of
time, or both, would constitute an Event of Default.
21. Waiver of Subrogation. All fire, extended coverage and/or damage insurance
---------------------
which must be carried by Tenant or Landlord shall be endorsed with a subrogation
clause substantially as follows: "This insurance shall not be invalidated should
the insured waive in writing, prior to a loss, any or all right of recovery
against any party for loss occurring to the property described herein." Landlord
and Tenant each hereby waives any rights it may have against the other
(including, but not limited to, a direct action for damages) on account of any
loss or damage occasioned to Landlord or Tenant, as the case may be (WHETHER OR
NOT SUCH LOSS OR DAMAGE IS CAUSED BY THE FAULT, NEGLIGENCE OR
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OTHER TORTIOUS CONDUCT, ACTS OR OMISSIONS OF LANDLORD OR TENANT OR THEIR
RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, EMPLOYEES, SERVANTS AGENTS OR
INVITEES), to their respective property, the Premises, its contents or to any
other portion of the Property arising from any risk covered by the current Texas
State Board of Insurance promulgated form of property insurance and the
customary commercially obtainable endorsements thereto, or covered by any other
insurance required to be carried by Tenant and Landlord, respectively, pursuant
to this Lease. If a party waiving rights under this Section is carrying a
property insurance policy in the promulgated form used in the State of Texas and
an amendment to such promulgated form is passed, such amendment shall be deemed
not a part of such promulgated form until it applies to the policy being carried
by the waiving party. Without in any way limiting the foregoing waivers and to
the extent permitted by applicable law, the parties hereto each, on behalf of
their respective insurance companies insuring the property of either Landlord or
Tenant against any such loss, waive any right of subrogation that Landlord or
Tenant or their respective insurers may have against the other party or their
respective officers, directors, employees, agents or invitees and all rights of
their respective insurance companies based upon an assignment from its insured.
Each party to this Lease agrees immediately to give to each such insurance
company written notification of the terms of the mutual waivers contained in
this Section and to have said insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waivers. The foregoing waivers shall be effective whether or not the
parties maintain the required insurance.
22. Tenant's Default and Landlord's Remedies.
----------------------------------------
22.1 Tenant's Default. The occurrence of any one or more of the following events
shall constitute an event of default under this Lease by Tenant (an "Event of
Default"):
(a) with respect to the first payment of Rent (whether a monthly
installment of Annual Rent or any other amount due and payable by Tenant
pursuant to this Lease) due from Tenant to Landlord under this Lease (or any
other payment due from Tenant to Landlord under any lease or license agreement
executed by Tenant for space in, on or about the Project, or any part thereof)
not made by Tenant when due in any twelve (12) month period, the failure by
Tenant to make such payment to Landlord within five (5) days after Tenant
receives written notice specifying that the applicable payment was not made when
such payment was due; with respect to any other payment of either (i) Rent due
from Tenant to Landlord under this Lease, or (ii) any other payment due from
Tenant to Landlord under any lease or license agreement executed by Tenant for
space in, on or about the Project, or any part thereof, whether or not Tenant
has received notice or demand for a payment described in subparts (i) or (ii) of
this subparagraph, the failure by Tenant to make such payment within five (5)
days after the due date thereof;
(b) the failure by Tenant to observe or perform any of the express or
implied covenants or provisions of this Lease to be observed or performed by
Tenant, other than as specified in Section 22.1(a) above, where such failure
shall continue for a period of ten (10) days after written notice thereof from
Landlord to Tenant; provided, however, that if the nature of Tenant's default is
such that more than ten (10) days are reasonably required for its cure, then
Tenant shall not be deemed to be in default if Tenant shall commence such cure
within said ten (10) day period and thereafter diligently prosecute such cure to
completion within ninety (90) days after such written notice of default (or such
longer time as Landlord may agree in writing), but in any event prior to the
time such failure would result in a violation of applicable Laws or a default by
Landlord under any lease or lien affecting the Project or the Building;
(c) a breach by Tenant of any of the provisions of Sections 12 and 14
hereof;
(d) the doing, or permitting to be done, by Tenant of any act which creates
a mechanic's lien or claim therefor against the Project or any part thereof or
against the interest of Landlord in the leasehold hereby created if the same is
not released, bonded or otherwise provided for by indemnification satisfactory
to Landlord within twenty (20) days after Tenant first obtains actual knowledge
of such lien or claim;
(e) the occurrence and continuance of a Vacation of the Premises (as
hereinafter defined) or a Material Abandonment of the Premises (as hereinafter
defined); or
(f) (i) the making by Tenant of any general assignment for the benefit of
creditors (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless in the case of a petition filed against the
Tenant the same is dismissed within ninety [90] days) (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease where possession
is not restored to Tenant within ninety (90) days or (iv) the
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attachment execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease where such
seizure is not discharged within ninety (90) days.
As used in this Lease, the phrase "Vacation of the Premises" shall mean vacating
the Premises without providing a reasonable level of security to minimize the
potential for vandalism, or where the coverage of the property insurance under
Section 20.1(a) is jeopardized as a result thereof, and the phrase "Material
Abandonment of the Premises" shall mean the abandonment by Tenant of the
Premises for ten (10) business days during any period of time in which an Event
of Default has occurred and is continuing.
22.2 Landlord's Remedies. Upon the occurrence and during the continuance of an
Event of Default, then, and in any such event, Landlord, besides other rights or
remedies it may have under this Lease, at law or in equity and without prejudice
to any of the same, shall have the option, without any notice to Tenant (except
as expressly provided below) and with or without judicial process, to pursue any
one or more of the following remedies:
(a) Landlord may terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord.
(b) To the extent permitted by applicable Laws, Landlord may enter upon and
take custodial possession of all or any portion of the Premises by picking the
locks if necessary, lock out or remove Tenant and any other person occupying all
or any portion of the Premises and alter the locks and other security devices at
the Premises, all without Landlord being deemed guilty of trespass or becoming
liable for any resulting loss or damage and without causing a termination or
forfeiture of this Lease or of Tenant's obligation to pay rent.
(c) Landlord may enter all or any portion of the Premises and take
possession of and remove any and all trade fixtures and personal property
situated thereon, without liability for trespass or conversion. Landlord may
retain control over all such property for the purpose of foreclosing the liens
and security interests described in Section 31.20 below by public or private
sale. If Landlord takes possession of and removes personal property from the
Premises, then prior to any disposition of the property by sale or until Tenant
reclaims the property if no foreclosure by public or private sale is
contemplated, Landlord may store it in a public warehouse or elsewhere at the
cost of and for the account of Tenant without the resort to legal process and
without becoming liable for any resulting loss or damage.
Landlord's pursuit of any remedy specified in this Lease will not constitute an
election to pursue that remedy only, nor preclude Landlord from pursuing any
other remedy available at law or in equity, nor constitute a forfeiture or
waiver of any Rent or other amount due to Landlord as described below.
22.3 Re-Entry and Re-Letting. In the event Landlord enters and takes possession
of all or any portion of the Premises without electing to terminate this Lease,
Landlord will have the right to relet all or any portion of the Premises for
Tenant, in the name of Tenant or Landlord or otherwise, on such terms as
Landlord deems advisable and Tenant hereby appoints Landlord its attorney-in-
fact for such purposes. Landlord will not be required to incur any expenses to
relet all or any portion of the Premises, although Landlord may at its option
incur customary leasing commissions or other costs for the account of Tenant as
Landlord shall deem necessary or appropriate to relet. In no event will the
failure of Landlord to relet all or any portion of the Premises reduce Tenant's
liability for monthly rentals and other charges due under this Lease or for
damages; provided, however, the foregoing shall not relieve Landlord from any
obligation under Texas law to mitigate the damages of Landlord arising as a
result of a default by Tenant under this Lease. To the extent Landlord is
obligated under Texas law to mitigate its damages following a default by Tenant
under this Lease, Landlord may satisfy such obligation by retaining a real
estate broker (such broker can be the same as the broker that is leasing the
other space in the Building and/or Project which is available for rent) and
acknowledging that all portions of the Premises as available for lease;
provided, however, in no event shall Landlord be obligated to either (a) relet
all or any portion(s) of the Premises for less than the then market value of
such premises as determined by Landlord, or (b) relet all or any portion(s) of
the Premises unless there is/are no other comparable space/spaces available for
lease at the Project or any other property owned by Landlord or an Affiliate of
Landlord within a five (5) mile radius of the Project. Without causing a
surrender or forfeiture of this Lease after the occurrence and during the
continuance of an Event of Default, Landlord may: (i) relet all or any portion
of the Premises for a term or terms to expire at the same time as, earlier than,
or subsequent to, the expiration of the Term; (ii) remodel or change the use and
character of all or any portion of the Premises; and (iii) grant rent
concessions in reletting all or any portion of the Premises, if necessary in
Landlord's judgment, without reducing Tenant's obligation for rentals specified
in this Lease. Landlord may retain the excess, if any, of the rent earned from
reletting all or any portion of the Premises over the rentals specified in this
Lease.
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22.4 Continuation of Lease. Upon the occurrence and during the continuance of
an Event of Default, in addition to any other remedies available to Landlord
under this Lease, at law or in equity, Landlord shall have the right to continue
this Lease in full force and effect, whether or not Tenant shall have abandoned
the Premises. In the event Landlord elects to continue this Lease in full force
and effect pursuant to this Section 22.4, then Landlord shall be entitled to
enforce all of its rights and remedies under this Lease, including the right to
recover rent as it becomes due. Landlord's election not to terminate this Lease
pursuant to this Section 22.4 or pursuant to any other provision of this Lease,
at law or in equity, shall not preclude Landlord from subsequently electing to
terminate this Lease or pursuing any of its other remedies.
22.5 Termination. Upon the termination of this Lease, Landlord will be entitled
to recover all unpaid Rent that has accrued through the date of termination plus
the costs of performing any of Tenant's obligations (other than the payment of
Rent) that should have been but were not satisfied as of the date of such
termination. Landlord shall also be entitled to recover the amounts set forth in
Section 22.6 below.
22.6 Repossession and Rental Acceleration. In the event Landlord either (a)
enters and takes possession of all or any portion of the Premises without
electing to terminate this Lease, or (b) terminates this Lease after the
occurrence and during the continuance of an Event of Default, Landlord will be
entitled to recover, not as rent or a penalty but as compensation for Landlord's
loss of the benefit of its bargain with Tenant, the difference between (i) an
amount equal to the present value of the Rent that this Lease provides Tenant
will pay for the remainder of the Term and for the balance of any then effective
extension of the Term, and (ii) the present value of the future rentals (net of
leasing commissions and other costs of reletting and refurbishing) for such
period that will be or with reasonable efforts could be collected by Landlord by
reletting all or any portion of the Premises. For purposes of determining what
could be collected by Landlord by reletting under the preceding sentence,
Landlord (i) will not be required to relet when other comparable space is
available for lease at the Building and/or the Project or any other property
owned by Landlord or an Affiliate of Landlord within a ten (10) mile radius of
the Project, and (ii) will not be required to incur any cost to relet other than
customary leasing commissions and customary leasing concessions/allowances.
22.7 Landlord's Right to Perform. Except as specifically provided otherwise in
this Lease, all covenants and agreements by Tenant under this Lease shall be
performed by Tenant at Tenant's sole cost and expense and without any abatement
or offset of rent. If Tenant shall fail to pay any sum of money (other than
Annual Rent) or perform any other act on its part to be paid or performed
hereunder and such failure shall continue for five (5) days with respect to
monetary obligations (or ten [10] days with respect to non-monetary obligations)
after Tenant's receipt of written notice thereof from Landlord, Landlord may,
without waiving or releasing Tenant from any of Tenant's obligations, make such
payment or perform such other act on behalf of Tenant. All sums so paid by
Landlord and all necessary incidental costs incurred by Landlord in performing
such other acts shall be payable by Tenant to Landlord within five (5) days
after demand therefor, together with interest thereon at the Default Interest
Rate as additional rent.
22.8 Interest. If any monthly installment of Annual Rent, or any other amount
payable by Tenant hereunder is not received by Landlord by the date when due, it
shall bear interest at the Default Interest Rate set forth in Section 1.9 of the
Summary from the date due until paid. All interest, and any late charges imposed
pursuant to Section 22.9 below, shall be considered additional rent due from
Tenant to Landlord under the terms of this Lease.
22.9 Late Charges; Returned Checks. Tenant acknowledges that, in addition to
interest costs, the late payments by Tenant to Landlord of any Annual Rent or
other sums due under this Lease will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such costs being extremely
difficult and impractical to fix. Accordingly, if any monthly installment of
Annual Rent or any other amount payable by Tenant hereunder is not received by
Landlord by the due date thereof, and such failure shall continue for five (5)
days after the same is due, Tenant shall pay to Landlord an additional sum of
five percent (5%) of the overdue amount as a late charge, but in no event more
than the maximum late charge allowed by law. Acceptance of a late charge or
interest shall not constitute a waiver of Tenant's default with respect to the
overdue amount or prevent Landlord from exercising any of the other rights and
remedies available to Landlord under this Lease or at law or in equity now or
hereafter in effect. In the event any check received by Landlord from Tenant in
payment of any amounts payable by Tenant hereunder is returned by Tenant's bank,
Tenant shall pay to Landlord a service charge of $25.00 for each such check upon
receipt of an invoice therefor.
22.10 Rights and Remedies Cumulative. All rights, options and remedies of
Landlord contained in this Section 22 and elsewhere in this Lease shall be
construed and held to be cumulative, and no one of them shall be exclusive of
the other, and Landlord shall have the right to pursue any one or all of such
remedies or any other remedy or relief which may be provided by law or in
equity, whether or not stated in this Lease. Nothing in this Section 22 shall be
deemed to limit or otherwise affect Tenant's indemnification of Landlord
pursuant to any provision of this Lease.
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22.11 Tenant's Waiver of Redemption. Tenant hereby waives and surrenders for
itself and all those claiming under it, including creditors of all kinds, (a)
any right and privilege which it or any of them may have under any present or
future law to redeem any of the Premises or to have a continuance of this Lease
after termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (b) the benefits of any
present or future law which exempts property from liability for debt or for
distress for rent.
22.12 Landlord's Default.
(a) Landlord shall not be deemed to be in default in the performance of
any of its obligations hereunder unless it shall fail to perform such
obligations and such failure shall continue for a period of thirty (30) days or
such additional time as is reasonably required to correct any such default after
written notice has been given by Tenant to Landlord specifying the nature of
Landlord's alleged default (a "Landlord's Default"). Notwithstanding the
immediately preceding sentence, if Landlord's failure to perform its obligations
under this Lease has materially, substantially and adversely interfered with
Tenant's ability to conduct its business upon the Premises, a Landlord's Default
shall not occur until such time as Landlord has received written notice of such
default and has failed to commence to cure the same within five (5) business
days after Landlord's receipt of such written notice or Landlord has commenced
to cure such default but has failed to diligently pursue such cure to completion
and thereafter failed to re-commence to cure such default and diligently pursue
the same to completion after written notice of its failure to initially
diligently pursue such cure to completion. Landlord shall not be liable in any
event for incidental, consequential and/or punitive damages to Tenant by reason
of any Landlord's Default, whether or not notice is given. Tenant shall have no
right to terminate this Lease as a result of any Landlord's Default.
Additionally, Tenant shall have no right to any offset or counterclaim against
Rent due hereunder as a result of any Landlord's Default.
(b) Tenant may, but shall not be obligated to, cure any Landlord's
Default that would be detrimental to Tenant's occupancy of the Premises if not
cured, and whenever Tenant so elects, all costs and expenses incurred by Tenant
in curing a Landlord's Default shall be paid by Landlord to Tenant within
fifteen (15) days after Landlord's receipt of Tenant's written demand therefor,
together with lawful interest thereon from the date of payment by Tenant to the
date of payment by Landlord; provided, however, that Tenant shall protect,
defend indemnify and hold Landlord and all Landlord Indemnitees exempt and
harmless against any damage to the Building, or any premises therein, resulting
from Tenant's effecting a cure of any Landlord's Default.
23. Intentionally deleted.
24. Subordination; Nondisturbance.
-----------------------------
(a) This Lease and the rights of Tenant hereunder shall be and are hereby
made subject and subordinate to all ground or underlying leases now or hereafter
existing and all renewals, modifications, consolidations, replacements and
extensions thereof, and to the lien of any mortgages or deeds of trust or any
other lien now or hereafter existing against the Project or any part thereof,
and/or any said ground lease or any part or parts thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof and to all
advances made, or hereafter to be made, upon the security thereof; provided,
however, that the foregoing subordination in respect of any ground or underlying
lease or any mortgage or deed of trust placed on the Project after the date
hereof shall not become effective until and unless such lessor or the holder of
such mortgage or deed of trust delivers to Tenant a non-disturbance agreement (a
"Non-Disturbance Agreement") which provides that if Tenant is not then in
default under, or in breach of any provision of, this Lease, such lessor or
holder of such mortgage or deed of trust will not disturb Tenant's right of
occupancy of the Premises in the event of a foreclosure of any such mortgage or
deed of trust or a termination of such ground or underlying lease (a Non-
Disturbance Agreement may also include Tenant's agreement to attorn as set forth
below and will contain such other provisions as such lessor or holder of such
mortgage or deed of trust shall require in connection therewith). Although the
subordination in the immediately preceding sentence shall be self-operating,
Tenant, or its successors in interest, shall, upon Landlord's request, execute
and deliver upon demand any and all Non-Disturbance Agreements delivered to
Tenant subordinating this Lease to such lease, mortgage, deed of trust or other
lien. Tenant also agrees that any lessor, mortgagee or trustee may elect (which
election shall be revocable) to have this Lease superior to any lease or lien of
its mortgage or deed of trust and, in the event of such election and upon
notification by such lessor, mortgagee or trustee to Tenant to that effect, this
Lease shall be deemed superior to the said lease, mortgage or deed of trust,
whether this Lease is dated prior to or subsequent to the date of said lease,
mortgage or deed of trust. Although the subordination in the immediately
preceding sentence shall be self-operating, Tenant, or its successors in
interest, shall, upon Landlord's request, execute and deliver upon the demand of
Landlord any and all instruments desired by Landlord, subordinating, in the
manner reasonably
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requested by Landlord, any such lease, mortgage, deed of trust or other lien to
this Lease. If Tenant fails to execute and deliver to Landlord any Non-
Disturbance Agreement or any such subordination instrument delivered to Tenant
for Tenant's execution within ten (10) days after Tenant's receipt of the same,
(I) such failure shall constitute an Event of Default hereunder until such time
as it has been delivered to Landlord, (2) Tenant shall be deemed to have agreed
to all of the terms and provisions of such Non-Disturbance Agreement or such
subordination instrument, and (3) Tenant shall thereafter be estopped from
disclaiming any of the obligations, benefits and burdens set forth therein
including, without limitation, (i) the subordination of this Lease to any deed
of trust, mortgage, ground lease or similar instruments, (ii) any non-
disturbance rights provided to Tenant therein, and (iii) any attornment
agreements of Tenant set forth therein. Landlord is hereby irrevocably appointed
and authorized as agent and attorney-in-fact of Tenant, coupled with an
interest, to execute all such Non-Disturbance Agreements and subordination
instruments in the event Tenant fails to execute said instruments within ten
(10) days after Tenant's receipt of the same.
(b) Landlord shall obtain a Non-Disturbance Agreement from the beneficiary
under the deed of trust that now covers the Building. Upon the delivery to
Tenant of multiple originals of a Non-Disturbance Agreement executed by such
beneficiary and the other party or parties thereto (other than Tenant), Tenant
shall, within ten (10) days after Tenant's receipt of the same, execute each of
the same and return all but one of such originals to Landlord at Landlord's
address for notices set forth in Section 1.1 of the Summary.
25. Estoppel Certificate.
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25.1 Tenant's Obligations. Within five (5) business days following Landlord's
written request, Tenant shall execute and deliver to Landlord an estoppel
certificate, in a form substantially similar to the form of Exhibit C attached
---------
hereto, certifying: (a) the Commencement Date; (b) that this Lease is unmodified
and in full force and effect (or, if modified, that this Lease is in full force
and effect as modified, and stating the date and nature of such modifications);
(c) the date to which the Rent and other sums payable under this Lease have been
paid; (d) that there are not, to the best of Tenant's knowledge, any defaults
under this Lease by either Landlord or Tenant, except as specified in such
certificate; and (e) such other matters as are set forth in Exhibit C or are
---------
reasonably requested by Landlord. Any such estoppel certificate delivered
pursuant to this Section 25.1 may be relied upon by any mortgagee, beneficiary,
purchaser or prospective purchaser of any portion of the Premises, as well as
their assignees.
25.2 Tenant's Failure to Deliver. Tenant's failure to deliver such estoppel
certificate within such time shall be conclusive upon Tenant that: (a) this
Lease is in full force and effect without modification, except as may be
represented by Landlord; (b) there are no uncured defaults in Landlord's or
Tenant's performance (other than Tenant's failure to deliver the estoppel
certificate); and (c) not more than one (1) month's rental has been paid in
advance. If Tenant shall fail to deliver any estoppel certificate required by
this Lease and such failure shall continue for a period of five (5) days after
Tenant's receipt of written notice thereof, Tenant shall indemnify, protect,
defend (with counsel reasonably approved by Landlord in writing) and hold
Landlord harmless from and against any and all Claims attributable to any
failure by Tenant to timely deliver any such estoppel certificate to Landlord
pursuant to Section 25.1 above.
26. Lease Execution.
---------------
26.1 Authority. If Tenant executes this Lease as a partnership, limited
liability company or corporation, then Tenant and the persons and/or entities
executing this Lease on behalf of Tenant represent and warrant that: (a) Tenant
is a duly authorized and existing partnership or corporation, as the case may
be, and is qualified to do business in the state in which the Premises are
located; (b) such persons and/or entities executing this Lease are duly
authorized to execute and deliver this Lease on Tenant's behalf in accordance
with the Tenant's partnership agreement (if Tenant is a partnership), or a duly
adopted resolution of Tenant's board of directors and the Tenant's by-laws (if
Tenant is a corporation); and (c) this Lease is binding upon Tenant in
accordance with its terms. Landlord and the persons and/or entities executing
this Lease on behalf of Landlord represent and warrant that: (a) Landlord is a
duly authorized and existing partnership and is qualified to do business in the
state in which the Premises are located; (b) such persons and/or entities
executing this Lease are duly authorized to execute and deliver this Lease on
Tenant's behalf in accordance with the Tenant's partnership agreement; and (c)
this Lease is binding upon Landlord in accordance with its terms.
26.2 Joint and Several Liability. If more than one person or entity executes
this Lease as Tenant: (a) each of them is and shall be jointly and severally
liable for the covenants, conditions, provisions and agreements of this Lease to
be kept, observed and performed by Tenant; and (b) the act or signature of, or
notice from or to, any one or more of them with respect to this Lease shall be
binding upon each and all of the persons and entities executing this Lease as
Tenant with the same force and effect as if each and all of them had so acted or
signed, or given or received such notice.
28
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26.3 No Option. The submission of this Lease for examination or execution by
Tenant does not constitute a reservation of or option for the Premises and this
Lease shall not become effective as a Lease until it has been executed by
Landlord and delivered to Tenant.
27. Modification and Cure Rights of Landlord's Mortgagees and Lessors.
-----------------------------------------------------------------
27.1 Modifications. If, in connection with Landlord's obtaining or entering
into any financing or ground lease for any portion of the Premises, the lender
or ground lessor shall request modifications to this Lease, Tenant shall, within
ten (10) days after request therefor, execute an amendment to this Lease
including such modifications, provided such modifications are reasonable, do not
increase the obligations of Tenant hereunder, or adversely affect the leasehold
estate created hereby or Tenant's rights hereunder or Tenant's ability to
conduct its business in the Premises.
27.2 Cure Rights.
(a) Should any mortgage or deed of trust affecting the Project be
foreclosed, or if any ground or underlying lease be terminated: (i) the
liability of the mortgagee, beneficiary or purchaser at such foreclosure sale,
or the liability of a subsequent owner designated as Landlord under this Lease,
shall exist only so long as such mortgagee, beneficiary, purchaser or owner is
the owner of the Project and such liability shall not continue or survive after
further transfer of ownership; (ii) Tenant shall be deemed to have attorned, as
Tenant under this Lease, to the purchaser at any foreclosure sale thereunder, or
if any ground or underlying 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 force and effect as a direct
lease between and binding upon Tenant and such mortgagee or ground lessor, as
the case may be. As used in this paragraph, the terms "mortgagee" and
---------
"beneficiary" shall include successors and assigns of such party, whether
-----------
immediate or remote, the purchaser of any mortgage or deed of trust, whether at
foreclosure or otherwise, and the successors, assigns and mortgagees and
beneficiaries of such purchaser, whether immediate or remote.
(b) In the event of any act or omission by Landlord under this Lease which
would give Tenant the right to terminate this Lease or to claim a partial or
total eviction, Tenant will not exercise any such right until:
(i) it has given written notice (by United States certified or
registered mail, postage prepaid) of such act or omission to the holder of any
mortgage or deed of trust on the Project and to the ground lessor of any ground
lease of the Project (whose names and addresses Landlord agrees will be
furnished to Tenant on request); and
(ii) any such holder of any mortgage or deed of trust on the Project,
or any such ground lessor of any ground lease of the Project, shall, following
its receipt of such notice, have failed with commercially reasonable diligence
to commence and to pursue to completion reasonable action to remedy such act or
omission; provided, however, if such act or omission cannot be cured without
possession of the Project, such holder of any mortgage or deed of trust or such
ground lessor shall not be obligated to commence and to pursue reasonable action
to remedy such act or omission, until it has obtained possession of the Project
pursuant to any applicable mortgage, deed of trust or ground lease.
28. Quiet Enjoyment.
---------------
Landlord covenants and agrees with Tenant that, upon Tenant performing all
of the covenants and provisions on Tenant's part to be observed and performed
under this Lease (including payment of rent hereunder), Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises in accordance with and
subject to the terms and conditions of this Lease as against all persons
claiming by, through or under Landlord.
29. Transfer of Landlord's Interest.
-------------------------------
The term "Landlord" as used in this Lease, so far as covenants or
obligations on the part of the Landlord are concerned, shall be limited to mean
and include only the owner or owners, at the time in question, of the fee title
to, or a lessee's interest in a ground lease of, the Building and/or Project. In
the event of any transfer or conveyance of any such title or interest (other
than a transfer for security purposes only), the transferor shall be
automatically relieved of all covenants and obligations on the part of Landlord
contained in this Lease accruing after the date of such transfer or conveyance.
Landlord and Landlord's transferees and assignees shall have the absolute right
to transfer all or any portion of their respective title and interest in the
Building, the Project and/or this Lease without the consent of Tenant, and such
29
<PAGE>
transfer or subsequent transfer shall not be deemed a violation on Landlord's
part of any of the terms and conditions of this Lease.
30. Limitation on Landlord's Liability.
----------------------------------
Notwithstanding anything contained in this Lease to the contrary, the
obligations of Landlord under this Lease (including any actual or alleged breach
or default by Landlord) do not constitute personal obligations of the individual
partners, members, managers, directors, officers or shareholders of Landlord or
Landlord's partners or Affiliates, and Tenant shall not seek recourse against
the individual partners, members, managers, directors, officers or shareholders
of Landlord or Landlord's partners or Affiliates, or any of their personal
assets for satisfaction of any liability with respect to this Lease. In
addition, in consideration of the benefits accruing hereunder to Tenant and
notwithstanding anything contained in this Lease to the contrary, Tenant hereby
covenants and agrees for itself and all of its successors and assigns that the
liability of Landlord for its obligations under this Lease (including any
liability as a result of any actual or alleged failure, breach or default
hereunder by Landlord), shall be limited solely to, and Tenant's and its
successors' and assigns' sole and exclusive remedy shall be against, Landlord's
interest in the Project, and no other assets of Landlord.
31. Miscellaneous.
-------------
31.1 Governing Law. This Lease shall be governed by, and construed pursuant to,
the laws of the state in which the Premises is located.
31.2 Successors and Assigns. Subject to the provisions of Section 29 above, and
except as otherwise provided in this Lease, all of the covenants, conditions and
provisions of this Lease shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective heirs, personal representatives and
permitted successors and assigns; provided, however, no rights shall inure to
the benefit of any Transferee of Tenant unless the Transfer to such Transferee
is made in compliance with the provisions of Section 14, and, except as
otherwise expressly provided herein to the contrary, no options or other rights
which are expressly made personal to the original Tenant or in any rider
attached hereto shall be assignable to or exercisable by anyone other than the
original Tenant.
31.3 No Merger. The voluntary or other surrender of this Lease by Tenant or a
mutual termination thereof shall not work as a merger and shall, at the option
of Landlord, either (a) terminate all or any existing subleases, or (b) operate
as an assignment to Landlord of Tenant's interest under any or all such
subleases.
31.4 Professional Fees. If either Landlord or Tenant should bring suit against
the other with respect to this Lease, including for unlawful detainer or any
other relief against the other hereunder, then all costs and expenses incurred
by the prevailing party therein (including, without limitation, its actual
appraisers', accountants', attorneys' and other professional fees, expenses and
court costs), shall be paid by the other party.
31.5 Waiver. The waiver by either party of any breach by the other party of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or any other term, covenant and condition
herein contained, nor shall any custom or practice which may become established
between the parties in the administration of the terms hereof be deemed a waiver
of, or in any way affect, the right of any party to insist upon the performance
by the other in strict accordance with said terms. No waiver of any default of
either party hereunder shall be implied from any acceptance by Landlord or
delivery by Tenant (as the case may be) of any rent or other payments due
hereunder or any omission by the non-defaulting party to take any action on
account of such default if such default persists or is repeated, and no express
waiver shall affect defaults other than as specified in said waiver. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.
31.6 Terms and Headings; Interpretation. Terms (including, without limitation,
the words "Landlord" and "Tenant") used herein shall include the plural as well
as the singular. Words used in any gender include other genders. The Section
headings of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
31.7 Time. Time is of the essence with respect to performance of every
provision of this Lease in which time or performance is a factor. All references
in this Lease to "days" shall mean calendar days unless specifically modified
herein
30
<PAGE>
to be "business" days. The term "business day" shall mean a day on which banks
are open for business in the State in which the Premises are located, and shall
exclude Saturdays, Sundays, and federal, state and local public holidays.
31.8 Prior Agreements; Amendments. This Lease, including the Summary and all
Exhibits and Riders attached hereto contains all of the covenants, provisions,
agreements, conditions and understandings between Landlord and Tenant concerning
the Premises and any other matter covered or mentioned in this Lease, and no
prior agreement or understanding, oral or written, express or implied,
pertaining to the Premises or any such other matter shall be effective for any
purpose. No provision of this Lease may be amended or added to except by an
agreement in writing signed by the parties hereto or their respective successors
in interest. The parties acknowledge that all prior agreements, representations
and negotiations are deemed superseded by the execution of this Lease to the
extent they are not expressly incorporated herein.
31.9 Separability. The invalidity or unenforceability of any provision of this
Lease (except for Tenant's obligation to pay Rent) shall in no way affect,
impair or invalidate any other provision hereof, and such other provisions shall
remain valid and in full force and effect to the fullest extent permitted by
law.
31.10 Recording. Neither Landlord nor Tenant shall record this Lease. In
addition, neither party shall record a short form memorandum of this Lease
without the prior written consent (and signature on the memorandum) of the
other, and provided that prior to recordation Tenant executes and delivers to
Landlord, in recordable form, a properly acknowledged quitclaim deed or other
instrument extinguishing all of the Tenant's rights and interest in and to the
Premises, and designating Landlord as the transferee, which deed or other
instrument shall be held by Landlord and may be recorded by Landlord once this
Lease terminates or expires (but not prior thereto).
31.11 Exhibits and Riders. All Exhibits and Riders attached to this Lease are
hereby incorporated in this Lease for all purposes as though set forth at length
herein.
31.12 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a
lesser amount than the rent payment herein stipulated shall be deemed to be
other than on account of the rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided in this Lease. Tenant agrees that each of the foregoing
covenants and agreements shall be applicable to any covenant or agreement either
expressly contained in this Lease or imposed by any statute or at common law.
31.13 Financial Statements. Upon ten (10) days prior written request from
Landlord (which Landlord may make at any time during the Term but no more often
than once in any calendar year), Tenant shall deliver to Landlord a current
financial statement of Tenant and any guarantor of this Lease. Such statements
shall be prepared in accordance with generally acceptable accounting principles
and certified as true in all material respects by Tenant (if Tenant is an
individual) or by an authorized officer or general partner of Tenant (if Tenant
is a corporation or partnership, respectively). Notwithstanding the foregoing,
Tenant shall have no obligation to provide Landlord with such certified
financial information with respect to Tenant during any period of time in which
Tenant is a publicly-held company in good standing with the United States
Securities and Exchange Commission with its Voting Stock being publicly traded
on the New York Stock Exchange, the American Stock Exchange or the NASDAQ.
Landlord covenants and agrees to keep the non-public financial information of
Tenant it receives during the Term strictly confidential and not disclose the
same except as follows: (a) to the extent the disclosure of the same may be
required by any applicable Law; (b) in connection with any financing sought by
Landlord; (c) in connection with any legal or arbitration proceedings related to
this Lease; (d) to any prospective purchaser of all or any portion of the
Project or any interest therein or in Landlord; and (e) to any partner of
Landlord and Landlord's or any such partner's officers, directors, trustees,
partners, agents, employees, attorneys, consultants, contractors or
representatives.
31.14 No Partnership. Landlord does not, in any way or for any purpose, become
a partner of Tenant in the conduct of its business, or otherwise, or joint
venturer or a member of a joint enterprise with Tenant by reason of this Lease.
31.15 Force Majeure. In the event that either party hereto shall be delayed or
hindered in or prevented from the performance of any act required hereunder by
reason of strikes, lock-outs, labor troubles, inability to procure materials,
failure of power, governmental moratorium or other governmental action or
inaction (including failure, refusal or delay in issuing permits, approvals
and/or authorizations), injunction or court order, riots, insurrection, war,
fire, earthquake, flood or other natural disaster or other reason of a like
nature not the fault of the party delaying in performing work or doing acts
required under the terms of this Lease (but excluding delays due to financial
inability) (herein collectively, "Force Majeure Delays"), then performance of
such act shall be excused for the period of the delay and the period for the
31
<PAGE>
performance of any such act shall be extended for a period equivalent to the
period of such delay. The provisions of this Section shall not apply to nor
operate to excuse Tenant from the payment of Rent strictly in accordance with
the terms of this Lease.
31.16 Counterparts. This Lease may be executed in one or more counterparts,
each of which shall constitute an original and all of which shall be one and the
same agreement.
31.17 Nondisclosure of Lease Terms. Tenant acknowledges and agrees that the
terms of this Lease are confidential and constitute proprietary information of
Landlord. Disclosure of the terms could adversely affect the ability of Landlord
to negotiate other leases and impair Landlord's relationship with other tenants.
Accordingly, Tenant agrees that it, and its partners, officers, directors,
employees, agents and attorneys, shall not intentionally and voluntarily
disclose the terms and conditions of this Lease to any newspaper or other
publication or any other tenant or apparent prospective tenant of the Building
or other portion of the Premises, or real estate agent, either directly or
indirectly, without the prior written consent of Landlord, provided, however,
that Tenant may disclose the terms to prospective subtenants or assignees under
this Lease. Tenant and its partners, officers, directors, employees, agents and
attorneys shall additionally have the right to disclose the terms and conditions
of this Lease as follows: (a) to the extent disclosure of some or all of such
terms, conditions or provisions may be required by law; (b) the financial terms
of this Lease to the extent that the disclosure of the same is required in
connection with any financing sought by Tenant; and (c) in connection with the
enforcement of Tenant's rights hereunder. The covenants of Tenant in this
Section have been given by Tenant as a material inducement to Landlord to lease
the Premises to Tenant.
31.18 Rules and Regulations. Tenant and Tenant's agents, employees and invitees
will comply fully with all requirements of the rules and regulations with
respect to the Building, the Project and the Common Areas which are attached
hereto as Exhibit D and made a part hereof as though fully set out herein.
---------
Landlord shall at all times have the right to change such rules and regulations
or to promulgate other reasonable rules and regulations in such manner as may be
deemed advisable for safety, care or cleanliness of the Building and the Project
and for preservation of good order therein, all of which rules and regulations,
changes and amendments will be forwarded to Tenant in writing and shall be
carried out and observed by Tenant; provided, however, no such other rules or
regulations shall materially and adversely affect the business being conducted
by Tenant at the Premises. Tenant shall further be responsible for compliance
with such rules and regulations by the employees, servants, agents, visitors and
invitees of Tenant. While all of said rules and regulations are intended to be
uniformly enforced as to all tenants and occupants of the Project, Landlord
shall not be responsible to Tenant for the non-performance by any other tenant
or occupant of the Project of any of said rules and regulations, and the failure
of such other tenant or occupant of the Project to comply with any of said rules
and regulations shall not relieve Tenant from the obligation to comply with the
same.
31.19 Proceedings for Non-Payment of Rent. In the event Landlord commences any
proceedings for non-payment of Rent or any other charges payable hereunder,
Tenant shall not interpose any counterclaim of whatever nature or description in
any such proceeding, unless the failure to raise the same would constitute a
waiver thereof. This shall not, however, be construed as a waiver of Tenant's
right to assert such claims in any separate action brought by Tenant.
31.20 Landlord's Lien. Intentionally deleted.
31.21 Security Deposit. Intentionally deleted.
31.22 Landlord Consents and Approvals; Indemnification. Except as expressly set
forth to the contrary in this Lease or any Exhibits or Riders attached hereto,
any time Landlord's consent or approval is required, Landlord may withhold such
consent or approval in Landlord's sole and absolute discretion. Additionally,
without limiting in any way Landlord's right to withhold its consent or approval
on reasonable grounds, whenever Landlord's consent or approval is expressly
required not to be unreasonably withheld or conditioned, it is agreed that
Landlord will not be acting unreasonably in refusing to give its consent or
approval to the matter Tenant is seeking to have Landlord consent to or approve
if, in Landlord's good faith opinion, such matter would (1) cause Landlord to
incur some cost or expense in connection with the leasing and/or build-out of
the remaining portions of the Building (other than any cost or expense which
Landlord would have otherwise incurred regardless of the matter being consented
to or approved) and Tenant has not offered in connection with its requested
consent to fully reimburse and/or indemnify Landlord for any such cost or
expense (such reimbursement to take place within 15 days after Tenant's receipt
of Landlord's written request therefor and amount thereof), (2) adversely affect
any of the Base Building Components or any of the systems of the Building, or
(3) otherwise adversely affect the Project (including, without limitation,
Landlord's ability to lease the remaining space in the Building and/or sell the
Project). Landlord acknowledges and agrees that the fact that Tenant plans to
construct such improvements to the Initial Premises as
32
<PAGE>
are necessary to complete its intended data center to be located at the Project
will not, in and of itself, adversely affect the Project. All indemnity
obligations of Landlord and Tenant set forth in this Lease or any Exhibits or
Riders attached hereto shall survive the expiration or earlier termination of
this Lease.
31.23 Satellite Dishes and Antennae. Tenant's rights with respect to the
installation and maintenance of communication dishes and antennae on the roof of
the Building are set forth in the Exhibit E attached hereto.
---------
31.24 Fiber Conduits. Tenant's rights to install, connect, run and maintain
telecommunications cabling across the Land to the Premises are set forth in the
Exhibit G attached hereto.
- ---------
31.25 Letter of Credit. Intentionally deleted.
31.26 Tenant's Power Generator. Tenant's rights with respect to the installation
and maintenance of a backup generator at the Project are set forth in the
Exhibit J attached hereto.
- ---------
31.27 Right of First Refusal. Tenant's right of first refusal with respect to
the remaining unoccupied portion of the Building is set forth on the Exhibit I
---------
attached hereto.
31.28 Addendum to Lease. Certain additional provisions with respect to this
Lease are set forth in the Rider A attached hereto. If any of the provisions set
-------
forth in the main body of this Lease or any Exhibit or other Rider attached
hereto would prevent Tenant from exercising the rights expressly granted to
Tenant in Rider A, the provisions of Rider A granting Tenant such rights shall
------- -------
control.
31.29 Leasehold Improvements. The rights and obligations set forth in the
Exhibit K attached hereto shall govern Tenant's construction of the Initial
- ---------
Improvements.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
33
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year
first above written.
TENANT: INFLOW, INC., a Delaware corporation
By: /s/ Arthur H. Zeile
---------------------------------
Name: Arthur H. Zeile
----------------------------
Title: President, CEO
---------------------------
LANDLORD: AGB NORWOOD PARK L.P., a Delaware limited partnership
By: AG NORWOOD PARK ACQUISITION CORP., L.P.
By: /s/ Dave Gottlieb
---------------------------------
Name: Dave Gottlieb
----------------------------
Title: Vice President
---------------------------
34
<PAGE>
EXHIBIT A
DEPICTION OF THE PREMISES
-------------------------
[to be supplied]
A-1
<PAGE>
[DIAGRAM]
EXHIBIT A
DEPICTION OF THE PREMISES
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION OF THE LAND
-----------------------------
Lot 1, Block A, Resubdivision Of Lot 6 and Lot 7, Replat of Norwood Park, Volume
94, Pages 299-300, Travis County, Texas
B-1
<PAGE>
EXHIBIT B-1
-----------
DEPICTION OF THE COMMON PARKING AREA
------------------------------------
[to be supplied]
B-1-1
<PAGE>
[DIAGRAM]
<PAGE>
EXHIBIT B-2
-----------
DEPICTION OF THE VISITOR PARKING AREA AND THE EXCLUSIVE PARKING AREA
--------------------------------------------------------------------
[to be supplied]
B-2-1
<PAGE>
[DIAGRAM]
<PAGE>
EXHIBIT C
SAMPLE FORM OF TENANT ESTOPPEL CERTIFICATE
------------------------------------------
The undersigned ("Tenant") hereby certifies to ______________________________
("Landlord"), and ______________________________ as follows:
1. Attached hereto is a true, correct and complete copy of that certain Lease
dated __________,by and between Landlord and Tenant (the "Lease"), which demises
Premises which are located at
__________________________________________________________________. The Lease is
now in full force and effect and has not been amended, modified or supplemented,
except as set forth in Section 6 below.
2. The term of the Lease commenced on [_____________].
3. The term of the Lease is currently scheduled to expire on _________________.
4. Tenant has no option to renew or extend the term of the Lease except:
_______________.
5. Tenant has no preferential right to purchase the Premises.
6. The Lease has: (Initial One)
( ) not been amended, modified, supplemented, extended, renewed or
assigned.
( ) been amended, modified, supplemented, extended, renewed or
assigned by the following described agreements, copies of which are attached
hereto: ______________________________.
7. Tenant has accepted and is now in possession of the Premises and has not
sublet, assigned or encumbered the Lease, the Premises or any portion thereof
except as follows: ____________.
8. The current monthly Rent is $________________.
9. The amount of security deposit (if any) is $____. No other security
deposits have been made.
10. All rental payments payable by Tenant have been paid in full as of the date
hereof. No rent under the Lease has been paid for more than thirty (30) days in
advance of its due date.
11. All work required to be performed by Landlord under the Lease has been
completed and has been accepted by Tenant, and all tenant improvement allowances
have been paid in full.
12. To the best of Tenant's knowledge, as of the date hereof, there are no
defaults on the part of Landlord or Tenant under the Lease.
13. Tenant has no defense as to its obligations under the Lease and claims no
set-off or counterclaim against Landlord.
14. Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies, except as
expressly provided in the Lease.
15. All insurance required of Tenant under the Lease has been provided by
Tenant and all premiums have been paid.
16. There has not been filed by or against Tenant a petition in bankruptcy,
voluntary or otherwise, any assignment for the benefit of creditors, any
petition seeking reorganization or arrangement under the bankruptcy laws of the
United States or any state thereof, or any other action brought pursuant to such
bankruptcy laws with respect to Tenant.
17. Tenant pays rent due Landlord under the Lease to Landlord and does not have
any knowledge of any other person who has any right to such rents by collateral
assignment or otherwise.
C-1
<PAGE>
The foregoing certification is made with the knowledge that
__________________________ is about to [fund a loan to Landlord or purchase the
Premises from Landlord], and that __________________________ is relying upon the
representations herein made in [funding such loan or purchasing the Premises].
Dated: ___________________
"TENANT'
[_____________________________________________]
By ____________________________________________
Name: _________________________________________
Title: ________________________________________
SAMPLE ONLY (NOT FOR EXECUTION)
C-2
<PAGE>
EXHIBIT D
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and INFLOW,
INC., a Delaware corporation ("Tenant"), have entered into that certain Triple
Net Lease (the "Lease") dated as of November 12, 1999, for the lease of certain
space in a building located in Travis County, Texas. This Exhibit D (this
"Exhibit") is attached to the Lease. Except to the extent otherwise indicated
herein, the initially capitalized terms used in this Exhibit shall have the
meanings assigned to them in the Lease.
RULES AND REGULATIONS
---------------------
1. Landlord agrees to furnish Tenant with three (3) keys to the Premises
without charge. Additional keys will be furnished at a nominal charge.
Tenant shall not change locks or install additional locks on doors without
prior written consent of Landlord. Tenant shall not make or cause to be
made duplicates of keys procured from Landlord without prior written
approval of Landlord. All keys to the Premises shall be surrendered to
Landlord upon termination of this Lease.
2. Tenant will refer all contractors rendering any service on or to the
Premises for Tenant to Landlord for Landlord's approval before performance
of any contractual service, which approval will not be unreasonably
withheld, conditioned or delayed. Tenant's contractors shall comply with
Landlord's reasonable rules and regulations pertaining to construction and
installation. This provision shall apply to all work performed to the
Premises, including installation of electrical devices and attachments and
installations of any nature affecting floors, walls, woodwork, trim,
windows, ceilings and equipment or any other physical portion of the
Premises or the Project. The foregoing shall not apply to any work done
relating to Tenant's Property or Tenant's Customer's Property. The
foregoing shall not apply to any work done relating to Tenant's Property or
Tenant's Customer's Property as long as such work will not affect the
Building and/or the Premises.
3. Tenant shall not at any time occupy any part of the Premises as sleeping or
lodging quarters.
4. 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, or place or use in or about the
Premises or the Project any explosives, gasoline, kerosene, oil, acids,
caustics, or any flammable, explosive or hazardous material without written
consent of Landlord; provided, however, the foregoing shall not apply to
Tenant's generator, associated fuel tanks or UPS battery backup systems or
to any Tenant Changes or to the computer or telecommunications equipment
operated by Tenant or its customers on the Premises.
5. Landlord will not be responsible for lost or stolen merchandise, trade
fixtures, furniture, furnishings, personal property, equipment, money or
jewelry from the Premises or the Project regardless of whether such loss
occurs when the area is locked against entry.
6. No dogs, cats, fowl or other animals shall be brought into or kept in or
about the Premises or Property.
7. Employees of Landlord shall not receive or carry messages for or to any
Tenant or other person or contract with or render free or paid services to
any Tenant or to any of Tenant's agents, employees or invitees.
8. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse or by the defacing or injury of any part of
the Project shall be borne by the person who shall occasion it. No person
shall waste water by interfering with the faucets or otherwise.
9. No person shall disturb occupants of the Project by the use of any radios,
record players, tape recorders, musical instruments, the making of unseemly
noises or any unreasonable use.
10. Nothing shall be thrown out of the windows of the Project or down the
stairways or other passages.
11. Tenant and its employees, agents and invitees shall park their vehicles
only in the Common Parking Area, the Exclusive Parking Area or, as to
visitors of Tenant, in the Visitor Parking Area. Tenant shall furnish
Landlord with state automobile license numbers of Tenant's vehicles and its
employees' vehicles within five (5) days after
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taking possession of the Premises and shall notify Landlord of any changes
within five (5) days after such change occurs with respect to vehicles
regularly using the Common Parking Area. Tenant shall not leave any vehicle
in a state of disrepair (including without limitation, flat tires, out of
date inspection stickers or licenses plates) on the Premises or on the
Project. If Tenant or its employees, agents or invitees (i) park their
vehicles in areas other than the Common Parking Area, the Exclusive Parking
Area or, as to visitors of Tenant, the Visitor Parking Area, or (ii) leave
any vehicle in a state of disrepair, Landlord, after giving written notice
to Tenant of such violation, shall have the right to remove such vehicles
at Tenant's expense.
12. Parking in the Common Parking Area shall be in compliance with all parking
rules and regulations including any sticker or other identification system
established by Landlord. Failure to observe the rules and regulations shall
terminate Tenant's right to use the parking or area and subject the vehicle
in violation of the parking rules and regulations to removal and
impoundment. No termination of parking privileges or removal or impoundment
of a vehicle shall create any liability on Landlord or be deemed to
interfere with Tenant's right to possession of its Premises. Vehicles must
be parked entirely within the stall lines and all direction signs, arrows
and posted speed limits must be observed. Parking is prohibited in areas
not striped for parking, in areas marked "2 HOUR VISITOR PARKING" (except
by visitors), in aisles, where "No Parking" signs are posted, on ramps, in
cross hatched areas, and in other areas as may be designated by Landlord.
Parking stickers or other forms of identification supplied by Landlord
shall remain the property of Landlord and not the property of Tenant and
are not transferable. Every person is required to park and lock his
vehicle. All responsibility for damage to vehicles or persons is assumed by
the owner of the vehicle or its driver.
13. Tenant assumes, and shall indemnify Landlord against, all risks and claims
of damage to persons and properties arising in connection with any movement
in or out of the Building of furniture, office supplies and equipment.
14. Tenant shall not lay floor covering within the Premises without written
approval of Landlord. The use of cement or other similar adhesive materials
not easily removed with water is expressly prohibited.
15. Tenant agrees to cooperate and assist Landlord in the prevention of
canvassing, soliciting and peddling within the Project.
16. If any governmental license or permit shall be required for the proper and
lawful conduct of Tenant's business, Tenant, before occupying the Premises
shall procure and maintain such license or permit and submit it for
Landlord's inspection. Tenant shall at all times comply with the terms of
any such license or permit.
17. Except with the prior written consent of Landlord, Tenant shall not sell or
permit the sale from the Premises of, or use, or permit the use of any
sidewalk or mall area adjacent to the Premises for the sale of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise,
nor shall Tenant carry on, or permit or allow any employee or other person
to carry on, business in or from the Premises for the service or
accommodation of occupants of any other portion of the Building, nor shall
the Premises be used for manufacturing of any kind, or for any business or
activity other than that specifically provided for in Tenant's lease. The
foregoing shall not apply with respect to Tenant's provision of co-location
services and other telecommunications services for its customers.
18. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the exterior walls or roof of the Building except as
permitted in the Lease.
19. Tenant shall not use in any space, or in the Common Areas of the Building,
any hand trucks except those equipped with rubber tires and side guards or
such other material handling equipment as Landlord may approve. No other
vehicles of any kind shall be brought by Tenant into the Building or kept
in or about the Premises without prior written approval of Landlord.
20. Tenant shall store all its trash and garbage within the Premises until
daily removal of same by janitorial service to such location in the
Building as may be designated from time to time by Landlord. No material
shall be placed in the Building trash boxes or receptacles if such material
is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in the city
in which the Premises is located without being in violation of any law or
ordinance governing such disposal.
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21. Tenant shall not permit the use or the operation of any coin operated
machines on the Premises, including without limitation, vending machines,
video games, pinball machines, or pay telephones without the prior written
consent of Landlord.
22 As used in the Lease, "business days" means Monday through Saturday (except
holidays); "regular hours" means 7:00 a.m. to 6:00 p.m. on weekdays and
9:00 a.m. to 1:00 p.m. on Saturdays; and "holidays" means New Years Day,
Memorial Day, Fourth of July, Labor Day, Thanksgiving Day and Christmas
Day, together with such other holidays designated by Landlord consistent
with those holidays designated by landlords of comparable office buildings
located in the county in which the Building is located.
23. Landlord desires to maintain the Project in the highest standard of dignity
and good taste consistent with comfort and convenience for Tenants. Any
action or condition not meeting this high standard should be reported
directly to Landlord. Your cooperation will be mutually beneficial and
sincerely appreciated. Subject to the terms and conditions of the Lease,
Landlord reserves the right to make such other and further reasonable rules
and regulations as in its judgment may from time to time be necessary, for
the safety, care and cleanliness of the Premises and the Project and for
the preservation of good order therein.
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EXHIBIT E
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Exhibit E
(this "Exhibit") is attached to the Lease. Except to the extent otherwise
indicated herein, the initially capitalized terms used in this Exhibit shall
have the meanings assigned to them in the Lease.
SATELLITE DISH/ANTENNA
----------------------
1. Provided that Tenant complies with the terms of this Exhibit, Tenant
may, at its risk and expense, install the Satellite Dish (as hereinafter
defined) on the roof of the Building in the area depicted in the Rider F
attached to the Lease (the "Satellite Dish Area"), which Satellite Dish Area
shall contain approximately 1,000 square feet of space. As used herein, the term
"Satellite Dish" shall mean each satellite dish or other antenna or dish or
telecommunications equipment and related wiring and equipment approved in
writing by Landlord to be located in the Satellite Dish Area, and the term
"Satellite Dishes" shall collectively refer to all of the foregoing. Satellite
Dishes may only be used by Tenant and any Permitted Transferee of all of
Tenant's interest in the Lease or a Permitted Transferee subleasing all or any
part of the Premises and their respective customers in the operation of their
respective businesses in the Premises. Satellite Dishes shall not be used for or
on behalf of any persons or entities other than Tenant or any Permitted
Transferee identified in the immediately preceding sentence and Tenant's and
such Permitted Transferee's customers (i.e., Satellite Dishes shall not be used
for any commercial or other for-profit use unrelated to such businesses). If the
Satellite Dish is not owned by Tenant or a Permitted Transferee then occupying
all or any portion of the Premises, Tenant or such Permitted Transferee shall,
prior to the installation of any Satellite Dish, deliver to Landlord a written
acknowledgement by the owner of the applicable Satellite Dish of Landlord's
rights under this Exhibit. Prior to installing a Satellite Dish in the Satellite
Dish Area, Tenant shall submit to Landlord for its approval plans and
specifications which (1) specify in reasonable detail the design, location and
size of the applicable Satellite Dish, and (2) are sufficiently detailed to
allow for the installation of the applicable Satellite Dish in a good and
workmanlike manner and in accordance with all Laws applicable thereto
(collectively, the "SD Legal Requirements"). Prior to installing a Satellite
Dish in the Satellite Dish Area, Tenant must also satisfy the following
conditions precedent: (a) Tenant shall have obtained the written approval of
Landlord required by the preceding sentence; (b) Tenant shall have obtained and
be maintaining all permits and/or approvals required by applicable Laws with
respect to the installation, maintenance and operation of the applicable
Satellite Dish and shall have provided Landlord with sufficient evidence of the
existence of such permits and/or approvals and that the installation of such
Satellite Dish planned by Tenant will comply in all respects with the SD Legal
Requirements; and (c) Tenant shall have furnished Landlord, in the form and
content required by Section 20 of the Lease, with evidence of the insurance that
Tenant is obligated to furnish to Landlord pursuant to Section 20 of the Lease.
Landlord's approval of any plans and specifications related to the installation
of a Satellite Dish shall create no responsibility or liability on the part of
Landlord for the completeness, design or sufficiency of such plans and
specifications, or the compliance of the same or the applicable Satellite Dish
with the SD Legal Requirements. If Tenant satisfies the conditions precedent set
forth above, Tenant shall install (in a good and workmanlike manner), maintain
and use the applicable Satellite Dish in accordance with all SD Legal
Requirements. Tenant will make no penetration through the roof of the Building
without Landlord's prior written consent (which consent shall not be
unreasonably withheld or delayed). After installing a Satellite Dish, Tenant
shall maintain all permits necessary for the maintenance and operation of the
applicable Satellite Dish while it is on the roof of the Building and operate
and maintain such Satellite Dish in such a manner so as not to unreasonably
interfere with (i) any other satellite, antennae, or other transmission facility
on the Building's roof, in the Building or otherwise at the Project, and (ii)
the use or occupancy of space at the Project by any other tenants or occupants
of such space (the interference described in this sentence is herein referred to
as "Interference"). Copies of all such permits and evidence of such consents
must be submitted to Landlord as soon as practicable after Tenant obtains the
same.
2. If, in Landlord's judgement reasonably exercised, a Satellite Dish has
caused Interference and such Interference did not arise merely as a result of
the existence of the applicable Satellite Dish at the time of Landlord's leasing
space to another tenant at the Project or Landlord's granting rights to a third
party on the roof of the Building or otherwise at the Project. Landlord shall
provide Tenant with written notice thereof and Tenant shall promptly begin
taking actions to prevent the applicable Interference and shall in any event end
such Interference within five (5) business days after Tenant's receipt of such
written notice. If Tenant has failed to promptly begin taking actions to prevent
the applicable Interference and/or failed to end such Interference within five
(5) business days after Tenant's receipt of written notice thereof, such failure
shall constitute an Event of Default and Landlord shall have the right, in
addition to any and all other remedies available to it under this Exhibit and
the Lease, to require that Tenant remove the Satellite Dish causing such
Interference by giving Tenant written notice thereof, which removal by Tenant
shall be completed in accordance with the paragraph 4 below and within thirty
(30) days after Tenant's receipt of such written removal notice. Tenant
acknowledges and agrees
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that continuing Interference may cause irreparable injury and, therefore,
Landlord shall additionally have the right to bring an action to enjoin such
Interference. Landlord acknowledges and agrees that if another tenant at the
Project and/or another user of the roof of the Building seeks to install or
actually installs a satellite dish or other antenna or dish or
telecommunications equipment and a Satellite Dish interferes with such tenant's
or user's property, such interference will not constitute Interference for the
purposes of this paragraph.
3. Landlord may require that Tenant screen each Satellite Dish with a
parapet or other screening device acceptable to Landlord. If Landlord does elect
to require that Tenant screen a Satellite Dish (whether at the time of the
installation thereof or at any time thereafter), Tenant shall promptly complete
such screening work and in no event shall such work fail to be completed within
30 days after Landlord's election to require such screening. Tenant shall
maintain each Satellite Dish and screening device in good repair and condition.
4. Tenant shall, at its risk and expense, remove all Satellite Dishes
(including all wiring and/or cabling related thereto) from the Project within
thirty (30) days after the occurrence of any of the following events: (A) a
proper termination of the Lease by Tenant or Landlord (other than a termination
of the Lease by Landlord following the occurrence and during the continuance of
an Event of Default); or (B) Tenant assigns any of its interest in the Lease or
sublets any portion of the Premises (other than to a Permitted Transferee).
Tenant shall, at its risk and expense on or before the date of the expiration of
the Term or any proper termination of the Lease or Tenant's right to possess the
Premises following the occurrence and during the continuance of an Event of
Default, remove all Satellite Dishes (including all wiring and/or cabling
related thereto) from the Project. If Tenant fails to remove any Satellite Dish
as required by the preceding 2 sentences or by paragraph 2 above, the applicable
Satellite Dish shall become the property of Landlord and Landlord (and its
agents, employees or contractors) may remove such Satellite Dish and store or
dispose of it in any manner Landlord deems appropriate without liability to
Tenant. Tenant shall, within ten (10) days after Tenant's receipt of Landlord's
written request for the following reimbursement, reimburse Landlord for all
costs incurred by Landlord in connection with any removal of the applicable
Satellite Dish by Landlord or its agents, employees or contractors that is
permitted by this Exhibit. Prior to any removal of a Satellite Dish by or on
behalf of Tenant (but excluding any removal of a Satellite Dish by Landlord or
its agent, employee or contractor), Tenant shall (i) obtain Landlord's written
approval (which approval shall not be unreasonably withheld or delayed) to the
plans related to the same (Landlord's approval of such plans shall create no
responsibility or liability on the part of Landlord for the completeness, design
or sufficiency of such plans), (ii) obtain and maintain all permits and/or
approvals required by the SD Legal Requirements with respect to the removal of
the applicable Satellite Dish and provide Landlord with sufficient evidence of
the existence of such permits and/or approvals and that the removal of such
Satellite Dish planned by Tenant will comply in all respects with all SD Legal
Requirements, and (iii) furnish Landlord with the written evidence of insurance
that Tenant is obligated to furnish to Landlord pursuant to Section 20 of the
Lease. Tenant shall repair any damage to the Building and/or Project caused by
or relating to a Satellite Dish (including, without limitation, any damage
caused by its installation, maintenance, use, or removal of the applicable
Satellite Dish) and restore the roof of the Building to its condition existing
before the installation of the applicable Satellite Dish.
5. Tenant shall protect, defend, indemnify and hold harmless Landlord and
all Landlord Indemnified Parties from all Claims resulting from and/or arising
in connection with or related to the installation, maintenance, use, or removal
of each Satellite Dish by Tenant, its agents or contractors or, if permitted by
this Exhibit, the removal of any Satellite Dish by Landlord, its agents,
employees or contractors, INCLUDING THOSE ARISING FROM THE NEGLIGENCE OF
LANDLORD OR ANY LANDLORD INDEMNIFIED PARTIES, unless the Claim in question was
caused by Landlord's or its agents', employees' or contractors' sole or gross
negligence or willful misconduct. All work relating to a Satellite Dish shall,
at Tenant's expense, be coordinated with Landlord's roofing contractor so as not
to adversely affect any warranty for the Building's roof. Except as otherwise
set forth in this Exhibit, there shall be no charge to Tenant for its use of the
roof of the Building for any of the Satellite Dishes. All additional equipment
and work related to any Satellite Dish shall be located in the Premises or the
Satellite Dish Area, unless an alternate location within or on top of the
Building is approved by Landlord. If Landlord allows such additional equipment
to be located outside of the Premises or the Satellite Dish Area, Tenant and
Landlord shall mutually agree upon a reasonable rental for space occupied by
such equipment. Subject to Landlord's rules and regulations related thereto,
Tenant and its contractors shall have reasonable access to each Satellite Dish
and related equipment for the purposes of servicing, repairing, or otherwise
maintaining the same.
6. The indemnification of Landlord and Landlord Indemnified Parties in the
preceding paragraph and the obligations of Tenant with respect to the removal of
each Satellite Dish from the roof of the Building and the Project shall survive
the expiration of the Term and any earlier termination of the Lease.
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EXHIBIT F
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Exhibit F
(this "Exhibit") is attached to the Lease. Except to the extent otherwise
indicated herein, the initially capitalized terms used in this Exhibit shall
have the meanings assigned to them in the Lease.
ARBITRATION PROVISIONS
----------------------
Any controversy or claim arising out of or relating to the Lease which
involves less than $50,000.00 or which relates to an unreasonable denial of any
consent or approval not to have been unreasonably withheld (the foregoing claims
or controversies together with matters specifically identified in the Lease as a
claim to be submitted for resolution by binding arbitration are herein referred
to as "Claims Subject to Arbitration") shall be settled by arbitration
administered by the American Arbitration Association (the "AAA") under its
Commercial Arbitration Rules (the "Rules"), and judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
Landlord and Tenant agree as follows: (1) all Claims Subject to Arbitration
shall be submitted to arbitration (using one arbitrator selected by the AAA or,
if requested by either party, three arbitrators selected as provided below)
administered by the AAA under the Rules; and (2) both Landlord and Tenant will
abide by and perform any award rendered by the arbitrators. The arbitrators
shall have the right to award any form of relief permitted to be awarded by any
court of law having jurisdiction. Any decision or award by the arbitrators shall
be enforceable in any court having jurisdiction.
In the event of a need for the submission of any Claims Subject to
Arbitration to arbitration, the initiating party shall (1) give written notice
to the other party of its intention to arbitrate, which notice must contain a
statement setting forth the nature of the dispute, the amount involved, if any,
the remedy sought, and the hearing locale requested, and (2) file at any
regional office of the AAA three copies of such written notice, three copies of
the applicable arbitration provisions of the Lease, and the appropriate filing
fee as provided by the Rules. Within fifteen (15) days after the non-initiating
party has received notice of such filing, the AAA shall appoint one arbitrator,
unless either party has given notice of its election to have three arbitrators
hear the matter, in which case Landlord and Tenant each may appoint one
arbitrator by identifying such appointed arbitrator in a written notice
delivered to the other party and filing such written notice at the appropriate
regional office of the AAA within such fifteen (15) day period. If either
Landlord or Tenant fails to so appoint an arbitrator, the AAA shall, as provided
in the Rules, appoint the arbitrator to have been selected by such party or
parties and the third arbitrator. The arbitration proceedings shall thereafter
take place as provided by the Rules. As provided in the Lease, the unsuccessful
party in the arbitration proceedings shall promptly pay to the successful party
all costs and expenses (including, without limitation, court costs and
attorneys' fees) incurred therein; provided, however, Landlord and Tenant shall
each be responsible for 50% of (i) all filing fees related to such arbitration
proceedings, and (ii) all fees payable to one or more of the arbitrators.
Notwithstanding anything to the contrary contained in this Exhibit, in no
event shall any dispute regarding the existence of an Event of Default or
Landlord's ability to exercise its rights and remedies in connection therewith
(including, without limitation, the exercise of any of Landlord's remedies set
forth in Section 22.2 of the Lease) constitute, or be deemed to constitute, a
"Claim Subject to Arbitration".
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EXHIBIT G
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Exhibit G
(this "Exhibit") is attached to the Lease. Except to the extent otherwise
indicated herein, the initially capitalized terms used in this Exhibit shall
have the meanings assigned to them in the Lease.
TELECOMMUNICATIONS CABLING LICENSE
----------------------------------
1. As partial consideration for the Rent to be paid by Tenant to Landlord
pursuant to the Lease, Landlord hereby grants to Tenant a non-exclusive license
(the "Fiber Optic License") to install, connect, run and maintain, after the
Effective Date and prior to the Removal Date (as defined below), up to ten (10)
telecommunications (including, without limitation, fiber optic conduits) from
the boundary of the Project to the Building under the Telecommunications Cabling
Area (as defined below). The fiber optic conduit described above is herein
referred to as the "Fiber Optic Conduit". The location of the Fiber Optic
Conduit shall be within the areas of the Land shown on the Rider A attached to
the Lease (the "Telecommunications Cabling Area") and shall be underground at a
depth approved by Landlord unless Landlord otherwise agrees in a writing signed
by Landlord or its managing agent. Tenant's rights within the Telecommunications
Cabling Area are nonexclusive and subject to the rights of all other parties
having rights therein and thereto, to the extent such rights do not unreasonably
interfere with the Fiber Optic License or its intended use by Tenant. The Fiber
Optic License is further subject to any and all Laws applicable thereto and to
the rights of all other parties (including, without limitation, Landlord) with
rights in and to the Telecommunications Cabling Area. Landlord has made no
representations or warranties regarding the condition of the Telecommunications
Cabling Area and/or the suitability of the Telecommunications Cabling Area for
Tenant's intended use. The Fiber Optic License is non-transferable except in
connection with a Transfer of the Lease to a Permitted Transferee. In the event
of a termination of the Lease or Tenant's right to possess the Premises, the
Fiber Optic License shall also terminate effective on the thirtieth (30th) day
after such termination. As used herein, the term "Removal Date" shall mean the
date on which Tenant is required by the terms of this Exhibit to remove the
Fiber Optic Conduit from the Project. The Fiber Optic License shall not be
terminated by Landlord other than in the event of a proper termination of the
Lease or Tenant's right to possess the Premises or as otherwise expressly
provided in this Exhibit.
2. The Fiber Optic Conduit may only be used by Tenant and any Permitted
Transferee and Tenant's or such Permitted Transferee's customers. Landlord shall
have the absolute right to require Tenant to relocate from time to time the
Fiber Optic Conduit to alternative locations at the Project (which alternative
locations shall then become the Telecommunications Cabling Area). In the event
of any such relocation (which relocation will be done in the same manner and
after satisfying the same conditions as applicable to the initial installation
of the Fiber Optic Conduit), Landlord will allow Tenant a reasonable time to
accomplish such relocation, not to exceed 90 days, and such relocation shall be
performed at Tenant's sole cost and expense subject to Tenant's right of
reimbursement in the immediately following sentence. Landlord acknowledges that
such relocation will be done by first installing redundant Fiber Optic Conduit
and by taking other precautions so that service to Tenant shall at no time be
interrupted. Within thirty (30) days after completing such relocation, Tenant
may submit to Landlord written evidence of all costs actually incurred by Tenant
in connection therewith and Landlord shall, provided no Event of Default has
occurred and is continuing and within fifteen (15) days after Landlord's receipt
of such written evidence of costs, pay to Tenant 100% of the amount of such
relocation costs.
3. Prior to installing the Fiber Optic Conduit in the Telecommunications
Cabling Area, Tenant shall submit to Landlord for its approval, which shall not
be unreasonably withheld or delayed, plans and specifications which are
sufficiently detailed to allow for the installation of the Fiber Optic Conduit
in a good and workmanlike manner and in accordance with all Laws applicable
thereto (collectively, the "Conduit Legal Requirements"). Prior to installing
the Fiber Optic Conduit in the Telecommunications Cabling Area, Tenant must also
satisfy the following conditions precedent: (a) Tenant shall have obtained the
written approval of Landlord required by the preceding sentence; (b) Tenant
shall have obtained and be maintaining all permits and/or approvals required by
applicable Laws with respect to the installation, maintenance and operation of
the Fiber Optic Conduit and shall have provided Landlord with sufficient
evidence of the existence of such permits and/or approvals and that the
installation of the Fiber Optic Conduit planned by Tenant will comply in all
respects with the Conduit Legal Requirements; and (c) Tenant shall have
furnished Landlord, in the form and content required by Section 20 of the Lease,
with evidence of the insurance that Tenant is obligated to furnish to Landlord
pursuant to Section 20 of the Lease. Landlord's approval of any plans and
specifications related to the installation of the Fiber Optic Conduit shall
create no responsibility or liability on the part of Landlord for the
completeness, design or sufficiency of such plans and specifications, or the
compliance of the same or the Fiber Optic Conduit with the Conduit Legal
Requirements. If Tenant satisfies the conditions precedent set forth above,
Tenant shall install (in a good and
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workmanlike manner), maintain and use the Fiber Optic Conduit in accordance with
all Conduit Legal Requirements. Tenant acknowledges and agrees that if the
installation of the Fiber Optic Conduit will require any penetrations through
the exterior of the Building, no such penetrations shall be made by Tenant or
any other party unless the same are made following Tenant's receipt of
Landlord's written approval with respect thereto, which shall not be
unreasonably withheld or delayed. Tenant shall promptly pay to Landlord or to
Tenant's contractors, as the case may be, when due, the cost of all work
performed in connection with the installation of the Fiber Optic Conduit, and
upon completion, deliver to Landlord evidence of payment and waivers of all
liens for labor, services or materials. Tenant shall protect, defend, indemnify
and hold Landlord and all Landlord Indemnified Parties harmless from all Claims
and/or liens for labor, services or materials relating to such work that may
arise as a result of any failure by Tenant to satisfy its obligations set forth
in this Exhibit. In the event Landlord incurs any expenses in the removal of
trash or due to the cleaning of the public corridors and loading dock areas or
any other areas of the Project as a direct result of Tenant's or Tenant's
contractors' work, then Tenant shall reimburse Landlord for such expenses within
ten (10) days of Tenant's receipt of a bill or bills from Landlord for the
amount of such expenses.
5. After installing the Fiber Optic Conduit, Tenant shall maintain all
permits and/or consents necessary for the maintenance and use of the Fiber Optic
Conduit and use and maintain the Fiber Optic Conduit and otherwise perform all
of Tenant's telecommunications activities/services ("Tenant's Telecommunications
Services") in such a manner so as not to unreasonably interfere with (i) any
other wiring, cabling, equipment and/or other property located at the Project,
(ii) any satellite, antennae, or other transmission facility on the Building's
roof, in the Building or otherwise at the Project, and (iii) the use or
occupancy of space at the Project by any other tenants or occupants of such
space (the interference described in this sentence is herein collectively
referred to as "Interference"). Copies of all such permits and evidence of such
consents must be submitted to Landlord as soon as practicable after Tenant
obtains the same. Tenant, at its sole cost and expense, shall be solely
responsible for and shall maintain the Fiber Optic Conduit in a safe, sound,
clean and good condition and repair. Subject to the rules and regulations then
in force and effect in accordance with the Lease, Tenant or its contractor shall
have access at all times to the Fiber Optic Conduit for purposes of servicing,
repairing, or otherwise maintaining the same.
6. If, in Landlord's judgement reasonably exercised, the Fiber Optic
Conduit and/or Tenant's Telecommunications Services have caused Interference and
such Interference did not arise merely as a result of the existence of the Fiber
Optic Conduit at the time of Landlord's granting rights to a third party within
the Telecommunications Cabling Area, Landlord shall provide Tenant with written
notice thereof and Tenant shall promptly begin taking actions to prevent the
applicable Interference and shall in any event end such Interference within five
(5) business days after Tenant's receipt of such written notice. If Tenant has
failed to promptly begin taking actions to prevent the applicable Interference
and/or failed to end such Interference within five (5) business days after
Tenant's receipt of written notice thereof, such failure shall constitute an
Event of Default and Landlord shall have the right, in addition to any and all
other remedies available to it under this Exhibit and the Lease, to require that
Tenant remove the Fiber Optic Conduit and/or cease the Tenant's
Telecommunications Services causing such Interference by giving Tenant written
notice thereof, which removal by Tenant shall be completed in accordance with
the following paragraph and within thirty (30) days after Tenant's receipt of
such written removal notice. Tenant acknowledges and agrees that continuing
Interference may cause irreparable injury and, therefore, Landlord shall
additionally have the right to bring an action to enjoin such Interference.
Landlord acknowledges and agrees that if another tenant at the Project and/or
another user of any of the Telecommunications Cabling Area seeks to install or
actually installs wiring, cabling and/or conduit within the Telecommunications
Cabling Area and any of the Fiber Optic Conduit interferes with such tenant's or
user's property, such interference will not constitute Interference for the
purposes of this paragraph.
7. Tenant shall, at its risk and expense, remove the Fiber Optic Conduit
from the Project within thirty (30) days after the occurrence of any of the
following events: (A) a proper termination of the Lease by Tenant or Landlord
(other than a termination of the Lease by Landlord following the occurrence and
during the continuance of an Event of Default); or (B) Tenant assigns any of its
interest in the Lease or sublets any portion of the Premises (other than to a
Permitted Transferee). Tenant shall also, at its risk and expense on or before
the Initial Expiration Date (as the same may be extended pursuant to a valid
exercise by Tenant of one or more or the Extension Options) or any proper
termination of the Lease or Tenant's right to possess the Premises following the
occurrence and during the continuance of an Event of Default, remove the Fiber
Optic Conduit from the Project. If Tenant fails to remove the Fiber Optic
Conduit as required by the preceding 2 sentences or by the immediately preceding
paragraph, the Fiber Optic Conduit shall become the property of Landlord and
Landlord (and its agents, employees or contractors) may remove the Fiber Optic
Conduit and store or dispose of it in any manner Landlord deems appropriate
without liability to Tenant. Tenant shall, within ten (10) days after Tenant's
receipt of Landlord's written request for the following reimbursement, reimburse
Landlord for all costs incurred by Landlord in connection with any removal of
the Fiber Optic Conduit by Landlord or its agents, employees or contractors that
is permitted by this Exhibit. Prior to any removal of the Fiber Optic Conduit by
or on behalf of Tenant (but excluding
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<PAGE>
any removal of the Fiber Optic Conduit by Landlord or its agent, employee or
contractor), Tenant shall (i) obtain Landlord's written approval to the plans
related to the same (Landlord's approval of such plans shall create no
responsibility or liability on the part of Landlord for the completeness, design
or sufficiency of such plans), (ii) obtain and maintain all permits and/or
approvals required by the Conduit Legal Requirements with respect to the removal
of the Fiber Optic Conduit and provide Landlord with sufficient evidence of the
existence of such permits and/or approvals and that the removal of the Fiber
Optic Conduit planned by Tenant will comply in all respects with all Conduit
Legal Requirements, and (iii) furnish Landlord with the written evidence of
insurance that Tenant is obligated to furnish to Landlord pursuant to Section 20
of the Lease. Tenant shall repair any damage to the Project caused by or
relating to the Fiber Optic Conduit (including, without limitation, any damage
caused by its installation, maintenance, use, or removal of the Fiber Optic
Conduit).
8. Tenant shall protect, defend, indemnify and hold harmless Landlord and
all Landlord Indemnified Parties from all Claims resulting from and/or arising
in connection with or related to (i) the installation, maintenance, use, or
removal of the Fiber Optic Conduit by Tenant or any other Tenant Parties or, if
permitted by this Exhibit, the removal of the Fiber Optic Conduit by Landlord,
its agents, employees or contractors, and (ii) any failure by Tenant to satisfy
its obligations set forth in this Exhibit, INCLUDING THOSE ARISING FROM THE
NEGLIGENCE OF LANDLORD OR ANY LANDLORD INDEMNIFIED PARTIES, unless the Claim in
question was caused by Landlord's or its agents', employees' or contractors'
sole or gross negligence or willful misconduct.
9. The Fiber Optic Conduit shall remain personalty of Tenant
notwithstanding the fact that it may be affixed or attached to the Building and,
except as otherwise provided above in this Exhibit, shall during the Term belong
to and be removable by Tenant. The indemnification obligations of Tenant in this
Exhibit and the obligations of Tenant with respect to the removal of the Fiber
Optic Conduit from the Project shall survive the expiration or any earlier
termination of the Lease.
10. The rights granted to Tenant under the Telecommunications Cabling
License also may be exercised by any one or more vendors of telecommunications
services to Tenant (a "Telecommunications Vendor"), subject to the terms and
conditions of the Telecommunications Cabling License. The performance of any
obligation, or the discharge of any liability of Tenant hereunder, by such
Telecommunications Vendor shall constitute the performance of such obligation or
the discharge of such liability by Tenant.
11. Upon the request of Tenant, Landlord shall grant to any
Telecommunications Vendor a license on the same terms and conditions as the
Telecommunications Cabling License. If any Telecommunications Vendor whose
equity is Publicly Traded (as defined below) requires that its own form of
agreement be used to grant license to such Publicly Traded Telecommunications
Vendor as a condition to providing telecommunications services to Tenant,
Landlord shall execute such form of agreement, to the extent the terms and
conditions of such form of agreement (i) grant no rights with respect to the
Project other than the rights granted to Tenant pursuant to the
Telecommunications Cabling License; (ii) except as expressly provided in this
paragraph, do not diminish the rights of the Landlord under the
Telecommunications Cabling License or the Lease in any respect; (iii) do not
create any obligations or liabilities of Landlord other than those created
pursuant to this Exhibit with respect to the Telecommunications Cabling License;
(iv) do not adversely affect any insurance carried by Landlord with respect to
the Project; (v) do not violate any obligation of Landlord to any Mortgagee or
Ground Lessor; or (vi) otherwise are not reasonably objected to by Landlord;
provided, however, Landlord shall not object to any provisions in such form of
agreement that (A) permits self-insurance; (B) provides for insurance that does
not include any waivers of subrogation; (C) provides for insurance that
otherwise varies from that required under Section 20 of the Lease, so long as
such variance, after taking into account the insurance carried by Tenant, does
not result in an increase in the Landlord's exposure to Claims; (D) provides for
longer periods of time to remove any of such vendor's equipment or perform other
obligations under the Telecommunications Cabling License, other than the curing
of Interference, so long as such longer periods of time are commercially
reasonable and in no event exceed thirty (30) days; (E) requires notices,
including, without limitation, notices of default, to be sent to specified
persons; or (F) contains no, or a less comprehensive, indemnification of
Landlord and Landlord Indemnified Parties than contained in the
Telecommunications Cabling License, so long as Tenant agrees to indemnify
Landlord and the Landlord Indemnified Parties on behalf of such Publicly Traded
Telecommunications Vendor to the extent required under the Telecommunications
Cabling License (and not covered by any indemnification of such Publicly Traded
Telecommunications Vendor). As used in this Exhibit, the term "Publicly Traded"
shall mean with respect to any Telecommunications Vendor the fact that such
vendor is in good standing with the United States Securities and Exchange
Commission and such vendor's Voting Stock is being publicly traded on the New
York Stock Exchange, the American Stock Exchange or the NASDAQ.
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<PAGE>
12. The Telecommunications Cabling License may be assigned, in whole or in
part, to any Permitted Transferee (including, without limitation, in such a
manner that both to the Tenant and any Permitted Transferee become licensees
under the Telecommunication Cabling License), subject to the terms and
conditions of this Exhibit.
G-4
<PAGE>
EXHIBIT H
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Exhibit H
(this "Exhibit") is attached to the Lease. Except to the extent otherwise
indicated herein, the initially capitalized terms used in this Exhibit shall
have the meanings assigned to them in the Lease.
LETTER OF CREDIT PROVISIONS
---------------------------
Intentionally deleted.
H-1
<PAGE>
EXHIBIT I
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Exhibit I
(this "Exhibit") is attached to the Lease. Except to the extent otherwise
indicated herein, the initially capitalized terms used in this Exhibit shall
have the meanings assigned to them in the Lease.
TENANT'S CONTINUING RIGHTS OF FIRST REFUSAL
-------------------------------------------
1. Provided no Event Default has occurred and is continuing and no event
has occurred and is continuing which with the giving of notice or the passage of
time, or both, would constitute an Event of Default, Landlord shall, during the
Term and prior to leasing all or any portion of the Right of First Refusal Space
(as hereinafter defined), provide Tenant with the first refusal rights set forth
below. As used herein, the term "Right of First Refusal Space" shall mean the
premises designated as "Right of First Refusal Space" on the Rider B attached to
the Lease.
2. Landlord shall, at any time during the Term if required by this
Exhibit, prior to leasing all or any portion of the Right of First Refusal
Space, deliver to Tenant a written statement (a "Statement") which shall reflect
Landlord's and the prospective tenant's non-binding agreement with respect to
rent, term, finish allowances and other tenant inducements, and other matters
related to the leasing of the applicable portion(s) of the Right of First
Refusal Space. Tenant shall have ten (10) business days after its receipt of a
Statement within which to notify Landlord in writing that it will lease the
applicable Right of First Refusal Space on the terms set forth in this Exhibit.
Failure by Tenant to notify Landlord within such ten (10) business day period
shall be deemed an election by Tenant not to lease the applicable Right of First
Refusal Space and Landlord shall have the right to lease such space to the
prospective tenant or an Affiliate thereof. If Landlord does not lease the
applicable Right of First Refusal Space to such prospective tenant or an
Affiliate thereof, Landlord shall be free to market such space to other
prospective tenants but subject to the rights of Tenant in this Exhibit. Tenant
agrees that if it exercises the right of first refusal described in this
paragraph, it must lease all of the Right of First Refusal Space described in
the applicable Statement.
3. At the time the Right of First Refusal Space described in the
applicable Statement is added to the Premises, the term "Premises" shall mean
the then existing Premises together with such Right of First Refusal Space and,
except as otherwise set forth in this Exhibit, Tenant's leasing of such Right of
First Refusal Space shall be subject to the provisions of the Lease (including,
without limitation, the length of the term of Tenant's leasing of the Right of
First Refusal Space which shall be co-terminous with the Term). Such Right of
First Refusal Space shall be leased to Tenant upon all terms and conditions of
the Lease with the following exceptions: (i) Annual Rent for such Right of First
Refusal Space will be equal to the Annual Rent then payable pursuant to the
Lease, subject to adjustments and increases as provided therein; (ii) Tenant
shall not be entitled to any allowances or inducements with respect to such
Right of First Refusal Space other than those provided below in this Exhibit;
and (iii) Annual Rent with respect to such Right of First Refusal Space shall
commence when Landlord delivers possession of such Right of First Refusal Space
to Tenant.
4. Within fifteen (15) days after the date of Landlord's receipt of
Tenant's written notice that it will lease the Right of First Refusal Space
described in the applicable Statement, Landlord and Tenant will enter into an
amendment to the Lease reflecting (i) the addition of such Right of First
Refusal Space to the Premises, (ii) the increase in Annual Rent payable under
the Lease as provided by this Exhibit, (iii) the increase in Tenant's Share,
(iv) the fact that the Right of First Refusal Space will be accepted by Tenant
in its "as is" condition and Landlord shall not provide to Tenant any allowances
(e.g., moving allowance, construction allowance, and the like) or other tenant
inducements other than those specified in the applicable Statement, and (v) such
other amendments to the Lease as are necessary due to the addition of such Right
of First Refusal Space to the Premises.
5. Tenant may not exercise its rights under this Exhibit if an Event of
Default by Tenant under the Lease has occurred and is continuing. Tenant's
rights under this Exhibit shall terminate following the occurrence of any of the
following events: (a) Tenant's right to possess all or any of the Premises is
properly terminated; (b) the failure of Tenant to timely exercise either of the
Extension Options; and/or (c) any proper termination of the Lease or Tenant's
right to possess the Premises.
I-1
<PAGE>
EXHIBIT J
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Exhibit J
(this "Exhibit") is attached to the Lease. Except to the extent otherwise
indicated herein, the initially capitalized terms used in this Exhibit shall
have the meanings assigned to them in the Lease.
TENANT'S POWER GENERATOR
------------------------
1. For the Term of the Lease, and as partial consideration for the monies
to be paid hereunder, Landlord hereby grants Tenant a an exclusive license (the
"Power Generator License"), subject to the approval of the City of Austin and
all other governmental authorities having jurisdiction over the Project and
Tenant's operations, to install, maintain, repair and replace from time to time,
at the location outside the Building identified on the Rider C attached to the
Lease (the "Generator Pad"), a power generator, together with associated
equipment and fuel tanks (collectively, "Tenant's Power Generator"), to provide
primary or backup power, or both, to Tenant's equipment at the Premises, and to
integrate Building power into Tenant's Power Generator. Landlord has made no
representations or warranties with respect to (i) Tenant's ability to install
the Generator Pad and/or Tenant's Power Generator at the Project, or (ii) the
manner in which Tenant's Power Generator would be integrated into the existing
systems servicing the Building and/or Premises. The Generator Pad and Tenant's
Power Generator shall by secured by a fence with a locked gate. During the Term
Tenant shall maintain such fencing in good repair and condition. Landlord shall
provide, at no additional charge, license rights and, if applicable, riser space
as necessary to connect Tenant's Power Generator to Tenant's equipment at or
otherwise serving the Premises. After installing Tenant's Power Generator,
Tenant shall maintain all permits necessary for the maintenance and operation of
Tenant's Power Generator while it is located at the Generator Pad. Landlord
agrees to cooperate with Tenant to obtain any land use permits required for the
construction, maintenance and operation of Tenant's Power Generator.
2. Tenant shall, at its risk and expense, remove the Generator Pad and
Tenant's Power Generator from the Project within thirty (30) days after the
occurrence of any of the following events: (A) a proper termination of the Lease
by Tenant or Landlord (other than a termination of the Lease by Landlord
following the occurrence and during the continuance of an Event of Default); or
(B) Tenant assigns any of its interest in the Lease or sublets any portion of
the Premises (other than to a Permitted Transferee). Tenant shall, at its risk
and expense on or before the date of the expiration of the Term or any proper
termination of the Lease or Tenant's right to possess the Premises following the
occurrence and during the continuance of an Event of Default, remove the
Generator Pad and Tenant's Power Generator from the Project. If Tenant fails to
remove either of the Generator Pad or Tenant's Power Generator as required by
the preceding 2 sentences, the Generator Pad or Tenant's Power Generator, as
applicable, shall become the property of Landlord and Landlord (and its agents,
employees or contractors) may remove the same and store or dispose of it in any
manner Landlord deems appropriate without liability to Tenant. Tenant shall,
within ten (10) days after Tenant's receipt of Landlord's written request for
the following reimbursement, reimburse Landlord for all costs incurred by
Landlord in connection with any removal of the Generator Pad or Tenant's Power
Generator, as applicable, by Landlord or its agents, employees or contractors
that is permitted by this Exhibit. Prior to any removal of the Generator Pad
and/or Tenant's Power Generator by or on behalf of Tenant (but excluding any
removal of the Generator Pad or Tenant's Power Generator by Landlord or its
agent, employee or contractor), Tenant shall (i) obtain Landlord's written
approval (which approval shall not be unreasonably withheld or delayed) to the
plans related to the same (Landlord's approval of such plans shall create no
responsibility or liability on the part of Landlord for the completeness, design
or sufficiency of such plans), (ii) obtain and maintain all permits and/or
approvals required by applicable Laws with respect to the removal of the
Generator Pad and/or Tenant's Power Generator and provide Landlord with
sufficient evidence of the existence of such permits and/or approvals and that
the removal of the Generator Pad and/or Tenant's Power Generator planned by
Tenant will comply in all respects with all applicable Laws, and (iii) furnish
Landlord with the written evidence of insurance that Tenant is obligated to
furnish to Landlord pursuant to Section 20 of the Lease. Tenant shall repair any
damage to the Generator Pad and/or Project caused by or relating to Tenant's use
of Tenant's Power Generator (including, without limitation, any damage caused by
its installation, maintenance, use, or removal of Tenant's Power Generator).
3. Tenant shall be solely responsible for all costs of constructing,
installing, maintaining and operating the Generator Pad and Tenant's Power
Generator. Prior to installing Tenant's Power Generator on the Generator Pad,
Tenant must also satisfy the following conditions precedent: (a) Tenant shall
have obtained and be maintaining all permits and/or approvals required by
applicable Laws with respect to the installation, maintenance and operation of
the Generator Pad and Tenant's Power Generator (collectively, the "Power
Generator Legal Requirements") and shall have provided Landlord with sufficient
evidence of the existence of such permits and/or approvals and that the
installation of the Generator Pad and/or Tenant's Power Generator planned by
Tenant will comply in all respects with the Power Generator Legal
J-1
<PAGE>
Requirements; and (b) Tenant shall have furnished Landlord, in the form and
content required by Section 20 of the Lease, with evidence of the insurance that
Tenant is obligated to furnish to Landlord pursuant to Section 20 of the Lease.
Landlord's approval of any plans and specifications related to the installation
of the Generator Pad and/or Tenant's Power Generator shall create no
responsibility or liability on the part of Landlord for the completeness, design
or sufficiency of such plans and specifications, or the compliance of the same
with the Power Generator Legal Requirements. If Tenant satisfies the conditions
precedent set forth above, Tenant shall install (in a good and workmanlike
manner), maintain and use Tenant's Power Generator in accordance with all Power
Generator Legal Requirements. Tenant shall promptly pay to Landlord or to
Tenant's contractors, as the case may be, when due, the cost of all work
performed in connection with the installation of the Generator Pad and Tenant's
Power Generator, and upon completion, deliver to Landlord evidence of payment
and waivers of all liens for labor, services or materials. Tenant shall protect,
defend, indemnify and hold Landlord and all Landlord Indemnified Parties
harmless from all Claims and/or liens for labor, services or materials relating
to such work that may arise as a result of any failure by Tenant to satisfy its
obligations set forth in this Exhibit. In the event Landlord incurs any expenses
in the removal of trash or due to the cleaning of the public corridors and
loading dock areas or any other areas of the Project as a direct result of
Tenant's or Tenant's contractors' work, then Tenant shall reimburse Landlord for
such expenses within ten (10) days of Tenant's receipt of a bill or bills from
Landlord for the amount of such expenses.
4. Landlord agrees that Rent or assessments or expenses will not be
charged to Tenant for the Power Generator License. Tenant's Power Generator and
the Generator Pad may only be used by Tenant and any Permitted Transferee.
5. Tenant shall protect, defend, indemnify and hold harmless Landlord and
all Landlord Indemnified Parties from all Claims resulting from and/or arising
in connection with or related to the installation, maintenance, use, or removal
of the Generator Pad and/or Tenant's Power Generator by Tenant, its agents or
contractors or, if permitted by this Exhibit, the removal of the Generator Pad
or Tenant's Power Generator by Landlord, its agents, employees or contractors,
INCLUDING THOSE ARISING FROM THE NEGLIGENCE OF LANDLORD OR ANY LANDLORD
INDEMNIFIED PARTIES, unless the Claim in question was caused by Landlord's or
its agents', employees' or contractors' sole or gross negligence or willful
misconduct. All additional equipment and work related to Tenant's Power
Generator shall be located in the Premises or at the Generator Pad, unless an
alternate location within the Project is approved by Landlord. If Landlord
allows such additional equipment to be located outside of the Premises and the
Generator Pad, Tenant and Landlord shall mutually agree upon a reasonable rental
for space occupied by such equipment. Tenant and its contractors shall have
access at all times to the Generator Pad and Tenant's Power Generator for the
purposes of servicing, repairing, or otherwise maintaining the same.
6. The indemnification of Landlord and Landlord Indemnified Parties in
the preceding paragraph and the obligations of Tenant with respect to the
removal of the Generator Pad and Tenant's Power Generator from the Project shall
survive the expiration of the Term and any earlier termination of the Lease.
J-2
<PAGE>
EXHIBIT K
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Exhibit K
(this "Exhibit") is attached to the Lease. Except to the extent otherwise
indicated herein, the initially capitalized terms used in this Exhibit shall
have the meanings assigned to them in the Lease.
LEASEHOLD IMPROVEMENTS
----------------------
1. Within thirty-five (35) days after the date of Landlord's execution of
the Lease, Tenant shall provide to Landlord for its approval final working
drawings, prepared by Tenant's architect (the "Architect") and approved by
Tenant (which approval shall be indicated by Tenant's signature thereon), of all
improvements that Tenant proposes to install in, and alterations to be made to,
the Initial Premises; such working drawings shall include, without limitation,
the partition layout, ceiling plan, electrical outlets and switches, telephone
outlets, drawings for any modifications to the mechanical and plumbing systems
of the Building and detailed plans and specifications for the construction of
the improvements called for under this Exhibit in accordance with all applicable
Laws. Further, if any of Tenant's proposed construction work will affect the
Building's HVAC, electrical, mechanical, or plumbing systems, then the working
drawings pertaining thereto shall be reviewed by the Building's engineer of
record, whom Tenant shall at its cost engage for such purpose. Subject to
Paragraph 5 below and Landlord's ability to withhold its approval to the
foregoing on reasonable grounds, Landlord agrees that it will approve (subject
to such modifications as Landlord may require) or disapprove of the final
working drawings described above within ten (10) business days after Landlord's
receipt of two (2) complete sets of the same. Based upon such review, Landlord
may order reasonable modifications to the Working Drawings, which modifications
will be made by Tenant in accordance with Landlord's direction; except that if
Tenant reasonably cannot make any such modification regarding a reasonable
improvement included by Tenant in the Working Drawings in good faith, and if
such modification would have a material adverse impact on the operation of
Tenant's business or Tenant's costs for the initial build-out of the Initial
Premises, then Tenant shall have the right to terminate the Lease by giving
Landlord written notice thereof within fifteen (15) days after Landlord's
request for the applicable modification unless Landlord withdraws its requested
modification either prior to its receipt of Tenant's termination notice or
within five (5) business days thereafter, in which case the Lease shall remain
in force and effect and the applicable modification will not be made to the
Working Drawings. If Tenant fails to terminate the Lease within such fifteen
(15) day period, Tenant shall have no further right to terminate the Lease based
on the applicable modification requested by Landlord and such modification shall
be made to the Working Drawings. As used herein, "Working Drawings" shall mean
the final working drawings approved by Landlord, as amended from time to time by
any approved changes thereto, and "Work" shall mean all alterations and
improvements to be constructed in accordance with and as indicated on the
Working Drawings. Approval by Landlord of the Working Drawings shall not be a
representation or warranty of Landlord that such drawings are adequate for any
use, purpose, or condition, or that such drawings comply with any applicable
Law, but shall merely be the consent of Landlord to the performance of the Work.
All changes in the Work must receive the prior written approval of Landlord, and
in the event of any such approved change Tenant shall, upon completion of the
Work, furnish Landlord with an accurate, reproducible "as-built" plan (e.g.,
sepia) of the improvements as constructed, which plan shall be incorporated into
the Lease by this reference for all purposes.
2. The Work shall be performed by contractors and/or subcontractors
approved in writing by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed.
3. All contractors and subcontractors shall be required to procure and
maintain insurance against such risks, in such amounts, and with such companies
as Landlord may reasonably require. Certificates of such insurance, with paid
receipts therefor, and copies of such certificates of insurance must be received
by Landlord before the Work is commenced. The Work shall be performed in a good
and workmanlike manner that is free of defects and is in strict conformance with
the Working Drawings, and shall be performed in such a manner and at such times
as to maintain harmonious labor relations and not to unreasonably interfere with
or delay Landlord's other contractors, the operation of the Building, and the
occupancy thereof by other tenants.
4. Tenant shall bear the entire cost of performing the Work (including,
without limitation, design of the Work and preparation of the Working Drawings,
costs of construction labor and materials, electrical usage during construction,
additional janitorial services, general tenant signage, related taxes and
insurance costs).
K-1
<PAGE>
RIDER A
AGB NORWOOD PARK, L.P., a Delaware limited partnership ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant"), have entered into that certain
Triple Net Lease (the "Lease") dated as of November 12, 1999, for the lease of
certain space in a building located in Travis County, Texas. This Rider A (this
"Rider") is attached to the Lease. Except to the extent otherwise indicated
herein, the initially capitalized terms used in this Rider shall have the
meanings assigned to them in the Lease.
ADDENDUM TO LEASE
-----------------
1. Landlord's Warranties. Landlord represents and warrants to Tenant as
---------------------
follows: (1) Landlord is the owner of good and indefeasible title to the
Project; (2) the Building and the Premises are, as of the date of the Lease, not
subject to any ground lease, mortgage or deed of trust except the deed of trust
in favor of National Bank of Abernathy; (3) the party executing the Lease on
behalf of Landlord has full power and authority to enter into the Lease on
behalf of Landlord and to bind Landlord to the terms of the Lease; (4) Landlord
has not granted, and to Landlord's knowledge, no other party has any right to
use or occupy the Premises from and after the Commencement Date; and (5) the
Project is not located within property designated by any Governmental
Authorities as within a 100-year flood plain.
2. Accommodation Space. Provided Tenant is not then in default under the
-------------------
Lease and has obtained Landlord's written approval with respect thereto
(including, without limitation, the location of the following and the manner in
which any of the following are constructed), Tenant shall have the right during
the Term to utilize available portions of the Land and/or roof of the Building
to accommodate equipment being utilized by Tenant in connection with its use and
occupancy of the Premises.
3. Co-Location of Space Within the Premises to Tenant's Customers. The
--------------------------------------------------------------
co-location of space within the Premises for Tenant's Customer's Equipment shall
not be a Transfer. Tenant shall have the right to do any of the following at no
additional charge to Tenant: (a) to co-locate Tenant's Customer's Equipment in
the Premises without Landlord's consent; (b) to provide short-term rights to use
portions of the Premises to Tenant's customers and vendors without Landlord's
consent; (c) to connect Tenant's Customer's Equipment to Tenant's
telecommunications facilities located at the Project; and (d) to provide
telecommunication services to Tenant's customers (including, without limitation,
other tenants of the Project), the manner in which cabling and/or wiring
necessary to provide such services can be installed by Tenant at the Project
being governed by various other provisions of this Rider and the Lease.
4. Conduit/Riser Space. Provided Tenant is not then in default under the
-------------------
Lease and has obtained Landlord's written approval with respect thereto (which
approval will not be unreasonably withheld, conditioned or delayed), Tenant
shall have the right during the Term to do the following (all at Tenant's sole
cost and expense): (a) use Existing Fiber Optic Cabling (as hereinafter
defined); (b) construct additional telecommunication entrances into the
Premises; and (c) install additional conduit ("Additional Conduit") within the
existing risers and shaftways of the Building as may be required in order to
connect Tenant's generator, power, HVAC equipment and piping, antennas,
grounding, and related equipment and for other purposes not inconsistent with
the design of such risers and shaftways. Tenant's rights in the immediately
preceding sentence are subject to Landlord's written approval of the manner in
which the same are being exercised by Tenant and such conditions as Landlord in
its sole discretion reasonably exercised may impose in connection therewith. As
used herein, the term "Existing Fiber Optic Cabling" shall mean the fiber optic
cabling, if any, located in the Building as of the Effective Date. Landlord has
made no representations or warranties regarding (i) the condition of the
Existing Fiber Optic Cabling or the risers or shaftways of the Building, or (ii)
the suitability of either of the foregoing for Tenant's intended use.
Notwithstanding anything to the contrary contained in the Lease, Tenant shall,
at its risk and expense on or before the date of the expiration of the Term or
any termination of the Lease or Tenant's right to possess the Premises, remove
all Additional Conduit from the Project. If Tenant fails to remove any
Additional Conduit as required by the preceding sentence, such Additional
Conduit shall become the property of Landlord and Landlord (and its agents,
employees or contractors) may remove the same and store or dispose of it in any
manner Landlord deems appropriate (but in compliance with Laws) without
liability to Tenant. Tenant shall, within ten (10) days after Tenant's receipt
of Landlord's written request for the following reimbursement, reimburse
Landlord for all costs incurred by Landlord in connection with any removal of
any Additional Conduit by Landlord or its agents, employees or contractors that
is permitted by this Rider. Prior to any removal of Additional Conduit by or on
behalf of Tenant (but excluding any removal of Additional Conduit by Landlord or
its agent, employee or contractor), Tenant shall obtain Landlord's written
approval to the plans related to the same (Landlord's approval of such plans
shall create no responsibility or liability on the part of Landlord for the
completeness, design or sufficiency of such plans).
Rider A-1
<PAGE>
5. Tenant UPS Systems. Provided Tenant is not then in default under the
------------------
Lease and has obtained Landlord's written approval with respect to the manner of
installation and integration of the following (which approval will not be
unreasonably withheld, conditioned or delayed), Tenant shall have the right
during the Term to install, at Tenant's sole cost and expense, one or more
uninterrupted power supply systems and their associated batteries (each a
"Tenant UPS System") within the Premises and to integrate the Building power
into each Tenant UPS System. Landlord has made no representations or warranties
with respect to (i) Tenant's ability to install any Tenant UPS System within the
Premises, or (ii) the manner in which any Tenant UPS System would be integrated
into the existing systems servicing the Building and/or Premises.
Notwithstanding anything to the contrary contained in the Lease, Tenant shall,
at its risk and expense on or before the date of the expiration of the Term or
any termination of the Lease or Tenant's right to possess the Premises, remove
each Tenant UPS System from the Project. If Tenant fails to remove any Tenant
UPS System as required by the preceding sentence, such UPS System shall become
the property of Landlord and Landlord (and its agents, employees or contractors)
may remove the same and store or dispose of it in any manner Landlord deems
appropriate without liability to Tenant. Tenant shall, within ten (10) days
after Tenant's receipt of Landlord's written request for the following
reimbursement, reimburse Landlord for all costs incurred by Landlord in
connection with any removal of any Tenant UPS System by Landlord or its agents,
employees or contractors that is permitted by this Rider. Prior to any removal
of a Tenant UPS System by or on behalf of Tenant (but excluding any removal of a
Tenant UPS System by Landlord or its agent, employee or contractor), Tenant
shall obtain Landlord's written approval to the plans related to the same
(Landlord's approval of such plans shall create no responsibility or liability
on the part of Landlord for the completeness, design or sufficiency of such
plans).
6. Grounding. Provided Tenant is not then in default under the Lease,
---------
Tenant shall have the right, at no additional charge but at Tenant's sole cost
and expense, to tie into any existing electrical grounding systems in the
Building or, if the such grounding systems do not meet Tenant's requirements, to
install Tenant's own electrical grounding system for the Premises. The manner in
which Tenant shall tie into existing electrical grounding systems and/or install
Tenant's own electrical grounding system for the Premises shall be subject to
Landlord's prior written approval (which approval will not be unreasonably
withheld, conditioned or delayed). Landlord has made no representations or
warranties with respect to the existing electrical grounding systems in the
Building.
7. Tenant Generators. Intentionally deleted.
-----------------
8. HVAC and Humidity Control. Provided Tenant is not then in default
-------------------------
under the Lease and has obtained Landlord's written approval with respect
thereto (which approval will not be unreasonably withheld, conditioned or
delayed), Tenant shall have the right during the Term to (i) install, at
Tenant's sole cost and expense, coolant lines within the Premises to support the
air conditioning systems servicing the Premises, (ii) install and operate a
separate and independent chiller or other cooling system servicing the Premises,
(iii) vent through the ventilation system servicing the Premises and to install
drains within the Premises for the HVAC equipment servicing the Premises and to
discard HVAC wastewater into the sewage system servicing the Premises, and (iv)
remove or cap any heating system servicing the Premises. In the event Tenant
does install such coolant lines and/or separate and independent chiller or other
cooling system, Tenant shall maintain the same in good condition and repair
throughout the Term.
9. Fire System. Provided Tenant is not then in default under the Lease
-----------
and has obtained Landlord's written approval with respect thereto (which
approval will not be unreasonably withheld, conditioned or delayed), Tenant
shall have the right during the Term to do the following (all at Tenant's sole
cost and expense): (a) convert the present sprinkler system within the Premises
to a dry-pipe, pre-action system, (b) relocate or encase any water mains or
other water pipes running through or adjacent to the Premises, (c) install an FM
200 gas system in the Premises, or (d) install any other fire suppression system
desired by Tenant within the Premises. Landlord has made no representations or
warranties with respect to (i) Tenant's ability to convert, relocate and/or
install any of the foregoing, or (ii) the manner in which any of the foregoing
would be integrated into the existing systems servicing the Building and/or
Premises. In the event Tenant does install an FM 200 gas system and/or other
fire suppression system within the Premises, Tenant shall maintain the same in
good condition and repair throughout the Term.
10. Structural. Provided Tenant is not then in default under the Lease and
----------
has obtained Landlord's written approval with respect thereto (which approval
will not be unreasonably withheld, conditioned or delayed), Tenant shall have
the right during the Term to do the following (all at Tenant's sole cost and
expense): (a) to reinforce floor load capacities of the Premises; (b) to cover
or block up windows and/or exterior walls in the Premises, provided that such
measures are reasonably acceptable to Landlord with respect to the external
aesthetics of the Building; (c) to fence in any equipment or facilities located
or installed outside the Premises in accordance with the Lease and all exhibits
and riders attached thereto; and (d) to install up to three manholes adjacent to
the exterior walls of the Premises for bringing
Rider A-2
<PAGE>
telecommunications fiber into the Premises. In the event Tenant does fence in
such equipment or facilities and/or install such manholes, Tenant shall maintain
the same in good condition and repair throughout the Term.
11. Security System. Tenant shall have the right to install its own
---------------
security system for the Premises ("Tenant's Security System"), and to create a
special security area within the Premises to encompass Tenant's equipment room.
Landlord will cooperate with Tenant in maintaining the security for such area.
Tenant shall be permitted to install security with non-building-standard locks
and other access controls which restrict access to Tenant and its customers,
provided that Landlord shall be provided with keys or other entry mechanisms
which may be used in accordance with the terms of the Lease. Landlord shall not
enter Tenant's secured equipment area or permit any janitorial, maintenance,
repair or other service to such area except as approved and supervised by
Tenant. Landlord or its agents shall enter Tenant's secured equipment area only
after at least twenty-four (24) hours notice to Tenant and when accompanied by
Tenant, except when failure to comply with the foregoing will cause imminent
danger to the Premises or other portions of the Building or any person. Any
entry by Landlord will be conducted with reasonable caution under the
circumstances to prevent damage to or interference with any of the equipment in
the area. During the Term Tenant shall maintain Tenant's Security System in good
condition and repair. Landlord has made no representations or warranties with
respect to (i) Tenant's ability to install Tenant's Security System within the
Premises, or (ii) the manner in which Tenant's Security System would be
integrated into the existing systems servicing the Building and/or Premises.
12. Equipment and Floor Loads. Provided Tenant is not then in default
-------------------------
under the Lease, Tenant shall have the right to install, maintain, repair and
replace computer, telecommunication, and other equipment in the equipment room
of the Premises (collectively, the "Equipment Room Property"), so long as the
floor load pattern does not exceed the floor capacity of the Building. Landlord
hereby acknowledges that such weights are not excessive loads for the structure
and hereby consents thereto. Tenant shall have the right to install fixed
telephone and HVAC systems in the Premises, and Landlord hereby consents
thereto. Prior to the expiration or earlier termination of the Lease or Tenant's
right to possess the Premises, Tenant shall have the right to move Equipment
Room Property in and out of the Premises from time to time in the course of its
business, and Landlord hereby consents thereto. Notwithstanding anything to the
contrary contained in the Lease, Tenant shall, at its risk and expense on or
before the date of the expiration of the Term or any termination of the Lease or
Tenant's right to possess the Premises, remove all Equipment Room Property from
the Project. If Tenant fails to remove any Equipment Room Property as required
by the preceding sentence, and such failure continues for ten (10) days after
Tenant's receipt of written notice thereof, such Equipment Room Property shall
become the property of Landlord and Landlord (and its agents, employees or
contractors) may remove the same and store or dispose of it in any manner
Landlord deems appropriate without liability to Tenant. Tenant shall, within ten
(10) days after Tenant's receipt of Landlord's written request for the following
reimbursement, reimburse Landlord for all costs incurred by Landlord in
connection with any removal of any Equipment Room Property by Landlord or its
agents, employees or contractors that is permitted by this Rider. Prior to any
removal of any Equipment Room Property by or on behalf of Tenant (but excluding
any removal of Equipment Room Property by Landlord or its agent, employee or
contractor), Tenant shall obtain Landlord's written approval to the plans
related to the same (Landlord's approval of such plans shall create no
responsibility or liability on the part of Landlord for the completeness, design
or sufficiency of such plans).
13. Landlord's Remedies. Notwithstanding anything to the contrary in the
-------------------
Lease, (i) in no event shall Landlord have a lien on any of the property of any
of Tenant's customers; and (ii) in no event shall Landlord be entitled to
withhold services under the Lease as a remedy for Tenant's default thereunder.
14. Indemnification. Tenant shall protect, defend, indemnify and hold
---------------
harmless Landlord and all Landlord Indemnified Parties from all Claims resulting
from and/or arising in connection with or related to (a) the exercise of
Tenant's rights pursuant to this Rider, and/or (b) the installation,
maintenance, use, or removal of any Additional Conduit, Existing Fiber Optic
Cabling, Tenant UPS System, Generator Pad, Tenant's Power Generator, Tenant's
Security System or Equipment Room Property by Tenant, its agents or contractors
or, if permitted by this Rider, the removal of any Additional Conduit, Existing
Fiber Optic Cabling, Tenant UPS System, Generator Pad, Tenant's Power Generator,
Tenant's Security System or Equipment Room Property by Landlord, its agents,
employees or contractors, INCLUDING THOSE ARISING FROM THE NEGLIGENCE OF
LANDLORD OR ANY LANDLORD INDEMNIFIED PARTIES, unless the Claim in question was
caused by Landlord's or its agents', employees' or contractors' sole or gross
negligence or willful misconduct.
15. Interference. The exercise of Tenant's rights set forth in this Rider
------------
shall not unreasonably interfere with (a) any rights of other tenants at the
Project, and (b) any other wiring, cabling, equipment and/or other property
located within the risers and shaftways of the Building or otherwise at the
Project (the interference described in this sentence is herein collectively
referred to as "Interference"). If, in Landlord's judgement reasonably
exercised, either (i) the Generator Pad, Additional Conduit, Tenant UPS System,
Tenant's Power Generator, Tenant's Security System and/or Equipment
Rider A-3
<PAGE>
Room Property are causing or have caused Interference and such Interference did
not arise merely as a result of the existence of any of the foregoing at the
time of Landlord's leasing other space in the Project, and/or (ii) Tenant's
exercise of its rights set forth in this Rider are causing or have caused
Interference, Landlord shall provide Tenant with written notice thereof and
Tenant shall promptly begin taking actions to prevent the applicable
Interference and shall in any event end such Interference within ten (10) days
after Tenant's receipt of such written notice. If Tenant has failed to promptly
begin taking actions to prevent the applicable Interference and/or failed to end
such Interference within ten (10) days after Tenant's receipt of written notice
thereof, such failure shall constitute an Event of Default and Landlord shall
have the right, in addition to any and all other remedies available to it under
this Rider and the Lease, to require that Tenant remove the Generator Pad,
Additional Conduit, Tenant UPS System, Tenant's Power Generator, Tenant's
Security System and/or Equipment Room Property, as applicable, by giving Tenant
written notice thereof, which removal by Tenant shall be completed in accordance
with this Rider and the Lease and within thirty (30) days after Tenant's receipt
of such written removal notice. Tenant acknowledges and agrees that continuing
Interference may cause irreparable injury and, therefore, Landlord shall
additionally have the right to bring an action to enjoin such Interference.
Landlord acknowledges and agrees that if another tenant at the Project seeks to
install or actually install wiring, cabling, equipment, antennas or other
property at the Project and any of Tenant's wiring, cabling, equipment, antennas
or other property at the Project (including, without limitation, the Generator
Pad, Additional Conduit, Tenant UPS System, Tenant's Power Generator, Tenant's
Security System and/or Equipment Room Property) interferes with such tenant's
property, such interference will not constitute Interference for the purposes of
this paragraph.
16. Interference To Tenant. Landlord acknowledges that Tenant's intended
----------------------
business to be conducted in the Premises require continuous, clean,
uninterrupted power and telecommunications services. Accordingly, prior to
permitting any other tenant or occupant of the Project to install any
telecommunications or electrical equipment facilities (other than building
standard electrical power) within the Project which Landlord believes might
result in immediate interference with Tenant's services or equipment, Landlord
shall consult with Tenant to determine whether such immediate interference might
occur. Landlord shall not grant any rights to any other tenants or occupants
within the Project relating to telecommunications or electrical equipment or
services which Landlord actually knows will cause immediate interference to
Tenant's services or equipment.
Rider A-4
<PAGE>
This Rider B is attached to that certain Triple Net Lease by and between
AGB NORWOOD PARK, L.P., as landlord, and INFLOW, INC., as tenant.
DEPICTION OF THE RIGHT OF FIRST REFUSAL SPACE
---------------------------------------------
[to be supplied]
<PAGE>
[DIAGRAM]
DEPICTION OF THE RIGHT OF FIRST REFUSAL SPACE
<PAGE>
RIDER C
This Rider C is attached to that certain Triple Net Lease by and between AGB
NORWOOD PARK, L.P., as landlord, and INFLOW, INC., as tenant.
LOCATION OF THE GENERATOR PAD
-----------------------------
[to be supplied]
<PAGE>
RIDER C
LOCATION OF THE GENERATOR PAD
[DIAGRAM]
<PAGE>
RIDER D
This Rider D is attached to that certain Triple Net Lease by and between
AGB NORWOOD PARK, L.P., as landlord, and INFLOW, INC., as tenant.
DEMISING WALL PLANS AND SPECIFICATIONS
--------------------------------------
[to be supplied]
<PAGE>
RIDER D
[DIAGRAM]
<PAGE>
RIDER E
This Rider E is attached to that certain Triple Net Lease by and between
AGB NORWOOD PARK, L.P., as landlord, and INFLOW, INC., as tenant.
RESTRICTIVE COVENANTS AND DEED RESTRICTIONS
-------------------------------------------
First Amended and Restated Declaration of Protective Covenants for Norwood Park,
recorded Dec. 20, 1994, at Film 5234494, Book 12337, Pages 1791 through 1811 in
the real property records of Travis County, Texas
Rider E-1
<PAGE>
RIDER F
This Rider F is attached to that certain Triple Net Lease by and between
AGB NORWOOD PARK, L.P., as landlord, and INFLOW, INC., as tenant.
SATELLITE DISH AREA
-------------------
[to be supplied]
<PAGE>
[DIAGRAM]
<PAGE>
RIDER G
This Rider G is attached to that certain Triple Net Lease by and between
AGB NORWOOD PARK, L.P. as landlord, and INFLOW, INC., as tenant.
TELECOMMUNICATIONS CABLING AREA
-------------------------------
[to be supplied]
<PAGE>
[DIAGRAM]
<PAGE>
EXHIBIT 10.19
SUBLEASE
This Sublease dated 12/15, 1999, (this "Sublease") is entered into by and
between Associates Information Services, Inc., a Delaware corporation, as
("Sublessor"), and Inflow, Inc., a Delaware corporation, as ("Sublessee").
WHEREAS, Sunset Park West Limited Partnership, a Massachusetts limited
partnership, as lessor ("Lessor") and AVCO Financial Services, Inc., a Delaware
Corporation ("AVCO") as lessee entered into a Lease dated September 8, 1993
("Master Lease") for the premises known as 17770 Cartwright Road, Irvine,
California; and,
WHEREAS, Sublessor became the successor in interest to AVCO in and to the Master
Lease by Assignment dated May 12, 1999 (the "Assignment"); and,
WHEREAS; Sublessor desires to sublease to Sublessee and Sublessee desires to
sublease from Sublessor, the Premises as herein defined in Section 2.1;
NOW THEREFORE;
ARTICLE I
BASIC SUBLEASE PROVISIONS
Each reference in this Sublease to the "Basic Sublease Provisions" shall
mean and refer to the following terms, the application of which shall be
governed by the provisions in the remaining Articles of this Sublease:
1. Address of Sublessor: Associates Information Services, Inc.
c/o Associates Corporation of North America
250 E. John Carpenter Freeway
Irving, Texas 75062
Attn: Corporate Properties Dept.-6Wgn
2. Address of Lessor: Ms. Beverly Birdman
c/o Sunset Park West Limited Partnership
State Street Bank and Trust Company
Boston, Massachusetts 02110
3. Premises Address: 17770 Cartwright Road, Suite 120
Irvine, California 92614
4. Address of Sublessee:
(a) Notices: Inflow, Inc.
17770 Cartwright Road, Suite 120
Irvine, California 92614
Attention: General Manager
with a copy to:
Inflow, Inc.
1860 Lincoln Street, Suite 305
Denver, Colorado 80295
Attention: Legal Department
5. Sublessee's Trade Name: Inflow
6. Sublessee's Contact Prior to Commencement Date: John Coons
& Phone #: (303) 824-3522
After Commencement Date: General Manager, Irvine
(t/b/d)
7. Premises Square Footage: 35,147 RSF
Must Take Space 1,463 RSF
Building Square Footage: 136,180 RSF
(subject to re-measurement pursuant to Exhibit "I")
8. Anticipated Commencement Date: 1/1/2000
1
<PAGE>
9. Term: Ten (10) Years (subject to Section 3.8 and
Articles XXI and XXII)
10. Monthly Rent: $65,022.58
(subject to adjustment per Exhibit E)
11. Security Deposit: $97,886.68
12. Permitted Uses: General office and installation, operation and maintenance
of equipment in connection with Sublessee's telecommunication business
(including, without limitation, collocation services to its customers)
only, all in accordance with Applicable Laws (as herein defined),
including, without limitation, the Restrictions (as hereinafter defined),
and pursuant to approvals to be obtained by Sublessee from all relevant
city, county and other required governmental agencies and authorities.
13. Sublessor's Broker: Staubach
14. Sublessee's Broker: Node Com, Inc.
15. Sublessor's Architect: Robert Borders & Associates
16. Guarantor: None
17. Vehicle Parking Spaces: I per 1000 RSF :35 spaces (37 spaces after
incorporation of Must Take Space.)
18. Additional Insureds: Lessor, Sublessor, Cushman & Wakefield of
California, Inc.
19. Sublessee's Liability Insurance Limits:
$2,000,000 per person
$5,000,000 per occurrence for personal injury
$2,000,000 per occurrence for property damage
20. Sublessee's Share: 25.366% (subject to adjustment in accordance with
Exhibit "I".)
21. Base Year for Operating 2000
Expenses:
EXHIBITS:
G Sign Specifications
A Premises/Area Calculation H Restrictions
B Legal Description I Calculation of Sublessee's Share
C Work Letter J Release And Waiver Form
D Commencement Date Memorandum K Master Lease and Assignment
E Adjustments to Monthly Rent L Intentionally Deleted
F Rules & Regulations M Must Take Space
<PAGE>
ARTICLE II
DEFINITIONS
2.1. Certain Definitions. The capitalized terms set forth below, unless the
context clearly requires otherwise, shall have the following meanings in this
Sublease:
"Additional Rent" means any and all sums (whether or not specifically
called "Additional Rent" in this Sublease) other than Monthly Rent which
Sublessee is or becomes obligated to pay to Sublessor under this Sublease. See
also "Rent".
"Alterations" means any alterations, decorations (other than decorations
not visible outside the Premises), modifications, additions or improvements made
in, on, about, under or contiguous to the Building or the Premises, including,
but not limited to, lighting, HVAC and electrical fixtures, pipes and conduits,
transfer, storage and disposal facilities, partitions, drapery, wall coverings,
shelves, cabinetwork, carpeting and other floor coverings, ceiling tiles,
fixtures and carpentry installations. The equipment, systems and alterations
defined as Sublessee's Special Systems, and Sublessee's Improvements as set
forth in Exhibits C-1 and C-2 shall not constitute "Alterations" hereunder.
"Anticipated Commencement Date" is defined in Section 3.2.
"Applicable Laws" means the laws, rules, regulations, ordinances,
restrictions, and practices described in Section 5.2
"Applicable Rate" means the rate set forth in the Master Lease, the maximum
rate permitted by applicable usury law, or 18% per annum, whichever is less.
"At all times" (whether or not capitalized) means twenty-four hours per
day, seven days per week throughout the Term.
"At the end of the Term" (and variations thereof, whether or not
capitalized) means upon the expiration of the Term or termination of this
Sublease for any reason.
"Broker" means the person or entity identified in Items 13 & 14 of the
Basic Sublease Provisions.
"Building" means that certain building located on the land described in
Exhibit "B" and identified as the building located at 17770 Cartwright Road,
Irvine, California, containing 136,180 RSF within which the Premises are
located.
"Building Costs" are defined in Section 7.3.
"Casualty" is defined in Section 12.1.
"City" means the city in which the Premises are located.
"Collocation License" is defined in Section 14.9.
"Collocation Licensee" is defined in Section 14.9.
"Commencement Date" means the commencement date of the Term, described in
Section 3.2.
"Common Area" means all areas and facilities within or around the Building
for the common use of the tenants of the Building, exclusive of the Premises,
and other portions of the Building leased (or to be leased) exclusively to other
tenants. The Common Area includes, but is not limited to, lobbies, hallways,
common bathrooms, elevators, risers, the loading dock and similar areas and
facilities within the Building and parking areas, access and perimeter roads,
sidewalks, landscaped areas and similar areas and facilities around the
Building, but on the land described in Exhibit "B". Sublessee's use of the
Common Area, and its rights and obligations with respect thereto, are more
particularly described in Article X.
"County" means the county in which the Premises are located.
"Event of Default" is defined in Section 15.1.
"Exercise Date" is defined in Section 22.3.
3
<PAGE>
"Guarantor" means the person(s) or entity, if any, identified in Item 16 of
the Basic Sublease Provisions.
"HVAC" means the heating, ventilating and air conditioning systems serving
the Building or portions thereof.
"Hazardous Materials" is defined in Section 6.1.
"Master Lease" means the lease dated September 8, 1983, a true, complete
(except for the rent provisions) and correct copy of which is attached hereto as
Exhibit K.
"Monthly Rent" means the monthly rental which Sublessee is to pay to
Sublessor pursuant to Section 4.1, as the same may be adjusted from time to time
as set forth in this Sublease. See also Rent.
"Mortgage" means any mortgage, deed of trust, or similar lien on or
covering the Building or any part thereof.
"Mortgagee" means any mortgagee, beneficiary of a deed of trust or lender
having a lien on or covering the Building or any part thereof.
"Must Have Common Area" means the Common Area necessary for the operation
of Sublessee's business in the Premises and include, the parking areas and
reasonable means of access thereto at all times; reasonable means of access to
the Building and the Premises at all times; the generators, the fuel tank(s)
therefor, all appurtenances necessary for the operation of the generators and
reasonable means of access thereto at all times; and reasonable means of access
at all times to all of Sublessee's Special Systems and other of Sublessee's
Property, including, without limitation, all conduits, cables and lines, except
that in order to preserve the access rights of other tenants, Sublessor may
impose reasonable access conditions on conduits, cables and lines within Common
Areas or the premises of other tenants.
"Notice" means each and every notice, communication, request, demand, reply
or advice, or duplicate thereof, in this Sublease provided or permitted to be
given, made or accepted by either party to any other party, which shall be in
writing and given in accordance with the provisions of Section 21.6.
"Operating Expenses" means, collectively, Building Costs and Real Property
Taxes.
"Operating Expense Base" means the allowance for Operating Expenses that
Sublessor will credit to Sublessee's Share of Operating Expenses under Article
VII, which allowance amount is set forth under Item 21 of the Basic Sublease
Provisions.
"Option Rent" is defined in Section 22.2.
"Option Rent Notice" is defined in Section 22.3.
"Option Term" is defined in Section 22.1.
"Permitted Transferee" is defined in Section 14.1.
"Plans" means the final Working Drawings for the construction of Sublessee
Improvements to be prepared and approved as set forth in the Work Letter.
"Premises" means the premises shown in Exhibit A, and all appurtenances
thereto, if any, for the exclusive use of Sublessee. The Premises are located
within and constitute a portion of the Building at the address set forth in Item
3 of the Basic Sublease Provisions.
"Premises Square Footage" means the entire Usable Area included within the
Premises and dedicated electrical areas, as set forth in Exhibit A-1 and
multiplied by a factor of 1.14 representing Sublessee's Share of the lobby
areas, stairwells, corridors, restrooms, mechanical room, janitorial room,
electrical room and telephone closets in the Building. The Premises Square
Footage as of the execution of this Sublease is set forth in Item 7 of the Basic
Sublease Provisions.
"Real Property Taxes" is defined in Section 7.4.
"Rent" means Monthly Rent and Additional Rent, collectively.
4
<PAGE>
"Restrictions" means any covenants, conditions, easements or restrictions
affecting the Premises or any portion thereof attached as Exhibit "H" hereto or
hereafter filed of record, and any changes, amendments or modifications thereof;
provided, however, no such changes, amendments or modifications within
Sublessor's control shall unreasonably interfere with Sublessee's use, occupancy
and enjoyment of the Building, the Common Area or the Premises or unreasonably
interfere with the conduct of the Sublessee's business therein.
"RSF" means rentable square footage for purposes of expressing the Premises
Square Footage or otherwise expressing the rentable square footage of the
Premises or any portion thereof, determined by measuring the "Usable Area" in
accordance with ANSI/BOMA Standard Z65.l-1996 and multiplying such Usable Area
by 1.14.
"Rules and Regulations" means the rules and regulations attached hereto as
Exhibit "F" and any reasonable modifications thereto promulgated by Sublessor or
Sublessor's Agents from time to time; provided, however, the Rules and
Regulations shall be subject to the other provisions of the Sublease, and in the
event of any conflict between any of the Rules and Regulations and the other
terms and conditions of the Sublease, the other terms and conditions of the
Sublease shall govern.
"Security Deposit" means the amount set forth in Item 11 of the Basic
Sublease Provisions, which shall be paid to Sublessor by Sublessee pursuant to
Section 4.6.
"Substantial" and "substantially complete" means that the Sublessee
Improvements or repair of the Premises following a Casualty, have been fully
completed except for minor details of construction, mechanical adjustments or
decoration which do not materially inteffere with Sublessee's use, occupancy and
enjoyment of the Premises or the conduct of its business therein (items normally
referred to as "punch list" items).
"Sublease" means this instrument with all exhibits, amendments, addenda and
riders attached hereto and made a part hereof.
"Sublessee Delays" means (i) any and all delays in the construction of the
Sublessee Improvements due to the fault of the Sublessee as defined and
specified in the Work Letter, and (ii) Sublessee's failure to deliver to
Sublessor prior to the Anticipated Commencement Date, executed copies of
policies of insurance or certificates thereof as required under Section 11.8.
"Sublessee's Improvements" or "Sublessee Improvements" means those certain
improvements to be constructed by Sublessee as provided in the Work Letter
(Exhibit C-l).
"Sublessee's Agents" means Sublessee's agents, representatives,
consultants, contractors, affiliates, subsidiaries, officers, directors,
employees, Collocation Licensees and guests.
"Sublessee's Exercise Notice" is defined in Section 22.3.
"Sublessee's Property" means Sublessee's, furniture, fixtures, equipment
and other personal property located in or on the Premises (including, without
limitation, Sublessee's Special Systems, and any and all furniture, fixtures,
equipment and other personal property of any Collocation Licensee) that may or
must be removed from the Building at the expiration or earlier termination of
this Sublease pursuant to this Sublease, including, without limitation, pursuant
to and in conformance with the conditions set forth in Exhibits "C-I" and "C-2".
"Sublessor's Agents" means Sublessor's authorized agents, representatives,
property managers (whether as agents or independent contractors), consultants,
contractors, partners, subsidiaries, affiliates, directors, officers and
employees, including without limitation the Additional Insureds named in Item 18
of the Basic Sublease Provisions.
"Sublessor's Architect" means the architect or architectural firm, duly
licensed in the State of California, from time to time designated by Sublessor
to perform the function of Sublessor's Architect set forth in this Sublease.
Sublessor's Architect initially shall be the architect or architectural firm
designated in Item 15 of the Basic Sublease Provisions.
"Sublessee's Special Systems" means the systems and equipment described in
Exhibit
"Tenant" (whether or not capitalized) means any occupant of the Building,
including but not limited to Sublessee, any other sublessee of Sublessor, any
tenant of Lessor (other than Sublessor under the Master Lease) or any assignee,
sub-sublessee or subtenant of any of the foregoing, from time to time.
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"Term" means the term of this Sublease, as provided in Section 3.2,
including any Option Term as to which Sublessee has exercised its option and
which has been consummated and become effective pursuant to Article XXII.
"Unavoidable Delay" means any delays which are beyond a party's reasonable
control, including, but not limited to, delays due to inclement weather,
strikes, acts of God, inability to obtain labor or materials, inability to
secure governmental approvals or permits, governmental restrictions, civil
commotion, fire, earthquake, explosion, flood, hurricane, the elements, or the
public enemy action or interference of governments authorities or events, war,
invasion, insurrection, rebellion, riots, lockouts or any other cause whether
similar or dissimilar to the foregoing which is beyond a party's reasonable
control; provided however, that in no event shall any of the foregoing ever
apply with respect to the payment of any monetary obligation.
"Usable Area" means usable square feet as determined by ANSI/BOMA Standard
Z65.l-1996.
"Work Letter" means the work letter between Sublessor and Sublessee
regarding construction of the Sublessee Improvements by Sublessee, in the form
of Exhibit "C".
2.2. Other Definitions. Terms defined elsewhere in this Sublease, unless
the context clearly requires otherwise, shall have the meaning as there given.
ARTICLE III
PREMISES AND TERM
3.1. Sublease of Premises. Subject to and upon the terms and conditions set
forth herein, Sublessor hereby subleases the Premises to Sublessee and Sublessee
hereby subleases the Premises from Sublessor.
3.2. Term and Commencement. Unless sooner terminated as provided herein,
the Term of this Sublease shall be for that period of years and months set forth
in Item 9 of the Basic Sublease Provisions, as the same may be extended in
accordance with any option or options to extend the Term granted herein, and
shall commence on the date (the "Commencement Date") that is the earlier of (i)
the date Sublessee commences occupancy of (other than for construction of the
Sublessee Improvements), or the conduct of business in, the Premises, or (ii)
January 1, 2000.
When the actual Commencement Date has occurred, Sublessor and Sublessee shall
execute a Commencement Date Memorandum in substantially the form shown in
Exhibit "D". Sublessor and Sublessee anticipate that the Term will commence on
the "Anticipated Commencement Date" set forth in Item 8 of the Basic Sublease
Provisions, but the Anticipated Commencement Date shall in no event affect the
actual Commencement Date, which shall be determined as set forth in this Section
3.2.
3.3. Early Entry. Sublessee and its authorized agents, contractors,
subcontractors and employees shall be granted a license by Sublessor to enter
upon the Premises at Sublessee's sole risk and expense at any time after the
execution of this Sublease, for the sole purpose of constructing Sublessee's
Improvements and installing Sublessee's Property in the Premises; provided,
however, that (i) the provisions of this Sublease, other than with respect to
the payment of Monthly Rent, shall apply during such early entry, including, but
not limited to, the provisions of Article XI relating to Sublessee's
indemnification of Sublessor, (ii) prior to any such entry, Sublessee shall pay
for and provide evidence of the insurance to be provided by Sublessee pursuant
to the provisions of Article XI, (iii) Sublessee shall pay all utility, service
and maintenance charges for the Premises attributable to Sublessee's early entry
and use of the Premises as reasonably determined by Sublessor, and (iv)
Sublessee shall complete the construction of the Sublessee Improvements in
accordance with and to the extent required by the Work Letter. Upon Sublessee's
breach of any of the foregoing conditions, Sublessor may, in addition to
exercising any of its other rights and remedies set forth herein, revoke such
license upon Notice to Sublessee, provided, however, Sublessor shall not revoke
this license for any other reason. Early entry of by Sublessee in accordance
with this Section 3.3 shall not constitute occupancy of the Premises for
purposes of establishing the Commencement Date.
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3.4. Delay in Possession. If for any reason Sublessor cannot deliver the
Premises to Sublessee on or before January 1, 2000, Sublessor shall not be
subject to any liability therefor, and such failure shall not affect the
validity of this Sublease or the obligations of Sublessee hereunder, but in such
case, Sublessee shall not be obligated to pay Monthly Rent or Additional Rent
other than as provided in Section 3.3 and Section 3.5 until the Commencement
Date has occurred and the date set forth in Section 3.2(ii) above shall be
extended by a time period equal to the delay in delivery of the Premises.
Sublessee understands that, notwithstanding anything to the contrary contained
in this Sublease, Sublessor shall have no obligation to deliver possession of
the Premises to Sublessee for so long as Sublessee fails to deliver to Sublessor
executed copies of policies of insurance or certificates thereof as required
under Section 11.8 and in such event the Commencement Date shall not be delayed.
3.5. Sublessee Delays. The Commencement Date shall not be delayed or
postponed due to Sublessee Delays, and the Term, Sublessee's obligations to pay
Rent and all of Sublessee's other obligations under this Sublease shall commence
upon the date which would have been the Commencement Date but for Sublessee
Delays.
3.6. Condition of Premises. Sublessor's sole construction obligations, if
any, regarding Sublessee Improvements for the Premises are set forth in Article
XX. The taking of possession or use of the Premises by Sublessee for any purpose
other than as provided in Section 3.3 shall conclusively establish that
Sublessee has inspected the Premises and accepts them as being in good and
sanitary order, condition and repair, latent defects excepted; provided,
however, Sublessee shall have a period of thirty (30) days after taking
possession of the Premises in which to give Notice to Sublessor of any
construction deficiencies or defects and, except as hereafter provided,
Sublessor will repair, replace or complete at its expense all items referenced
in such Notice within thirty (30) days after receipt of such Notice, subject to
Unavoidable Delay, or as soon thereafter as Sublessor, acting to good faith, can
repair, replace or complete the same. If Sublessor reasonably contends that a
particular item in such Notice is not justified, the parties will resolve the
issue as set forth in Section 12.7 and the Third Architect's determination shall
be final and binding upon the parties
3.7. No Representations. Except as otherwise expressly provided in this
Sublease, Sublessee acknowledges that neither Sublessor nor any of Sublessor's
Agents has made any representations or warranties as to the suitability or
fitness of the Premises for the conduct of Sublessee's business, including, but
not limited to, any representations or warranties regarding zoning or other land
use matters, or for any other purpose Sublessee acknowledges and agrees that it
is accepting the Premises "as is", except for hidden or latent defects and that
neither Sublessor nor any of Sublessor's Agents has agreed to undertake any
Alterations or construct any Sublessee Improvements to the Premises.
3.8. Termination by Sublessee. If (a) the Lessor does not execute documents
with respect to this Sublease satisfactory to both the Sublessor and Sublessee
on or before the date which is 10 days after execution of this Sublease by
Sublessor and Sublessee; or (b) Sublessee has not received or is not satisfied
with the title documents regarding the Premises, including Restrictions, the
plat and the estate for years on or before the date which is 10 days after
execution of this Sublease by Sublessor and Sublessee; or (c) Sublessor does not
deliver possession of the Premises to Sublessee on or before January 1, 2000 for
any reason other than a delay caused by Sublessee, its agents or contractors;
then Sublessee may terminate this Sublease by Notice to Sublessor given no later
than ten (10) business days after the relevant deadline, Sublessor shall refund
to Sublessee the Security Deposit and Rent, if any, paid by Sublessee and,
thereupon, this Sublease shall be of no further force or effect and neither
party shall have any further rights or obligations hereunder except with respect
to any obligations hereunder which by the express terms hereof survive
termination of this Sublease. If Lessor does not execute documents with respect
to this Sublease satisfactory to both the Sublessor and Sublessee and Sublessee
does not give Notice of termination as provided in this Section 3.8 above, this
Sublease shall remain in full force and effect in accordance with the terms
hereof, except that the Term shall expire on September 30, 2008 and Article XXII
shall not apply; provided, however, Sublessor shall continue to use commercially
reasonable efforts to obtain from Lessor documents satisfactory to both the
Sublessor and. Sublessee with respect to this Sublease, and if such documents
are obtained, the Term shall be extended for the period stated in Item 9 of the
Basic Sublease Provision and Article XXII shall be in full force and effect.
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ARTICLE IV
RENT AND ADJUSTMENTS
4.1 Monthly Rent. From and after the Commencement Date, Sublessee shall pay
to the Sublessor, for each calendar month of the Term, the Monthly Rent set
forth in Item 10 of the Basic Sublease Provisions, as the same may be adjusted
from time to time as provided in Section 4.2. Monthly Rent shall be due and
payable to Sublessor in lawful money of the United States, in advance, on the
first (1st) day of each calendar month of the Term, without abatement,
deduction, claim or offset and without prior notice, invoice or demand, at
Sublessor's address set forth in Item 1 of the Basic Sublease Provisions or at
such place as Sublessor may from time to time designate. Sublessee's payment of
Monthly Rent for the first (1st) month of the Term shall be delivered to
Sublessor within two (2) business days after Sublessor's Notice to Sublessee
that Sublessee may take possession of the Premises.
4.2. Adjustments. Monthly Rent shall be adjusted from time to time as
provided in Exhibit "E" and "M".
4.3 Additional Rent. Additional Rent shall be due and payable to Sublessor
in lawful money of the United States, at Sublessor's address set forth in Item I
of the Basic Sublease Provisions or at such other place as Sublessor may from
time to time designate, without abatement, deduction, claim or offset, within
thirty (30) days of receipt of Sublessor's invoice or statement for same, or, if
this Sublease provides another time for the payment of certain items of
Additional Rent, then at such other time.
4.4 Prorations. If the Commencement Date is not the first (1st) day of a
month, or if the expiration of the Term is not the last day of a month, a
prorated installment of Monthly Rent based on the number of days in such month
shall be paid for the fractional month during which the Term commences or
terminates.
4.5 Late Payment Charges. Sublessee acknowledges that late payment by
Sublessee to Sublessor of Rent under this Sublease will cause Sublessor to incur
costs not contemplated by this Sublease, the exact amount of which is extremely
difficult or impracticable to determine. Such costs include, but are not limited
to, processing and accounting charges, late charges that may be imposed on
Sublessor by the terms of any Mortgage, and late charges and penalties that may
be imposed due to late payment of Real Property Taxes. Therefore, if any
installment of Monthly Rent or any payment of Additional Rent due from Sublessee
is not received by Sublessor in good funds by the fifth (5th) day from
Sublessee's receipt of Notice that such amount is overdue, Sublessee shall pay
to Sublessor an additional sum equal to three percent (3%) of the amount overdue
as a late charge for every month or portion thereof that such amount remains
unpaid. The parties acknowledge that this late charge represents a fair and
reasonable estimate of the costs that Sublessor will incur by reason of the late
payment by Sublessee. Acceptance of any late Rent and late charge therefor shall
not prevent Sublessor from exercising any of the other rights and remedies
available to Sublessor for any other Event of Default under this Sublease.
Sublessor shall charge Sublessee $25.00 for each returned check.
4.6 Security Deposit. Sublessee has deposited with Sublessor the sum set
forth in Item 11 of the Basic Sublease Provisions as a Security Deposit for the
full and faithful performance of every provision of this Sublease to be
performed by Sublessee. Upon an Event of Default, without further Notice to
Sublessee, Sublessor may apply the Security Deposit, without waiver of any other
rights Sublessor may have under this Sublease or at law or in equity as a result
of such Event of Default, to the payment of any Rent not paid when due, the
repair of damage to the Premises or the payment of any other amount which
Sublessor may be entitled under this Sublease. If any portion of the Security
Deposit is so applied, Sublessee shall, within thirty (30) days after written
demand therefor, deposit cash with Sublessor in an amount sufficient to restore
the Security Deposit to its original amount. Sublessor shall not be required to
keep the Security Deposit separate from its general funds. The Security Deposit,
or balance thereof not applied in accordance with this Sublease, shall be
returned to Sublessee within thirty (30) days after the expiration of the Term,
provided, however, that Sublessor may retain the Security Deposit until such
later time as any amounts of Additional Rent due from Sublessee to Sublessor
have been determined and paid in full. Sublessee hereby waives the provisions of
Section 1950.7C of the California Civil Code and any present or future laws
otherwise governing the return of the Security Deposit to Sublessee to the
extent of reasonably anticipated Additional Rent retained by Sublessor pursuant
to the previous sentence. Provided there exists no Event of Default by
Sublessee, Sublessee shall have the right from time to time to substitute a
letter of credit for the cash Security Deposit, in form and pursuant to terms
reasonably acceptable to Sublessor.
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ARTICLE V
USE
5.1 Sublessee's Use. Sublessee shall use the Premises solely for the
purposes set forth in Item 12 of the Basic Sublease Provisions and shall use the
Premises for no other purpose. Sublessee's use of the Premises shall be subject
to all of the terms and conditions of this Sublease, including, but not limited
to, all the provisions of this Article V. Sublessee, at Sublessee's sole cost
and expense, shall procure, maintain and make available for Sublessor's
inspection throughout the Term, all governmental approvals, licenses and permits
required for the proper and lawful conduct of Sublessee's permitted use of the
Premises. At Sublessor's request, Sublessee shall deliver copies of all such
approvals, licenses and permits to Sublessor. Notwithstanding any other
provision of this Sublease to the contrary, Sublessee and Sublessee's Agents
shall have access at all times to the Premises and the Must Have Common Area.
5.2 Compliance With Applicable Laws. Throughout the Term, Sublessee, at
Sublessee's sole cost and expense, shall comply with (to the extent applicable
to Sublessee's use of the Premises, Building or Common Area), and shall not use
the Premises, Building or Common Area, or suffer or permit anything to be done
in or about the same (to the extent applicable to Sublessee's use of the
Premises, Building or Common Area) which will in any way conflict with (i) any
and all present and future laws, statutes, zoning restrictions, ordinances,
orders, regulations, directions, rules and requirements of all governmental or
private authorities having jurisdiction over all or any part of the Premises,
Building or Common Area, (including, but not limited to, state, municipal,
county and federal governments and their departments, bureaus, boards and
officials) pertaining to the use or occupancy of, or applicable to, the Premises
or privileges appurtenant to or in connection with the enjoyment of the
Premises, (ii) any and all applicable federal, state and local laws, regulations
or ordinances pertaining to air and water quality, Hazardous Materials (as
defined in Section 6.1), waste disposal, air emissions and other environmental
or health and safety matters, zoning, land use and utility availability, which
impose any duty upon Sublessor or Sublessee directly or with respect to the use
or occupation of the Premises, Building or Common Area, (iii) the requirements
of the Board of Fire Underwriters or other similar body now or hereafter
constituted relating to or affecting the condition, use or occupancy of the
Premises, Building or Common Area, (iv) the Restrictions, and (v) the Rules and
Regulations (collectively, (i) through (v) above are hereinafter referred to as
"Applicable Laws"). Sublessee shall not commit any waste of the Premises,
Building, or Common Area, or any public or private nuisance or any other act or
thing which would unreasonably disturb the quiet enjoyment of any other tenant
of the Building or any occupant of nearby property. Sublessee shall not place or
permit to be placed any loads upon the floors, walls or ceilings in excess of
the maximum designed load or which might damage the Premises or the Building, or
place or permit to be placed any harmful liquids in the drainage systems, and
Sublessee shall not dump or store, or permit to be dumped or stored any
inventory, waste materials, refuse or other materials or to the extent within
Sublessee's control, allow any such materials to remain outside the Building
proper, except in designated enclosed trash areas. Sublessee shall not conduct
or permit any auctions, sheriffs sales or other like activities at the Building
or any portion thereof. Notwithstanding the above, nothing in the Section shall
be construed to require Sublessee to make any alterations to the Common Areas or
the Building (other than the Premises); provided, however, if Sublessee elects
to make Sublessee Improvements, install Special Systems or make Alterations
during the Term, Sublessee shall be responsible for compliance, to the extent
required by governmental authorities having jurisdiction to obtain any approvals
from such authorities for such actions.
5.3 Restrictions. Sublessee agrees that this Sublease is subject and
subordinate to any Restrictions, as the same may now exist and that it will
execute and deliver to Sublessor within fifteen (15) days of Sublessee's receipt
of Sublessor's request therefor, any further documentation or instruments which
Sublessor deems necessary or desirable to evidence or effect such subordination.
Without limiting the provisions of Section 5.2, Sublessee shall throughout the
Term timely comply withall of the terms, provisions, conditions and restrictions
of the Restrictions which pertain to, restrict or affect the Premises or
Sublessee's use thereof, or Sublessee's use of any other area of the Building
permitted hereunder, including the payment by Sublessee, as part of Sublessee's
Share of Operating Expenses, subject to the provisions of Section 7.3(b)), of
any periodic or special dues or assessments charged against the Premises or
Sublessee which may be allocated to the Premises or Sublessee in accordance with
the provisions of the Restrictions. Sublessee shall hold Lessor. Sublessor.
Sublessor's Agents and the Premises harmless and shall indemnify, protect and
defend Sublessor and Sublessor's Agents from and against any loss, expense,
damage, attorney's fees and costs or liability arising out of or in connection
with the failure of Sublessee to so perform or comply with the Restrictions.
Sublessee agrees that it will subordinate the Sublease to any other covenants,
conditions and restrictions and any reciprocal easement agreements or any
similar agreements which Sublessor may hereafter record against the Building and
to any amendment or modification to any of the existing Restrictions, provided
that such subordination does not unreasonably interfere with Sublessee's use,
occupancy and enjoyment of the Building, the Common Area or the Premises or
unreasonably interfere with the conduct of the Sublesses's business
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therein. Notwithstanding anything contained in this Article 5, if any of the
Restrictions materially interfere with or restrict Sublessee's ability to
install, connect, use, maintain, repair, replace or remove telecommunications
cable and related facilities, Sublessor will work in good faith with Sublessee
and use all commercially efforts to accommodate such use. Notwithstanding any
provision herein to the contrary, no liens set forth on Exhibit "H" will be
Sublessee's responsibility and Sublessee shall have no liability for such liens.
5.4 Sublessor's Right of Entry. Sublessor and Sublessor's Agents shall be
provided with all keys, mechanical or electrical, required to access all parts
of the Premises and shall have the right to enter the Premises at all reasonable
times with reasonable notice (which may be given telephonically) and escort
provided by Sublessee, and at anytime in the event of an emergency, to inspect
the Premises, to take samples and conduct environmental investigations, to post
notices of nonresponsibility and similar notices and signs indicating the
availability of the Premises for sale, to show the Premises to interested
parties such as prospective lenders and purchasers, to make necessary
Alterations, maintenance and repairs, to perform Sublessee's obligations as
permitted herein when Sublessee has failed to do so and, at any reasonable time
within one hundred eighty (180) days prior to the expiration of the Term, to
place upon the Premises reasonable signs indicating the availability of the
Premises for lease and to show the Premises to prospective tenants, all without
being deemed to have caused an eviction of Sublessee and without any liability
to Sublessee or abatement of Rent. Sublessor shall at all times have the right
to retain a key which unlocks all of the doors in the Premises, excluding
Sublessee's telecommunications and computer equipment cabinets, vaults and safes
and equipment cabinets of Collocation Licenses, and Sublessor and Sublessor's
Agents shall have the right to use any and all means which Sublessor may deem
proper to open the doors in an emergency to obtain entry to the Premises, and
any entry to the Premises so obtained by Sublessor or Sublessor's Agents shall
not under any circumstances be deemed to be a forcible or unlawful entry into,
or a detainer of, the Premises, or an eviction of Sublessee from the Premises.
In exercising its rights of entry and in the performance of any work of any kind
in the Building, the Common Area or the Premises pursuant to this Section or any
other provision of this Sublease, Sublessor shall use commercially reasonable
efforts to cause the least possible interference with Sublessee's business and
shall be subject to such reasonable security procedures as Sublessee may
require.
ARTICLE VI
HAZARDOUS MATERIALS
6.1 Definition of Hazardous Materials. For purposes of this Sublease, the
term "Hazardous Materials" includes (i) any "Hazardous Materials" as defined in
Section 2550 1(k) of the California Health and Safety Code unless Sublessee
establishes, to the reasonable satisfaction of Sublessor, that because of the
quantity, concentration, or physical or chemical characteristics, such substance
or matter does not pose a present or potential hazard to human or animal health
safety or to the environment, (ii) any other substance or matter which results
in liability to any person or entity from exposure to such substance or matter
under any statutory or common law theory, and (iii) any substance or matter
which is in excess of relevant and appropriate levels set forth in any
applicable federal, state or local law or regulation pertaining to any hazardous
or toxic substance, material or waste, or for which any applicable federal,
state or local agency orders or otherwise requires removal, treatment or
remediation.
6.2 Use of Hazardous Materials. Except for common office supplies,
customary cleaning materials, and materials required for cleaning and
maintaining computer and telecommunications equipment, batteries and fuel for
Sublessee's Special Systems, Sublessee shall not cause or permit any Hazardous
Materials to be brought upon, stored, used, generated, released into the
environment or disposed of on, under, from or about the Premises (which for
purposes of this Article VI shall include, but is not limited to, subsurface
soil and ground water) without the prior written consent of Sublessor and
Lessor. Sublessor or Lessor may, in their sole discretion, place such conditions
as they reasonably deem appropriate with respect to such Hazardous Materials.
and may further require that Sublessee demonstrate to Sublessor and Lessor that
such Hazardous Materials are necessary or useful to Sublessee's business and
will be generated, stored, used and disposed of in a manner that complies with
all Applicable Laws regulating such Hazardous Materials and with good business
practices. Without limiting any other rights or remedies of Lessor or Sublessor
under this Sublease, Sublessee shall pay the cost of any cleanup work performed
on, under or about the Premises and the Building as required by this Sublease or
any Applicable Laws in connection with the removal, disposal, neutralization or
other treatment of Hazardous Materials, the release of which was caused by
Sublessee.
6.3 Disclosures. Sublessee shall promptly give Notice to Lessor and
Sublessor of, and, upon the request of Sublessor, shall promptly provide
Sublessor with true, correct, complete and legible copies of, all of the
following environmental items relating to the Premises: reports filed pursuant
to any self-reporting requirements; reports filed pursuant to any Applicable
Laws or this Sublease; all permit applications, permits, monitoring reports,
workplace exposure and community exposure warnings or notices, and all other
reports, disclosures, plans or documents (even those which may be characterized
as confidential) relating to water discharges, air pollution, waste generation
or disposal, underground storage tanks or Hazardous Materials all
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orders, reports, notices, listings and correspondence (even those which may be
considered confidential) of or concerning the release, investigation,
compliance, clean up, remedial and corrective actions, and abatement of
Hazardous Materials whether or not required by Applicable Laws; and all
complaints and other legal documents filed against Sublessee related to
Sublessee's use, handling, storage or disposal of Hazardous Materials.
6.4 Inspection; Compliance. Lessor and Sublessor and Sublessor's Agents
shall have the right, but not the obligation to inspect, investigate, sample
and/or monitor the Premises, including any air, soil, water, groundwater or
other sampling, and any other testing, digging, drilling or analyses, at any
time to determine whether Sublessee is complying with the terms of this Article
VI, and in connection therewith, Sublessee shall provide Lessor and Sublessor
with full access to all relevant facilities, records and personnel. If Sublessee
is not in compliance with any of the provisions of this Article VI, or in the
event of a release of any Hazardous Materials on, under, from or about the
Premises caused by Sublessee, Lessor and Sublessor and Sublessor's Agents shall
have the right, but not the obligation, without limitation of any of Sublessor's
other rights and remedies under this Sublease, to immediately enter upon the
Premises and to discharge Sublessee's obligations under this Article VI at
Sublessee's expense, including, without limitation, the taking of emergency or
long-term remedial action. Lessor and Sublessor and Sublessor's Agents shall
endeavor to minimize interference with Sublessee's business, but shall not be
liable for any such interference. All sums reasonably disbursed, deposited or
incurred by Lessor and Sublessor in connection herewith, including, but not
limited to, all costs, expenses and actual attorneys fees, shall be due and
payable by Sublessee to Lessor and Sublessor, as an item of Additional Rent, on
demand by Lessor and Sublessor, together with interest thereon at the Applicable
Rate from the date of such demand until paid by Sublessee.
6.5 Indemnification. To the fullest extent permitted by law, Sublessee
hereby agrees to indemnify, hold harmless, protect and defend (with attorneys
reasonably acceptable to Sublessor and Lessor) Sublessor and Sublessor's Agents,
Lessor and Lessee's Agents and any successors to all or any portion of
Sublessor's and Lessor's interest in the Premises and the Building and their
directors, officers, partners, employees, authorized agents, affiliates,
representatives and Mortgagees, from and against any and all liabilities,
losses, damages (including, but not limited to, damages for the loss or
restriction on use of rentable or usable space or any amenity of the Premises
and/or the Building or damages arising from any adverse impact on marketing of
space in the Premises and/or the Building), diminution in the value of the
Premises and/or the Building, judgements, fines, demands, claims, recoveries,
deficiencies, costs and expenses (including, but not limited to, reasonable
attorneys' fees, disbursements and court costs and all other professional or
consultant's expenses), to the extent caused by the presence, use, generation,
storage, treatment, on or off-site disposal or transportation of Hazardous
Materials on, into, from, under or about the Premises and/or the Building by
Sublessee and specifically including the cost of any required or necessary
repair, restoration, clean-up (including, but not limited to, the costs of
investigation and removal of Hazardous Materials) or detoxification of the
Premises and/or the Building and the preparation of any closure or other
required plans, whether or not such action is required or necessary during the
Term or after the expiration of this Sublease. In no event shall Sublessee have
any liability to Sublessor, Lessor, Mortgagee or any other person or entity on
account of any Hazardous Materials on, under, in or in the vicinity of the
Premises, the Building or the Common Area prior to the date Sublessee takes
occupancy of the Premises (including, without limitation, early occupancy
pursuant to Section 3.3) or for any such Hazardous Materials or any liability
with respect any violation of Applicable Laws existing or arising out of
conditions existing prior to such date or otherwise not the fault or
responsibility of Sublessee or any of Sublessee's Agents.
ARTICLE VII
OPERATING EXPENSES: TAXES; UTILITIES
7.1 Sublessee to Bear Sublessee's Share of Operating Expenses. Beginning
in 2001, Sublessee shall pay to Sublessor Sublessee's Share (as defined in
Section 7.2) of Operating Expenses in excess of the Operating Expense Base as
follows. Prior to the Commencement Date and thereafter prior to the commencement
of each of Sublessor's fiscal years during the Term, Sublessor shall give
Sublessee a written estimate of Sublessee's Share of Operating Expenses in
excess of the Operating Expense Base for the ensuing fiscal year or partial
fiscal year, as the case may be. The Operating Expense Base shall be adjusted to
reflect Operating Expenses which would have been incurred or paid during such
year as if the Building had been 95% occupied. Sublessee shall pay, as an item
of Additional Rent, such estimated amount in equal monthly installments, in
advance, on or before the first (1st) day of each calendar month concurrent with
its payment of Monthly Rent. If Sublessor has not furnished its written estimate
by the time set forth below, Sublessee shall pay monthly installments of
Sublessee's Share of Operating Expenses in excess of the Operating Expense Base
at the rate established for the prior fiscal year, if any; provided that when
the new estimate is delivered to Sublessee. Sublessee at the next monthly
payment date, shall pay Sublessor any accrued deficiency based on the new
estimate, or Sublessor shall credit any accrued overpayment based on such
estimate toward Sublessee's next installment payment hereunder. Within a
reasonable period of time after the end of each of Sublessor's fiscal year (in
no event more than one hundred twenty (120) days after the end of each fiscal
year unless sooner
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completed by Sublessor) Sublessor shall furnish Sublessee a statement showing in
reasonable detail Sublessee's Share of the actual Operating Expenses in excess
of the Operating Expense Base incurred for the period in question. If
Sublessee's estimated payments are less than Sublessee's Share of actual
Operating Expenses in excess of the Operating Expense Base as shown by the
applicable statement, Sublessee shall pay the difference to Sublessor within
thirty (30) days thereafter. If Sublessee shall have overpaid Sublessor,
Sublessor shall pay such amount to Sublessee within thirty (30) days thereafter.
When the final determination is made of Sublessee's Share of the actual
Operating Expenses in excess of the Operating Expense Base for the fiscal year
in which this Sublease terminates, Sublessee shall, even if this Sublease has
terminated, pay to Sublessor within thirty (30) days of receipt of Notice the
excess of Sublessee's Share of such actual Operating Expenses in excess of the
Operating Expense Base over the estimate of Sublessee's Share of such Operating
Expenses paid. Conversely, any overpayment shall be rebated by Sublessor to
Sublessee within thirty (30) days after determination. In determining Building
Costs for the Building, if at any time, the Building is not fully occupied,
Sublessor may make an appropriate adjustment to the Building Costs which
Sublessor reasonably determines would have been incurred or paid during such
year as if the Building had been 95% occupied. If Sublessor shall reasonably
determine at any time that the estimate of Sublessee's Share of Operating
Expenses in excess of the Operating Expense Base for the current fiscal year is
or will become inadequate to meet Sublessee's Share of all such Operating
Expenses for any reason, Sublessor shall immediately determine the appropriate
amount of such inadequacy and issue a supplemental estimate as to Sublessee's
Share of such Operating Expenses and Sublessee shall pay any increase as
reflected by such supplemental estimate. Any delay or failure by Sublessor in
delivering any estimate or statement pursuant to this Section 7.1 shall not
constitute a waiver of its right to require Sublessee to pay Sublessee's Share
of Operating Expenses in excess of the Operating Expense Base pursuant hereto.
7.2 Definition of Sublessee's Share. The term "Sublessee's Share" means
that portion of an Operating Expense determined by multiplying the cost of such
item by a fraction, the numerator of which is the Premises Square Footage and
the denominator of which is the Building Square Footage as of the date on which
the computation is made, to be charged with such Operating Expense. A
determination of Sublessee's Share for Operating Expenses is set forth in
Exhibit I attached hereto and made a part of this Sublease.
7.3 (a) Definition of Building Costs. The term "Building Costs" means all
costs and expenses incurred by Sublessor or Sublessor's Agents in connection
with the operation of the Building, including but not limited to, the following:
repair and maintenance of the roof, foundation and exterior walls of the
Building; periodic painting of the Building; periodic cleaning of the exterior
windows of the Building; landscaping services; outside pest control; normal
maintenance and repair of the HVAC through maintenance contracts or otherwise;
sweeping; maintenance services; repairs to and replacement of asphalt paving,
bumpers, striping, light bulbs, light standards, monument and directional signs
and lighting systems, perimeter walls, retaining walls, sidewalks, planters,
landscaping and sprinkler system in planting area; any and all assessments
levied against the Building pursuant to the Restrictions; water, electrical and
other utility services not supplied directly to Sublessee or another tenant of
the Building; removal of trash, rubbish and other refuse from the Building;
cleaning of and replacement of Building owned signs of the Building, including
relamping and repairs made as required; repair, operation and maintenance of the
Common Area, including but not limited to, removal of any obstructions not
reasonably required for the Common Area uses, prohibition and removal of the
sale or display of merchandise or the storing of materials and/or equipment in
the Common Area, and payment of all electrical, water and other utility charges
or fees for services furnished to the Common Area; obtaining and maintaining
public liability, property damage and other forms of insurance which Sublessor
may or is required to maintain in connection with the Building (including the
payment of any deductibles up to a limit of $10,000 thereunder); costs incurred
in connection with compliance of any laws applicable to the Building not in
effect on the Commencement Date, including without limitation any such laws
regarding Hazardous Materials; repair of Common Area improvements, equipment and
supplies; employment of such personnel as Sublessor may deem reasonably
necessary, if any, to direct parking and police the Common Area and facilities;
the cost of any capital improvements made by or on behalf of Sublessor to the
Building or Common Area, other than improvements for specific tenants, but only
to the extent such capital improvements are required by any law enacted after
the Commencement Date or which reduce or are intended to reduce Building Costs,
such costs being amortized over the useful life of such capital improvements
calculated at a market cost of funds, all as reasonably determined by Sublessor;
depreciation of machinery and equipment to the extent used in connection with
the maintenance and operation of the Common Area; employment of personnel used
in connection with any of the foregoing, including, but not limited to, payment
or provision for unemployment insurance, worker's compensation insurance and
other reasonable and customary employee costs; the cost of bookkeeping,
accounting and auditing and legal services provided in connection with any of
the foregoing; the cost of any environmental consultant or other services used
in connection with Sublessor's monitoring of the Building with respect to
Hazardous Materials (other than any environmental audits or similar
investigations undertaken primarily for the purpose of financing or selling of
the Building or for any equity transaction involving Lessor or Sublessor);
except as set forth in Section 7.6, the cost of any tax or insurance consultant
utilized in connection with the Building to reduce or reasonably intended to
reduce Operating Expenses; and any other items reasonably necessary from time to
time to properly repair, maintain and operate the Building. Building
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Costs shall also include a management fee to cover Sublessor's management,
overhead and administrative expenses specifically related to management of the
Building; provided, however, (i) such fee shall not exceed the amount
customarily charged by third-party property managers not affiliated with
Sublessor and (ii) if Sublessor elects to delegate its duties hereunder to a
professional property manager, then Building Costs shall not include any
management fee to Sublessor (except for any costs and/or administrative and
overhead expenses reasonably incurred by Sublessor in monitoring and auditing
the performance delegated to the professional property manager, but only to the
extent attributable to the Building) but under such circumstances any reasonable
amounts paid to the professional property manager shall be added to and deemed a
part of Building Costs. If Sublessor elects to perform any maintenance, repair
or property management herein described in conjunction with properties other
than the Building, and if a common maintenance or management contractor is
contracted for such purpose, the contract amount allocable to the Building, as
reasonably determined by Sublessor, shall be added to and deemed a part of
Building Costs hereunder. Increases in Building Costs by reason of a
disproportionate impact by Sublessee thereon (for example, and not by way of
limitation, increases in costs of trash collection because of Sublessee's
excessive generation of trash or increases in costs of Common Area maintenance
because of Sublessee's unprompted storage of inventory or materials in the
Common Area) in Sublessor's reasonable judgement, may be billed by Sublessor, as
an item of Additional Rent, directly to Sublessee.
(b) Exclusions to Operating Expenses.
(1) Costs associated with the operation of the business of the
ownership or entity of Sublessor, as distinguished from the costs
of Building operations, including, but not limited to, general
administration and overhead, partnership accounting and legal
matters, costs of any lawsuits and other legal costs associated
with any tenant, Lessor or any Mortgagee (except as the actions of
Sublessee may be in issue), any principal of Sublessor or, to the
extent not related to the Building, any other third party; costs of
selling, syndicating, financing, mortgaging or hypothecating any of
Sublessor's interest in the Building; costs of any disputes between
Sublessor and its employees (if any), disputes of Sublessor with
Sublessor's Agents, or disputes with other tenants.
(2) Depreciation, amortization and other non-cash items and points,
fees, penalties, late charges, interest, principal and all other
similar payments for the borrowing of money on Mortgages, and other
debt costs, if any.
(3) Costs associated with replacement and/or major repair to the roof,
foundation or other structural elements of the Building or the
major mechanical systems of the Building.
(4) Legal fees, space planner's fees, real estate broker's leasing
commissions, and advertising expenses incurred in connection with
the development, marketing or leasing of the Building.
(5) Costs for which Sublessor is reimbursed by any insurance carrier,
any other tenant (other than pursuant to any provision relating to
Operating Expenses similar to the one in this Sublease) or any
third party or for any services to the Building, the Common Area or
any portion thereof which are paid directly by any tenant or other
third party.
(6) Any bad debt loss, rent loss, or reserves for bad debts or rent
loss.
(7) The expense of services provided to other tenants in the Building
and not provided to Sublessee.
(8) Costs incurred by Sublessor with respect to goods and services
(including utilities sold and supplied to tenants) to the extent
that Sublessor is entitled to direct reimbursement for such costs.
(9) All items and services for which Sublessee or any other tenant in
the Building directly reimburses Sublessor or which Sublessor
provides selectively to one or more tenants (other than Sublessee)
without reimbursement.
(10) Amounts paid as ground rental by Sublessor, if any, and any
amounts paid by Sublessor to Lessor.
(11) Costs, including permit, license and inspections costs, incurred
with respect to the installation of tenant improvements made for
new tenants in the Building or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant space for
tenants.
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(12) Costs of Alterations or improvements to the Premises or the
premises of other tenants.
(13) Electrical power costs for which any tenant directly contracts with
the local public service company.
(14) Wages, benefits and other costs of any employee who does not devote
substantially all of his or her employed time to the operation and
management of the Building, unless such wages and benefits are
prorated to reflect time spent on operating and managing the
Building vis-a-vis time spent on matters unrelated to operating and
maintaining the Building.
(15) Expenses to the extent resulting from the gross negligence of,
violation or breach of any law, Restriction, sublease or other
agreement with any tenant (including Sublessee under this
Sublease), the Master Lease or any Mortgage by, Sublessor,
Sublessor's Agents or Lessor or, its agents, servants or employees,
including, without limitation, any fees, fines, charges, interest,
penalties or similar amounts arising therefrom or from any late
payment.
(16) Capital expenditures except to the extent provided in Section
7.3(a).
(17) Costs of goods and services acquired from any affiliate of
Sublessor or of any of Sublessor's Agents, to the extent in excess
of the costs that would be paid to an unaffiliated, third-party
provider of such goods and services.
(18) Costs and expenses incurred (whenever incurred) in repairing any
latent defects in the Building or the Common Area or in removing,
remediating or satisfying any liability arising out of, Hazardous
Materials in, on, under or about the Building or the Common Area
existing as of the date Sublessee first takes occupancy of the
Premises or introduced to the Building or the Common Area by any
person or entity other than Sublessee or any of Sublessee's Agents.
(19) Any costs or expenses required to make the Building or the Common
Area, or any portion thereof, comply with Applicable Laws in effect
on the Commencement Date.
(20) Political contributions or costs and expenses for new sculptures,
paintings or other objects of art, but not the costs for repairing
or replacing (with paintings of similar value) existing paintings.
(21) Any costs included in any management fee paid with respect to the
Building or the Common Area and which costs, if also included
separately in Operating Expenses, would result in a duplication.
Operating Expenses charged to all tenants of the Building shall not
exceed one hundred percent (100%) of the Building Costs and Real Estate
Taxes actually incurred except for the cost of insurance Sublessor is
required to maintain under this Sublease. Sublessor may assess the
Building a portion of costs attributable to the Building under
Sublessor's umbrella policy provided the cost of such insurance so
assessed to the Operating Expenses shall not exceed costs for similar
buildings in reasonable proximity to the Building as published annually
by BOMA.
(c) Discounts. Operating Expenses shall be reduced by all cash discounts,
trade discounts, or quantity discounts received by Sublessor or Sublessor's
managing agent in the purchase of any goods, utilities, or services in
connection with the operation of the Building. If capital items are leased,
rather than purchased, by Sublessor, the decision by Sublessor to lease the
item in question shall not serve to increase Sublessee's proportionate
share of Operating Expenses beyond that which would have applied had the
item in question been purchased. In the calculation of any expenses
hereunder, no expense shall be charged more than once.
(d) Audit Rights. Sublessor shall keep or cause to be kept, separate and
complete books of account covering all Operating Expenses in accordance
with generally accepted accounting principles and showing the method of
calculating Sublessee's Share of Operating Expenses in excess of the
Operating Expense Base, and shall preserve for at least two (2) years after
the close of each of Sublessor's fiscal year, all material documents
evidencing said Operating Expenses for that fiscal year. Sublessor shall
not be required to maintain documents for any other years and Sublessee's
right to audit as set forth below
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shall not extend to any years other than those for which Sublessor is
required to keep records Pursuant to this Paragraph 7.3(d). Sublessee, at
its sole cost and expense, through any certified public accountant
designated by it, shall have the right, with reasonable notice, during
reasonable business hours and not more frequently than once during any
fiscal year, to examine and/or audit the books and documents mentioned
above evidencing such Operating Expenses for the previous fiscal year. If
such examination or audit reveals a variance, Sublessee may give Notice
thereof to Sublessor. Sublessor shall have thirty (30) days after receipt
of such Notice to dispute the examination or audit by giving Notice of
such dispute to Sublessee. If Sublessor does not give any such Notice of
dispute, the determination of Operating Expenses pursuant to such
examination or audit shall be binding upon the parties. If Sublessor gives
notice of such dispute within such thirty (30) day period, Sublessor's
certified public accountant and Sublessee's certified public accountant
shall mutually select a neutral third certified public accountant (the
"Third Accountant"), and the determination of Operating Expenses by the
Third Accountant shall be binding on both parties. Any amount due to
either party on account of Operating Expenses following such determination
shall be paid to the other party within thirty (30) days after the
determination In the event the determination of the Third Accountant
indicates a variance of more than 10%, the reasonable cost of Sublessee's
audit, based on hourly fees (as opposed to, for example, fees based on the
amount of reduction achieved) shall be paid by Sublessor, otherwise such
cost shall be paid by Sublessee. The costs of the Third Accountant shall
be split evenly between the Sublessor and Sublessee.
7.4 Definition of Real Property Taxes. The term "Real Property Taxes"
means any form of tax, assessment, charge, license, fee, rent tax, levy,
Trustee's, fees, water rent, rate or charge, sewer rent, penalty (only if a
result of Sublessee's delinquency), real property, personal property or other
tax (other than Sublessor's net income, estate, succession, inheritance, or
franchise taxes or any Mortgage taxes or sales or transfer taxes due to change
in ownership), now or hereafter imposed with respect to the Building or any part
thereof (including any Alterations), this Sublease or any Rent payable under
this Sublease by any authority having the direct or indirect power to tax, or by
any city, county, state or federal government or any improvement district or
other district or division thereof, whether such tax or any portion thereof (i)
is determined by the area of the Building or any part thereof or the Rent
payable under this Sublease by Sublessee including, but not limited, to any
gross income or excise tax levied by any of the foregoing authorities with
respect to receipt of the Rent due under this Sublease, (ii) is levied or
assessed in lieu of, in substitution for, or in addition to, existing or
additional taxes with respect to the Building or any part thereof whether or not
now customary or within the contemplation of Sublessor or Sublessee, or (iii) is
based upon any legal or equitable interest of Sublessor in the Building or any
part thereof, Any assessments for any capital improvement (such as, by way of
example only, sidewalk, sewer or street improvements) included in Real Property
Taxes shall be amortized over the useful life of the improvement, unless such
assessments are payable in installments over a number of years reasonably
equivalent to the useful life of the improvement.
7.5 Apportionment of Taxes. If the Building is assessed as part of a
larger parcel, then Sublessor shall equitably apportion the Real Property Taxes
assessed against the real property which includes the Building and reasonably
determine the amount of Real Property Taxes attributable to the Building. If
other buildings exist on the assessed parcel, the Real Property Taxes
apportioned to the Building shall be based upon the ratio of the square footage
of all buildings within the Building to the square footage of all buildings on
the assessed parcel, and the amount of Real Property Taxes so apportioned to the
Building shall be included as part of Operating Expenses as equitably adjusted
to take into account differences in such buildings from the Building which
affect the manner in which the Real Property Taxes are assessed, such as, by way
of example only, higher or lower rental rates and other factors affecting value.
Sublessor's reasonable determination of such apportionment shall be conclusive.
7.6 Permitted Contests. At Sublessee's request, Sublessor shall, and at
any time Sublessee may, contest the amount or validity of any Real Property
Taxes by appropriate proceedings, provided that, if Sublessee undertakes such
contest Sublessee gives Sublessor prior Notice of any such contest and keeps
Sublessor advised as to all proceedings, and provided further that, in any
event, Sublessee shall continue to reimburse Sublessor for Sublessor's payment
of such Real Property Taxes unless such proceedings shall operate to prevent or
stay such payment and the collection of the tax so contested. Sublessor shall
join in any such proceedings if any Applicable Laws shall so require, provided
that Sublessee shall hold harmless, indemnify, protect and defend Sublessor from
and against any liability, claim, demand, cost or expense in connection
therewith, including, but not limited to, actual attorneys' fees and costs
reasonably incurred. Sublessor shall cooperate with any contest undertaken by
Sublessee or other tenant and shall reimburse Sublessee's or other tenant's
costs and expenses thereof if successful (which costs and expenses may then be
included in Operating Expenses).
7.7 Utilities and Services. Sublessor agrees to furnish to the Premises at
all times during the Term, 2000 amps, 460 volts, 3 phase electrical
current, water for lavatory and drinking purposes, chilled water for
the purposes of air conditioning and to the extent provided in the
Building only, elevator service by non-attended
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automatic elevators. Sublessee shall provide its own janitorial service for the
Premises. In the event Sublessee fails to provide janitorial service or service
of a frequency or quality equal to or greater than that provided by Sublessor
for other tenants in the Building, Sublessor may, but is not obligated to, after
thirty (30) days Notice of such failure, provide same at Sublessee's expense and
the cost of same shall be Additional Rent. The cost of all such utilities and
services, to the extent provided, shall be included within the definition of
Building Costs, and shall be paid by Sublessee in the manner set forth in
Section 7.1. Sublessor shall not be liable for, and Sublessee shall not be
entitled to any abatement or reduction of Rent by reason of Sublessor's failure
to furnish any of the foregoing when such failure is caused by Unavoidable
Delay. If Sublessee requires or utilizes more water than set forth above,
Sublessor may at its option require Sublessee to pay, as Additional Rent, the
cost, as reasonably determined by Sublessor, incurred by such extraordinary
usage. In addition, Sublessee shall install separate electric meter(s) for the
Premises, at Sublessee's sole expense, and Sublessee thereafter shall pay all
charges of the metered service. Sublessee shall comply with any present or
future government conservation requirements required under Applicable Law
related to such utilities and services. If there is any failure, stoppage or
interruption of any services provided hereunder, Sublessor shall use all
commercially reasonable efforts and reasonable diligence to resume services
promptly. Sublessor shall at all times have free access to all mechanical
installations of the Building and Premises, including but not limited to HVAC
equipment, machine rooms and electrical closets, subject to reasonable
requirements of Sublessee to protect the Premises and Sublessee's Property.
Sublessee shall have the exclusive right to use one of the two existing
generators and the non-exclusive right to use the fuel tanks, fuel and
appurtenances thereto reasonably necessary for the operation thereof and for
Sublessee's additional generator permitted under this Sublease at all times
throughout the Term. Sublessee shall install meters or other devices to
determine the fuel consumed by Sublessee's generator(s) and Sublessee shall
reimburse Sublessor for fuel consumed by Sublessor. The other generator shall be
reserved for the use of Sublessor and other tenants. Sublessor shall at all
times remain the owner of both generators. Sublessee shall operate and maintain
its generator at its sole cost and expense. Sublessor shall maintain, in
accordance with Applicable Laws, the fuel tank and fuel and such appurtenances,
including, without limitation, maintaining at all times fuel in the fuel tank in
the amount of at least 90% of the maximum amount permitted by Applicable Laws.
Sublessor shall monitor fuel quality relative to manufacturer's specifications
and provide periodic reports to Sublessee. Sublessee shall have the right to
replace its generator from time to time at its expense. Notwithstanding anything
to the contrary herein, upon the expiration or termination of this Sublease,
Sublessor (or Lessor as the case may be) shall have ownership of both
generators, including any new generator if Sublessee's generator is replaced.
Sublessor shall make available at all times throughout the Term to Sublessee the
available space in the generator room for Sublessee's addition of a third
generator of similar size and configuration as the generators located therein or
larger, if space permits. Any such additional third generator shall be for the
exclusive use of Sublessee and shall be part of Sublessee's Special Systems and
Sublessee's Property, removable by Sublessee at any time during or at the end of
the Term.
ARTICLE VIII
ALTERATIONS
8.1 Permitted Alterations. Sublessee shall not make or permit any
Alterations in excess of $15,000 per event in, on or about the Premises without
the prior written consent of Sublessor, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, in the event any Alterations
would (i) affect the exterior of the Building or the outside areas (or be
visible from adjoining sites), (ii) affect or penetrate any of the structural
portions of the Building, including, but not limited to, the roof, (iii) require
any change to the structural or mechanical portions of the Premises, or change
any existing governmental approval or permit as a prerequisite to the
construction thereof, (iv) interfere in any material respect with the proper
functioning of or Sublessor's access to any mechanical, electrical, plumbing or
HVAC systems, facilities or equipment located in or serving the Building, (v)
diminish the value of the Premises, or (vi) occur outside the Premises,
Sublessor shall use commercially reasonable efforts to determine a mutually
agreeable solution or plan with Sublessee, but approval by Sublessor shall be at
its sole and absolute discretion. All Alterations shall be constructed pursuant
to plans and specifications previously provided to and approved in writing by
Sublessor, which approval shall not be unreasonably withheld or delayed, and
shall be installed by a licensed contractor at Sublessee's sole expense in
compliance with all Applicable Laws, and shall be accomplished in a good and
workmanlike manner conforming in quality and design with the Premises existing
as of the Commencement Date. No Hazardous Materials, including, but not limited
to, asbestos or asbestos-containing materials, shall be used by Sublessee or
Sublessee's Agents in the construction of any Alterations permitted hereunder
other than in compliance with Applicable Laws and with prior Notice to
Sublessor. Alterations completed in a manner materially different than indicated
by the plans and specifications approved by Sublessor or in violation of the
foregoing shall be a default under this Sublease. All Alterations (other than
Sublessee's Property) made by Sublessee shall be and become the property of
Sublessor upon the installation thereof; provided, however, that Sublessor may,
at its option, by giving Notice to Sublessee at the time the Alteration is
approved by Sublessor, require that Sublessee, upon the termination of this
Sublease, at Sublessee's expense, remove any or all non-structural Alterations
installed by or on behalf of Sublessee and return the Premises to its condition
prior to such Alteration, normal wear and tear excepted; provided however, at
the end of the Term.
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Sublessee shall not be obligated to, and shall have the right to elect not to
remove conduit, cabling and lines. Notwithstanding any other provisions of this
Sublease, Sublessee shall be solely responsible for the maintenance, repair and
replacement of any and all Alterations made by or on behalf of Sublessee
(including without limitation by Sublessor on behalf of Sublessee) to the
Premises. Sublessee shall have the right to perform Alterations by selecting a
general contractor, construction manager, subcontractors, architects and
engineers of its choice, subject to Sublessor's reasonable approval. Sublessor
shall not receive any profit from Sublessee's Alterations but Sublessee shall
reimburse Sublessor reasonable costs incurred by Sublessor for consultants as
Sublessor may reasonably require to review and evaluate Sublessee's proposed
Alterations. Subject to Sublessor's reasonable restrictions for reasons such as,
but not limited to, noise, dust, and access required by other tenants, Sublessee
shall have the right to perform Alterations at all times, and shall have
reasonable access to loading docks, freight elevators and other Common Areas
therefor. Prior to commencing any Alterations, Sublessee shall submit plans and
specifications to Sublessor. If Sublessor fails to approve or disapprove the
plans and specifications within five (5) business days after submission, the
same shall be deemed approved by Sublessor. Approval by Sublessor of any
Alterations shall not be construed as a representation that such Alterations are
in compliance with any applicable laws, building codes or regulations.
8.2 Trade Fixtures. Sublessee shall, at its own expense, provide, install
and maintain in good condition all of Sublessee's Property used in the conduct
of its business in the Premises from time to time.
8.3 Mechanics' Liens. Sublessee shall give Sublessor Notice of
Sublessee's intention to perform any work on the Premises which might result in
any claim of lien at least twenty (20) days prior to the commencement of such
work to enable Sublessor to post and record a notice of non-responsibility or
other notice Sublessor deems proper prior to the commencement of any such work
(or lesser period of time if Sublessee causes any such notices to be posted and
recorded). Sublessee shall not permit any mechanic's, materialmen's or other
liens to be filed against the property of which the Premises are a part or
against Sublessee's leasehold interest in the Premises. If Sublessee fails to
cause the release of record of any lien(s) filed against the Premises or its
leasehold estate therein by payment or posting of a proper bond (or other
protection of Sublessor's and Lessor's interest as they may reasonably require)
within thirty (30) days from the date of receipt of Notice of the lien
filing(s), then Sublessor may, at Sublessee's expense, cause such lien(s) to be
released by any means Sublessor reasonably deems proper, including, but not
limited to, payment of or defense against the claim giving rise to the lien(s).
All sums reasonably disbursed, deposited or incurred by Sublessor in connection
with the release of the lien(s), including but not limited to, all costs,
expenses and reasonable attorneys' fees, shall be due and payable by Sublessee
to Sublessor, as an item of Additional Rent, or deemed by Sublessor, together
with interest thereon at the Applicable Rate from the date of such demand until
paid by Sublessee.
8.4 Alterations by Sublessor. Sublessor reserves the right at any time and
from time to time without the same constituting an actual or constructive
eviction and without incurring any liability to Sublessee therefor or otherwise
affecting Sublessee's obligations under this Sublease, to make such changes,
alterations, additions, improvements, repairs or replacements in or to the
Building (including, without limitation, the Premises, but only to the extent
required to do so by any Applicable Laws) and the fixtures and equipment thereof
(other than any of Sublessee's Property), as well as in or to the street
entrances, walls, passages, and stairways thereof, or to change the name by
which the Building is commonly known, as Sublessor may deem necessary or
desirable, provided such action by Sublessor shall not unreasonably interfere
with Sublessee's use, occupancy and enjoyment of the Premises or the conduct of
its business therein. Nothing contained herein shall be deemed to relieve
Sublessee of any duty, obligation or liability of Sublessee with respect to
making any repair, replacement or improvement or complying with any Applicable
Laws in connection with the Premises, and nothing contained herein shall be
deemed or construed to impose upon Sublessor any obligation, responsibility or
liability whatsoever for the care, supervision or repair of the Building or any
part thereof other than as otherwise provided in this Sublease.
8.5 Applicability. Except for Paragraphs 8.2 and 8.3, the provisions of
this Article VIII shall not apply to Sublessee's Improvements which shall be
governed by this Exhibit "C-1" and all other Articles of this Sublease. Except
for Paragraphs 8.2 and 8.3, the provisions of this Article VIII shall not apply
to Sublessee's Special Systems which shall be governed by Exhibit "C-2" and all
other Articles of this Sublease. Paragraphs 8.2 and 8.3 shall apply to
Sublessee's Improvements, Sublessee's Special Systems and Alterations.
ARTICLE IX
MAINTENANCE AND REPAIR
9. 1 Sublessor's Maintenance and Repair Obligations. Sublessor shall,
subject to reimbursement by Sublessee's Share of Operating Expenses in excess of
the Operating Expense Base, and subject to Section 9.2, Article XII and Article
XIII, maintain in good condition and repair the roof (including, without
limitation, as needed, any replacement thereof), exterior walls, and foundation
of the Building, provide normal
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maintenance services for the HVAC serving the Building through maintenance
contracts or otherwise, and paint the exterior of the Building and clean the
exterior windows of the Building as and when such painting or window cleaning,
as the case may be, become necessary at Sublessor's reasonable discretion.
Sublessor shall also provide maintenance and repair services to the building
standard plumbing, electrical, natural gas, telephone and mechanical systems
serving the Premises (but not including any service dedicated for Sublessee's
exclusive use installed by or on behalf of Sublessee). Except in the case of any
emergency of which Sublessor is aware, Sublessor shall not be required to make
any repairs to the roof, exterior walls, exterior entrances, foundation or to
any systems within the Premises unless and until Sublessee has given Notice to
Sublessor of the need for such repair and Sublessor shall have a reasonable
period of time thereafter to commence and complete said repair; provided,
however, Sublessor shall not be required to make any repairs stated in
Sublessee's Notice except to the extent required of Sublessor under this
Sublease. Subject to Section 7.3(b), the cost of any maintenance and repairs on
the part of Sublessor provided for in this Section 9.1 shall be considered part
of Building Costs, except that repairs which arise out of any negligence or
willful misconduct of Sublessee or Sublessee's Agents shall be made at the
expense of Sublessee. Sublessor's obligation to so repair and maintain the
Premises shall be limited to the cost of effecting such repair and maintenance
and in no event shall Sublessor be liable for any expenses in excess of said
amounts, including but not limited to, any consequential damages, opportunity
costs or lost profits incurred or suffered by Sublessee.
9.2 Sublessee's Maintenance and Repair Obligations. Sublessee shall at all
times during the Term, at Sublessee's sole cost and expense, clean, keep,
maintain, repair and make necessary improvements to, the Premises and every
portion thereof and all improvements therein or thereto, in good and sanitary
order and condition to the reasonable satisfaction of Sublessor and in
compliance with all Applicable Laws, usual wear and tear excepted. Any damage or
deterioration of the Premises shall not be deemed usual wear and tear if the
same reasonably could have been prevented by commercially customary maintenance
by Sublessee. Sublessee's repair and maintenance obligations herein shall
include, but are not limited to, all necessary maintenance and repairs to all
portions of the Premises, and, to the extent within the Premises, all exterior
entrances, all interior glass, windows and window casements, show window
moldings, partitions, doors, door jambs, door closures, hardware, fixtures,
electrical lighting and outlets, plumbing fixtures, sewage facilities, interior
walls, floor coverings, floors, ceilings, fans and exhaust equipment, and fire
extinguisher equipment and systems dedicated to the Premises or modified by
Sublessee for the dedicated use of the Premises. Electrical and HVAC equipment
installed by Sublessee for the exclusive use and benefit of the Premises shall
be maintained by the Sublessee at the Sublessee's sole cost and expense.
Sublessee shall maintain the existing generator exclusively serving the Premises
at Sublessee's sole cost and expense, and any costs for maintenance, repair
and/or replacement incurred by Sublessor in connection therewith due to
Sublessee's failure to meet its maintenance obligation hereunder shall be billed
directly to Sublessee as Additional Rent. As part of its maintenance obligations
hereunder, Sublessee shall, at Sublessor's request, provide Sublessor with
copies of all maintenance schedules, repairs and notices prepared by, for, or on
behalf of Sublessee. Sublessor may impose reasonable restrictions and
requirements with respect to repairs by Sublessee, which repairs shall be at
least equal in quality to the original work, and the provisions of Section 8.3
shall apply to all such repairs. Sublessee's obligation to repair includes the
obligation to replace, as necessary, regardless of whether the benefit of such
replacement extends the Term. If in the reasonable opinion of Sublessor,
Sublessee shall fail to adequately maintain and repair automatic fire
extinguisher equipment, including but not limited to sprinkler systems and
alarms, installed by or modified by Sublessee, then upon Notice to Sublessee,
Sublessor shall have the right to undertake obligations of Sublessee hereunder
which Sublessor deems appropriate to undertake that affect the Building as a
whole, in which event the cost thereof shall be paid by Sublessee as additional
rent. Sublessee shall not permit or authorize any person to go onto the roof of
the Building without the prior consent of Sublessor.
9.3 Waiver. Sublessee hereby waives all rights provided for by the
provisions of Section 1941 and 1942 of the California Civil Code and any present
or future laws regarding Sublessee's right to make repairs at the expense of
Sublessor or to terminate this Sublease because of the condition of the
Premises.
9.4 Self-help. If Sublessee refuses or fails to repair and maintain the
Premises as required hereunder within thirty (30) days from the date of
Sublessee's receipt of Sublessor's Notice to Sublessee to effect such repair
and maintenance, Sublessor may enter upon the Premises and make such repairs or
perform such maintenance. All sums reasonably disbursed, deposited or incurred
by Sublessor in connection with such repairs or maintenance, plus ten percent
(10%) for overhead, shall be due and payable by Sublessee to Sublessor, as an
item of Additional Rent, on demand by Sublessor, together with interest at the
Applicable Rate on such aggregate amount from the date of such demand until paid
by Sublessee.
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ARTICLE X
COMMON AREA AND PARKING
10.1 Grant of Nonexclusive Common Area License and Right. Sublessor
hereby grants to Sublessee and Sublessee's Agents the right to use at all times
throughout the Term, in common with Sublessor and all persons, firms and
corporations conducting business in the Building and their respective customers,
guests, licensees, invitees, tenants, employees and agents, the Common Area for
vehicular parking, for pedestrian and vehicular ingress, egress and travel, and
for such other purposes and for doing such other things as may be provided for,
authorized and/or permitted hereunder, such nonexclusive license and right to be
appurtenant to Sublessee's leasehold estate created by this Sublease and not
subject to termination except upon expiration or earlier termination of this
Sublease. The nonexclusive license and rights granted pursuant to the provisions
of this Article X shall be subject to the provisions of the Restrictions that
pertain in any way to the Common Area covered by such Restrictions, and the
provisions of this Sublease.
10.2 Use of Common Area. Notwithstanding anything to the contrary herein,
Sublessee and Sublessee's Agents and their respective successors and assigns
shall use the Common Area only for the purposes permitted hereby and by the
Restrictions and the Rules and Regulations. All uses permitted within the Common
Area shall be undertaken with reason and judgement so as not to interfere with
the primary use of the Common Area which is to provide parking and vehicular and
pedestrian access throughout the Common Area, to and within the Building and to
adjacent public streets for the Sublessee, Sublessee's Agents, Sublessor,
Sublessor's Agents, tenants and all persons, firms and corporations conducting
business within the Building and their respective customers, guests and
licensees. In no event shall Sublessee erect, install or place, or cause to be
erected, installed, or placed any structure, building, trailer, fence, wall,
signs or other obstructions on the Common Area, except as otherwise permitted
herein and in the Restrictions, and Sublessee shall not store or sell any
merchandise, equipment or materials on the Common Area.
10.3 Control of Common Area. Subject to provisions of the Restrictions,
all Common Area and all improvements located from time to time within the Common
Area (other than Sublessee's Property) shall at all times be subject to the
exclusive control and management of the Sublessor. Sublessor shall have the
right to construct, maintain and operate lighting facilities within the Common
Area; to police the Common Area from time to time; to change the area, level,
location and arrangement of the parking areas and other improvements within the
Common Area, to restrict parking by tenants, their officers, agents and
employees to employee parking areas; to enforce parking charges (by operation of
meter or otherwise) for any spaces in excess of those set forth in Article I,
Item 17; to close all or any portion of the Common Area or improvements therein
to such extent as may, in the opinion of counsel for Sublessor, be legally
sufficient to prevent a dedication thereof or the accrual of any rights to any
person or to the public therein; to close temporarily all or any portion of the
Common Area and/or the improvements thereon; to discourage non-customer parking;
and to do and perform such other acts in and to said Common Area and
improvements thereon as, in the use of good business judgement, Sublessor shall
determine to be advisable and does not unreasonably restrict Sublessor's use,
occupancy and enjoyment of the Premises, including, without limitation,
Sublessee's access to the parking spaces set forth in Item 17 of the Basic
Sublease provisions at all times for the use of Sublessee and Sublessee's
agents.
10.4 Maintenance of Common Area. Subject to the provisions of the
Restrictions, Sublessor shall operate and maintain (or cause to be operated and
maintained) the Common Area in a first-class condition, in compliance with
Applicable Laws, in such manner as Sublessor in its reasonable acts of
discretion shall determine from time to time. Without limiting the scope of such
discretion, Sublessor shall have the full right and authority to employ or cause
to be employed all personnel and to make or cause to be made all reasonable
rules and regulations pertaining to or necessary for the proper operation and
maintenance of the Common Area and the improvements located thereon; provided,
however, no such rule or regulation unreasonably interferes with Sublessee's
use, occupancy and enjoyment of the Building, the Common Area or the Premises or
unreasonably interferes with the conduct of the Sublessee's business in the
Premises. The cost of such maintenance of the Common Area shall be included as
part of Building Costs, subject to the provisions of Section 7.3(b). Except with
prior written consent, no part of the Common Area may be used for the storage of
any items, including without limitation, vehicles, materials, inventory and
equipment. All trash and other refuse shall be placed in designated receptacles.
Except as otherwise expressly provided herein, no work of any kind, including,
but not limited to, painting, drying, cleaning, repairing, manufacturing,
assembling, cutting, merchandising or displaying shall be permitted upon the
Common Area.
10.5 Revocation of License. All Common Area and improvements located
thereon which Sublessee is permitted to use and occupy pursuant to the
provisions of this Sublease are to be used and occupied under a revocable
license and right, and if any such license be revoked, or if the amount of such
areas be diminished, Sublessor shall not be subject to any liability nor shall
Sublessee be entitled to compensation or diminution or
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abatement of Rent, and such revocation or diminution of such area shall not be
deemed constructive or actual eviction; provided, however, such license shall
not be revoked other than upon the expiration or earlier termination of this
Sublease and diminution of the Common Area shall in no event result in the
reduction of the amount of vehicle parking in excess of twenty percent (20%) of
the amount of vehicle parking set forth in Item 17 of the Basic Sublease
Provisions and only in the event of a condemnation, impairment to the Must Have
Common Area in any material respect, interference with any of Sublessee's
Special Systems or otherwise unreasonably interfere with Sublessee's use,
occupancy and enjoyment of the Premises, the Building or the Common Area or the
conduct of Sublessee's business in the Premises. It is understood and agreed
that the condemnation or other taking or appropriation by any public or quasi-
public authority, or sale in lieu of condemnation, of all or any portion of the
Common Area shall not constitute a violation of Sublessor's agreements
hereunder, and Sublessee shall not be entitled to participate in or make any
claim for any award or other condemnation proceeds arising from any such taking
or appropriation of the Common Area; provided, however, if such condemnation or
other taking results in the reduction of the amount of vehicle parking available
to Sublessee in excess of twenty percent (20%) of the amount of vehicle parking
set forth in Item 17 of the Basic Sublease Provisions, impairment to the Must
Have Common Area in any material respect, interferes with any of Sublessee's
Special Systems or otherwise unreasonably interferes with Sublessee's use,
occupancy and enjoyment of the Premises, the Building or the Common Area or the
conduct of Sublessee's business in the Premises, Sublessee shall have the right
upon Notice to Sublessor to terminate this Sublease. In the event Common Area
space is reduced such that the resulting load factor for defining RSF is less
than the factor set forth in the definition of "Premises Square Footage," the
Sublessee's Share of the Building as set forth in Exhibit I shall be reduced
accordingly.
10.6 Sublessor's Reserved Rights. Sublessor reserves the right to install,
use, maintain, repair, relocate and replace pipes, ducts, conduits, wires and
appurtenant meters and equipment which are now or in the future serving the
Building and are within the Premises or outside the Premises, change the
boundary lines of the Building and install, use, maintain, repair, alter or
relocate, expand and replace any Common Area; provided, however, Sublessor shall
not reduce the amount of vehicle parking available to Sublessee set forth in
Item 17 of the Basic Sublease Provisions by more than twenty percent (20%) and
only in the event of condemnation, impair the Must Have Common Area in any
material respect, interfere with any of Sublessee's Special Systems or otherwise
unreasonably interfere with Sublessee's use, occupancy and enjoyment of the
Premises, the Building or the Common Area or the conduct of Sublessee's business
in the Premises. Such rights of Sublessor shall include, but are not limited to,
temporarily designating from time to time certain portions of the Common Area as
exclusively for the benefit of other tenants in the Building other than any Must
Have Common Area, including, without limitation, any areas where Sublessee's
Special Systems are located or which are necessary for the installation,
connection, use, maintenance, repair, replacement or removal of Sublessee's
Special Systems.
10.7 Parking. Sublessee shall be entitled at all times during the Term to
the number of vehicle parking spaces set forth in Item 17 of the Basic Sublease
Provisions, which spaces shall be unreserved and unassigned and without charge,
on those portions of the Common Area designated by Sublessor for parking.
Sublessee shall not use more parking spaces than such number. Other than with
respect to vehicles used in construction, repair and maintenance activities
permitted hereunder, all parking spaces shall be used only for parking by
vehicles no larger than full size passenger automobiles or pick-up trucks.
Sublessee shall not permit or allow any vehicles that belong to or are
controlled by Sublessee or Sublessee's Agents to be loaded, unloaded, or parked
in areas other than those designated by Sublessor for such activities. If
Sublessee permits or allows any of the prohibited activities described above,
then Sublessor shall have the right, without notice, in addition to such other
rights and remedies that Sublessor may have, to remove or tow away the vehicle
involved and charge the cost to Sublessee, which cost shall be immediately
payable upon demand by Sublessor. Parking within the Common Area shall be
limited to striped parking stalls, and no parking shall be permitted in any
driveways, accessways or in any area which would prohibit or impede the free
flow of traffic within the Common Area. During periods of construction and at
all times, so long as Sublessee's business in the Premises is conducted on a 24
hour-per-day basis, Sublessee and Sublessee's Agents may park vehicles
overnight: otherwise, there shall be no overnight parking of any vehicles of any
kind, and vehicles which have been abandoned or parking in violation of the
terms hereof may be towed away at the owner's expense. Sublessor may, at
Sublessor's sole discretion, make other reserved vehicle parking space(s)
available to Sublessee, at an additional charge to be mutually agreed upon
between the parties. If Sublessee requires additional parking spaces over the
amount set forth in Item 17 of the Basic Sublease Provisions, subject to
availability. Sublessor may provide additional spaces at a charge equal to
prevailing market rates for surface parking but in no event less than
$20/space/month.
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ARTICLE XI
INDEMNITY AND INSURANCE
11.1 (a) Sublessee Indemnification. To the fullest extent permitted by law,
Sublessee hereby agrees to defend (with attorneys reasonably acceptable to
Sublessor and Lessor), indemnify, protect and hold harmless Sublessor and
Sublessor's Agents and Lessor, and any successors to all or any portion of
Sublessor's or Lessor's interest in the Premises and their directors, officers,
partners, employees, authorized agents, representatives, affiliates and
Mortgagees, from and against any and all damage, loss, claim, liability and
expense including, but not limited to, attorneys' fees and legal costs, incurred
directly or indirectly by reason of any claim, suit or judgement brought by or
on behalf of (i) any person or persons for damage, loss or expense due to, but
not limited to, bodily injury or property damage sustained by such person or
persons which arise out of, are occasioned by, or are in any way attributable to
the use or occupancy of the Premises by Sublessee or the acts or omissions of
the Sublessee or Sublessee's Agents in or about the Premises or the Building
(including but not limited to any Event of Default hereunder), or (ii) Sublessee
or Sublessee's Agents for damage, loss or expense due to, but not limited to,
bodily injury or property damage which arise out of, are occasioned by, or are
in any way attributable to the use of any of the Common Area, except, in each
case, to the extent caused by the negligence or willful misconduct of the
indemnified party.
(b) Sublessor Indemnification. To the fullest extent permitted by law,
Sublessor hereby agrees to indemnify, protect and hold harmless Sublessee and
Sublessee's Agents, and any successors to all or any portion of Sublessee's
interest in the Premises and their directors, officers, partners, employees,
authorized agents, representatives, affiliates, from and against any and all
damage, loss, claim, liability and expense including, but not limited to,
attorney's fees and legal costs, incurred directly or indirectly by reason of
any claim, suit or judgment brought by or on behalf of (i) any person or persons
for damage, loss or expense due to, but not limited to, bodily injury or
property damage sustained by such person or persons which arise out of, are
occasioned by, or are in any way attributable to the use or occupancy of the
Premises by the Sublessor or the acts or omissions of the Sublessor or
Sublessor's Agents in or about the Premises or the Building (including but not
limited to any Event of Default hereunder), or (ii) Sublessor or Sublessor's
Agents for damage, loss or expense due to, but not limited to, bodily injury or
property damage which arise out of, are occasioned by, or are in any way
attributable to the use of any of the Common Area, except, in each case, to the
extent caused by the negligence or willful misconduct of the indemnified party.
11.2 Property Insurance. Sublessor at its expense, subject to reimbursement
as provided in Article VII, shall obtain and keep in force during the Term, a
policy or policies of insurance, covering loss or damage to the Premises and the
Building, and objects owned by Sublessor at least in the amount of the full
replacement cost thereof, and in no event less than the total amount required by
Mortgagees and or the Master Lease. Such insurance shall cover against all
perils included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils ("all risk" or "special form causes
of loss," as such terms are used in the insurance industry), including, at
Sublessor's option, collapse, earthquake and flood and other perils as required
by the Mortgagees or deemed necessary by Sublessor. In addition, Sublessor shall
obtain coverage for perils normally covered under a "Boiler and Machinery"
policy as such terms are used in the insurance industry. A stipulated value or
agreed amount endorsement deleting any coinsurance provision of said policy or
policies shall be procured with said insurance. The cost of such insurance
policies shall be included in the definition of Building Costs. Such insurance
policies shall provide for payment of loss thereunder to Sublessor or, at
Sublessor's election to the Mortgagees. Sublessee shall pay for any increase in
the property insurance of the Building if Sublessor provides reasonable evidence
that such increase is caused by Sublessee's acts, omissions, or particular use
or occupancy of the Premises (other than the permitted purposes stated in Item
12 of the Basic Sublease Provisions). Sublessee shall obtain and keep in force
during the Term. at its sole cost and expense, (i) an "all risk" or "special
causes of action" property policy in the amount of the full replacement cost
covering Sublessee's Improvements, Sublessee's Special Systems, and any
Alterations made by or at the request of Sublessee, with Sublessor insured as
its interest may appear, and (ii) an "all risk" or "Special Form - Cause of
Loss" policy of business interruption and/or loss of income insurance covering a
period of one (1) year, plus such additional period of time, if any, as will
permit Sublessee to be in a position to have the same revenues as were in effect
the day before a loss giving rise to a claim under such insurance occurs;
provided, however, Sublessor shall not be entitled to any proceeds therefrom
other than Rent.
11.3 Liability/Miscellaneous Insurance. Sublessee shall maintain in full
force and effect at all times during the Term (plus such earlier and later
periods as Sublessee may be in occupancy of the Premises). at its sole cost and
expense. for the protection of Sublessee, Sublessor and Sublessor's Agents and
Mortgagees policies of insurance issued by a carrier or carriers meeting the
requirements set forth in Section 11.8 below which afford the following
coverages: (i) statutory workers' compensation (ii) employer's liability with
minimum limits of five hundred thousand dollars ($500.000). (iii)
comprehensive/commercial general liability insurance including, but not limited
to, blanket contractual liability (including the indemnity set forth in
Section
<PAGE>
11.1), fire legal liability, broad form property damage, personal injury,
completed operations, products liability independent contractors, and owned,
non-owned and hired vehicles, of not less than the limits set forth in Item 19
of the Basic Sublease Provisions (or current limit carried, whichever is
greater), and (iv) such other insurance in such form and amounts as may be
reasonably required by Sublessor or the Mortgagee from time to time. Sublessor
or Sublessor's Agents on behalf of Sublessor may, at Sublessor's election,
obtain liability insurance in such amounts and on such terms as Sublessor shall
reasonably determine, and the cost thereof shall be included in Building Costs
and paid by Sublessee in the manner described in, and subject to, Article VII.
11.4 DEDUCTIBLES. Any policy of insurance required of Sublessee pursuant to
this Sublease containing a deductible exceeding Ten Thousand Dollars
($10,000.00) per occurrence must be approved in writing by Sublessor prior to
the issuance of such policy. Sublessee shall be solely responsible for the
payment of any deductible for any insurance policy or policies required of
Sublessee hereunder.
11.5 BLANKET COVERAGE. Any insurance required by Sublessee or Sublessor
pursuant to this Sublease may be provided by means of a so-called "blanket
policy" or umbrella policy, so long as (i) the Premises are specifically covered
(by rider, endorsement or otherwise), (ii) the limits of the policy are
applicable on a "per location" basis to the Premises, and (iii) the policy
otherwise complies with the provisions of this Sublease.
11.6 INCREASED COVERAGE. Upon demand, Sublessee shall provide Sublessor, at
Sublessee's expense, with such increased amount of existing insurance, and such
other insurance as Sublessor or the Mortgagee may reasonably require.
11.7 SUFFICIENCY OF COVERAGE. Neither Sublessor nor any of Sublessor's
Agents makes any representation that the types of insurance and limits specified
to be carried by Sublessee under this Sublease are adequate to protect
Sublessee. If Sublessee believes that any such insurance coverage is
insufficient, Sublessee shall provide at its own expense, such additional
insurance as Sublessee deems adequate. Nothing contained herein shall limit
Sublessee's liability under this Sublease, and Sublessee's liability under any
provision of this Sublease, including without limitation under any indemnity
provisions, shall not be limited to the amount of any insurance obtained.
11.8 INSURANCE REQUIREMENTS. Sublessee's insurance (i) shall be in a form
reasonably satisfactory to Sublessor and the Mortgagee and shall be carried with
companies that have a general policyholder's Best's rating of not less than
"A-VII" and that are determined by Sublessor, in its reasonable discretion, as
financially sound on a current basis, (ii) shall provide that such policies
shall not be subject to material alteration or cancellation except after at
least thirty (30) days prior written notice to Sublessor, and (iii) shall be
primary, and any insurance carried by Sublessor or Sublessor's Agents shall be
noncontributing. Sublessee's policy or policies, or duly executed certificates
for them shall be deposited with Sublessor prior to the Commencement Date, and
prior to renewal of such policies. If Sublessee fails to procure and maintain
the insurance required to be procured by Sublessee under this Sublease,
Sublessor may, but shall not be required to, order such insurance at Sublessee's
expense. All sums reasonably disbursed, deposited or incurred by Sublessor in
connection therewith, including, but not limited to, all costs, expenses and
actual attorneys' fees, shall be due and payable by Sublessee to Sublessor, as
an item of Additional Rent, on demand by Sublessor, together with interest
thereon at the Applicable Rate from the date of such demand until paid by
Sublessee.
11.9 [Intentionally deleted]
11.10 SUBLESSOR'S DISCLAIMER. Notwithstanding any other provisions of this
Sublease, and to the fullest extent permitted by law, Sublessor and Sublessor's
Agents shall not be liable for any loss or damage to persons or property
resulting from theft, vandalism, fire, explosion, falling materials, glass, tile
or sheetrock, steam, gas, electricity, water or rain which may leak from any
part of the Premises, or from the pipes, appliances or plumbing works therein or
from the roof, street or subsurface or whatsoever, unless caused by or due to
the negligence or willful misconduct of Sublessor. Sublessor and Sublessor's
Agents shall not be liable for interference with light or air, except as
otherwise expressly provided in this Sublease. Sublessee shall give prompt
Notice to Sublessor in case of a casualty, accident or repair needed to the
Premises.
11.11 MUTUAL WAIVER OF SUBROGATION. Sublessor and Sublessee each hereby
waives all rights of recovery against the other and the other's agents on
account of loss and damage occasioned to such waiving party to the extent only
that such loss or damage is insured against under any insurance policies
required by this Article XI (and to the extent such insurance is inadequate to
cover such loss, this waiver shall not apply to amounts of loss above such
coverage). Sublessee and Sublessor shall, upon obtaining policies of insurance
required hereunder, give notice to the insurance carriers that the foregoing
waiver of subrogation is contained in this Sublease.
<PAGE>
ARTICLE XII
DAMAGE OR DESTRUCTION
12.1 Sublessor's Obligation to Rebuild. If the Premises and/or the Building
are damaged or destroyed by fire or other casualty (a "Casualty"), Sublessee
shall promptly give Notice thereof to Sublessor, and Sublessor shall thereafter
repair the Premises and/or the Building as set forth in Section 12.4 and 12.5
unless Sublessor has the right to terminate this Sublease as provided in Section
12.2 and Sublessor elects to so terminate or Sublessee has the right to
terminate this Sublease as provided in Section 12.3 and Sublessor elects to so
terminate.
12.2 Sublessor's Right to Terminate. Sublessor shall have the right to
terminate this Sublease following a Casualty if any of the following occurs: (i)
insurance proceeds (together with; a.) the deductible amount ($10,000)
reimbursed to Sublessor as part of Operating Expenses, b.) the balance of any
deductible amount under the insurance obtained by Sublessor, and c.) any
additional amounts Sublessee and other tenants elect, at their option, to
contribute in excess of the deductible amount) are not available to Sublessor
(for whatever reason except for Sublessor's failure to procure or maintain the
insurance required under this Sublease) to pay one hundred percent (100%) of the
cost to fully repair the Premises and/or the Building as required under this
Lease; (ii) Sublessor's Architect determines that the Premises and/or the
Building cannot, with reasonable diligence, be fully repaired by Sublessor (or
cannot be safely repaired because of the presence of hazardous factors,
including, but not limited to, Hazardous Materials, earthquake faults,
radiation, chemical waste and other similar dangers) within one hundred eighty
(180) days after the date of such Casualty; (iii) the Premises and/or the
Building are destroyed or damaged during the last twelve (12) months of the Term
unless Sublessee then has the right to give Sublessee's Exercise Notice with
respect to an Option Term and Sublessee tenders Sublessee's Exercise Notice
(which Sublessee shall have the right to do even in the absence of an Option
Rent Notice); or (iv) an Event of Default has occurred and is continuing at the
time of such Casualty. If Sublessor elects to terminate this Sublease following
a Casualty pursuant to this Section 12.2, Sublessor shall give Sublessee Notice
of its election to terminate within thirty (30) days after Sublessor receives
Notice of such Casualty, and this Sublease shall terminate upon the date of such
Notice (unless the Premises have become entirely or substantially entirely
uninhabitable for the normal conduct of Sublessee's business therein, in which
case this Sublease shall terminate upon the date of the Casualty.)
12.3 Sublessee's Right to Terminate. Subject to the later terms hereof,
Sublessee shall have the right to terminate this Sublease following the
destruction of the Premises (or damage to the Premises so extensive as to
reasonably prevent Sublessee's use, occupancy and enjoyment of the Premises or
the normal conduct of Sublessee's business therein) if any of the following
occurs: (i) the Premises cannot, with reasonable diligence, be fully repaired by
Sublessor within one hundred eighty (180) days after the date of such Casualty,
as determined by Sublessor's Architect as set forth in Section 12.7; or (ii) the
damage or destruction occurs during the last twelve (12) months of the Term and
cannot, with reasonable diligence, be fully repaired by Sublessor within ninety
(90) days after the date of such Casualty, as determined by Sublessor's
Architect as set forth in Section 12.7. Notwithstanding the foregoing, Sublessee
shall not have the right to terminate under this Section 12.3 if an Event of
Default has occurred and is continuing at the time of such Casualty or at the
time of exercising the right to terminate. If Sublessee elects to terminate this
Sublease pursuant to this Section 12.3, Sublessee shall give Sublessor Notice of
its election to terminate within ten (10) days after the later of the date of
such damage or destruction or the date Sublessee receives notice from
Sublessor's Architect as set forth in Section 12.7 that the Premises cannot be
fully repaired within the time periods as set forth above, and this Sublease
shall terminate upon Sublessor's receipt of such Notice (unless the Premises
have become entirely or substantially entirely uninhabitable for the normal
conduct of Sublessee's business therein, in which case this Sublease shall
terminate upon the date of the Casualty.)
12.4 Effect of Termination. If this Sublease is terminated following a
Casualty pursuant to Section 12.2 or Section 12.3, Sublessor shall, subject to
the rights of Lessor or any Mortgagees, be entitled to receive and retain all
the insurance proceeds resulting from or attributable to such Casualty, payable
under policies obtained by Sublessor. If neither party exercises any such right
to terminate this Sublease, this Sublease will continue in full force and
effect, and Sublessor shall, promptly following the tenth (10th) day after the
date of such Casualty and receipt of the amounts set forth in clause (i) of
Section 12.2, commence the process of obtaining necessary permits and approvals
for the repair of the Premises, and shall commence such repair and prosecute the
same diligently to completion as soon thereafter as is practicable. Sublessee
shall fully cooperate with Sublessor in removing Sublessee's Property and any
debris from the Premises to facilitate the making of such repairs.
12.5 Limited Obligation to Repair. Sublessor's obligation, should it elect
to be obligated to repair the Premises and/or the Building following a Casualty,
shall be limited to the Common Area, basic Building core and shell, building
standard HVAC, plumbing, electrical and other Building systems (and any Building
improvements required to have been made by Sublessor after the Commencement Date
under this Sublease or
<PAGE>
by Applicable Laws). If Sublessor repairs the Premises and/or the Building as
provided in this Article XII, Sublessee shall, at its expense, replace or fully
repair all Sublessee Improvements and Alterations existing at the time of such
Casualty that is or at the end of the Term becomes Sublessor's property
hereunder, but as to Sublessee's Property, only to the extent desired by
Sublessee.
12.6 ABATEMENT OF MONTHLY RENT. During any period when Sublessee is
reasonably unable to use the Premises, or any part thereof, for the normal
conduct of its business therein, as determined by Sublessor's Architect pursuant
to Section 12.7 by reason of a Casualty, Monthly Rent shall be temporarily
abated in proportion to the degree of such inability, but only to the extent of
any business interruption or loss of income insurance proceeds received by
Sublessor from Sublessee's insurance described in Section 11.2. Such abatement
shall commence upon the date Sublessee gives Notice to Sublessor of such
Casualty and shall end upon the earlier of 30 days after substantial completion
of the repair of the Premises which Sublessor undertakes or is obligated to
undertake hereunder or the resumption of business by Sublessee in the Premises.
Sublessee shall not be entitled to any compensation or damages from Sublessor
for loss of the use of the Premises, Sublessee's Property or other damage or any
inconvenience occasioned by a Casualty or by the repair or restoration of the
Premises thereafter, including, but not limited to, any consequential damages,
opportunity costs or lost profits incurred or suffered by Sublessee. Sublessee
hereby waives the provisions of Section 1932(2) and Section 1933(4) of the
California Civil Code, and the provisions of any similar successor statutes.
12.7 ARCHITECT'S DETERMINATION. Sublessor's Architect shall make a good
faith estimate, in its professional opinion, relating to RSF the estimated cost
or repair of any damage, replacement costs, the time period required for repair
or the interference with or suitability of the Premises for Sublessee's use or
occupancy and the conduct of its business therein. In the event Sublessee does
not agree with Sublessor's Architect's determination, Sublessee shall hire, at
its expense, its own architect, duly licensed in the State of California, to
provide a second opinion. In the event Sublessee's architect's opinion is
materially the same as Sublessor's architect, the Sublessor's Architect's
opinion shall govern. In the event Sublessee's architect's opinion shall
materially differ from that of the Sublessor's Architect's opinion, then
Sublessee's architect and Sublessor's Architect shall mutually select a neutral
third architect ("Third Architect") and the determination of the Third Architect
shall be binding on both parties. The cost of the Third Architect shall be split
evenly between the Sublessor and Sublessee.
ARTICLE XIII
COMDEMNATION
13.1 TOTAL TAKING TERMINATION. If title to the Premises is taken for any
public or quasi-public use under any statute or by right of eminent domain so
that reconstruction of the Premises will not, as determined by Sublessor's
Architect pursuant to Section 12.7, result in the Premises being suitable for
Sublessee's continued occupancy for the use and purposes permitted by this
Sublease and the normal conduct of Sublessee's business therein, this Sublease
shall terminate as of the date possession of the Premises or part thereof is so
taken.
13.2 PARTIAL TAKING. If any part of the Premises is taken for any public or
quasi-public use under any statute or by right of eminent domain and in
Sublessor's and Sublessee's reasonable opinion, the remaining part is reasonably
suitable for Sublessee's continued occupancy for the uses permitted by this
Sublease and the conduct of its business therein, this Sublease shall, as to the
part so taken, terminate as of the date that possession of such part of the
Premises is taken and the Monthly Rent shall be reduced in the same proportion
that the RSF of the portion of the Premises so taken (less any addition thereto
by reason of any reconstruction) bears to the original Premises Square Footage
(including, without limitation, the Must Take Space, if the same has been added
to the Premises pursuant to Exhibit "M"), as reasonably determined by
Sublessor's Architect pursuant to Section 12.7. Sublessor shall, at its own cost
and expense, make all necessary repairs or Alterations to restore the Premises
so as to make the portion of the Premises not taken a complete architectural
unit. Sublessor shall not be required, however, to exceed the scope of the work
done by Sublessor in originally constructing the Premises to the condition
existing on the Commencement Date (together with any other improvements required
to be made by Sublessor under this Sublease) and to the extent severance damages
from the condemning authority are sufficient therefore, and subject to any
requirements under the Master Lease or of any Mortgagee, to restore Sublessee's
Improvements, Sublessee's Special Systems and any Alterations made by or on
behalf of Sublessee. If severance damages from the condemning authority are not
available to Sublessor in sufficient amounts to permit such restoration,
Sublessee shall have the option to pay the shortfall. whereupon Sublessor shall
complete such restoration; otherwise Sublessor may terminate this Sublease upon
Notice to Sublessee. If Sublessor does not restore Sublessee's Improvements,
Sublessee's Special Systems or such Alterations for any reason, Sublessee shall
have the option to terminate this Sublease upon Notice to Sublessor. Monthly
Rent due and payable hereunder shall be temporarily abated during such
restoration period in proportion to the degree Sublessee is reasonably unable to
use the Premises for the normal conduct of its business therein. as reasonably
determined by Sublessor's Architect pursuant to Section 12.7. Each party hereby
waives the provisions of Section 1265 of the California Code of Civil Procedures
and any present or
<PAGE>
future law allowing either party to petition the Superior Court to terminate
this Sublease in the event of a partial taking of the Building or Premises.
13.3 No Apportionment of Award. No award for any partial or total taking
shall be apportioned, it being agreed and understood that Sublessor shall be
entitled to the entire award for any partial or entire taking; provided,
however, subject to the Master Lease, Sublessor shall pay to Sublessee any
portion of any award made to Sublessor (or to Lessor and that is paid by Lessor
to Sublessor) that is attributable to the taking of any of Sublessee's Property.
Subject to the preceding sentence, Sublessee assigns to Sublessor its interest
in any award which may be made in such taking or condemnation, together with any
and all rights of Sublessee arising in or to the same or any part thereof.
Nothing contained herein shall be deemed to give Sublessor any interest in or
require Sublessee to assign to Sublessor any separate award made to Sublessee
for the taking of Sublessee's Property, for the interruption of Sublessee's
business or its moving costs, or for the loss of its goodwill, or to make any
claim for any of the foregoing.
13.4 Temporary Taking. A temporary taking of the Premises (which for
purposes hereof shall mean a taking of all or any part of the Premises for one
hundred eighty (180) days or less and ninety days or less within the last twelve
(12) months of the Term) shall not terminate this Sublease and will give
Sublessee the right to an abatement for an equitable portion of the Rent. Any
award made to Sublessee by reason of such temporary taking shall belong entirely
to Sublessee and Sublessor shall not be entitled to share therein. Each party
agrees to execute and deliver to the other all reasonable instruments that may
be required to effectuate the provisions of this Section 13.4.
13.5 Sale Under Threat of Condemnation. A sale made in good faith to any
authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed a
taking under the power of eminent domain for all purposes of this Article XIII.
ARTICLE XIV
ASSIGNMENT AND SUBLETTING
14.1 Prohibition. Sublessee shall have the absolute right to assign this
Sublease or sub-sublet all or any part of the Premises to any other entity which
is an affiliate, subsidiary or parent of the Sublessee or to any entity which
merges or consolidates with or acquires substantially all of the assets of the
Sublessee (so long as such entity has a tangible net worth equal to $100,000,000
or more after the merger, consolidation or acquisition) (a "Permitted
Transferee") without the consent, either written or oral, of the Sublessor.
Except for a Permitted Transferee, Sublessee shall not directly or indirectly,
voluntarily or by operation of law, assign (which term shall include any
transfer, assignment, pledge, mortgage or hypothecation) this Sublease, or any
right or interest hereunder, or sub-sublet the Premises or any part thereof, or
allow any other person or entity other than a Collocation Licensee to occupy or
use all or any part of the Premises without first obtaining the written consent
of Sublessor in each instance, which consent shall not be unreasonably withheld
or delayed. No assignment, encumbrance, sub-subletting, or other transfer in
violation of the terms of this Article XIV, whether voluntary or involuntary, by
operation of law, under legal process or proceedings, in bankruptcy, or
otherwise shall be valid or effective and, at the option of Sublessor, shall
constitute an Event of Default under this Sublease. To the extent not prohibited
by provisions of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), Sublessee on behalf of itself, creditors, administrators and
assigns waives the applicability of Section 541c and 365(e) of the Bankruptcy
Code unless the proposed assignee of the trustee for the estate of the bankrupt
meets Sublessor's standards as set forth below. Sublessor has entered into this
Sublease with Sublessee in order to obtain for the benefit of the Building the
unique attraction of Sublessee's name and business; the foregoing prohibition on
assignment or sub-subletting is expressly agreed to by Sublessee in
consideration of such fact. If this Sublease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations payable or otherwise to be delivered in connection with such
assignment shall be paid or delivered to Sublessor, shall be and remain the
exclusive property of Sublessor and shall not constitute property of Sublessee
or the estate of Sublessee within the meaning of the Bankruptcy Code. Any and
all monies or other considerations constituting Sublessor's property under the
preceding sentence not paid or delivered to Sublessor shall be held in trust for
the benefit of Sublessor and be promptly paid or delivered to Sublessor. Any
person or entity to which this Sublease is assigned pursuant to the provisions
of the Bankruptcy Code shall be deemed without further act or deed to have
assumed all of the obligations arising under this Sublease on and after the date
of such assignment. Any such assignee shall upon demand execute and deliver to
Sublessor an instrument confirming such assumption.
14.2 Sublessor's Consent. In the event Sublessor consents to any assignment
or sub-subletting. such consent shall also be deemed a consent of the Lessor and
shall not constitute a waiver of any of the restrictions of this Article XIV and
the same shall apply to each successive assignment or sub-subletting hereunder,
if any. In no event shall Sublessor's consent to an assignment or sub-subletting
affect the continuing primary liability of Sublessee (which, following
assignment, shall be joint and several with the assignee), or relieve Sublessee
of
<PAGE>
any of its obligations hereunder without an express written release being given
by Sublessor. In the event that Sublessor shall consent to an assignment under
this Article XIV, such assignment shall not be effective until the assignee
shall assume all of the obligations of this Sublease on the part of Sublessee to
be performed or observed and whereby the assignee shall agree that the
provisions contained in this Sublease shall, notwithstanding such assignment,
continue to be binding upon it with respect to all future assignments and any
sub-subletting. In the event that Sublessor shall consent to a sub-subletting
under this Article XIV, such sub-subletting shall not be effective until the
sub-sublessee shall confirm in writing for the benefit of Sublessor, that its
sub-sublease is subject to all of the terms and conditions of this Sublease
(except with respect to the payment of Rent and any terms and conditions of this
Sublease that are not applicable to the portion of the Premises being
sub-subleased) and that upon the occurrence of an Event of Default and the
giving of Notice to Sublessee and written notice to the sub-sublessee, the
sub-sublessee shall pay rent due under the sub-sublease directly to Sublessor on
account of, and to be credited against, Rent due under this Sublease, and upon
the termination of this Sublease, if requested in writing to the sub-sublessee
by Sublessor prior to such termination, the sub-sublease shall become a sublease
directly with Sublessor, provided, however, in such event, Sublessor shall not
be liable to the sub-sublessee for any obligations of Sublessee to the
sub-sublessee that are not obligations of the Sublessor under this Sublease nor
for any claims against, or defaults of, Sublessee under the sub-sublease that
are not defaults of the Sublessor hereunder. Such assignment or sub-sublease
agreement shall be duly executed and a fully executed copy thereof shall be
delivered to Sublessor, and Sublessor may collect Monthly Rent and Additional
Rent due hereunder directly from the assignee or, to the extent provided in the
preceding sentence, any sub-sublessee. Collection of Monthly Rent and Additional
Rent directly from an assignee or sub-sublessee shall not constitute a consent
to such assignment or sub-subletting, nor shall such collection constitute a
recognition of such assignee or sub-sublessee as the Sublessee hereunder or a
release of Sublessee from the performance of all of its obligations hereunder.
14.3 Information. Regardless of whether Sublessor's consent is required
under this Article XIV, Sublessee shall give Notice to Sublessor of Sublessee's
intent to assign this Sublease or any right or interest hereunder, or to
sub-sublease the Premises or any part thereof, and of the name of the proposed
assignee or sub-sublesse, the nature of the proposed assignee's or
sub-sublessee's business to be conducted on the Premises, the terms and
provisions of the proposed assignment or sub-sublease, a copy of the proposed
assignment or sub-sublease form, and such other information as Sublessor may
reasonably request concerning the proposed assignee or sub-sublessee, including,
but not limited to, net worth, income statements and other financial statements
for a two year period preceding Sublessee's request for consent, evidence of
insurance complying with the requirements of Article XI, and the fee described
in Section 14.7.
14.4 Standard for Consent. In the event of an assignment requiring
Sublessor's approval, Sublessor shall, within five (5) business days after
receipt of such Notice from Sublessee and all information requested by Sublessor
concerning the proposed assignee or sub-sublessee, elect to take one of the
following actions by giving Notice to Sublessee:
(a) Consent to such proposed assignment or sub-sublease;
(b) Refuse to consent to such proposed assignment or sub-sublease; or
(c) If Sublessee proposes to sub-sublease all of the Premises for the
entire remaining Term. Sublessor may, at its option exercised by five (5)
business days written Notice to Sublessee, elect to recapture the Premises and,
unless prior to such date Sublessee withdraws its request by Notice to
Sublessor, as of the thirteenth (13th) day after Sublessor gives Notice to
Sublessee of its election to recapture, this Sublease shall terminate.
Sublessor's consent shall not be unreasonably withheld or delayed.
Sublessee agrees, by way of example and without limitation, that it shall
not be unreasonable for Sublessor to withhold its consent to a proposed
assignment or sub-subletting requiring Sublessor's approval if any of the
following situations exist or may exist:
(i) Sublessor reasonably determines that the proposed assignee's or
sub-sublessee's use of the Premises conflicts with Article V or Article VI,
presents an unacceptable risk, as reasonably determined by Sublessor, under
Article VI, or conflicts with any other provision under this Sublease;
(ii) Sublessor reasonably determines that the proposed assignee or
sub-sublessee is not as financially responsible as Sublessee as of the date of
Sublessee's request for consent or as of the effective date of such assignment
or sub-subletting;
<PAGE>
(iii) Sublessor reasonably determines that the proposed assignment or
sub-subletting would breach a covenant, condition or restriction in some other
sublease, financing agreement or other agreement relating to the Building, the
Premises or this Sublease; or
(iv) Subject to Section 15.3(b), an Event of Default has occurred and is
continuing at the time of Sublessee's request for Sublessor's consent, or as of
the effective date of such assignment or sub-subletting.
Sublessee acknowledges that if Sublessee has any exterior sign rights under
this Sublease, such rights are personal to Sublessee and may not be assigned or
transferred to any assignee of this Sublease or sub-sublesse of the Premises
without Sublessor's prior written consent, which consent may be withheld in
Sublessor's sole and absolute discretion.
14.5 Bonus Value. Sublessee agrees that fifty percent (50%) of any amounts
paid by the assignee or sub-sublessee, however described, in excess of (i) the
Monthly Rent payable by Sublessee hereunder (or, in the case of a sub-sublease
of a portion of the Premises, in excess of the Monthly Rent reasonably allocable
to such portion), plus (ii) Sublessee's direct out-of-pocket costs which
Sublessee certifies to Sublessor have been paid or are to be paid to provide
occupancy related services to such assignee or sub-sublessee of a nature
commonly provided by Sublessor of similar space, plus (iii) all costs Sublessee
incurred in reletting the Premises, including, but not limited to, broker's
commissions, expenses of cleaning and remodeling the Premises, attorneys' fees
and like costs, shall be property of Sublessor and such amounts shall be payable
directly to Sublessor by the assignee or sub-sublessee. At Sublessor's request,
a written agreement shall be entered into by and among Sublessee, Sublessor and
the proposed assignee or sub-sublessee confirming the requirements of this
Section 14.5. Sublessor's share of the excess Monthly Rent shall not exceed
fifty percent (50%) of the difference between the Monthly Rent payable by
Sublessee hereunder and the Market Rate (as herein defined) for such portion of
the Premises subject to such assignment or sub-sublease. Excess Monthly Rent
shall not include rent from the sub-sublessee attributable to any of Sublessee's
reasonable costs of assignment or sub-subleasing or any consideration received
on account of or attributable to Sublessee's improvements or Sublessee's
Property, including, but not limited to Sublessee's Special Systems. "Market
Rate" shall mean the rent assessed at similar buildings in the Irvine Spectrum
area at such time, comparable in size, location and quality to the Premises.
14.6 Certain Transfers. Except where Sublessee or the resulting or
controlling entity has a tangible net worth of $100,000,000 or more, the sale of
all or substantially all of Sublessee's assets (other than sales in the ordinary
course of business) or, if Sublessee is a corporation, an unincorporated
association, or a partnership, the transfer, assignment or hypothecation of any
stock or equity interest in such corporation, association or partnership in the
aggregate in excess of fifty percent (50%) thereof (except for publicly traded
shares of stock or venture capital or similar institutional investor financings
constituting a transfer of fifty percent (50%) or more in the aggregate, so long
as there is either no change in control of Sublessee as a result thereof or
control of Sublessee either remains with senior management of Sublessee or moves
to an institutional investor but not to a telecom or other operating company)
shall be deemed an assignment within the provisions of this Article XIV.
14.7 Sublessor's Fee and Expenses. If Sublessee requests Sublessor's
consent to an assignment or sub-subletting by Sublessee under this Sublease,
Sublessee shall pay to Sublessor all of Sublessor's reasonable out-of-pocket
expenses, including, but not limited to, attorneys fees reasonably incurred
related to such assignment or sub-subletting by Sublessee, whether or not the
assignment or sub-subletting is approved.
14.8 Transfer of the Premises by Sublessor. Upon any conveyance of the
Premises and assignment by Sublessor of this Sublease, Sublessor shall and is
hereby entirely released from all liability under any and all of its covenants
and obligations contained in or derived from this Sublease occurring after the
date of such conveyance and assignment, and Sublessee agrees to attorn to any
entity purchasing or otherwise acquiring the Premises, so long as such entity
assumes all of the obligations of Sublessor under this Sublease and expressly
acknowledges in writing to Sublessee the receipt of the Security Deposit (and
the amount thereof) and agrees to hold, apply and, if required, to repay all
such sums in accordance with this Sublease.
14.9 Collocation Licenses. Notwithstanding anything contained in this
Article XIV or elsewhere in this Sublease, Sublessee may, at any time and from
time to time throughout the Term, grant to any persons or entities (a
"Collocation Licensee") the right to use a portion of the Premises for location
of its telecommunications equipment and the conduct of telecommunications and/or
internet business activities (each a "Collocation License") without obtaining
the prior written or oral consent of Sublessor, provided that any such
Collocation License shall (a) be subject to all of the terms and conditions of
this Sublease; (b) be deemed a license only and, shall not under any
circumstances convey to any Collocation Licensee a leasehold or other real
property interest in or to the Premises or the Building or any portion thereof
and (c) terminate upon the expiration or termination of this Sublease. Sublessee
shall indemnify, hold harmless, protect and defend Sublessor from and against
any and all damage, loss, claim, liability and expense, including, but not
limited to,
<PAGE>
attorney's fees and legal costs, incurred directly or indirectly by reason of
any claim, suit or judgment, to the extent arising out of any Collocation
Licensee's use or occupancy of the Premises pursuant to a Collocation License.
Sublessee shall require any and all Collocation Licensees to abide by current
Building Rules and Regulations to the extent applicable. Any Alterations to the
Premises required or requested by any Collocation Licensee shall be completed in
accordance with Article VIII. All information provided by Sublessee to Sublessor
regarding Collocation Licensees shall be considered confidential by Sublessor
and shall be used solely for proper purposes in the management of the Building.
Sublessor agrees to safeguard such information with the same degree of care that
it exercises with respect to its own proprietary and confidential information.
Sublessor agrees that no such information will be disclosed or made available to
any third party except for employees of Sublessor, for auditing purposes by
independent certified accountants and for complying with applicable law,
including regulations or court orders; provided, however, Sublessor shall give
Sublessee prompt Notice of any requested disclosure and, so long as no violation
of any court order or law or other liability to Sublessor arises therefrom, a
reasonable opportunity to prevent such disclosure. Notwithstanding anything set
forth in this Sublease to the contrary, Sublessor shall have no right to receive
or share in any consideration received by Sublessee pursuant to any Collocation
License or otherwise arising out of Sublessee's business relationship with any
Collocation Licensee.
ARTICLE XV
DEFAULTS AND REMEDIES
15.1 Sublessee's Default. At the option of Sublessor, a default under this
Sublease by Sublessee shall exist if any of the following events shall occur
(each is called an "Event of Default"):
(a) Sublessee fails to pay any Rent payable hereunder, as and when
due, for a period of ten (10) days after receipt of Notice by Sublessor;
provided, however, the Notice given hereunder shall be in lieu of, and not in
addition to, any notice required under Section 1161, et seq., of the California
Code of Civil Procedure;
(b) Sublessee attempts to make or suffers to be made any transfer,
assignment or sub-subletting except as provided in Article XIV hereof:
(c) Any of Sublessee's rights under this Sublease are sold or
otherwise transferred by or under court order or legal process or otherwise or
if any of the events described in Section 15.2 occur;
(d) Sublessee abandons the Premises without paying rent or fails to
continuously comply with all other obligations hereunder;
(e) Any representation or warranty given by Sublessee under or in
connection with this Sublease proves to be materially false or misleading;
(f) Sublessee fails to comply with the provisions of Article VI
("Hazardous Materials"), Article XIV ("Assignment and Subletting"), Atticle XVI
("Subordination; Estoppel Certificate; Financials"), Section 21.5
("Modifications for Mortgagees") or Section 21.19 ("Authority") within two (2)
business days after Notice from Sublessor, provided, however, the Notice
required by this Section 15.1(f) shall be in lieu of, and not in addition to,
any notice required under Section 1161, et seq., of the California Code of Civil
Procedure; or
(g) Sublessee fails to observe, keep, perform or cure within thirty
(30) days after receipt of Notice by Sublessor any of the other terms,
covenants, agreements or conditions contained in this Sublease or those set
forth in any other agreements or Rules or Regulations which Sublessee is
obligated to observe or perform pursuant to this Sublease. In the event such
default reasonably could not be cured or corrected within such thirty (30) day
period, but is reasonably susceptible to cure or correction, then Sublessee
shall not be in default hereunder if Sublessee commences the cure or correction
of such default within such thirty (30) day period and diligently prosecutes the
same to completion after commencing such cure or correction. The Notice required
by this Section 15.1(g) shall be in lieu of, and not in addition to, any notice
required under Section 1161, et seq., of the California Code of Civil
Procedure.
Notices given under this Section 15.1 shall specify the alleged default and
shall demand that Sublessee perform the provisions of this Sublease or pay the
Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Premises. No such Notice shall be deemed a forfeiture or a
termination of this Sublease unless Sublessor so elects in the Notice.
15.2 Bankruptcy or Insolvency. In no event shall this Sublease be assigned
or assignable by operation of law and in no event shall this Sublease be an
asset of Sublessee in any receivership, bankruptcy, insolvency or
reorganization proceeding. In the event:
<PAGE>
(a) A court makes or enters any decree or order adjudging Sublessee to
be insolvent, or approving as properly filed by or against Sublessee a petition
seeking reorganization or other arrangement of Sublessee under any provisions of
the Bankruptcy Code or any applicable state law, or directing the winding up or
liquidation of Sublessee and such decree or order shall have continued for a
period of ninety (90);
(b) Sublessee makes or suffers any transfer which constitutes a
fraudulent or otherwise avoidable transfer under any provisions of the
Bankruptcy Code or any applicable state law;
(c) Sublessee assigns its assets for the benefit of its creditors; or
(d) The material part of the property of Sublessee or any property
essential to the continuing conduct of Sublessee's business or of Sublessee's
interest in this Sublease is sequestered, attached or executed upon, and
Sublessee fails to secure a return or release of such property within ninety
(90) days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; then, this Sublease shall, at
Sublessor's election, immediately terminate and be of no further force or effect
whatsoever, without the necessity for any further action by Sublessor, except
that Sublessee shall not be relieved of obligations which have accrued prior to
the date of such termination. Upon such termination, the provisions herein
relating to the expiration or earlier termination of this Sublease shall
control, and Sublessee shall immediately surrender the Premises in the condition
required by the provisions of this Sublease. Additionally, Sublessor shall be
entitled to all relief, including recovery of damages from Sublessee, which may
from time to time be permitted, or recoverable, under the Bankruptcy Code or any
other applicable state laws.
15.3 Sublessor's Remedies. Upon the occurrence of an Event of Default,
then, in addition to and without waiving any other rights and remedies available
to Sublessor at law or in equity or otherwise provided in this Sublease,
Sublessor may, at its option, cumulatively or in the alternative, to the extent
not inconsistent or duplicative, exercise the following remedies:
(a) Sublessor may terminate Sublessee's right to possession of the
Premises, in which case this Sublease shall terminate and Sublessee shall
immediately surrender possession of the Premises to Sublessor. No act by
Sublessor other than giving Notice to Sublessee of Sublessor's election to
terminate Sublessee's right to possession shall terminate this Sublease. Acts of
maintenance, efforts to relet the Premises, or the appointment of a receiver on
Sublessor's initiative to protect Sublessor's interest under this Sublease shall
not constitute a termination of Sublessee's right to possession. Termination
shall terminate Sublessee's right to possession of the Premises but shall not
relieve Sublessee of any obligation under this Sublease which has accrued prior
to the date of such termination. Upon such termination, Sublessor shall have the
right to re-enter the Premises, and remove all persons and subject to Section
15.3(c), property, and Sublessor shall also be entitled to recover from
Sublessee:
(i) The worth at the time of award of the unpaid Monthly Rent
and Additional Rent which had been earned at the time of termination;
(ii) The worth at the time of award of the amount by which the
unpaid Monthly Rent and Additional Rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Sublessor could have reasonably avoided;
(iii) The worth at the time of award of the amount by which the
unpaid Monthly Rent and Additional Rent for the balance of the Term after the
time of award exceeds the amount of such rental loss that Sublessee proves could
be reasonably avoided;
(iv) Any other amount necessary to compensate Sublessor for all
the detriment proximately caused by Sublessee's failure to perform its
obligations under this Sublease or which in the ordinary course of things would
be likely to result from Sublessee's default, including but not limited to, the
cost of recovering possession of the Premises, commissions and other expenses of
reletting, including necessary repair, demolition and renovation of the Premises
to the condition existing immediately prior to Sublesse's occupancy, the
unamortized portion of any Sublessee improvements and brokerage commissions
funded by Sublessor in connection with this Sublease, the cost of rectifying any
damage to the Premises occasioned by the act or omission of Sublessee,
reasonable attorneys' fees, and any other reasonable costs; and
(v) At Sublessor's election, all other amounts in addition to or
in lieu of the foregoing as may be permitted by law.
As used in subsections (i) and (ii) above, the "worth at the time of
award" shall be computed by allowing interest at the maximum legal rate
permitted by law. As used in subsection (iii) above
<PAGE>
the "worth at the time of award" shall be computed by discounting the amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(b) Sublessor may elect not to terminate Sublessee's right to
possession of the Premises, in which event this Sublease will continue in full
force and effect as long as Sublessor does not terminate Sublessee's right to
possession, and Sublessor may continue to enforce all of its rights and remedies
under this Sublease, including the right to collect all Rent as it becomes due.
In the event that Sublessor elects to avail itself of the remedy provided by
this Section 15.3(b), Sublessor shall not unreasonably withhold its consent to
an assignment or sub-subletting of the Premises subject to the reasonable
standards for Sublessor's consent as are contained in this Sublease. In
addition, in the event Sublessee has entered into a sub-sublease which is valid
under the terms of this Sublease, Sublessor may also, at its option, cause
Sublessee to assign to Sublessor the interest of Sublessee under said sub-
sublease, including, but not limited to, Sublessee's right to payment of Rent as
it becomes due. Sublessor may elect to enter the Premises and relet them, or any
part of them, to third parties for Sublessee's account. Sublessee shall be
liable immediately to Sublessor for all reasonable costs Sublessor incurs in
reletting the Premises, including, but not limited to, broker's commissions,
expenses of cleaning and remodeling the Premises required by the reletting,
attorneys' fees and like costs. Reletting can be for a period shorter or longer
than the remaining Term and for the entire Premises or any portion thereof.
Sublessee shall pay to Sublessor the Monthly Rent and Additional Rent due under
this Sublease on the dates the Monthly Rent and such Additional Rent are due,
less the Rent Sublessor actually collects from any reletting. Except as provided
in the preceding sentence, if Sublessor relets the Premises or any portion
thereof, such reletting shall not relieve Sublessee of any obligation hereunder.
Notwithstanding the above, no act by Sublessor allowed by this Section 15.3(b)
shall terminate this Sublease unless Sublessor gives Notice to Sublessee that
Sublessor elects to terminate this Sublease.
(c) Notwithstanding anything to the contrary in this Sublease, (i) in
no event shall Sublessor have a lien on any of Sublessee's Property , including,
without limitation, the property of any Collocation Licensee; (ii) in no event
shall Sublessor be entitled to withhold services under this Sublease as a remedy
for Sublessee's default; and (iii) in no event shall Sublessor be entitled to
enter the Premises and remove or interfere with Sublessee's Property, including,
without limitation, the property of any Collocation Licensee, without judicial
process; and (iv) upon any termination of this Sublease or the right to
possession, Sublessee and Sublessee's Agents shall have a reasonable period of
time, not exceed thirty (30) days, to remove Sublessee's Property from the
Premises, the Building and the Common Area.
15.4 No Surrender. Sublessee waives any right of redemption or relief from
forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or
under any other present or future law in the event Sublessee is evicted or
Sublessor takes possession of the Premises by reason of an Event of Default. No
act or thing done by Sublessor or Sublessor's Agents during the Term shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
a surrender shall be valid unless in writing and signed by Sublessor. No
employee of Sublessor or of Sublessor's Agents shall have any power to accept
the keys to the Premises prior to the termination of this Sublease, and the
delivery of the keys to any employee shall not operate as a termination of this
Sublease or a surrender of the Premises.
15.5 Interest on Late Payments. Any Rent due under this Sublease that is
not paid to Sublessor within five (5) days of the date when due shall commence
to bear interest at the Applicable Rate until fully paid, and neither the
accrual nor the payment of such interest shall cure any Event of Default under
this Sublease.
15.6 Attorneys' and Other Fees. All sums reasonably incurred by Sublessor
in connection with an Event of Default or holding over of possession by
Sublessee after the expiration or termination of this Sublease without
Sublessor's consent, including, but not limited to, all costs, expenses and
actual accountants, appraisers', attorneys' and other professional fees, and any
collection agency or other collection charges, shall be due and payable by
Sublessee to Sublessor on demand, and shall bear interest at the Applicable Rate
from the date incurred until paid by Sublessee. In addition, in the event that
any action shall be instituted by either of the parties hereto for the
enforcement of any of its rights in and under this Sublease, the party in whose
favor judgement shall be rendered shall be entitled to recover from the other
party all expenses reasonably incurred by the prevailing party in such action,
including actual costs and reasonable attorneys' fees.
15.7 Sublessor's Default Under This Sublease. Sublessor shall not be deemed
to be in default in the performance of any obligation required to be performed
by it hereunder unless and until it has failed to perform such obligation within
thirty (30) days after receipt of Notice by Sublessee to Sublessor (and the
Mortgagees who have provided Sublessee with Notice) specifying the nature of
such default; provided, however, that if the nature of Sublessor's obligation is
such that more than thirty (30) days are required for its performance, then
Sublessor shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter diligently
prosecutes the same to completion. Notwithstanding the immediately preceding
sentence, if at any time Sublessor's failure to perform any of its obligations
under this Lease materially, substantially and adversely interferes with
Sublessee's ability to conduct its business upon the
<PAGE>
Premises, and if Sublessor does not, within a commercially reasonable time
(including immediately in case of an emergency) following Notice (which in the
case of an emergency may be given telephonically to the Building manager),
repair and maintain the Building or the Common Area or otherwise perform its
obligations as required hereunder, Sublessor may make such repairs, perform such
maintenance or take such other commercially reasonable actions as may be
necessary to cure such interference. All sums reasonably disbursed, deposited or
incurred by Sublessor in connection with such repairs, maintenance or other
actions, shall be due and payable by Sublessor to Sublessee, on demand by
Sublessee, together with interest at the Applicable Rate on such aggregate
amount from the date of such demand until paid by Sublessor.
15.8 Limitation of Sublessor's and Sublessee's Liability. The obligations
of Sublessor and Sublessee do not constitute the personal obligations of the
individual partners, trustees, directors, officers or shareholders of Sublessee,
of Sublessor or its constituent partners or of Lessor. If Sublessor or Sublessee
shall fail to perform any covenant, term, or condition of this Sublease,
Sublessor or Sublessee shall be required to deliver to the non-performing party
Notice of the same. If, as a consequence of such default, Sublessee shall
recover a money judgement against Sublessor, such judgement shall be satisfied
only out of rent or other income from such property receivable by Sublessor or
out of consideration received by Sublessor from the disposition of all or any
part of Sublessor's right, or interest in the Building, and no action for any
deficiency may be sought or obtained by Sublessee.
15.9 Mortgagee and Lessor Protection. Upon any default on the part of
Sublessor, Sublessee will give Notice by registered or certified mail to Lessor
and any Mortgagee who has provided Sublessee with Notice of its interest
together with an address for receiving notice, and shall offer Lessor and such
Mortgagee reasonable opportunity to cure the default (which in no extent shall
be less than thirty (30) days), including time to obtain possession of the
Premises by power of sale or a judicial foreclosure, if such should prove
necessary, to effect a cure. Sublessee agrees that each of the Mortgagees to
whom this Sublease has been assigned by Sublessor is an express third party
beneficiary hereof. Sublessee shall not make any prepayment of Monthly Rent more
than one (1) month in advance without the prior written consent of such
Mortgagee. Sublessee waives any right under California Civil Code Section 1950.5
or any other present or future law to the collection of any deposit from such
Mortgagee or any purchaser at a foreclosure sale of such Mortgagee's interest
unless such Mortgagee or such purchaser shall have actually received and not
refunded the deposit. Sublessee agrees to make all payments under this Sublease
to the Mortgagee with the most senior encumbrance upon receiving beyond the
applicable cure period a direction, in writing, to pay said amounts to such
Mortgagee.
15.10 Sublessor's Right to Perform. If Sublessee shall at any time fail to
make any payment or perform any other act on its part to be made or performed
under this Sublease beyond any cure period set forth herein, Sublessor may (but
shall not be obligated to), at Sublessee's expense, and without waiving or
releasing Sublessee from any obligation of Sublessee under this Sublease, make
such payment or perform such other act to the extent commercially reasonable,
and in connection therewith, pay expenses and employ counsel. All sums paid by
Sublessor and all penalties, interest and costs, including, but not limited to,
collection and attorneys' fees reasonably incurred in connection therewith,
shall be due and payable by Sublessee to Sublessor, as an item of Additional
Rent, on demand by Sublessor, together with interest thereon at the Applicable
Rate from the date of such demand until paid by Sublessee.
15.11 Waiver of Jury Trial. To the full extent permitted by law,
Sublessor and Sublessee each hereby waives the right to trial by jury in any
action, proceeding or counterclaim brought by either party on any matter
whatsoever arising out of or in any way connected with this Sublease, the
relationship of Sublessor and Sublessee, Sublessee's use or occupancy of the
Premises and/or any claim of injury or damage in connection therewith.
ARTICLE XVI
SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
16.1 Subordination, Attornment and Non-disturbance. Without the necessity
of any additional document being executed by Sublessee for the purpose of
effecting a subordination, and at the election of Sublessor or any Mortgagee or
any ground lessor with respect to the land of which the Premises are a part,
this Sublease shall be subject and subordinate at all times to (i) all ground
leases or underlying leases except the Master Lease which may now exist or
hereafter be executed affecting the Building, and (ii) the lien of any Mortgagee
which may now exist or hereafter be executed in any amount for which the
Building, ground leases or underlying leases, or Sublessor's or Lessee's
interest or estate in any of said items is specified as security. Sublessor,
Lessor or any such Mortgagee or ground lessor shall have the right, at its
election, to subordinate or cause to be subordinated any such ground leases or
underlying leases or any such liens to this Sublease. No subordination shall
permit material interference with Sublessee's rights hereunder, and any ground
lessor, the Lessor, or Mortgagee shall recognize Sublessee and its permitted
successors and assigns as the Sublessee of the
31
<PAGE>
Premises and shall not disturb Sublessee's right to quiet possession of the
Premises during the Term so long as no Event of Default has occurred and is
continuing under this Sublease. If Sublessor's interest in the Premises is
acquired by any ground lessor, the Lessor or any Mortgagee, or in the event
proceedings are brought for the foreclosure of, or in the event of exercise of
the power of sale under, any Mortgage made by Sublessor covering the Premises or
any part thereof, or in the event a conveyance in lieu of foreclosure is made
for any reason, Sublessee shall, notwithstanding any subordination and upon the
request of such successor in interest to Sublessor, attorn to and become the
Sublessee of the successor in interest to Sublessor and recognize such successor
in interest as the Sublessor under this Sublease. Although this Section 16.1 is
self-executing, Sublessee covenants and agrees to execute and deliver within ten
(10) business days after receipt of written notice by Sublessor and in such form
as may be reasonably requested by Sublessor, or any Mortgagee or ground lessor,
any additional documents evidencing the priority or subordination of this
Sublease with respect to any such ground leases or underlying leases or the
lien of any such Mortgage, or evidencing the attornment of Sublessee to any
successor in interest to Sublessor as herein provided, so long as such documents
expressly acknowledge the Sublessee's right of non-disturbance hereunder.
Sublessee's failure to timely execute and deliver such additional documents
shall, at Sublessor's option, constitute an Event of Default hereunder.
16.2 Estoppel Certificate. Sublessee shall within ten (10) business days
following receipt of written request by Sublessor, execute and deliver to
Sublessor any documents, including estoppel certificates, in a form reasonably
required by Sublessor, (i) certifying whether this Sublease is unmodified and in
full force and effect or, if modified, will attach a copy of such modification
and Sublessee shall certify that this Sublease, as so modified, is in full force
and effect and the date to which the Rent and other charges are paid in advance,
if any, (ii) acknowledging that there are not, to Sublessee's knowledge, any
uncured defaults on the part of the Sublessor or stating the nature of any
uncured defaults, (iii) evidencing the status of this Sublease as may be
reasonably required by a Mortgagee or a purchaser of the Premises, (iv)
certifying the current Monthly Rent amount and the amount and form of Security
Deposit on deposit with Sublessor, and (v) certifying to such other information
as Sublessor, Sublessor's Agents, Mortgagees and prospective purchasers may
reasonably request, including, but not limited to, any requested information
regarding Hazardous Materials. Estoppel certificates will be considered true and
correct if not returned within ten (10) business days after receipt by
Sublessee.
ARTICLE XVII
SIGNS AND GRAPHICS
Sublessor shall provide at Sublessor's expense, Sublessee identification in the
building directory and at the main entry to the Premises. Sublessee shall be
permitted the following additional signs:
a) Sublessee shall be entitled to maintain signs, subject only to applicable
laws, in any location on or about the Premises that are not visible from
the exterior of the Premises.
b) Sublessee shall be entitled to maintain identification signs in the
Premises in a primary visitor entry/reception area that are visible from
the exterior of the Premises, subject only to applicable laws and
Sublessor's approval which shall not be unreasonably withheld.
c) Sublessee shall be entitled to;
(i.) install identification to the existing shared monument sign subject
only to applicable laws and Sublessor's approval which shall not be
unreasonably withheld, or
(ii.) install one (1) new exterior monument sign in reasonable proximity
to the Premises for Sublessee's dedicated use subject only to
applicable laws and Sublessor's approval which shall not be
unreasonably withheld, or
(iii.) install one (1) exterior sign on the exterior of the low-rise
portion of the Building subject only to applicable laws and
Sublessor's approval which shall not be unreasonably withheld.
In reviewing proposed signage as described in subparagraph c.) above, it shall
not be unreasonable for Sublessor to deny approval if the installation of such
proposed signage requires the destruction of trees or restricts the visibility
of existing signs or restricts the view from the building of other tenants
within the Building, nor shall it be unreasonable for the Sublessor to require
screening behind proposed signage or other protection for the roof or Building
exterior. Except as permitted above, Sublessee shall have no right to maintain
other identification signs in any location on or about the Premises that are
visible from the exterior of the Premises and shall not display or erect any
other signs, displays or other advertising materials that are visible from the
exterior of the Building. Except for signs set forth above, the size, design,
color and other physical aspects of other permitted signs shall be subject to
Sublessor's written approval prior to installation, which approval may be
withheld in Sublessor's discretion, any Restrictions and any applicable
municipal or other governmental permits and approvals. All such signs (other
than the signs set forth above) and graphics shall conform to the Sign Criteria
set forth in Exhibit "G" or as may be amended by Sublessor from time to time by
Notice to Sublessee; provided, however, no such modification shall be applicable
to any sign installed by Sublessee prior to such modification or shall
unreasonably restrict signage within the Building or the Premises. Except as
noted above, the cost of all signs and graphics, including the installation,
maintenance and removal thereof, shall be at Sublessee's sole cost and expense.
If Sublessee fails to maintain its signs, or if Sublessee
<PAGE>
fails to remove same upon termination of this Sublease and repair any damage
caused by such removal (including, but not limited to, repainting the affected
area, if required by Sublessor), Sublessor may, within ten (10) days after
Notice from Sublessor of such failure, do so at Sublessee's expense. All sums
reasonably disbursed, deposited or incurred by Sublessor in connection with such
removal, including, but not limited to, all costs, expenses and actual
attorneys' fees, shall be due and payable by Sublessee to Sublessor on demand by
Sublessor, together with interest thereon at the Applicable Rate from the date
of such demand until paid by Sublessee.
ARTICLE XVIII
QUIET ENJOYMENT
Sublessor covenants that Sublessee, upon performing the terms, conditions
and covenants of this Sublease, shall have quiet and peaceful possession of the
Premises as against any person or entity claiming the same by, through or under
Sublessor or Lessor.
ARTICLE XIX
SURRENDER; HOLDING OVER
19.1 Surrender of the Premises. Upon the expiration or earlier termination
of this Sublease, Sublessee shall surrender the Premises to the Sublessor in its
condition existing as of the Commencement Date, normal wear and tear and acts of
God excepted, with all interior walls in good repair, all carpets shampooed and
cleaned, the HVAC equipment, plumbing, electrical and other mechanical
installations in good operating order and all floors cleaned and waxed, all to
the reasonable satisfaction of Sublessor. Sublessee shall remove from the
Premises all of Sublessee's Alterations which Sublessor requires Sublessee to
remove pursuant to Section 8.1 and all of Sublessee's Property (except such of
Sublessee's Property as Sublessee is permitted to leave in the Building pursuant
to Exhibits "C-l" and "C-2" at the expiration or earlier termination of this
Sublease) and shall repair any damage and perform any restoration work caused by
such removal. If Sublessee fails to remove such Alterations and Sublessee's
Property which Sublessee is authorized and obligated to remove pursuant to the
above, and such failure continues after the termination of this Sublease,
Sublessor may, subject to Section 15.3(c), retain such property and all rights
of Sublessee with respect to it shall cease, or Sublessor may place all or any
portion of such property in public storage for Sublessee's account. Sublessee
shall pay to Sublessor, upon demand, the costs of removal of any such
Alterations and Sublessee's Property and storage and transportation costs of
same, and the cost of repairing and restoring the Premises, together with
attorneys' fees and interest on said amounts at the Applicable Rate from the
date of expenditure by Sublessor. If the Premises are not so surrendered at the
termination of this Sublease, Sublessee hereby agrees to indemnify Sublessor and
Sublessor's Agents against all loss or liability resulting from any delay by
Sublessee in so surrendering the Premises, including, but not limited to, any
claims made by any succeeding tenant, losses to Sublessor due to lost
opportunities to sublease to succeeding tenants, and actual attorneys' fees and
costs.
19.2 Holding Over. If Sublessee remains in possession of all or any part of
the Premises after the expiration of the Term with the prior written consent of
Sublessor, such possession shall constitute a month-to-month tenancy only and
shall not constitute a renewal or extension for any further term. If Sublessee
remains in possession of all or any part of the Premises after the expiration of
the Term without the prior written consent of Sublessor, such possession shall
constitute a tenancy at sufferance, Monthly Rent shall be increased to an amount
equal to one hundred twenty-five percent (125%) of the Monthly Rent payable
during the last month of the Term, and any other sums due hereunder shall be
payable in the amounts and at the times specified in this Sublease. Any such
tenancy shall be subject to every other term, condition, and covenant contained
in this Sublease. Sublessee shall indemnify Sublessor and Lessor from and
against any and all claims, losses, expenses and liabilities for damages
resulting from Sublessee's failure to surrender possession, including, without
limitation, any claims made by any succeeding tenant.
ARTICLE XX
CONSTRUCTION OF SUBLESSEE IMPROVEMENTS
The Premises shall be delivered in the following condition: (a) the
Premises shall be delivered broom-clean, in their present condition; (b) the
roof of the Building will be in good condition; (c) the Common Area shall be in
compliance with all Applicable Laws, including, without limitation, the
Americans with Disabilities Act (ADA) following the completion of construction
which Sublessor has undertaken and shall complete with reasonable diligence; (d)
Sublessor shall provide Sublessee with any existing CAD drawings of the
Building; (e) Sublessor shall provide Sublessee with available one-line drawings
of the Building's mechanical and electrical systems; (f) Sublessor shall provide
available documentation regarding Building systems, including without
limitation, mechanical systems, electrical systems and HVAC, as reasonably
requested by Sublessee; and (g) all Building documentation required under this
Article shall be provided in electronic format if available.
<PAGE>
ARTICLE XXI
NOT USED
ARTICLE XXII
RENEWAL OPTION
22.1 Option Right. Sublessor hereby grants Sublessee and any Permitted
Transferee or assignee [or sub-subtenant] to whom this Sublease has been
assigned with the consent of Sublessor (collectively, the "Sublessee" for
purposes of this Article XXII), two (2) options to extend the Term for a period
of five (5) years each (each, an "Option Term"), which options shall be
exercisable only by Notice given by Sublessee as set forth below. Upon the
exercise of each such option to extend, the Term, as it applies to the Premises,
shall be extended for a period of five (5) years.
22.2 Option Rent. The Rent payable by Sublessee during the applicable
Option Term (the "Option Rent") shall be the Fair Rental Value for the Premises
as of the commencement of the applicable Option Term. The "Fair Rental Value"
shall mean the rent assessed at similar buildings in the Irvine Spectrum area
for the lease, as of the applicable Option Term, of premises comparable in
size, location and quality to the Premises (but not taking into account any of
Sublessee's Property or any Alterations made by or on behalf of Sublessee) for a
term of five (5) years.
22.3 Exercise of Option. The applicable option contained in this Section
22.3 shall be exercised by Sublessee, if at all, and only in the following
manner: (i) Sublessee shall deliver Notice to Sublessor not more than twelve
(12) months nor less than six (6) months prior to the expiration of the Term,
stating that Sublessee may be interested in exercising its option; (ii)
Sublessor after receipt of Sublessee's Notice, shall deliver Notice (the "Option
Rent Notice") to Sublessee not more than thirty (30) days after receipt of
Sublessee's Notice, setting forth Sublessor's determination of the Option Rent;
and (iii) if Sublessee wishes to exercise such option, Sublessee shall, on or
before the date (the "Exercise Date") which is the earlier of (A) the date
occurring three (3) months prior to the expiration of the Term, and (B) the date
occurring sixty (60) days after Sublessee's receipt of the Option Rent Notice,
exercise the option by delivering Notice thereof to Sublessor ("Sublessee's
Exercise Notice"), and concurrent with such exercise and in Sublessee's Exercise
Notice, Sublessee may, at its option, object to the Option Rent contained in the
Option Rent Notice, in which case the parties shall follow the procedure, and
the Option Rent shall be determined, as set forth in Section 22.4 below.
22.4 Determination of Option Rent. In the event Sublessee objects in
Sublessee's Exercise Notice to the Option Rent initially determined by
Sublessor, Sublessor and Sublessee shall attempt to agree upon the Option Rent,
using their best good-faith efforts. If Sublessor and Sublessee fail to reach
agreement within thirty (30) days following Sublessor's receipt of Sublessee's
Exercise Notice objecting to the Option Rent, and the parties cannot agree upon
the Fair Rental Value for the Option Term, then Sublessor and Sublessee shall
each within ten (10) days after the expiration of such thirty (30) day period
(or earlier if agreed by Sublessor and Sublessee), at their own cost, appoint a
real estate broker with at least five (5) years full-time commercial brokering
experience in the area in which the Premises are located to appraise and set the
Option Rent for the Premises for the Option Term. If a party does not appoint a
broker within such ten (10) day period, the single broker appointed shall be
the sole appraiser and shall set the Option Rent for the Premises for the Option
Term within thirty (30) days after the expiration of such ten (10) day period.
If two brokers are appointed by the parties, they shall meet promptly and
attempt to set the Option Rent for the Premises for the Option Term. If they are
unable to agree within thirty (30) days after the second broker has been
appointed, they shall, prior to the expiration of such thirty (30) day period,
attempt to select a third broker meeting the qualifications stated in this
Section 22.4. If they are unable to agree on a third broker, either of the
parties to this Sublease by giving ten (10) days' Notice to the other party, can
file a petition with the American Arbitration Association solely for the purpose
of selecting a third broker who meets the qualifications stated in this Section.
Each party shall bear the cost of the third broker and any costs of the American
Arbitration Association equally.
If a third broker is selected, within ten (10) days after the selection of
the third broker, each broker appointed by the parties shall submit to the third
broker, his or her appraisal of the Option Rent for the Premises for the Option
Term. The third broker shall, within ten (10) days after receiving the two
brokers' appraisals, determine the Fair Rental Value.
After the Option Rent for the Premises for the Option Term has been set in
accordance with the foregoing provisions of this Section 22.4, the single
broker, the two appointed brokers or the third broker, as the case may be shall
immediately notify the parties. That Option Rent shall be binding upon the
parties for the specific Option Term. In no event shall Sublessee be required to
give Sublessee's Exercise Notice prior to the date Option Rent is set and the
time for giving Sublessee's Exercise Notice shall be extended as necessary so
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Sublessee has at least five (5) days after receiving Notice of the Option Rent
to give Sublessee's Exercise Notice.
ARTICLE XXIII
MISCELLANEOUS AND INTERPRETIVE PROVISIONS
23.1 Broker. Sublessor and Sublessee each warrant and represent to the
other that they have had no dealings with any real estate broker, agent or
finder in connection with the negotiation of this Sublease or the introduction
of the parties to this transaction, except for the Sublessor's Broker and the
Sublessee's Broker set forth in Items 13 & 14 of the Basic Sublease Provisions
(whose commissions shall be paid by Sublessor), and that it knows of no other
real estate broker, agent or finder who is or might be entitled to a commission
or fee in connection with this Sublease. In the event of any additional claims
for brokers or finders fees with respect to this Sublease, Sublessee shall
indemnify, hold harmless, protect and defend Sublessor from and against any and
all damage, loss, claim, liability and expense including, but not limited to,
attorney's fees and legal costs, incurred directly or indirectly by reason of
any claim, suit or judgment to the extent arising out of any statement or
representation or agreement made by Sublessee, and Sublessor shall indemnify,
hold harmless, protect and defend Sublessee from and against any and all damage,
loss, claim, liability and expense including, but not limited to, attorney's
fees and legal costs, incurred directly or indirectly by reason of any claim,
suit or judgment to the extent arising out of any statement, representation or
agreement made by Sublessor or compensation to Sublessor's Broker or with
respect to this Sublease, Sublessee's Broker.
23.2 Examination of Sublease. Submission of this Sublease for examination
or signature by Sublessee does not create a reservation of or option to
Sublease. This Sublease shall become effective and binding only upon full
execution of this Sublease by Sublessor and Sublessee.
23.3 No Recording. Unless required by law, Sublessee shall not record this
Sublease or any memorandum of this Sublease without Sublessor's prior written
consent. Notwithstanding the above, upon request, either party shall deliver a
memorandum of this Sublease in recordable form which the other party thereafter
may file for record.
23.4 Quitclaim. Upon any termination of this Sublease, Sublessee shall, at
Sublessor's request, execute, have acknowledged and deliver to Sublessor an
instrument in writing releasing and quitclaiming to Sublessor all right, title
and interest of Sublessee in and to the Premises by reason of this Sublease or
otherwise.
23.5 Modifications. If in connection with obtaining financing for the
Premises or any portion thereof, Lessor or Mortgagee shall request reasonable
modifications to this Sublease as a condition to such financing, Sublessee shall
not unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not adversely affect any of Sublessee's rights hereunder.
23.6 Notice. Any notice required or desired to be given under this
Sublease shall be in writing and shall be addressed to the address of the party
to be served as provided in the Basic Lease Provisions. The addresses of
Sublessor, Lessor and Sublessee are as set forth in Items 1, 2 and 3,
respectively, of the Basic Sublease Provisions. Each such notice shall be deemed
received, effective and given upon actual receipt, or refusal of receipt in the
United States, if mailed certified mail, return receipt requested, and postage
prepaid, or upon receipt if delivered by overnight courier properly addressed to
the party to be served as provided herein.
23.7 Captions. The captions and headings used in this Sublease are for the
purpose of convenience only and shall not be constituted to limit or extend the
meaning of any part of this Sublease.
23.8 Executed Copy. Any fully executed copy of this Sublease shall be
deemed an original for all purposes.
23.9 Time. Time is of the essence for the performance of each term,
condition and covenant of this Sublease.
23.10 Severability. If any one of the provisions contained herein shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of this Sublease, but this Sublease shall be construed as if such invalid,
illegal or unenforceable provision had not been contained herein.
23.11 Survival. All covenants and indemnities set forth herein which
contemplate the payment of sums, or the performance by Sublessee or Sublessor
after the Term or, in the case of Sublessee, following an Event of Default,
including specifically, but not limited to, the covenants and indemnities set
forth in Section
35
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5.3. Article VI, Article VII, Section 8.1, Section 9.2, Section 11.1, Section
11.10, Article XV, and Article XIX, and all representations and warranties of
Sublessee, the Lessor and Sublessor shall survive the expiration or sooner
termination of this Sublease.
23.12 Choice of Law. This Sublease shall be construed and enforced in
accordance with the laws of the State of California. The language in all parts
of this Sublease shall in all cases be construed as a whole according to its
fair meaning and not strictly against either Sublessor or Sublessee.
23.13 Gender; Singular, Plural. When the context of this Sublease requires,
the neuter gender includes the masculine, the feminine, a partnership or
corporation or joint venture, the singular includes the plural and the plural
includes the singular.
23.14 Non-agency. It is not the intention of Sublessor or Sublessee to
create hereby a relationship of master-servant or principal-agent or partners or
joint venturers, and under no circumstances shall Sublessee herein be considered
the agent of Sublessor or Sublessor be considered the agent of Sublessee, it
being the sole purpose and intent of the parties hereto to create a relationship
of landlord and tenant.
23.15 Successors. The terms, covenants, conditions and agreements contained
in this Sublease shall, subject to the provisions as to assignment,
sub-subletting, and bankruptcy contained herein and any other provisions
restricting successors or assigns, apply to and bind the heirs, successors,
legal representatives and assigns of the Lessor, Sublessor and Sublessee.
23.16 Fitness Center. In consideration of Sublessor's making available to
the Sublessee and its employees those certain facilities, workout areas and
equipment located in the Building (the "Fitness Center"), Sublessee hereby
expressly agrees that the Sublessor and Lessor and their respective agents,
employees, officers, directors and partners ("Agents") shall not be liable for
any loss, injury, death or damage (including consequential damages) to persons
or property resulting from the use of the facilities and equipment in the
Fitness Center and that Sublessee and its employees assume all risk related to
the use of the Fitness Center. Sublessee understands that no employee will be
granted access to the Fitness Center until such employee has executed a Release
and Waiver Form attached as Exhibit "J" hereto. Sublessee expressly agrees that
the Release and Waiver Form contained herein is to protect Lessor and Sublessor
and their respective Agents, employees, officer, directors and partners from the
consequences of their action(s) or lack of action(s), regardless of whether such
is the concurrent or proximate cause of damages. Sublessee agrees to indemnify,
defend and hold harmless Sublessor, Lessor and their Agents from and against any
all claims, losses, liabilities and expenses resulting from the use of the
Fitness Center by Sublessee or its employees.
23.17 Waiver; Remedies Cumulative. The waiver by either party of any term,
covenant, agreement or condition herein contained shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant,
agreement or condition herein contained, nor shall any custom or practice which
may grow up between the parties in the administration of this Sublease be
construed to waive or to lessen the right of either party to insist upon the
performance by either party in strict accordance with all of the provisions of
this Sublease. The subsequent acceptance of Rent hereunder by Sublessor shall
not be deemed to be a waiver of any preceding breach by Sublessee of any
provisions, covenant, agreement or condition of this Sublease, other than the
failure of Sublessee to pay the particular Rent payment so accepted, regardless
of Sublessor's knowledge of such preceding breach at the time of acceptance of
such Rent payment. Sublessor's acceptance of any check, letter or payment shall
in no event be deemed an accord and satisfaction, and Sublessor shall accept the
check, letter or payment without prejudice to Sublessor's right to recover the
balance of the Rent or pursue any other remedy available to it. The rights and
remedies of either party under this Sublease shall be cumulative and in addition
to any and all other rights and remedies which either party has or may have.
23.18 Unavoidable Delay. Except for the payment of Rent, neither party
shall be charged with, liable for, or responsible to the other party for
anything or in any amount for any Unavoidable Delay and any Unavoidable Delay
shall not be deemed a breach of or default in the performance of this Sublease,
it being specifically agreed that any time limit provision contained in this
Sublease (other than the scheduled expiration of the Term) shall be extended for
the same period of the time lost by Unavoidable Delay.
23.19 Entire Agreement. This Sublease is the entire agreement between the
parties, and supersedes any prior agreements, representations, negotiations or
correspondence between the parties except as expressed herein. Except as
otherwise provided herein, no subsequent change or addition to this Sublease
shall be binding unless in writing and signed by the parties hereto.
23.20 Authority. If Lessor, Sublessor or Sublessee is a corporation or a
partnership, each individual executing this Sublease on behalf of the
corporation or partnership, as the case may be, represents and warrants that he
is duly authorized to execute and deliver this Sublease on behalf of said entity
in accordance with its
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corporate bylaws, statement of partnership or certificate of limited
partnership, as the case may be, and that this Sublease is binding upon said
entity in accordance with its terms.
23.21 Guaranty. As a condition to the execution of this Sublease by
Sublessor, the obligations, covenants and performance of the Sublessee as herein
provided shall be guaranteed in writing by the Guarantor listed in Item 16 of
the Basic Sublease Provisions, if any, on a form of guarantee provided by
Sublessor.
23.22 Exhibits; References. All exhibits, amendments, riders and addenda
attached to this Sublease are hereby incorporated into and made a part of this
Sublease. All references in this Sublease to Articles, Sections, Exhibits, and
clauses are made, respectively, to Articles, Sections, Exhibits, and clauses of
this Sublease, unless otherwise specified.
23.23 Basic Sublease Provisions. The Basic Sublease Provisions at the
beginning of this Sublease are intended to provide general information only. In
the event of any inconsistency between the Basic Sublease Provisions and the
specific provisions of this Sublease, the specific provisions of this Sublease
shall prevail.
23.24 No Merger. The voluntary or other surrender of this Sublease by
Sublessee, or a mutual cancellation thereof, or a termination by Sublessor,
shall not work a merger, and shall, at the option of Sublessor, terminate all or
any existing sub-subtenancies or may, at the option of Sublessor, operate as an
assignment to Sublessor of any or all such sub-subtenancies.
23.25 Joint and Several Obligations. If more than one person or entity is
Sublessee, the obligations imposed on each such person or entity shall be joint
and several.
23.26 No Light or Air Easement. Any diminution or shutting off of light or
air by any structure which may be erected on lands adjacent to the Building
shall in no way affect this Sublease, abate Rent or otherwise impose any
liability on Sublessor. Except as otherwise expressly provided herein, this
Sublease does not confer any right with regard to the subsurface below the
ground level of the Building.
23.27 Security Measures. Sublessee hereby acknowledges that Sublessor shall
have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Building. Sublessee assumes all
responsibility for the protection of Sublessee, Sublessee's Agents and the
property of Sublessee and of Sublessee's Agents from acts of third parties.
Nothing herein contained shall prevent Sublessor, at Sublessor's sole option,
from providing security protection for the Building or any part thereof, in
which event the cost thereof shall be included within the definition of Building
Costs and paid by Sublessee in the manner set forth in Section 7.1, subject to
Section 7.3(b).
23.28 Confidentiality. Sublessor acknowledges that it may have access to
---------------
certain confidential information of Sublessee concerning Sublessee's business,
facilities, operations, plans, Collocation Licensees, proprietary software,
technology, and products ("Confidential Information"). Sublessor agrees that it
will not use in any way, for its own account or the account of any third party,
except as expressly permitted by this Sublease, nor disclose to any third party
(except as required by law or to its attorneys, accountants, and other advisors
and Mortgagees and prospective purchasers of the Premises, but only as
reasonably necessary and subject to the confidentiality provisions hereof), any
of Sublessee's Confidential Information and will take reasonable precautions to
protect the confidentiality of such Confidential Information. The obligations of
Sublessor under this Section 23.28 shall survive the expiration or termination
of this Sublease.
23.29 Sublessor's Warranties. Sublessor hereby represents and warrants to
----------------------
Sublessee: (i) Sublessor is the sole owner of, and has good and marketable title
to, the leasehold estate under the Master Lease, including without limitation,
the Building and the Premises, subject only to the Master Lease and the
Restrictions; (ii) the Sublessor's estate in the Building and the Premises, as
of the date hereof, is not subject to any Mortgage; (iii) the Master Lease is a
legally valid instrument, binding upon and enforceable against Sublessor and the
Lessor, is in full force and effect and has not been terminated and no notice
has been given or action taken which, and no event has occurred which in and of
itself or with the giving of notice or the passage of time or both, has or would
result in a termination of the Master Lease or create any default thereunder;
(iv) a true and complete (except for the rent provisions) copy of the Master
Lease and the Assignment are attached hereto as Exhibit K (v) the Sublessor is a
Delaware corporation, validly existing, qualified to do business in the State of
California and in good standing in the States of Delaware and California; (vi)
the party executing this Sublease on behalf of Sublessor has full power and
authority to enter into this Sublease on behalf of Sublessor and to bind
Sublessor to the terms and conditions of this Sublease; (vii) no other party has
any right to use or occupy the Premises from and after the date hereof; and
(vii) to the best of Sublessor's knowledge, there are no Hazardous Materials in
the Premises.
23.30 Not Used.
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23.31 Matters with Respect to Rules and Regulations. Notwithstanding
anything to the contrary in the Rules and Regulations, Sublessee shall have the
right to (i) install, maintain, repair and replace computer, telecommunication,
and other equipment in the Premises, in any location of Sublessee's choosing,
without Sublessor's input or consent, so long as the floor loading patterns of
such equipment do not exceed the loading capacity of the floor, (ii) move
computer, telecommunication, and other movable equipment used in Sublessee's
business in and out of the Premises at any time and from time to time in the
course of its business, without any requirement for notice to or supervision by
Sublessor or the Building Manager unless such movement shall require the use of
Common Areas within the Building and in such event, notice to or supervision by
the Building Manager shall be required, (iii) enter mechanical rooms, air
conditioning rooms, electrical closets, janitorial closets, telecommunication
closets, the roof and similar areas where Sublessee's Special Systems or
Sublessee's Property may be located as necessary for the conduct of Sublessee's
business, without the prior written consent of Sublessor but with prior
telephonic notice to the Building manager, except in emergency which threatens
systems critical to Sublessee's business, in which case telephonic notice to the
Building manager shall be given as soon as practicable. In addition to the other
provisions of the Rules and Regulations that are overridden by the express terms
of this Sublease, the following items in the Rules and Regulations shall not
apply to Sublessee's operations in the Premises: (a) except in emergencies, the
first sentence of Rule 3 is limited to construction activities by third party
providers, (b) the last sentence of Rule 3 shall not apply for activities
confined exclusively to the Premises, (c) Rule 19 shall not apply, and (f)
Sublessor's exercise of its rights under Rule 22 shall be exercised so as to
provide a reasonable means of access to the Premises and supporting areas for
Sublessor's employees, customers and vendors at all times.
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IN WITNESS WHEREOF, the parties have executed this agreement as of the day and
year first above written.
- ---------------------------------- -----------------------------------
ASSOCIATES INFORMATION SERVICES, INFLOW INC.
INC.
BY: /s/ Wayne G. Stoltzman By: /s/ [ILLEGIBLE]
------------------------------- --------------------------------
Wayne G. Stoltzman
TITLE: Vice President TITLE: President, CEO
---------------------------- -----------------------------
Witness: /s/ [ILLEGIBLE] Witness: /s/ [ILLEGIBLE]
-------------------------- ---------------------------
BY: BY:
------------------------------- --------------------------------
TITLE: TITLE:
---------------------------- -----------------------------
Witness: Witness:
-------------------------- ---------------------------
SUBLESSOR'S ACKNOWLEDGMENT:
STATE OF TEXAS )
SS
COUNTY OF DALLAS)
ON 12/16/99, before me, the undersigned, a Notary Public in and for
said State, personally appeared Wayne G. Stoltzman known to me to be
the Vice President of Associates Information Services, Inc., the
Corporation that executed the within instrument and known to me that
such Corporation herein named, and he acknowledged to me that such
Corporation executed the within instrument pursuant to its by-laws or
a resolution of its board of directors.
WITNESS my hand and official seal.
/s/ Vicky Smith
-------------------------------------
Notary Public in and for said State
Commission expires: 1-13-03 [SEAL OF VICKY SMITH]
-------------
SUBLESSEE'S ACKNOWLEDGMENT:
STATE OF COLORADO )
CITY AND ) SS
COUNTY OF DENVER )
ON December 15, 1999 before me, the undersigned, a Notary Public in and
for said State, personally appeared Art Zeile known to me to be the
(corporation) President and CEO of Inflow, Inc. the Corporation that executed
the within instrument and known to me that such Corporation herein named, and
he acknowledged to me that such Corporation executed the within instrument
pursuant to its by-laws or a resolution of its board of directors.
WITNESS my hand and official seal.
/s/ Nancy B. Printz
-----------------------------------
Notary Public in and for said State
[SEAL OF NANCY B. PRINTZ]
Commission expires: 11/23/03
----------------
<PAGE>
EXHIBIT A
PREVISES AREA CALCULATION
[DIAGRAM]
<PAGE>
EXHIBIT "B"
The land referred to herein is situated in the State of California, County of
Orange, City of Irvine and is described as follows:
Parcel I as shown on a Map No. 81-604 recorded in Book 170, Pages 20 and 21 of
Parcel Maps in the Office of the County Recorder of said county.
Except all oil, oil rights, minerals, mineral rights, natural gas, natural gas
rights, and other hydrocarbons by whatsoever name known that may be within or
under the parcel of land hereinabove described, together with the perpetual
right of drilling, mining, exploring and operating therefor and removing the
same from said land or any other land, including the right to whipstock or
directionally drill and mine from lands other than those hereinabove described,
oil or gas wells, tunnels and shafts into, through or across the subsurface of
the land hereinabove described, and to bottom such whipstocked or directionally
drilled wells, tunnels, and shafts under and beneath or beyond the exterior
limits thereof, and to redrill, retunnel, equip, maintain, repair deepen, and
operate any such wells or mines, without however, the right to drill, mine,
explore and operate through the surface or the upper five hundred feet of the
subsurface of the land hereinabove described, as reserved in the Deed recorded
April 29, 1970 in Book 9277, Page 256, Official Records.
Also except all oil, oil rights, minerals, mineral rights, natural gas, natural
gas rights, and other hydrocarbons by whatsoever name known that may be within
or under the parcel of land hereinabove described, together with the perpetual
right of drilling, mining, exploring and operating therefor and storing in and
removing the same from said land or any other land, including the right to
whipstock or directionally drill and mine from lands other than those
hereinabove described, oil or gas wells, tunnels and shafts into, through or
across the subsurface of the land hereinabove described, and to bottom such
whipstocked or directionally drilled wells, tunnels, and shafts under and
beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip,
maintain repair, deepen, and operate any such wells or mines, without however,
the right to drill, mine store, explore and operate through the surface or the
upper five hundred feet of the subsurface of the land hereinabove described as
reserved in the Deed from Irvine Industrial Complex, a California corporation,
recorded October 26, 1973, in Book 10963, Page 158 of Official Records.
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EXHIBIT "C-1"
WORK LETTER
This Exhibit is attached to and made a part of that certain Standard Form
Office Sublease dated 12/15/99, by and between Associates Information Services,
Inc., as "Sublessor", and Inflow, Inc., as "Sublessee", for the Premises known
as Suite 120, 17770 Cartwright Road, Irvine, California.
1. APPLICATION OF EXHIBIT
Capitalized terms used and not otherwise defined herein shall have the
same definitions as set forth in the Sublease. The provisions of this Work
Letter shall apply to the planning and completion of improvements requested by
Sublessee (the "Sublessee Improvements") for the fitting out of the initial
Premises, as more fully set forth herein. Except for Paragraphs 8.2 and 8.3, the
provisions of Article VIII of the Sublease (Alterations) shall not apply with
respect to Sublessee's Improvements. Sublessor's consents and approvals as to
all matters under this Exhibit "C- 1" shall not be unreasonably withheld.
2. SUBLESSOR AND SUBLESSEE PRE-CONSTRUCTION OBLIGATIONS
1. (a) Preliminary Plans. Within thirty (30) business days following full
execution of this Sublease, Sublessee's Architect shall submit to the Sublessor
for approval preliminary plans for the Sublessee Improvements, including,
without limitation, sketches and/or drawings showing the locations of doors,
partitioning, electrical fixtures, outlets and switches, plumbing fixtures,
floor loads and other requirements, and a list of all specialized installations
and improvements and upgrade specifications reasonably determined by Sublessee
as required for its use of the Premises. Sublessor shall approve or disapprove
such plans by Notice to Sublessee within five (5) business days after receipt
thereof. If Sublessor fails to gives Sublessee Notice of its disapproval within
such five (5) day period, the plans shall be deemed approved. Sublessor agrees
to and shall promptly and fully cooperate with Sublessee's Architect and,
subject to availability, shall supply all information Sublessee's Architect
deems necessary for the preparation of the Preliminary Plans. Sublessee
acknowledges that the Preliminary Plans shall be prepared by Sublessee's
Architect after consultation with Sublessor's Architects or consultants
regarding the proposed Sublessee Improvements. The costs associated with
preparation of the Preliminary Plans shall be borne by Sublessee and paid as set
forth in Section 5 of the Work Letter.
(b) Working Drawings. Within thirty (30) business days following
approval of the Preliminary Plans by both Sublessor and Sublessee, Sublessee's
Architect shall prepare working drawings (the "Working Drawings") for the
Sublessee Improvements based upon the approved Preliminary Plans. The Working
Drawings shall include architectural, mechanical and electrical construction
drawings for the Sublessee Improvements based on the Preliminary Plans.
Notwithstanding the Preliminary Plans, in all cases the Working Drawings (i)
shall be subject to Sublessor's final approval, which approval shall not be
unreasonably withheld, (ii) shall not be in conflict with building codes for the
city or county or with insurance requirements for a fire resistive Class A
building, and (iii) shall be in the form required by appropriate governmental
authorities responsible for issuing permits and licenses required for
construction. The costs associated with preparation of the Working Drawings
shall be borne by Sublessee and paid as set forth in Section 5 of this Work
Letter.
(c) Approval of Working Drawings. Sublessee or Sublessee's Architect
shall submit the Preliminary Plans and Working Drawings to Sublessor for
Sublessor's review, and Sublessor shall give Notice to Sublessee and Sublessee's
Architect within five (5) business days after delivery thereof of any requested
revisions. Within five (5) business days after receipt of Sublessor's Notice,
Sublessee's Architect shall make all approved revisions to the Working Drawings
and submit two (2) copies thereof to Sublessor for its final review and
approval, which shall be given within three (3) business days thereafter.
Concurrently with the above review and approval process, Sublessee may submit
all plans and specifications to city and other applicable governmental agencies
in an attempt to expedite city plan checking and approval and issuance of all
necessary permits and licenses to construct the Sublessee Improvements as shown
on the Working Drawings. Any changes which are required by city or other
governmental agencies shall be immediately submitted to Sublessor for
Sublessor's review and approval, and Sublessee shall promptly give Notice to
Sublessor of such changes.
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(d) Schedule of Critical Dates. Set forth below is a schedule of certain
critical dates relating to Sublessor's and Sublessee's respective obligations
for the design and construction of the Sublessee Improvements. Such dates and
the respective obligations of Sublessor and Sublessee are more fully described
elsewhere in this Work Letter. The purpose of the following schedule is to
provide a reference for Sublessor and Sublessee and Sublessee and to make
certain the Final Approval Date occurs as set forth herein. Following the Final
Approval Date, Sublessor shall be deemed to have released Sublessee to commence
construction of the Sublessee Improvements as set forth in Section 4 below.
<TABLE>
Reference Date Due Responsible Party
<S> <C> <C> <C>
A Preliminary Plans Completion Within thirty (30) business days after full execution Sublessee
of the Sublease
B Preliminary Plans Review Five (5) business days after Sublessee submits Sublessor
the Working Drawings to Sublessor
C Working Drawings Completion Thirty (30) business days after approval of the Sublessee
Preliminary Plans
D Working Drawings Review Five (5) business days after Sublessee submits Sublessor
the Working Drawings to Sublessor
E Final Approval Date Three (3) business days after Sublessee submits Sublessor
the revised Working Drawings to Sublessor.
</TABLE>
(e) Sublessee's Property. The Approved Preliminary Plans shall include a
statement by Sublessee of those elements of Sublessee's Improvements which (i)
are to be part of Sublessee's Property and may be removed from the Building or
abandoned, at Sublessee's election, at the end of the Term; (ii) are to be part
of Sublessee's Property and must be removed from the Building at the end of the
Term; or (iii) upon construction or installation shall become part of the
Building and Sublessor's property and shall not be removed from the Building at
the end of the Term. Within sixty (60) days after the completion of the Approved
Working Drawings, Sublessor and Sublessee shall execute an amendment to this
Sublease setting forth the above.
(f) Determination. In making the determination under Section 2(e) above,
Sublessee shall have the right to remove any or all systems and equipment
(including, without limitation, any of Sublessee's Special Systems), at any time
during or upon the expiration or earlier termination of the Term; provided,
however, to the extent any equipment or system installed by Sublessee replaces
or enhances any equipment or system within the Building on the date possession
of the Premises is delivered to Sublessee, Sublessee may remove the equipment or
system installed by Sublessee only if Sublessee re-installs the equipment or
system that was within the Building on such date or installs a replacement
equipment or system of equal or greater quality and utility. In no event shall
Sublessee be required to remove any equipment or system at the expiration or
earlier termination of the Term that are within the Building on the date
possession of the Premises is delivered to Sublessee.
3. BUILDING PERMIT
After the Final Approval Date has occurred, Sublessee shall, if Sublessee
has not already done so, submit the Working Drawings to the appropriate
governmental body or bodies for final plan checking and a building permit.
Sublessee, with Sublessor's cooperation, shall cause to be made any change in
the Working Drawings necessary to obtain the building permit, provided, however,
after the Final Approval Date, no changes shall be made to the Working Drawings
without the prior written approval of Sublessor.
4. CONSTRUCTION OF SUBLESSEE IMPROVEMENTS
Prior to or after the Final Approval Date has occurred, Sublessee shall
select a qualified, licensed contractor ("Contractor"). Sublessee shall submit
to Sublessor AIA Document A305 completed by the Contractor and applicable
insurance certificates and within three (3) business days thereafter Sublessor
shall approve the contractor selection. Sublessor shall not unreasonably
withhold its consent to Sublessee's contractor selection. If Sublessor fails to
give Notice to Sublessee of its approval within such three (3) day period, the
selection of the contractor shall be deemed approved. Sublessee shall cause the
construction of the Sublessee Improvements to be carried out in substantial
conformance with the Working Drawings in a good and workmanlike manner using
first-class materials. The costs associated with the construction of the
Sublessee Improvements shall be paid as set forth in Sections 5 and 6 of this
Work Letter. Sublessee shall insure that the
<PAGE>
construction complies with all applicable building, fire, health, and sanitary
codes and regulations, the satisfaction of which shall be evidenced by a
certificate of occupancy for the Premises.
5. SUBLESSEE IMPROVEMENT ALLOWANCE
Sublessor shall provide Sublessee with a Sublessee Improvement Allowance in
the amount of no Dollars ($0) towards the cost of the design and construction of
the Sublessee Improvements, including without limitation design, engineering and
consulting fees (collectively, the "Sublessee Improvement Costs"). The Sublessee
shall be solely responsible for all Sublessee Improvements Costs, including
without limitation, the following:
(i) Preparation by Sublessee's Architect of the Preliminary Plans and the
Working Drawings as provided in Section 2 of this Work Letter, including without
limitation, all fees charged by City (including without limitation fees for
building permits and plan checks) in connection with the Sublessee Improvements
work in the Premises;
(ii) Construction work for completion of the Sublessee Improvements as
reflected in the Construction Contract; and
(iii) All contractors' charges, general conditions, performance bond
premiums, and construction supervision fees.
(iv) Reasonable professional construction management fees incurred by
Sublessor, which shall not exceed the lesser of (a) 3% of the Dollar Volume if
the Dollar Volume is less than or equal to $100,000, 2.5% of the Dollar Volume
if the Dollar Volume is greater than $100,000 and less than or equal to
$250,000, 2% of the Dollar Volume if the Dollar Volume is greater than $250,000
and less than or equal to $500,000, and 1.5% of the Dollar Volume if the Dollar
Volume is greater than $500,000, or (b) $5000. As used in this Section, "Dollar
Volume" shall mean the cost to Sublessee for construction materials and labor
required to construct and install the improvements (which shall specifically
exclude the cost of all equipment).
7. CHANGE ORDERS
Sublessee may from time to time request and obtain change orders during
the course of construction. Such requests shall be in writing and reasonably set
forth the scope of the change requested. Upon Sublessee's submission of a change
order to Sublessor, Sublessor shall, within three (3) business days, submit to
Sublessee approval of request for modification, which approval shall not be
unreasonably withheld. If Sublessor fails to respond in three (3) business days,
such request shall be deemed approved.
8. SUBLESSEE DELAYS
In no event shall the Commencement Date of the Sublease be extended or
delayed due or attributable to delays due to the fault of Sublessee ("Sublessee
Delays"). Sublessee Delays shall include, but are not limited to, delays caused
by or resulting from any one or more of the following:
(a) Sublessee's failure to timely prepare and/or revise the Preliminary
Plans and Working Drawings;
(b) Sublessee's use of special materials, finishes or installations
which are not readily available.
(c) Change orders requested by Sublessee;
(d) Interference by Sublessee or by Sublessee's Agents with Sublessor's
activities;
(e) Sublessee's failure to approve any other item or perform any other
obligation in accordance with and by the dates specified herein or in the
Construction Contract;
(f) Sublessee's requested changes in the Preliminary Plans, Working
Drawings or any other plans and specifications after the approval thereof by
Sublessee or submission thereof by Sublessee to Sublessor;
(g) Sublessee's obtaining or failure to obtain any necessary
governmental approvals or permits for Sublessee's intended use of the Premises,
except for the design and construction of the Premises.
44
<PAGE>
If the Commencement Date of the Sublease is delayed by any Sublessee Delays,
whether or not within the control of Sublessee (except for Unavoidable Delays),
then the Commencement Date of the Sublease and the payment of Rent shall not be
delayed and the payment of Rent shall commence on the Commencement Date.
Sublessor shall give Sublessee Notice within a reasonable time of any
circumstance that Sublessor believes constitutes a Sublessee Delay.
9. TRADE FIXTURES AND EQUIPMENT
Sublessee acknowledges and agrees that Sublessee is solely responsible for
obtaining, delivering and installing in the Premises Sublessee's Property and
other similar items and that Sublessor shall have no responsibility whatsoever
with regard thereto. Sublessee further acknowledges and agrees that neither the
Commencement Date of the Sublease nor the payment of Rent shall be delayed for
any period of time whatsoever due to any delay in the furnishing of the Premises
with such items.
10. FAILURE OF SUBLESSEE TO COMPLY
Any failure of Sublessee or Sublessor to comply with any of the provisions
contained in this Work Letter within the times for compliance herein set forth
shall be deemed a default under the Sublease. In addition to the remedies
provided to Sublessor in this Work Letter upon the occurrence of such a default
by Sublessee or Sublessor, either party shall have all remedies available at law
or equity against the defaulting party, including but not limited to those set
forth in the Sublease.
45
<PAGE>
EXHIBIT C-2
Inflow, Inc.
Equipment and Operating Rights
All rights and privileges contained in this Exhibit C-2 shall apply to all
Sublessee's Special Systems and at all times be subject to Sublessor's
obligations under Article Fourth of the Master Lease to not adversely affect the
market value, utility and character of the Building. With respect to Sublessee's
Special Systems, the construction means, methods, materials, demolition if
required, reconstruction if required, equipment location, and construction
scheduling shall be subject to Sublessor's approval which shall not be
unreasonably withheld or delayed. Sublessor shall have the right to require
aesthetic covering or screening suitable to Sublessor for any or all of the
Sublessee's Special Systems located outside the Premises.
All rights and privileges contained in this Exhibit C-2 shall at all times be
subject to applicable federal, state and municipal laws, and building codes.
Approval by Sublessor of any Sublessee's Special Systems shall not be construed
as a representation that such Sublessee's Special Systems are in compliance with
any laws, building codes or the Master Lease. Sublessor makes no representation
that any of the Sublessee's Special Systems are permissible under applicable
federal, state and municipal laws, and building codes nor that such Sublessee's
Special Systems are feasible or cost effective under the limitations of both
applicable law and Sublessor's obligations under the Master Lease. To the
fullest extent permitted by law, Sublessee hereby agrees to defend (with
attorneys reasonably acceptable to Sublessor and Lessor), indemnify, protect and
hold harmless Sublessor and Sublessor's Agents, from and against any and all
damage, loss, claim, liability and expense including, but not limited to,
attorneys' fees and legal costs, incurred directly or indirectly by reason of
any claim, suit or judgement brought by or on behalf of (i) any person or
persons for damage, loss or expense due to, but not limited to, bodily injury or
property damage sustained by such person or persons which arise out of, are
occasioned by, or are in any way attributable to the Sublessee's Special Systems
described herein except to the extent caused by the negligence or willful
misconduct of Sublessor.
In the event demolition is required to effect any Sublessee's Special Systems
contained in this Exhibit C-2, Sublessee shall restore anything so demolished to
a condition equal to or better than that which existed prior to the demolition.
If removal at the expiration or earlier termination of this Sublease is required
herein, Sublessee shall effect such removal at Sublessee's expense and any
damage cause by such removal shall be repaired to a condition equal to or better
than that which existed prior to the removal. If Sublessee fails to restore any
demolition or damage described above or Sublessee fails to effect any removal
required herein, Sublessor may do so at Sublessee's expense. All sums reasonably
disbursed, deposited or incurred by Sublessor in connection with such
restoration or removal, including, but not limited to, all costs, expenses and
actual attorneys' fees, shall be due and payable by Sublessee to Sublessor on
demand by Sublessor, together with interest thereon at the Applicable Rate from
the date of such demand until paid by Sublessee. Sublessee's obligations under
this Exhibit C-2 shall survive the expiration or earlier termination of this
Sublease.
All Sublessee's Special Systems in this Exhibit C-2 shall be performed at the
sole cost and expense of Sublessee. Notwithstanding any other provisions of this
Sublease, Sublessee shall be solely responsible for the maintenance, repair and
replacement of any and all Sublessee's Special Systems made by or on behalf of
Sublessee.
There shall be no additional Rent charged to Sublessee on account of the
exercise of any of the rights, or making, construction or installation of the
Sublessee's Special Systems, under or pursuant to this Exhibit C-2. All of the
rights in this Exhibit C-2 may be exercised from time to time throughout the
Term, however, in the event Sublessee shall not install Sublessee's Special
Systems concurrent with Sublessee's Improvements, Sublessor shall not receive
any profit from the installation of Sublessee's Special Systems but Sublessee
shall reimburse Sublessor reasonable costs incurred by Sublessor for consultants
as Sublessor may reasonably require to review and evaluate Sublessee's proposed
installations, including without limitation, construction management fees as set
forth in Paragraph 4 of Exhibit "C-1".
46
<PAGE>
Conduit/Riser Space
- -------------------
a. Sublessee shall have the right to install conduit and facilities (including,
without limitation, multiple and redundant entrances) to connect Sublessee's or
Collocation Licensees' telecommunications equipment and facilities to its
network or telecommunications service providers' facilities outside the Building
(including, without limitation, in the surrounding streets). Sublessor shall
grant to Sublessee and Sublessee's vendors such easements and licenses as
Sublessee may reasonable request from time to time for such purpose.
b. Any conduit installed by Sublessee shall unless Sublessee otherwise elects,
becomes the property of the Sublessor and shall be surrendered with the Premises
upon expiration or earlier termination of the Term.
HVAC Systems
- ------------
a. Sublessee shall have the right to:
1. Install up to 250 tons of HVAC equipment outside the Premises,
including, without limitation, on the roof of the Building (low-rise portion
only) and connect the same to the Building HVAC system to obtain chilled water.
2. Cap any heating system in the Premises.
3. Install drains for the HVAC equipment.
4. Install HVAC cooling units and condensers, air-cooled AC units and
air-cooled condensers within the Premises.
b. Supplemental HVAC not or integral to the Building HVAC installed by Sublessee
shall at all times be Sublessee's Property and shall not become part of the
Building and Sublessee shall have the right to remove the same at any time
during or upon the expiration or earlier termination of the Term Connection of
supplemental HVAC to the Building HVAC system for obtaining chilled water shall
in no event be deemed to make the supplemental HVAC "integral" to the Building
HVAC.
Electrical Systems
- ------------------
a. Sublessee shall separately meter or submeter all electrical service for the
Premises, including, without limitation for, Sublessee's Improvements,
Sublessee's Special Systems, and Alterations wherever located in the Building or
Common Area. Sublessee shall separately meter or submeter all electrical service
for the benefit of Sublessee's Agents if same is independent of the service
described in the preceding sentence.
b. Sublessee may provide, at Sublessee's expense, additional, separately metered
or sub-metered electric service.
c. Sublessee shall have the right to upgrade power at its own expense and have
the right to install one (1) additional generator, with a capacity not to exceed
1.5 Megs, and appurtenances in a location to be selected by Sublessee, subject
to Sublessor's approval, not to be unreasonably withheld.
d. Sublessee shall have the right to tie into any existing grounding systems in
the Building or, at Sublessee's option, to install its own electrical grounding
system.
e. Sublessee shall have the right to install interruptible power supply (UPS)
systems and associated batteries and equipment, transient voltage surge
suppressor (TYSS) equipment, DC power plant, ATS equipment, power distribution
cabinets and equipment, and power panels.
f. Electrical systems and equipment installed by Sublessee shall at all times be
Sublessee's Property and shall not become part of the Building and Sublessee
shall have the right, but not the obligation, to remove the same at any time
during or upon the expiration or earlier termination of the Term.
47
<PAGE>
Structural
- ----------
Sublessor makes no representations regarding the capacity of floors or
suitability of the Premises for Sublessee's use. Sublessee has inspected the
Premises and accepts it "as-is". Sublessee may make such changes as may be
necessary to reinforce the floor loads of the Premises or any portion thereof.
Any such changes to reinforce the floors become part of the Building upon
installation and shall not be removed by Sublessee.
Life Safety
- -----------
a. Sublessee shall have the right to install a double action, pre-action fire
suppression system. Such system shall be connected to the Building's life safety
system, if compatible, and shall comply with all applicable laws and shall
become part of the Building and Sublessor's property and shall not be removed by
Sublessee at the earlier termination or expiration of the Term.
b. Sublessee shall have the right to install an FM 200 gas system, a VESDA early
warning air sampling detection system and/or any other fire suppression or
warning system or systems approved by Sublessor, which approval shall not be
unreasonably withheld or delayed. Any such fire suppression or warning system
shall at all times be Sublessee's Property and shall not become part of the
Building, may be removed at any time, and shall be removed by Sublessee at the
end of the Term, provided that Sublessee must ensure that a working fire
suppression system that complies with fire codes remains in the Premises at the
earlier termination or expiration of the Term.
Antenna and Other Telecommunications Facilities
- -----------------------------------------------
Sublessee may install, at its expense, one or more self-supporting antennae,
dishes or other telecommunications facilities on the roof of the Building,
provided no more than 2000 square feet of roof space is required. Any
installation shall be subject to Sublessor's approval of the size, design,
installation, screening and appearance, such approval not be unreasonably
withheld or delayed. Any such antenna, facilities and supporting structures
shall at all times be Sublessee's Property, may be removed at any time, and
shall be removed at the earlier termination or expiration of the Term. Sublessee
shall make no use of such antenna that causes interference with the Air Touch
antenna. Any penetrations of the roof in connection with installation of
Sublessee's equipment shall be performed by Sublessor's designated roofing
contractor in order to preserve Sublessor's warranty rights.
Third Party Equipment (Collocation)
- ----------------------------------
Sublessee shall have the right to place equipment of Collocation Licensees
within the Premises (and on the roof of the Building to the extent Sublessee has
the right to do so under this Exhibit "C-2"). This right shall not be construed
as subleasing of the Premises. Any such equipment shall at all times be deemed
Sublessee's Property, may be removed at any time, and shall be removed at the
earlier termination or expiration of the Term.
Security Systems
- ----------------
Sublessee shall have the right to install its own security system for the
Premises, and to create a special security area within the Premises to encompass
Sublessee's equipment room. Sublessee shall be entitled to install non-building
standard locks and other access controls within the Premises, provided,
Sublessor and Sublessor's Agents shall be provided with keys or other entry
mechanisms which may be used in accordance with terms and conditions of this
Sublease. Any such security system shall at all times be Sublessee's Property,
may be removed at any time and, at Sublessee's option, may be removed or
abandoned at the expiration or earlier termination of the Term.
48
<PAGE>
General
- -------
All of Sublessor's consents and approvals under this Exhibit "C-2" shall not be
unreasonably withheld or delayed. Except for Paragraphs 8.2 and 8.3, Article
VIII of the Sublease shall not apply. Except as otherwise provided in this
Sublease, Sublessee shall have the right to remove any or all of Sublessee's
Special Systems at any time during or upon the expiration or earlier termination
of the Term; provided, however, to the extent any equipment or system installed
by Sublessee replaces or enhances any equipment or system within the Building on
the date possession of the Premises is delivered to Sublessee, Sublessee may
remove such equipment or system only if Sublessee re-installs the equipment or
system that was within the Building on such date or a replacement with equipment
or a system of equal or greater quality and utility. In no event shall Sublessee
be required to remove any equipment or system at the earlier termination or
expiration of the Term that is within the Building on the date possession of the
Premises is delivered to Sublessee. In the event Sublessee removes any equipment
located on the roof, Sublessee shall cap, or as reasonably required by Sublessor
or to maintain the warranty of the roof, remove all conduits connections, ducts,
wiring, lines, or other roof penetrations appurtenant to the equipment removed
and patch such penetrations per the roof manufacturer's specifications.
49
<PAGE>
EXHIBIT "D"
SUBLEASE AND RENT COMMENCEMENT MEMORANDUM
SUBLEASE DATE
SUBLESSEE
SUBLESSOR Associates Information Services, Inc.
PREMISES 17770 Cartwright Road
Irvine, California
Square Feet of Premises
Square Feet of Building
Pursuant to the above Sublease, Section _____________, Sublessor and
Sublessee agree and certify to the following:
Sublease Commencement Date
Sublease Expiration Date
Base Rent $ per month
Operating Expenses:
CAM $ per month
Real Estate Taxes $ per month
Insurance $ per month
State Taxes $ per month
Commencement Date for Base Rent
Free Base Rent for Months
Commencement Date for Additional Rent
Free Additional Rent for Months
Leasehold Expenses $ amortized $ monthly
Real Estate Commission $ amortized $ monthly
SUBLESSOR: SUBLESSEE:
ASSOCIATES INFORMATION SERVICES, INC.
By: By:
---------------------------- ---------------------------
W. G. Stoltzman
Its: Vice President Its:
--------------------------- --------------------------
Date: Date:
-------------------------- -------------------------
50
<PAGE>
EXHIBIT "E"
ADJUSTMENTS TO MONTHLY RENT
(Fixed Adjustment)
This Exhibit is attached to and made a part of that certain Standard Form
Sublease dated December 15, 1999 by and between Associates Information Services,
Inc., as "Sublessor", and Inflow, Inc. as "Sublessee", and Sunset Park West
Limited Partnership as "Lessor" for the Premises known as 17770 Cartwright Road,
Suite 120, Irvine, California.
The capitalized terms used and not otherwise defined in this Exhibit shall
have the same definitions as set forth in the Sublease. The provisions of this
Exhibit shall supersede any inconsistent or conflicting provisions of the
Sublease.
The Monthly Rent shall be adjusted, as of the commencement of the dates set
forth below, in accordance with the following schedule.
Months During Term Monthly Rent
------------------ ------------
1 -- 12 $65,022.58
13 -- 24 $67,623.48
25 -- 36 $70,328.42
37 -- 48 $73,141.56
49 -- 60 $76,067.22
61 -- 72 $79,109.91
73 -- 84 $82,274.31
85 -- 96 $85,565.28
97 -- 120 $88,987.89
51
<PAGE>
EXHIBIT F
RULES & REGULATIONS
1. No tenant shall place any additional lock or locks on any door in its leased
premises without Sublessor's prior written consent. Tenants shall not install
additional locks or bolts of any kind upon any of the doors of, or within, their
premises without prior written consent of Sublessor, nor shall tenants make any
changes in existing locks or the mechanisms thereof. Each tenant shall, upon the
termination of its tenancy, provide Sublessor with the combinations to all
combination locks on doors, safes, safe cabinets and vaults and deliver to
Sublessor all keys to the premises and all interior doors, cabinets, and other
key-controlled mechanisms therein, whether or not such keys were furnished to
such tenant by Sublessor. In the event of the loss of any key furnished to any
tenant by Sublessor, or upon request of any tenant for other security reasons,
such tenant shall pay Sublessor the cost of replacing the same or of changing
the keypad code, lock or locks opened by such code and/or key if Sublessor shall
deem it necessary to make such a change, plus a reasonable administrative
charge.
2. Sublessor will provide and maintain an alphabetical directory board for all
tenants in the first floor (main lobby) of the Building and no other directory
shall be permitted unless previously consented to by Sublessor in writing. Each
tenant shall be allowed one line on such board and any additional lines shall
require Sublessor's prior written consent and if such consent is given, then the
additional lines shall be at tenant's expense.
3. With respect to work being performed by tenants in any leased premises with
the approval of Sublessor, all tenants will refer all contractor's
representatives, installation technicians, janitorial workers and other
mechanics, artisans and laborers rendering any service in connection with the
repair, maintenance or improvement of the premises Building Manager for Building
Manager's approval (such approval not to be unreasonably withheld or delayed)
and/or supervision before performance of any such service. This provision shall
apply to all work performed in the Building including, but not limited to,
installations of voice and data equipment, electrical devices and attachments,
and any and all installations of every nature affecting floors, walls, woodwork,
trim ceilings, equipment and any other physical portion of the Building.
4. Movement in or out of the Building of furniture or other large quantities of
office equipment, freight, supplies or personal property, or dispatch or receipt
of any tenant of any merchandise or materials which requires extensive use of
the loading dock, or movement through main Building entrances or lobby shall be
restricted to hours designated by Building Manager. All such movement shall be
in the manner agreed between tenant and Building Manager by pre-arrangement
before performance. Tenants shall not move or install such objects in or about
their premises in such a fashion as to unreasonably obstruct the activities of
other tenants, and all such moving shall be at the sole expense, risk and
responsibility of tenant. Tenants shall not use any hand trucks other than those
equipped with rubber tires and side guards in the delivery, receipt or other
movement of freight, supplies, furniture, fixtures and other personal property
to, from, or within the Building. Such pre-arrangement initiated by tenant will
include reasonable determination by Building Manager and be subject to Building
Manager's reasonable decision and control of the time, method and routing of
movement, and limitations imposed by safety or other concerns which may prohibit
any article, equipment or any other item from being brought into the Building.
Each tenant is to assume all risk as to damage to articles moved and injury to
persons or public engaged or not engaged in such movement, including equipment,
property and personnel of Sublessor or Building Manager if damaged or injured as
a result of acts in connection with carrying out this service for any tenant
from time of entering the Land on which the Building stands to completion of
work; and Sublessor or Building Manager shall not be liable for acts of any
person engaged in, or any damage or loss to any of said property of persons
resulting from any act in connection with such service performed by any tenant.
Sublessor reserves the right to inspect all such freight, supplies, furniture,
fixtures and other personal property to be brought into the Building and to
exclude from the Building, all such objects which violate any of these rules and
regulations of the provisions of this Sublease.
5. No signs will be allowed in any form on the exterior of the Building or on
the inside or outside of the windows of the Building and no signs except in
uniform location and uniform styles fixed by Sublessor will be permitted in the
public corridors or on corridor doors or entrances to tenant's space. All signs
will be contracted by Sublessor for tenant at the rate fixed by Sublessor from
time to time, and tenant will be billed and shall pay for such service
accordingly.
52
<PAGE>
6. Tenants shall only use their premises for the purpose as stated in their
sublease. Tenants shall not use their premises for lodging, sleeping, cooking,
or for any immoral or illegal purpose or for any purpose that will damage the
premises or the Building, or the reputation thereof, or for any purposes other
than those specified in the this Sublease. Tenants shall not use their premises
for manufacturing or for the storage of goods, wares or merchandise, except as
such storage may be incidental to the use of the premises for general retail
purposes and except in such portions of the premises as may be specifically
designated by Sublessor for such storage. Tenants shall not occupy their
premises or permit any portion of the premises to be occupied for the
manufacture or direct sale of liquor, narcotics, or tobacco in any form, or as a
medical office, music or dance studio or employment agency. Sublessor shall not
conduct in or about the premises any auction, public or private, without the
prior written approval of Sublessor.
7. Except for generator fuel and UPS batteries and components, tenant shall not
place or use any inflammable, or hazardous fluid, substance or device in or
about the premises without the prior written consent of Sublessor. Not
withstanding the above, tenant shall comply with all rules, orders, regulations
of the applicable Fire Rating Bureau, or any other similar body, and tenant
shall not commit any act or permit any object to be brought or kept in the
premises which shall increase the rate of fire insurance on the premises or on
property located therein.
8. Sublessor shall not be responsible to the tenants, their agents, employees,
customers or invitees for any loss of money, jewelry, or other personal property
from the Premises or Common Area. Sublessor shall not be responsible to tenants
for any damages to any property therein from any cause whatsoever whether such
loss or damage occurs when an area is locked against entry or not.
9. Tenants shall not bring or keep within their premises any bird, animal,
bicycle or motorcycle.
10. Employees of Sublessor shall not receive or carry messages for or to any
tenant or any other person, nor contract with nor render free or paid services
to any tenant or any tenant's servants, employees, contractors, jobbers, agents,
invitees, licensees, guest or visitors. In the event that any of Sublessor's
employees perform any such services, such employees shall be deemed to be the
agents of tenant regardless of whether or how payment is arranged for such
services and tenant thereby indemnifies and holds harmless from any and all
liability in connection with any such services and any associated injury or
damage to property or injury or death to persons resulting therefrom.
11. Tenants shall not deposit any trash, refuse, cigarettes, or other substances
of any kind within or outside their premises, or Building except in the refuse
containers provided therefore. Tenants shall not introduce into their premises
any substance which might add an undue burden to the cleaning or maintenance of
the premises or the Building. Each tenant shall exercise its best efforts to
keep the sidewalks, entrances, passages, courts, lobby areas, garages or parking
areas, elevators, escalators, stairways, vestibules, public corridors and halls
in and about the Building (hereinafter "Common Area") clean and free from
rubbish. Tenants shall use the Common Area only as a means of ingress and
egress, and Tenants shall permit no loitering by any persons upon Common Area or
elsewhere with the Building.
12. Mechanical rooms and the roof of the Building are not for the use of the
general public, and Tenants shall not enter the Building's common mechanical
rooms, air conditioning rooms, electrical closets, janitorial closets, or
similar areas or go upon the roof of the Building without the prior written
consent of Sublessor.
13. Tenants shall not place within their premises any safes, copying machines,
computer equipment other than desktop personal computers or other objects or
unusual size or weight, not shall Tenants place within their premises any
objects which exceed the floor weight specifications of the premises without the
prior written consent of the Sublessor. The placement and positioning of all
such objects within the premises shall be prescribed by Sublessor and such
objects shall, in all cases, be placed upon plates or footings of such size as
shall be prescribed by Sublessor.
14. Not used.
15. Subject to the Sublease provisions, without Sublessor's prior approval,
tenants shall not install any radio or television antenna, loudspeaker, music
system or other device on the roof or exterior walls of the Building or on
common walls with adjacent tenants. In no event shall any such devices which
interfere with existing devices be permitted.
16. No hand trucks or other vehicles of any kind shall be used in or brought
into the Building or the premises by any tenant or others unless such vehicle
shall have been inspected and approved by Subleasor.
53
<PAGE>
17. Each tenant shall dispose of all trash and refuse only in receptacles
therefore provided by Sublessor. 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 or removing and disposing of trash and
garbage and without being in violation of any law or ordinance governing such
disposal. All garbage and refuse shall be made only through entryways and
elevators provided for such purposes and at such times as Sublessor shall
designate.
18. Subject to applicable fire or other safety regulations, all doors opening
onto Common Area and all doors upon the perimeter of the premises shall be kept
closed and, during non-business hours, locked, except when in use for ingress or
egress. If any tenant uses the premises after regular business hours or on
non-business days, such tenant shall lock any entrance doors to the premises
used by such tenant immediately after using such doors. Tenants shall exercise
reasonable precaution in the protection of their personal property from loss or
damage by keeping doors or unattended areas locked. Tenants shall also report
any thefts or losses to the Sublessor or security personnel as soon as
reasonably possible after discovery and shall also notify the Building Manager
as soon as reasonably possible after discovery and shall also notify the
Building Manager of the presence of any persons whose conduct is suspicious or
causes a disturbance.
19. Tenants shall not employ any person or persons other than the janitor or
Sublessor for the purpose of cleaning the premises unless otherwise agreed to by
Sublessor. Except with the written consent of Sublessor, no person or persons
other than those approved by Sublessor shall be permitted to enter the Building
for the purpose of cleaning the same. Tenants shall not cause any unnecessary
labor by reason of such tenant's carelessness or indifference in the
preservation of good order and cleanliness. Sublessor shall in no way be
responsible to any tenant for any loss of property on the premises, however,
occurring, or for any damage done to the effects of any tenant by the janitor or
any employee or any other person. Janitorial service shall include ordinary
dusting and cleaning by the janitor assigned to such work and shall not include
cleaning of carpets or rugs or moving of furniture or other special services.
Janitorial service shall be furnished Mondays through Fridays, legal holidays
excepted; janitorial service will not be furnished to areas which are occupied
after 9:30 P.M. Window cleaning shall be done only by Sublessor.
20. Tenants shall not make or permit any improper, objectionable or unpleasant
noises or odors in the Building or otherwise interfere in any way with tenants
or persons having business with them. No person shall disturb the occupants of
the Building by the use of any musical instruments, the making of unpleasant
noises, or other unreasonable use.
21. No vending machines shall be installed, maintained, or operated upon the
premises without the prior written consent of Sublessor.
22. On Saturdays, Sundays and legal holidays, and on other days between the
hours of 6:00 P.M. and 7:00 A.M., the following day, access to the Building, or
to the halls, corridors, elevators or stairways in the Building, or to the
premises, may be refused unless the person seeking access is known to the
persons or employees of the Building in charge and has a pass or is properly
identified. Sublessor shall in no case be liable for damages for any error with
regard to the admission to or exclusion from the Building of any person.
Sublessor further, in case of insurrection, mob riot, public excitement, or
other commotion, reserves the right to prevent access to the Building (other
than to tenant's critical employees) during the continuance of the same by
closing the doors or otherwise, for the safety of the tenants and protection of
property in the Building and the Building. Sublessor further reserves the right
to close and keep locked all entrance and exit doors of the Building Saturday,
Sundays and legal holidays, and on other days between the hours of 6:00 P.M. and
7:00 A.M. of the following day, and during such further hours as Sublessor may
deem advisable for the adequate protection of the Building and the property of
its tenants.
23. All rubbish removal over and above normal office usage will be billed as
additional rental to tenants.
24. Sublessor reserves the right to make such other reasonable rules and
regulations as in its reasonable judgement may from time to time be needed for
safety, care and cleanliness of the Building, and for the preservation of good
order therein.
25. Tenants shall not obstruct or interfere with the rights of other tenants of
the Building, or of persons having business in the Building, or in any way
injure or annoy such tenants or persons.
26. Canvassing, soliciting and peddling in the Building is prohibited without
the prior written approval of Sublessor. Tenants shall not disturb, solicit, or
canvass any occupant of the Building without the prior written approval of
Sublessor.
27. All office equipment and other device of any electrical or mechanical nature
shall be placed by tenants in their premises in settings approved by Sublessor,
so as to absorb or prevent any vibration, noise or annoyance. Tenants shall not
cause improper noises, vibrations or odors within the Building.
54
<PAGE>
28. Tenants shall not use the washrooms, restrooms and plumbing fixtures of the
premises and appurtenances thereto for any other purpose than the purposes for
which they were constructed, and tenants shall not deposit any sweepings,
rubbish, rags or other improper substances therein. Tenants shall not waste
water by interfering or tampering with the faucets or otherwise. In the event
any tenant or any tenant's servants, employees, agents, contractors, licensees,
invitees, guests or visitors cause any damage to such washrooms, restrooms,
plumbing fixtures or appurtenances, such tenant shall pay to Sublessor the costs
of repair or replacement plus an administrative charge.
29. Sublessor shall have the right to prohibit any publicity, advertising or use
of the name of the Building by tenant which, in Sublessor's opinion, tends to
impair the reputation of the Building, or its desirability for office operations
and upon Notice from Sublessor, tenant shall refrain from or discontinue any
such publicity, advertising or use of the Building name.
30. Tenants shall not be permitted to use any area of the Building outside of
tenants' premises for storage of supplies, furnishings, equipment, or personal
property without prior written consent of Sublessor.
31. Tenants will not be permitted to locate furnishings or cabinets adjacent to
mechanical or electrical access panels or over air conditioning outlets so as to
prevent operating personnel from servicing such units as routine or emergency
access may require. Cost of moving such furnishings for Sublessor's access will
be borne by tenants.
32. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify, alter or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease covering premises in the Building.
55
<PAGE>
FITNESS CENTER
RULES AND REGULATIONS
1. The Fitness Center will be locked at all times and accessible only to those
with the appropriate security key card.
2. The Fitness Center is for the use of employees of tenants of the building
only; friends, relatives, children, or visitors are not permitted in the
facility.
3. All persons using the exercise equipment and showers agree to do so at their
own risk and agree to operate all equipment as intended and in accordance with
the manufacturers' instructions.
4. Day lockers are provided in the facility on a first come, first serve basis.
Clothing and personal belongings should be left in lockers or changing rooms
only while you are using the facilities. Any lock left on the lockers will be
cut off and the contents of the locker removed to the management office and
discarded after 30 days.
5. No street clothes are allowed - appropriate work-out attire with tennis shoes
only.
6. Smoking is not permitted in the Fitness Center.
7. Glass containers and alcoholic beverages are not permitted in the Fitness
Center.
8. Please assist us in maintaining the Fitness Center's cleanliness by properly
disposing of trash, towels, etc., in the appropriate receptacles provided.
9. Sublessor reserves the right to add, change or delete any rule and/or
regulation herein contained and to change method of operation to ensure maximum
enjoyment of the Fitness Center.
56
<PAGE>
PARKING RULES
1. Tenants and their employees, agents and invitees, shall observe and comply
with the driving and parking signs and markers on the premises surrounding the
Building. Sublessor shall not be responsible for any damage to any vehicle towed
because of non-compliance with parking regulations.
2. Parking areas shall be used only for parking by vehicles no longer than full
size, passenger automobiles herein called "Permitted Size Vehicles". Vehicles
other than Permitted Size Vehicles are herein referred to as "Oversized
Vehicles".
3. Any vehicle not parked in a marked stall shall be towed at vehicle owner's
expense.
4. Users of the parking area will obey all posted signs and park only in the
areas designated for the vehicle parking.
5. Tenants shall not permit or allow any vehicles that belong to or are
controlled by tenants' employees, suppliers, shippers, customers, or invitees to
be loaded, unloaded, or parked in areas other than those designed by Sublessor
for such activities.
6. Parking stickers or identification devices shall be the property of the
Sublessor and shall be returned to Sublessor by the holder thereof upon
termination of the holder's parking privileges. Sublessor will pay such
replacement charge as is reasonably established by Sublessor for the loss of
such devices other than stickers.
7. Sublessor reserves the right to refuse the sale of monthly identification
devices to any person or entity that willfully refuses to comply with the
applicable rules, regulations, laws, and/or agreements as set forth by the
Sublessor.
8. Unless otherwise instructed, every person using the parking area is required
to park and lock his own vehicle. Sublessor will not be responsible for any
damage to vehicles, injury to persons, or loss of property, all of which risks
are assumed by the party using the parking area.
9. Validation, if established, will be permissible only by such method or
methods as Sublessor and/or its licensee may establish at rates generally
applicable to visitor parking.
10. The maintenance, washing, waxing or cleaning of vehicles in the parking lot
or Common Area, is prohibited.
11. Tenants shall be responsible for seeing that all employees, agents and
invitees comply with the applicable parking rules, regulations, laws and
agreements.
12. Sublessor reserves the right to modify these rules and/or adopt such other
reasonable and nondiscriminatory rules and regulations as it may deem necessary
for the proper operation of the parking area.
13. Such parking use, as in herein provided, is intended merely as a license
only, and no bailment is intended or shall be created hereby.
14. No overnight parking shall be permitted without prior consent of Sublessor.
15. Sublessor reserves the right to designate reserved parking spaces in the
parking areas.
16. Sublessor reserves the right to require tenants and its employees to park
vehicles in designated areas of the parking lot.
17. Storage of vehicles or equipment in the parking area is prohibited.
Sublessor has the right to enforce this restriction by removal and storage of
vehicles or equipment and such cost of storage and removal shall be borne by
tenants. tenants shall observe designated restricted parking areas, such as
visitor parking, fire lanes, handicap parking and loading zones. Sublessor has
the right to enforce this parking rule by removal and storage of tenants'
vehicles at the expense of tenants.
57
<PAGE>
EXHIBIT G
CARTWRIGHT BUILDING
SIGN SPECIFICATIONS
This Exhibit is attached to and made a part of that certain standard form
Sublease dated 12/15, 1999, by and between Associates Information Services,
Inc., as "Sublessor", and INFLOW, INC., as "Sublessee", for the Premises known
as 17770 Cartwright Road, Irvine, California.
SIGN CRITERIA
This criteria establishes the uniform policy for all Sublessee
identification signs for Building. This criteria has been established for the
purpose of maintaining the overall appearance of the Building and also giving
the Sublessee maximum visibility. Conformance will be strictly enforced. Any
sign installed that does not conform to the sign criteria will be brought into
conformity at the expense of the Sublessee.
A. General Requirements
1. A design of each proposed sign shall be approved by the Sublessor
prior to fabrication of the Building sign.
2. Sublessor shall direct the placement of all Sublessee signs and
the method of attachment to the Building.
3. Sublessee shall contract directly and solely with the signmaker.
Lettering and installation shall be paid for by the Sublessee.
4. Sublessee responsible for fulfillment of all requirements of this
criteria.
B. Specifications
1. Color shall be white or black. Color of entry sign located on
glass to be white only.
2. Typestyle of entry sign to be Helvetica Medium; typestyle of the
warehouse sign to be Helvetica Medium.
3. No electrical of audible signs will be allowed. Upon removal of
any sign, any damage to the Building will be repaired by
Sublessee.
4. Except as provided herein, no advertising placards, banners,
pennants, names, insignia, trademarks, or other descriptive
material shall be affixed or maintained upon an automated
machine, exterior glass of Building, landscaped areas, streets,
or parking areas.
5. The background area for these graphics shall be unobstructed and
free or large vertical seams, mullions or contrasting strips.
6. Applied symbol lettering shall be attached to the Building face
without the use of visible supports or raceways. Surface painted
is not acceptable. Wall-mounted graphics will be constructed of
high-density polyurethane foam with acrylic face. Colors shall be
white or black.
58
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C. Materials
1. Materials for the Building sign shall be 1 1/2 high density
polyurethane foam. It shall have pained faces and returns. Sign to be
attached to Building fascia via silicone ("Construction GE Sealant").
2. The graphics will consist of individual fabricated letters mounted on
the face of the Building.
D. Sign Area Requirements
1. Building sign not to exceed 14' - 0" in length. Maximum letter height
18"/letters and 22" logos. Minimum letter height is 8"/letters and 10"
logos. Total sign area not to exceed nineteen (19) square feet.
59
<PAGE>
EXHIBIT "H"
1. General and Special Taxes, a Lien, not yet due and payable for Fiscal Year:
1983/1984.
2. The Lien of Supplemental Taxes, if any, assessed pursuant to the provisions
of Chapter 498, Statutes of 1983 of the State of California.
3. Easement, and incidents thereto,
In Favor of: The County of Orange
Recorded, Official Records: March 17, 1964
Book/Reel: 6965
Page/Image: 721
Series/Instrument No.: 14543
Purpose: Avigation
Affects: Said land
4. Covenants, Conditions and Restrictions, omitting restrictions, if any,
based on race, color, religion or national origin, as contained in
instrument,
Recorded, Official Records: May 21, 1965
Book/Reel: 7529
Page/Image: 600
Series/Instrument No.: 16662
Containing Mortgagee Protection Clause: Yes
Containing Express forfeiture or reversion: No
5. Covenants, Conditions and Restrictions, omitting restrictions, if any,
based on race, color, religion or national origin, as contained in
instrument,
Recorded, Official Records: July 6, 1971
Book/Reel: 9707
Page/Image: 825
Series/Instrument No. 3871
Containing Mortgagee Protection Clause: Yes
Containing Express forfeiture or reversion: No
6. Lack of Rights of access to and from the public street; said rights having
been relinquished by the provisions of the dedication statement as shown on
the filed map of said subdivision.
Street Name: Main Street
Affects: The Southwesterly line of Parcels 14 and 15 of Parcel Map 130,
Pages 46-49 except at drive entry locations
7. Easement shown on Filed Map, and incidents thereto,
Purpose: Public Utility
Affects: Those portions of said land 3 feet in width adjacent to
Cartwright Road and Da Vinci. As shown on Parcel Map in Book 130,
Pages 46-49.
8. Easement shown on Filed Map, and incidents thereto,
Purpose: Public Utility
Affects: The Southwesterly 15 feet of Parcel 14. As shown on Parcel Map in
Book 130, Pages 46-49.
9. Restrictions, omitting restrictions, if any, based on race, color, religion
or national origin, as contained in
Deed,
Recorded, Official Records: October 26, 1973
Book/Reel: 10963
Page/Image: 158
Series/Instrument No.: 26017
Containing Mortgagee Protection Clause: Yes
Containing Express forfeiture or reversion: Yes
60
<PAGE>
10. Easement, and incidents thereto,
In Favor of: Southern California Edison Company, a corporation,
Recorded, Official Records: November 18, 1974
Book/Reel: 11289
Page/Image: 662
Series/Instrument No.: 14326
Purpose: Public Utility
Affects: As follows:
A strip of land four (4) feet in width lying within Parcel 4 as shown on a
map filed in Book 44, Page 47 of Parcel Maps, in the office of the Recorder
of said Orange County, the Southwesterly Line of said strip described as
follows:
Beginning at a point in the Northeasterly line of Main Street 100 feet wide
which point is located North 61" 11' 45" West 67 feet measured from the
Southeasterly line of said Parcel 4; thence North 61" 11' 45" West a
distance of 8 feet.
11. Easement, and incidents thereto,
In Favor of: The pacific Telephone and Telegraph Company
Recorded, Official Records: December 14, 1979
Book/Reel: 13434
Page/Image: 1946
Series/Instrument No.: 20175
Purpose; Public Utility
Affects: A strip of land 3 feet in width adjacent to Cartwright Road and
Da Vinci
12. Easement, and incidents thereto,
In Favor of: The Pacific Telephone and Telegraph Company
Recorded, Official Records: December 14, 1979
Book/Reel: 13434
Page/Image: 1949
Series/Instrument No.: 20176
Purpose: Public Utility
Affects: As follows:
The Southwesterly fourteen feet of said Parcel 14, said fourteen foot
easement to be lengthened or shortened so as to terminate into the
Easterly line of Cartwright Road as now exists.
13. Easement, and incidents thereto,
In Favor of: Southern California Edison Company, a corporation
Recorded, Official Records: May 3, 1982
Series/Instrument No.: 82-151150
Purpose: Public Utilities
Affects: A strip of land 6 feet wide, lying within Parcel 15, as shown on
a map filed in Book 130, Pages 46-49, inclusive, of parcel maps in the
office of the Recorder of said Orange County, the centerline of said strip
being described as follows:
Beginning at a point on the Northeasterly line of Main Street, 100 feet
wide, as shown on said Parcel map, distant thereon North 61" 11' 45" West
90 feet from the Southerly corner of said Parcel; thence North 28" 48' 15"
East 28 feet.
61
<PAGE>
EXHIBIT "I"
CALCULATION OF SUBLESSEE'S SHARE
This Exhibit is attached to and made a part of that certain standard form
Sublease dated 12/15, 1999, by and between Associates Information Services, Inc.
as "Sublessor", and INFLOW, INC., as "Sublessee", for the Premises known as
17770 Cartwright Rd. Costa Mesa, California.
The capitalized terms used and not otherwise defined herein shall have the
same definitions as set forth in the Sublease. The provisions of this Exhibit
shall supersede any inconsistent or conflicting provisions of the Sublease.
Building:
- --------
Sublessee understands that the Premises are a part of a Building having the
approximate square footage as set forth in Item 6 of the Basic Sublease
Provisions contained in the Sublease.
Calculation of Sublessee's Share:
- ---------------------------------
Sublessee's Share of various Operating Expenses under the Sublease shall be
determined as a function of Building square footage. Sublessee acknowledges that
the total square footage of the Building, may change from time to time, but not
to exceed once per year and accompanied by reasonable supporting documentation,
and that Sublessee's Share under any or all of the foregoing categories may vary
accordingly, effective on the first day of the month after such change occurs.
Set forth below is the initial Sublessee's Share (i.e., calculated as of
the date of the Sublease), with respect to Operating Expenses to be charged as a
function of the Building, as of the date of the Sublease. Sublessee understands
that (i) Sublessor shall determine, in its reasonable discretion, what Operating
Expenses are included within each accounting category to be charged as a
function of the Building, and (ii) Sublessor may change the category of any
Operating Expenses at any time, at Sublessor's reasonable discretion.
Sublessee's Share: 34,544/136,180 = 25.366%
Re-Measurement
- --------------
Sublessee shall have the right to have its architect measure, in accordance
with exhibit A, the Usable Area of the Premises, the Must Take Space or the
Building, or any or all of them. If Sublessee gives Sublessor Notice that the
RSF of the Premises, the Must Take Space or the Building, or any or all of them,
as measured by Sublessee's Architect, are different than as stated in this
Sublease, Sublessor shall have thirty (30) days within which to give Sublessee
Notice that Sublessor' Architect disputes such measurement. If Sublessor gives
such Notice to Sublessee, the RSF shall be determined as provided in the last
two sentences of Section 12.7 of the Sublease. If Sublessor does not give
Sublessee such Notice within such thirty (30) day period, the RSF of the
Premises, the Must Take Space or the Building, or any or all of them as the case
may be shall be binding upon the parties. If the RSF of the Building, the Must
Take Space or the Premises, or any or all of them, as determined pursuant to the
foregoing provisions is different than that stated in Item 7 of the Basic
Sublease Provisions, then (i) Item 7 of the Basic Sublease Provisions and (ii)
Sublessee's Share as stated in Item 20 of the Basic Sublease Provisions shall be
adjusted accordingly. If the RSF of the Premises as determined pursuant to the
foregoing provisions is revised, then Monthly Rent shall be adjusted based upon
the Monthly Rent/RSF for the Premises as set forth in Exhibit "E".
62
<PAGE>
EXHIBIT "J"
RELEASE AND WAIVER FORM
By and in consideration of the use of the facilities, workout areas and
equipment of the exercise facilities located at 17770 Cartwright Road, Irvine,
California 92714 (the "Fitness Center"), I expressly agree that Associates
Information Services, Inc., Cushman & Wakefield of California, Inc. and Sunset
Park West Limited Partnership, and their respective agents, employees, officers,
directors and partners, shall not be liable for any damages to me and my
property as a result of the use of the facilities and equipment of the Fitness
Center. By the execution of this Release and Waiver, I assume full
responsibility for any such injuries or damages which may occur in or about the
Fitness Center to me. By this Release and Waiver, I, my heirs, executors,
administrators and assigns do hereby fully and forever waive, release and
discharge Associates Information Services, Inc., Cushman & Wakefield of
California, Inc. and Sunset Park West Limited Partnership, and their respective
agents, employees, officers, directors and partners from any and all present or
future claims, damages, demands and rights of action. I expressly agree that
this Release and Waiver is to protect Associates Information Services, Inc.,
Cushman & Wakefield of California, Inc. and Sunset Park West Limited
Partnership, and their respective agents, employees, officers, directors and
partners from the consequences of their own action(s) or lack of actions(s),
regardless of whether such is the concurrent or proximate cause of the damages.
I, warrant, represent and agree that I am in good physical condition and
that I have no disability, impairment or ailment preventing me from engaging in
active or passive exercise.
I agree to keep and obey all rules and regulations in force for the Fitness
Center including rules with respect to safety, personal hygiene and appropriate
conduct. Associates Information Services, Inc. reserves the right to revoke my
privileges for cause if I fail to keep and obey such rules and regulations.
I understand and agree that all information required for access to the
Fitness Center is, to the best of my knowledge, true and accurate, and that if
any of this information should change, I will notify Cushman & Wakefield of
California, Inc. of those changes within 10 working days (2 weeks) of said
change.
By:
---------------------------------
Employee's Signature
Print Name:
-------------------------
Telephone Number:
-------------------------
Date:
-------------------------------------
63
<PAGE>
EXHIBIT "K"
ASSIGNMENT OF LEASE
-------------------
THIS ASSIGNMENT OF LEASE ("Assignment"), by and between Textron Funding
Corportation, (f.k.a. AVCO Financial Services, Inc.) ("Assignor"), and
Associates Information Services, Inc. ("Assignee"),
In consideration of the assignment of the rights under the Lease, including
the right of occupancy, and the acceptance of the delegation of duties under the
Lease, including the duty to pay rent, Assignor hereby assigns to Assignee all
of Assignor's right, title, and interest in and to that certain Lease made by
and between Sunset Park West Limited Partnership, and Assignor dated the 8th of
September, 1983, (the "Lease"), covering the premises at 17770 Cartwright Road,
Irvine, California 92714 (the "Premises"), and Assignee accepts all of
Assignor's right, title, and interest in and to that certain Lease to have and
to hold those Premises commencing for the unexpired term of the Lease subject to
the rents, covenants, conditions, and stipulations in the Lease.
This Assignment contains the final, complete, and exclusive agreement of
the parties hereto as to all of the matters set forth herein.
Except as herein otherwise provided, all terms, agreement, and conditions
in the Lease are hereby made a part of this Assignment, and Assignee herein
being obligated as if Tenant in said Lease.
Landlord is hereby notified of Assignee's address for all notices being:
Associates Information Services, Inc., c/o Associates Corporation of North
America, P.O. Box 660237, Dallas, TX 75266-0237, ATTN: Corporate Properties
Dept.- Senior Vice President.
IN WHITNESS WHEREOF, Assignee, and Assignor have caused this Assignment to
be executed and delivered by their respective duly authorized representatives
and to take effect as of the 6th day of January, 1999.
WITNESS: TEXTRON FUNDING CORPORATION (F.K.A. AVCO
FINANCIAL SERVICES, INC.)
Assignor
/s/ Signature Illegible By: /s/ Michael D. Cahn
- ------------------------------- ------------------------------------
Name: Michael D. Cahn
----------------------------------
Title: Vice President, General Council
and Secretary
---------------------------------
Date: 5/12/99
----------------------------------
ASSOCIATES INFORMATION SERVICES, INC.
Assignee
/s/ Signature Illegible By: /s/ D.W.D. Bain
- ------------------------------- ------------------------------------
Name: D.W.D. Bain
----------------------------------
Title: Senior Vice President
---------------------------------
Date: 5/12/99
----------------------------------
64
<PAGE>
64
Exhibit K
Lease
Sunset Park West Limited Partenership,
as lessor
and
AVCO FINANCIAL SERVICES, INC.,
as lessee
Dated:
As of September 8, 1983
65
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Table of Contents
-----------------
Article: Page
- -------- ----
First Property description 1
Second Rent..................................................... 2
Third Taxes, utility charges, etc. ............................ 4
Fourth Repairs, alterations and improvements, state of
repair on termination, future development
and lessee's options with respect thereto 6
Fifth 11
Sixth Use; Compliance.......................................... 12
Seventh Net lease; additional rent; no abatements ............... 12
Eight Installation and signs, etc; removal of fixtures;
painting................................................. 14
Ninth Quiet Possession......................................... 15
Tenth Assigning and subletting................................. 16
Eleventh Lessee's renewal options................................. 17
Twelfth Maintenance of insurance................................. 18
Thirteenth Adjustment of losses..................................... 23
Fourteenth Collection of insurance moneys........................... 23
Fifteenth Notice of casualties..................................... 24
Sixteenth No separate insurance.................................... 24
Seventeenth Insurance certifications................................. 25
66
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Eighteenth Easements, condemnation................................... 25
Nineteenth Damage by casualty........................................ 35
Twentieth Lessee's right of termination............................. 40
Twenty-First Plans for restoration..................................... 43
Twenty-second Lessee's default.......................................... 44
Twenty-Third (Intentionally deleted)................................... 48
Twenty-Fourth Remedies cumulative....................................... 48
Twenty-Fifth No waiver................................................. 48
Twenty-Sixth Holding Over.............................................. 49
Twenty-Seventh Definitions............................................... 49
Twenty-Eighth Article Headings.......................................... 51
Twenty-Ninth Separability clause....................................... 51
Thirtieth Notices................................................... 51
Thirty-First Miscellaneous; Financial Statements; Lessor's
Mortgages................................................. 52
Thirty-Second Investment tax credit..................................... 53
Thirty-Third Right of first offer...................................... 53
Thirty-Fourth Option to purchase........................................ 55
Thirty-Fifth Payment Pursuant to Schedule C............................ 60
Thirty-Sixth Lessor's liability limited................................ 61
Thirty-Seventh (Intentionally Deleted)................................... 61
Thirty-Eighth Perpetuities.............................................. 61
67
<PAGE>
Schedules
---------
A - Land Description
A-1 Permitted Title Encumbrances
B - Base Rent Schedule
C - Schedule C Payments
D - Renewal Option Rentals
-ii-
68
<PAGE>
This Lease, dated as of September __, 1983 (as amended or supplemented from
time to time, "this lease"), between SUNSET PARK WEST LIMITED PARTNERSHIP, a
Massachusetts limited partnership, as lessor ("lessor") and AVCO FINANCIAL
SERVICES, Inc., a Delaware corporation, as lessee ("lessee"):
WITNESSETH:
That in consideration or of the mutual agreements herein contained, the
parties hereto do hereby covenant to and with each other as follows:
ARTICLE FIRST (Property description):
Lessor does hereby lease to the lessee the real property described in the
Schedule A hereto (the "Land") and the buildings and improvements thereon (the
"Improvements) (collectively the "leased premises") in Irvine, California.
The leased premises are leased with the Improvements on an "as is" basis,
and are subject to such covenants, conditions, restrictions, easements,
reservations and rights of way set forth in Schedule A-1 hereto, a remainder
interest in the Land owned by Claradon Land Company, Inc. ("Land Remainder
Owner"), any state of facts an accurate survey or physical inspection might
show, zoning rules, restrictions, regulations, resolutions and ordinances, and
building restrictions and governmental regulations now in effect or hereafter
adopted by any governmental authorities having jurisdiction. Lessee represents
and warrants that it has examined the record title to the leased premises and
has found the same to be satisfactory for all purposes hereof.
69
<PAGE>
TO HAVE AND TO HOLD the leased premises, together with the tenements,
hereditaments, appurtenances and easements thereunto belonging, at the rental
and upon the terms and conditions herein stated, for a term commencing on that
date when title to the Improvements is conveyed from lessee to lessor and the
First Mortgage, as defined in Article Twenty-Seventh hereof, closes, (the
"Commencement Date") and continuing for twenty-five (25) years.
Lessor owns a 30 year estate for years in the Land ("Estate for Years").
Lessor has an option to enter into a ground lease with the Land Remainder Owner
at the end of the Estate for Years for a period, including additional options,
of not less than 45 years (the "Ground Lease"). Lessor agrees to enter into the
Ground Lease and thereafter to exercise such Ground Lease options as may be
necessary to extend the term thereof so as to not be less than the Term hereof,
as the same may from time to time be extended by lessee pursuant to Article
Eleventh.
ARTICLE SECOND (Rent):
Lessee does hereby agree to pay without offset, deduction or counterclaim
to lessor, as the rent for the leased premises during the interim term and the
original term, installments determined pursuant to the Base Rent Schedule set
forth in Exhibit B hereto (the "Base Rent"), payable monthly in arrears on or
before the eighth day of each month during the original term hereof.
Said payments shall be made to lessor in immediately available funds, c/o
Winthrop Financial Co., Inc., at 225 Franklin Street, Boston, Massachusetts
02110, or to any other payee or at any other address which lessor, or any
successor in interest of lessor, may in writing designate. If an installment of
the rent or any item of additional
70
<PAGE>
rent referred to hereinafter is paid after the due date thereof, it shall bear
the greater of (i) interest from such a due date at the lesser of (a) /2% per
annum in excess of the prime rate from time to time established by Bank of
Boston Corporation (such prime rate being currently defined by the Bank of
Boston Corporation as its "Base Rate"), and (ii) 2% per annum in excess of the
interest rate under the First Mortgage, as defined in Article Twenty-Seventh
hereof (the interest rate computed pursuant to this clause (ii) being deemed to
be 13.5% per annum thereafter), or (b) the maximum rate permitted by applicable
usury law. Such interest shall be immediately due and payable as additional rent
hereunder.
ARTICLE THIRD (Taxes, utility charges, etc.):
Lessee agrees that it will pay, as additional rent hereunder, all charges
for electricity, water, gas, telephone, and other utility services used on the
leased premises. Lessee further agrees to pay all taxes (excluding, however, net
income and franchise taxes payable by lessor but including, without limitation,
sales, use, value added and similar taxes), assessments, real property taxes,
personal property taxes, Trustees' fees, water rents, rates and charges, sewer
rents, and other governmental impositions and charges of every kind and nature
whatsoever, extraordinarily as well as ordinary, and each and every installment
thereof, which shall or may during the term hereof be charged, laid, levied,
assessed, imposed, become due and payable, or liens upon, or arise in connection
with the ownership, use, leasing, sub-leasing, occupancy or possession of or
grow due or payable out of or for, the leased premises during the original term
or any renewal thereof. Lessee further agrees to pay, as additional rent
hereunder, all taxes which may be levied, assessed or imposed by the State of
California or by any political or
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taxing subdivision thereof, upon or measured by the rents hereunder or the
income arising therefrom, to the extent that such taxes are in lieu of or a
substitute for any tax upon the leased premises which, if such tax were in
effect, would be payable by lessee under the provisions hereof. Taxes, water
rent, rates and charges, sewer rents and other governmental impositions and
charges assessed during the term, but payable in whole or in installments after
the termination of this Lease, shall be adjusted and prorated and lessor shall
pay the prorated share thereof for the period subsequent to the term, and lessee
shall pay the prorated share thereof for the term of this Lease. Taxes water,
rents, rates and charges, sewer rents and other governmental impositions,
charges and supplemental assessments assessed during the term of this Lease, but
payable in respect of any prior to the commencement of this Lease, shall not be
adjusted or prorated, but shall be paid entirely by lessee. Lessee shall have
the right to apply for the conversion of any special assessment for local
improvements in order to cause the same to be payable in installments, and upon
such conversion, lessee shall be obligated to pay and discharge punctually only
such of said installments as shall become due and payable during the term.
Lessee shall within thirty (30) days after payment produce and exhibit to
lessor satisfactory evidence of the payment of any tax, assessment, or other
charge constituting a lien on the leased premises which has become due and
payable (excluding all taxes and charges payable by lessor and not otherwise
payable by lessee hereunder).
ARTICLE FOURTH (Repairs, alterations, and improvements, state of repair on
termination; future development and lessee's options with respect thereto):
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Lessee agrees that lessor shall be under no obligation to rebuild, replace,
maintain or make any repairs to the leased premises, or to the improvements
thereon during the original term or any renewal thereof. Lessee shall, at all
times during the original term or any renewal thereof, and at its own cost and
expense, keep and maintain in thorough repair and good, safe and substantial
order and condition, ordinary wear and tear excepted, all buildings and
improvements erected on the leased premises, or forming a part thereof
(including all building equipment which is an integral part of the building
structure), both inside and outside, structural and non-structural,
extraordinary and ordianry. Lessor agrees that lessee may make such alteration
and improvements to the leased premises as lessee may deem desirable for the use
thereof and may, at lessee's option and without cost to lessor, at any time and
from time to time during the original lease term, or during any renewal period
hereinafter provided for, do any one of the following, to wit:
I. alter or remodel any building or improvement on the leased premises,
provided the market value is not adversely affected and the utility
and character of any building or improvement so altered or remodeled
is not adversely affected or materially changed thereby, and/or
II. construct an addition or additions thereto, provided the market value
is not adversely affected and the utility and character of the leased
premises is not adversely affected or materially changed thereby,
and/or
III. construct a new building or buildings on the leased premises,
provided the market value is not adversely affected and the utility
and character of the leased premises is not adversely affected or
materially changed thereby;
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provided that lessee in any case shall first obtain any building
alteration and other permits that may be required by any governmental
authorities having jurisdiction, and shall submit to lessor notice
thereof and reasonably descriptive specifications thereof for any
such work costing in excess of $100,000.
All work performed by lessee hereunder shall be done continuously and
expeditiously, in a good and workmanlike manner and in compliance
with the requirements of applicable laws and regulations and
applicable insurance policies. Lessee shall pay all costs incurred,
and keep the lease premises free of all liens, in connection with
such work. At the expiration or termination of this Lease, or any
extension or renewal thereof, lessee shall leave the lease premises
in good condition, allowance being make for ordinary wear and tear
and damage by fire, or by earthquake, or by the elements, excepted
(except as otherwise provided in Article Eighteenth), and lessee
shall not be required to restore the leased premises to the condition
which the leased premises are in as of the commencement of the term
hereof, it being agreed that lessor shall accept the leased premises
with such alterations, remodeling, additions or new construction, as
may have been made pursuant to the authorization contained in this
paragraph. All such alterations, remodeling, additions, new
construction and improvements shall be deemed to be and immediately
become part of the realty and the sole and absolute property of
lessor and shall be deemed to
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be part of the leased premises. Lessee agrees that it will not permit
any mechanics', materialmen's or other liens to stand against the
leased premises for work or materials furnished lessee in connection
with any such alterations, remodeling, additions or new construction,
it being provided however, that lessee shall have the right to
contest the validity of any such lien or claim, but upon a final
determination of the validity thereof lessee shall immediately pay
any judgement or decree rendered against lessee; with all proper
costs and charges, and shall cause any such lien to be released of
record without cost to lessor.
Should lessee, during the original term hereof, alter, remodel, add
to, or Construct new improvements pursuant to the provisions of clauses I, II or
III hereof, and provided the cost thereof is greater that $500,000 during any
twelve (12) month period, lessee may, on completion of said improvements, offer
to sell the same to lessor for an amount not greater than the cost thereof.
Should lessor accept lessee's offer (provided that all of the holders of the
indebtedness secured by the First Mortgage shall have consented thereto), which
acceptance shall be made in writing within ninety (90) days of the date of such
offer, lessor shall within seventy-five (75) days after lessor's written
acceptance thereof, pay the purchase price (hereinafter, "Additional Funds") to
lessee, and lessor and lessee shall enter into a modification of this Lease
covering the property hereby leased and such new improvements. The lease
modification agreement shall (1) provide for and increase in the rentals during
the original term by an amount sufficient to amortize, over then remaining
balance of the original term hereof, 100% of the Additional Funds with interest
thereon at the rate payable by lessor in connection with
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borrowing the Additional Funds; and (2) increase the option rentals provided for
in ARICLE ELEVENTH hereof by multiplying the amount of Additional Funds by the
following constant percentages: first renewal term, 12.50%; second renewal term,
13.00%; third renewal term, 13.50%; fourth renewal term, 14.00%; fifth renewal
term 14.50%; sixth renewal term 15.00%. lessee agrees to pay all closing costs
(including transfer taxes, recording fees and taxes, lender's disbursements of
counsel to lessor and lessor's lender and trustee or escrow fees) incurred by
lessor in connection with purchasing the new improvements, amending this Lease
and obtaining a new or amended mortgage loan to finance the Additional Funds.
Should lessee's offer to seel such new improvements through conventional
leasehold financing.
ARTICLE FIFTH (Use; Compliance with laws):
Lessee may use the leased premises for any lawful purpose. Lessee will not
abandon the leased premises or permit the same to remain unoccupied and
unattended for a continuous period of ninety (90) days. Lessee agrees throughout
the original term of this Lease and any renewal thereof to comply with all laws,
ordinances, orders, rules, regulations and requirements of all governmental
authorities having jurisdiction of the leased premises including, without
limitation, those requiring structural changes or other capital expenditures
with respect to the leased premises, and comply with all applicable requirements
of insurance policies required to be maintained hereunder. Lessee may contact
the validity of any such laws, ordinances, orders, rules, regulations and
requirements but shall indemnify and hold lessor harmless against the
consequences of any violation thereof by lessee. Upon the written request of
lessor at any time or from
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time to time, lessee will furnish to lessor copies all certificates of occupancy
and building and other permits which it shall have obtained with respect to the
leased premises and an opinion of its counsel (which, by its terms, may be
relied upon by lessor and lessor's Mortgagees) to the effect that all applicable
zoning ordinances and regulations and requirements applicable to the leased
premises have been complied with.
ARTICLE SIXTH (Lessee's assumption of liability):
Lessee agrees that it will defend, indemnify and save lessor harmless from
any and all liability, damage, expense, cause of action, suits, claims, or
judgements arising from injury to a person or property on the leased premises,
or upon the adjoining streets and sidewalks or arising from the occupation, use,
possession, conduct or management of the leased premises. Lessee further agrees
to defend, indemnify and save lessor harmless from any and all liability arising
from any failure by lessee to perform any of the agreements, terms, covenants or
conditions of this lease on lessee's part to be performed.
ARTICLE SEVENTH (Net Lease; additional rent, no abatements):
This is a net lease, it being the intention of the parties hereto that
lessee shall pay as additional rent, without offset, all costs of maintenance,
taxes and other charges that are assessed or levied against the lease premises,
including without limitation the costs, taxes and charges set forth in this
Lease. All taxes, charges, costs and expenses which lessee assumes or agrees to
pay hereunder, together with all interest and penalties that may accrue thereon
in the event of lessee's failure to pay the same as herein provided, all other
damages, costs and expenses which lessor may suffer or incur, and any and all
other
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sums which may become due, by reason of any default of lessee to comply with the
covenants, agreements, terms and conditions of this Lease on lessee's part to be
performed, and each or any of them, shall be deemed to be additional rent, and
in the event of nonpayment lessor shall have all the rights and remedies herein
provided in the case on nonpayment or rent.
In addition, lessee will, at its own cost and expense, duly and punctually
make all payments relating to the leased premises required to be made by lessor
under the First Mortgage (except debt service payments with respect to the notes
which the First Mortgage secures) when and as the same shall become due and
payable.
No abatement, diminution or reduction or rent, charges or other
compensation shall be claimed by or allowed to lessee, or any persons claiming
under it, under any circumstances, whether for inconvenience, discomfort,
interruption of business, or otherwise, arising from the making of alterations,
changes, additions, improvements or repairs to any building now on or which may
hereafter be erected on the leased premises, by virtue of or arising from, and
during the restoration of the leased premises after the destruction or damage
thereof by fire or other cause.
Except to the extent otherwise expressly provided in this Lease, this Lease
shall not terminate, nor shall lessee be entitled to any abatement of rent or
reduction thereof, nor shall the obligations of lessee be otherwise affected, by
reason of damage to or destruction of all or any part of the leased premises
from whatever cause, the taking of the leased premises or any portion thereof by
condemnation or otherwise, the lawful prohibition of lessee's use by any private
person or corporation, or by reason of any
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eviction by paramount title, or for any other cause whether similar or
dissimilar to the foregoing, any present or future law to the contrary
notwithstanding.
ARTICLE EIGHTH (Installation and signs, etc.; removal of fixtures; painting):
Lessee may place or install on and/or in the leased premises such fixtures
and equipment as it shall deem desirable for the conduct of business therein,
and may paint the building improvements such colors as it elects. Lessee shall
have the exclusive right, provided that it shall first obtain any permits
required by any governmental authorities having jurisdiction of the leased
premises, to paint and erect or authorize signs in and over the leased premises
and on the outside of the building improvements thereon, and upon the written
request of lessor will remove any such signs upon the expiration or the sooner
termination of this lease. Personal property, fixtures and equipment used in the
conduct of lessee's business (as distinguished from fixtures and equipment used
in connection with the operation and maintenance of the building improvements)
places by lessee or any subtenant or any predecessor in interest on or in the
leased premises (even though placed prior to the commencement of said term),
shall not become a part of the realty, even if nailed or screwed or otherwise
fastened to the lease premises, but shall retain their status as personalty and
may be removed by lessee at any time. Lessee may obliterate any signs or color
effects installed by it. Any damage caused the leased premises by the removal of
such property or the obliteration of any signs or color effects shall be
repaired by lessee at its expense. Any trade fixtures or personal property not
used in connection with the operation of the leased premises and belonging to
lessee or to any
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subtenant, if not removed within twenty (20) days after expiration or the sooner
termination of this Lease, shall be deemed abandoned and shall become the
property of lessor without any payment or offset therefor.
ARTICLE NINTH (Quiet possession):
So long as this Lease remains in effect lessee is not in default in the
performance of its obligations hereunder, lessee shall have quiet and peaceful
possession thereof as against any adverse claim of lessor or any party claiming
under lessor, subject to all exceptions to said title to the leased premises set
forth in Schedule A-1 hereof, all other matters referred to in the second
paragraph of Article First hereof and subject also to the third and fourth
paragraphs of Article Seventh hereof.
ARTICLE TENTH (Assigning and subletting):
Lessee shall have the first right to assign this Lease or to underlease or
sublet the whole or any part of the leased premises. Should lessee assign this
Lease or sublet the whole or any part of said leased premises, it shall
nevertheless remain primarily liable to lessor for full payment of the rent and
the performance and observance of lessee's other obligations under this Lease as
a principal and not as a surety. Lessee agrees to notify lessor in writing of
any assignment or subletting promptly after the effective date thereof, and, on
request of lessor, to furnish lessor with a conformed copy of any such
assignment or sublease. In the event of lessee's default in any of the
provisions hereof, after the leased premises have been assigned or sublet by
lessee, lessor may collect rent from the assignee or sublessee, but any
collection of rent from an assignee or sublessee shall not
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be deemed an acceptance by lessor of the assignee or sublessee as lessee and
shall not relieve lessee of its primary liability hereunder. Any such sublease
shall be subject to termination by lessor at its option on termination of this
Lease except in the instance in which this Lease is terminated and the leased
premises purchased by lessee.
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ARTICLE ELEVENTH (Lessee's renewal options):
Lessor hereby grants to lessee the right, at lessee's option, to extend the term
of this lease for six (6) separate and additional periods of five (5) years each
after the expiration of the original term hereof at a monthly rental (which
shall be payable in arrears on the eighth day of each month) equal to the
amounts set forth in Schedule D, plus (ii) the amount of increased net rental
determined pursuant to Article Fourth in connection with new or additional
improvements purchased by lessor from lessee, and upon the terms (other than
length of term and annual rental) herein specified. These options shall be
exercised by written notice given to lessor or delivered or mailed to lessor at
least twelve (12) month before the expiration of the original term hereof, or,
in the event lessee has previously exercised one or more options herein given,
such notice shall be given at least nine (9) months before the expiration of the
renewal term then in effect. The parties hereto agree that a new lease need not
be executed upon the exercise of any of these options, but that this Lease will
remain in full force and effect, changed only as to the matters specified in
this Article, except that there shall be no option of further renewal following
the expiration of the final renewal term.
ARTICLE TWELFTH (Maintenance of insurance):
(a) Without limiting any other obligations hereunder, lessee shall at all times
(except as otherwise provided below) maintain at its expense the following
insurance covering the improvements or activities at the leased premises in
insurance companies duly licensed to do business in California:
(i) During the period of any construction or reconstruction of the
Improvements, "All-Risk" Builder's Risk Insurance on Completed Value
(non-reporting) Form;
(ii) At all other times, fire and extended coverage plus vandalism and
malicious mischief insurance;
(iii) Sprinkler leakage insurance covering accidental discharge from
sprinkler or other fire prevention systems now or hereafter
installed, in amounts determined by lessee to be appropriate or for
such higher amounts as may at any time be reasonably required by
lessor;
(iv) Boiler and pressure vessels insurance covering explosion of any steam
boilers, pressure vessels or similar apparatus requiring inspection
under applicable state or municipal laws or regulations in any of the
Improvements, in amounts determined by lessee to be reasonable or in
such higher amounts as may at any time be reasonably required by
lessor;
(v) If the leased premises are located in an area identified by the
Secretary of Housing and Urban Development as a flood hazard area,
flood insurance in an amount equal to the maximum coverage available
under the National Flood Insurance Act of 1968, as amended;
(vi) Rental value insurance covering loss of rental income from perils
required to be insured against in paragraphs (ii) through (iv) above
in amounts deemed appropriate by lessee or as reasonably required by
lessor;
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(vii) Public liability insurance covering all activities in or about the
leased premises or Improvements or adjoining streets, sidewalks and
passageways in amounts not less than $2,000,000 per person,
$5,000,000 per occurrence for personal injury and $2,000,000 per
occurrence for property damage, such insurance to include
contractual liability coverage for liabilities assumed by lessee
under this lease, including specifically those set forth in this
Article Twelfth;
(viii) Workers' Compensation Insurance in full compliance with requirements
of the State of California and covering all construction of other
work on or about the leased premises and the Improvements;
(ix) Such other or increased insurance as lessor may reasonably require
from time to time; and
(x) All of the above insurance shall be written subject to terms and
conditions reasonably satisfactory to lessor.
(b) Policies required in clauses (I) through (vi) of subparagraph (a) above
shall include lessor and lessee as insured as their interests may appear,
shall name lessor's mortgagees as loss payees under a standard mortgagee
endorsement and shall be in amounts sufficient to prevent lessor or lessee
from becoming a co-insurer within the terms of the policies. Each policy
shall provide that losses shall be adjusted and paid to hereinafter
provided. Each policy shall further provide that, as to the interest of
lessor and lessor's mortgagees, coverage shall not be invalidated or
adversely affected by any act or omission of lessor or lessee or their
respective employees or agents or any occupant of the leased premises which
might otherwise result in forfeiture.
(c) Policies required in clauses (I) through (iv) of subparagraph (a) above
shall provide for coverage in an amount equal to not less than 100% of the
replacement cost of the Improvements, including cost of demolition and
debris removal, and removal of foundation, without allowance for
depreciation.
(d) Policies required in clause (vii) of subparagraph (a) above shall include
lessor, lessor's mortgagees and lessee as issureds, shall be primary and
without any right of contribution as to any other insurance carried by or
for lessor and shall be endorsed to state that all terms and conditions
except for limits of liability shall operate in the same manner as if there
were a separate policy covering each insured.
(e) Policies required in (i) through (ix) above shall provide that they may
not be cancelled or materially changed so as adversely to affect the
protection of lessor until thirty (30) days after lessor and lessor's
mortgages shall have received written notice of intent so to cancel or
materially change the policy. Except for public liability insurance
policies lessee shall cause each policy to provide that the insurer(s)
waive any right of subrogation against lessor and its agents or employees.
(f) At the request of lessor and at the expense of lessee, the current
replacement cost of the Improvements shall be established by an independent
appraiser selected by lessee and reasonably acceptable to lessor, provided,
however, that such appraisal shall not be requested by lessor more often
than once every three years.
(g) Lessee shall either provide the certificate(s) pursuant to Article
Seventeenth hereof or shall deliver to lessor and lessor's mortgages an
original or certified copy of each insurance policy required hereunder upon
the execution of this lease and of each renewal of each such policy at
least thirty (30) days prior to the renewal date (provided that if lessee
shall deliver such certificate, lessor may thereafter request a
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certified copy of such policy required upon commencement hereof and, as to
renewals, in the event that the terms of a blanket policy are changed as
they relate to the leased premises). Lessee shall pay the premium on each
policy when due and shall furnish lessor, upon request, with satisfactory
evidence of such payment.
(h) Anything contained in this Article Twelfth to the contrary notwithstanding,
and provided that lessor's First Mortgagee shall so permit, any and all
insurance which lessee is obligated to carry pursuant to this Article
Twelfth may be carried pursuant to a prudent self-insurance program so long
as lessee maintains a tangible new worth, determined in accordance with
generally accepted accounting principles, of at least $100,000,000 (as
confirmed by the financial statements delivered by lessee pursuant to
Article Thirty-First hereof), provided that no event of default hereunder
shall be required to make an offer to purchase pursuant to Article
Nineteenth and such offer shall be rejected by lessor, or if lessee shall
elect to terminate the Lease during a renewal option term by reason of fire
or other casualty, lessee shall pay to lessor an amount equivalent to the
insurance proceeds which would exist or be payable with respect to such
casualty if the insurance specified in this Article Twelfth were being
carried. Neither the maintenance of insurance or self-insurance for the
risks specified in subparagraphs (a) (vii) and (viii) above nor the
delivery of the proceeds thereof to lessor shall diminish the obligations
of lessee with respect to such risks pursuant to Article Sixth above.
ARTICLE THIRTEENTH (Adjustment of losses):
Losses covered by the insurance provided for in paragraph (a) (I) through (v) of
Article Twelfth shall be adjusted with the carriers thereof by and at the cost
of lessee, provided, however, that if the loss shall be in excess of $250,000,
no final adjustment shall be made without the written approval of lessor and the
First Mortgagee of the amount of the adjustment unless lessee shall have
restored the Improvements pursuant to Article Twentieth hereof, in which event
such approval shall no longer be required. Losses up to $250,000 shall be
payable to lessee. Losses in excess of $250,000 shall be payable to lessee.
Losses in excess of $250,000 shall be payable to a Depository, as defined in
Article Twenty-Seventh hereof.
ARTICLE FOURTEENTH (Collection of insurance moneys):
Lessor and lessee each agrees that it will cooperate with the other, to such
extent as such other party may reasonably require, in connection with the
prosecution or defense of any action or proceeding arising out of, or for the
collection of any insurance moneys that may be due in the event of, any loss or
damage, and that it will execute and deliver to such other party such
instruments as may be required to facilitate the recovery of any insurance
moneys, but the costs and expenses of all such actions and proceedings shall be
paid by lessee.
ARTICLE FIFTEENTH (Notice of casualties):
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Lessee agrees to give prompt notice to lessor and lessor's mortgagees with
respect to all fires or other casualties occurring upon the leased premises,
where the apparent damage to the Improvements resulting therefrom shall equal or
exceed $100,000.
ARTICLE SIXTEENTH (No separate insurance):
Lessee shall not take out separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under Article Twelfth,
unless lessor is included thereon as named insured; with loss payable to
lessor's mortgagees as in this Lease provided. Lessee shall immediately notify
and lessor's mortgagees when any such separate insurance is obtained and shall
deliver to lessor and lessor's mortgagees a certificate of insurance, on form
satisfactory to lessor and lessor's mortgagees, or the original or a certified
copy of all such policies and renewals thereof.
ARTICLE SEVENTEENTH (Insurance certifications):
Lessee shall furnish to lessor and lessor's mortgagees upon execution of this
Lease and thereafter upon request of lessor or lessor's mortgagees, but not more
frequently than once a year, a letter of certification signed by its broker,
agent or insurer specifying those policies of insurance pertaining to the
Improvements or activities at the leased premises and stating that such
insurance complies in all respects with the requirements of this lease.
ARTICLE EIGHTEENTH (Easements, condemnation) :
A. Lessor hereby empowers lessee, from time to time during the original term
of this Lease and during any renewal terms: (a) to grant easements
affection the leased premises to provide utility service to the leased
premises running along boundary lines and to the Improvements; (b) to
dedicate or convey, as required, portions of the leased premises for road,
highway and other public purposes; and (c) to execute petitions to have the
leased premises or a portion or portions thereof annexed to any
municipality or included within utility, highway or other improvement or
service district. If any monetary consideration is received by lessee as a
result of the granting of any such easement or the dedication or conveyance
of any portion of the leased premises as hereinabove provided, such
consideration shall be retained by lessee if the same shall be One Hundred
Thousand Dollars ($100,000) or less, but, if it is an amount in excess of
One Hundred Thousand Dollars ($100,000) , it shall be allocated between
lessor and lessee in the same proportion that (a) the fair market value of
lessor's interest in this Lease, valued as if the granting of such easement
or dedication or conveyance giving rise to the receipt of such
consideration had not occurred ("Lessor's Interest Before Grant of
Interest") bears to (b) the fair market value of lessee's interest in this
Lease, valued as if the granting of such easement or dedication or
conveyance giving rise to the receipt of such consideration had not
occurred ("Lessee's Interest Before Grant of Interest"), provided that if
one of Lessor's Interest Before Grant of Interest and Lessee's Interest
Before Grant of Interest is a positive number and the other is a negative
number, all of the award or payment shall be
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distributed or retained by the party whose Interest Before Grant of
Interest is a positive number.
The powers hereinabove granted the lessee shall be exercised by
lessee without the joinder of lessor, but lessor agrees to cooperate fully
with lessee if for any reason it is necessary or desirable under the laws
of California for lessor to join in the execution of any instrument or to
cooperate with lessee in any other way in order for said powers to be
effectively exercised. As a condition precedent to the exercise by lessee
of any of the powers granted to lessee in this Article, lessee shall inform
lessor and lessor's mortgagees in writing of the action to be taken, shall
certify to lessor and lessor's mortgagees, in a certificate executed by the
president or a vice president of lessee, that I lessee's opinion such
action will not adversely affect either the market value of the leased
premises or the use of the leased premises for their intended purpose, and
shall deliver all instruments required by lessor and lessor's mortgagees.
In the event that any person or corporation, municipal, public or private,
having powers of eminent domain over the leased premises, shall propose to
condemn and acquire title to all or any portion of the leased premises,
lessor and lessee shall confer with regard to the desirability of a
transfer in lieu of condemnation, and, if lessor and lessee shall determine
to make any such conveyance shall be treated in the same manner as a
condemnation award or payment for purposes of this Article Eighteenth.
Nothing occurring pursuant to the foregoing two paragraphs shall affect
lessee's obligations under this Lease.
B. In the event that any person or corporation, municipal, public, private or
otherwise, shall at any time during the original term hereof condemn and
acquire title to all or a substantial portion of the leased premises
(including some portion of the Improvements or, if such taking is of land
only, such taking renders a substantial portion of the Improvements
unuseable), or to any easement therein, in or by condemnation proceedings
pursuant to any law, general, special or otherwise, which condemnation
shall make the leased premises no longer economic, lessee may elect, within
sixty (60) days after such condemnation or acquisition of title by such
person or corporation, to give written notice to lessor and lessor's
mortgagees of its intention to terminate this Lease as provided for in
Article Twentieth hereof. As a part of said notice lessee shall furnish a
certification, executed by the president or a vice president of lessee, to
the effect that the Board of Directors of lessee has determined that such
condemnation has made the leased premises no longer economic, (lessee's
"Condemnation Certificate") and shall offer to purchase the leased premises
upon the terms set out in Article Twentieth hereof. If such offer to
purchase shall be accepted or be deemed to have been accepted as provided
in Article Twentieth, lessor shall transfer and convey, or cause to be
transferred and conveyed, such Improvements and Land to lessee in the
manner provided in Article Twentieth, and upon consummation of such
purchase by lessee, any award or payment made in said condemnation
proceedings shall be paid to and/or retained by lessee. If lessee's offer
to purchase shall have been rejected and this lease terminated as provided
for in said Article Twentieth, any award or payment made in such
condemnation proceedings in respect of the leased premises shall be
distributed to lessor.
Should such condemnation not relate to all or a substantial portion
of the leased premises or should lessee not give such notice of termination
of this Lease, this Lease
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shall be deemed to continue as to the remaining portion of the leased
premises. In such event, or in the event of any condemnation of any portion
of the leased premises, or any easement therein, which shall not entitle
lessee to give notice of its intention to terminate this Lease as
hereinabove provided, the entire award or payment made in respect of damage
to the leased premises, shall be transferred and assigned to a Depositary,
except that if such award or payment is One Hundred Thousand Dollars
($100,000.00) or less, Lessor shall cause such Depositary to transfer and
assign the same to lessee. Lessee shall make all repairs or alterations (if
any) to the leased premises made necessary by such condemnation, so that
the market value, utility and character of the leased premises as so
repaired and altered shall at least be substantially equal to the market
value utility and character thereof immediately prior to such condemnation
irrespective of the availability or sufficiency of any award or payment
with respect thereto. Lessee's obligations with respect to such repairs or
alterations are subject to the following further understandings and
agreements (the "Restoration Procedure"):
(a) All awards and payments paid to a Depositary on account of such
condemnation, shall be applied in the following manner:
(i) Lessor and lessee shall be reimbursed for all necessary
appraisal fees and other expenses incurred by them in
connection with the condemnation proceeding.
(ii) There shall be paid to lessee from said awards and
payments such part thereof as shall equal the cost to
lessee of doing such temporary work as in lessee's
reasonable opinion may be necessary in order to protect
the leased premises pending settlement of the loss
attributable to the condemnation or the restoration of
such leased premises.
(iii) There shall be paid to lessee from said awards and
payments such part thereof as shall equal the cost to
lessee of restoring the leased premises as required
above. If said awards or payments shall not equal the
cost to lessee of such restoration, lessee shall
nevertheless complete the same without expense to lessor
and all work undertaken by lessee in connection with such
restoration shall be free of liens. All such work shall
be done in accordance with the provisions and conditions
of Article Fourth.
(iv) Payment to lessee pursuant to clauses (ii) or (iii) of
this paragraph (a) shall be made to lessee from time to
time as the work progresses, but not more frequently that
once in any calendar month, in amounts equal to the cost
of labor and material incorporated into the used in such
work plus builders', architects' and engineers' fees and
other charges in connection with such work, upon delivery
to the Depositary and to lessor, of a certificate of a
responsible officer of lessee certifying that the amounts
so to be paid to lessee are payable to lessee in
accordance with the provisions of this Article
Eighteenth, that such amounts are then due and payable by
lessee or have theretofore been paid by lessee and that
the amount remaining with Depositary is sufficient to pay
for the completion of the restoration.
(b) In the event that any of the awards or payments paid to a
Depositary, as hereinabove provided, shall remain after the
completion of such restoration, so that there is a remaining
balance of such award or payment after application of
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the award or payment in accordance with the prior provisions of this
Article Eighteenth, (such remaining balance being hereinafter
referred to as the net surplus award), the Depositary shall pay such
net surplus award, if the same shall be One Hundred Thousand Dollars
($100,000) or less, to lessee. If the net surplus award shall be in
excess of One Hundred Thousand Dollars ($100,000), it shall be paid
over to lessor or as lessor may direct. Should the entire leased
premises be condemned at any time during the original term hereof and
this Lease be terminated either by operation of law or through the
exercise of lessee's option to terminate as hereinabove provided,
then, and in such event, lessee shall be deemed to have offered to
purchase the leased premises on the sixtieth (60th) day following
such condemnation or termination, upon the terms set forth in Article
Twentieth hereof. If such offer to purchase shall be accepted or be
deemed to have been accepted as provided in Article Twentieth, lessor
shall transfer and assign, or cause to be transferred and assigned,
all of its right, title and interest in and to the award for such
condemnation simultaneously with lessee's payment of the purchase
price as provided in Article Twentieth. If Lessee's offer to purchase
shall have been rejected and this Lease terminated as provided in
said Article Twentieth, any award or payment made in such
condemnation proceeding in respect of the leased premises shall be
distributed to lessor.
C. Should a condemnation occur during a renewal term, lessee shall either (a)
terminate the renewal term then in effect, or (b) remain in possession and
repair and alter the leased premises to the extent made necessary by such
condemnation, so that the value and utility of the leased premises as so
repaired and altered shall at least be substantially equal to the value and
utility thereof immediately prior to such condemnation. If lessee elects to
terminate the renewal term, lessee shall give to lessor, within sixty (60)
days of such condemnation, written notice cancelling and terminating such
renewal term as of a date which is thirty (30) days after the date of such
notice, provided that lessee simultaneously delivers with such notice
lessee's Condemnation Certificate. If such Condemnation Certificate is so
delivered, upon expiration of said thirty (30) days after the date of such
notice, provided that lessee simultaneously delivers with such notice
lessee's Condemnation Certificate. If such Condemnation Certificate is so
delivered, upon expiration of said thirty (30) days', the renewal term
shall cease and terminate provided that lessee shall pay all installments
of rent and all other sums then due and payable under this Lease to and
including such date of termination, and the award or payment made in
respect of such condemnation shall be distributed to lessor. Should lessee,
however, elect to remain in possession, the renewal term shall continue as
to the remaining portion of the leased premises. In such event, the entire
award or payment made in respect of damage to the leased premises, shall be
transferred and assigned to the Depositary, except that if such award or
payment is One Hundred Thousand Dollars ($100,000.00) or less, lessor shall
cause such Depositary to transfer and assign the same to lessee. Lessee
shall make all repairs or alterations (if any) the leased remises made
necessary by such condemnation so that the value and utility thereof
immediately prior to such condemnation irrespective of the availability or
sufficiency of any award or payment with respect thereto. Lessee's
obligations with respect to
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such alterations or additions during a renewal Term are subject to the
Restoration Procedure, as hereinabove defined in this Article Eighteenth,
except that should a net surplus award remain after such repairs or
alterations are completed, the Depositary shall pay such surplus to lessor.
ARTICLE NINETEENTH (Damage by casualty) :
A. If the Improvements shall be damaged or destroyed by fire or any other any
other peril whatsoever lessee shall, except as hereinafter provided,
restore the leased premises and the Improvements or shall cause the same to
be restored to such extent that, upon the completion of such restoration
work, the market value, utility and character of the leased premises and
the Improvements as so restored shall at least be substantially equal to
the market value, utility and character thereof immediately prior to such
damage or destruction, irrespective of the availability or sufficiency of
any fire or other insurance proceeds payable with respect thereto. Lessee's
obligations hereunder are subject to the following further understandings
and agreements:
(a) All insurance moneys, if any, paid to a Depositary as provided in
Article Thirteenth hereof on account of such damage or destruction,
shall be applied in the following manner:
(i) There shall be paid to lessee form said insurance moneys such
part thereof as shall equal the cost to lessee of doing such
temporary work as in lessee's reasonable opinion may be
necessary in order to protect the leased premises pending
adjustment of the insurance loss or the restoration of such
leased premises.
(ii) There shall be paid to lessee from said insurance moneys such
part thereof as shall equal the cost to lessee of restoring the
leased premises as required above. If said insurance moneys
shall not equal the cost to lessee of such restoration, lessee
shall nevertheless complete the same without expense to lessor
and all the work undertaken by lessee in connection with such
restoration shall be free of liens. All such work shall be done
in accordance with the provisions and conditions of Article
Fourth.
(iii) Payment to lessee pursuant to clauses (I) or (ii) or this
paragraph (a) from insurance moneys shall be made to lessee
form time to time as the work progresses, but not more
frequently than once in any calendar month, in amounts equal to
the cost of labor and material incorporated into and used in
such work plus builders', architects' and engineers' fees and
other charges in connection with such work, upon delivery to
the Depositary and to lessor, of a certificate of a responsible
officer of lessee certifying that the amounts so to be paid to
lessee are payable to lessee in accordance with the provisions
of this Article Nineteenth that such amounts are then due and
payable by lessee or have theretofore been paid by lessee and
that the amount remaining with the Depositary or lessor's
mortgagees, as the case may be, is sufficient to pay for the
completion of the restoration.
(b) In the event that any of the insurance moneys paid by the
insurance companies to a Depositary with respect to the
leased premises, as hereinabove provided, shall remain
after the completion of such restoration, the excess
shall be paid over to lessor or as lessor may direct.
B. If such fire or other casualty destroys all or substantially all of the
leased premises during the original term of this Lease and lessee does not
desire to restore the
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Improvements and provided that such fire or other casualty has rendered the
leased premises no longer economic to restore for lessee's continued use
and occupancy, lessee may elect, within sixty (60) days after such fire or
other casualty, to give written notice to lessor and lessor's mortgages of
its intention to terminate this Lease as provided in Article Twentieth
hereof. As a part of said notice lessee shall furnish a certification
executed by the president or a vice president of lessee has determined that
the fire or other casualty has rendered the leased premises no longer
economic and that lessee has determined that the Improvements will not be
rebuilt, replaced or repaired, ("Lessee's Casualty Certificate"), and shall
offer to purchase the Improvements and the Land as provided in Article
Twentieth hereof. If such offer to purchase shall be accepted or be deemed
to have been accepted, lessor shall transfer and convey or cause to be
conveyed such Improvements and Land to lessee in the manner provided in
Article Twentieth, and upon consummation of such purchase by lessee all
insurance moneys paid or payable as a result of such fire or casualty shall
be paid to and/or retained by lessee. If lessee's offer to purchase shall
have been rejected and this Lease terminated as provided for in said
Article Twentieth, all such insurance moneys shall be paid directly to
lessor.
C. Should the fire or other casualty occur during a renewal option term and
lessee elect not to rebuild or repair said Improvements, lessee may, within
sixty (60) days after such loss or damage give to lessor written notice
cancelling and terminating the renewal term then in effect as of a date
which is thirty (30) days, the renewal term shall terminate provided that
lessee shall pay all installments of rent and all other sums then due and
payable under this Lease to and including such date of termination, and all
insurance moneys shall be paid directly to lessor.
D. Subject to the provisions of the two preceding paragraphs, in the event of
any such damage or destruction by fire or other casualty, the provisions of
this Lease shall be unaffected and lessee shall remain and continue liable
for the payment of all installments of rent, additional rent, real estate
taxes, assessments and all other taxes, charges and other impositions
required hereunder to be paid by lessee, as though no damage or destruction
by fire or other casualty had occurred, until the Lease terminates as
provided above or otherwise in accordance with the terms of this Lease.
E. Except as otherwise specifically provided in this Lease, this Lease shall
not terminate or be affected in any way and lessee shall not be released
from any of its obligations under this Lease by reason of damage to or
destruction of all or any portion of the Improvements. Lessee hereby waives
the provisions of Sections 1932 and 1933 of the California Civil Code and
of any other statute or rule of law now or hereafter in effect contrary to
the obligations of Lessee under the Lease or which may relieve lessee
therefrom.
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ARTICLE TWENTIETH (Lessee's right of termination):
In the event lessee shall have the right to terminate this Lease, pursuant
to Article Eighteenth or Article Nineteenth, it shall give written notice to
lessor and First Mortgage of its intention to terminate this Lease as provided
therein, and shall offer to purchase the Improvements and the Land for an amount
(the "Rejectable Purchase Price") which shall be equal to the present value of
the remaining cash rentals for the basic lease term, discounted at 10.55979%
per annum, such amount to include all accrued and unpaid fixed rentals, but in
no event shall the Rejectable Purchase Price be less than the balance then due
and payable upon pre-payment of the First Mortgage, including interest accrued
thereon and unpaid.
Unless such offer to purchase shall have been rejected by notice given not
later than one hundred eighty (180) days after the making of such offer, such
offer to purchase after the making of such offer, such offer to purchase shall
be conclusively deemed to have been accepted. If such offer is accepted, or is
deemed to have been accepted, lessor shall within two hundred ten (210) days
after the date of lessee's notice open or cause to be opened an escrow with a
title insurance company located in Orange County, California and shall deposit
or shall cause to be deposited in said escrow a good and sufficient deed or
other instrument of transfer and such other instruments and authorizations, if
any, as may be necessary to convey to and vest in lessee the title to the
Improvements and the Land in their then state of physical condition, free and
clear of the lien of any mortgage or deed of trust created by any lessor (which
shall be released or reconveyed by lessor in the escrow settlement), and free
and clear of any other liens, charges, encumbrances or exceptions, except those
set forth in schedule A-1; provided, however, and lessee agrees, that lessee
will take title to the Improvements and the Land subject to any liens, charges,
encumbrances and exceptions created, suffered or approved by lessee, and subject
also to any other liens, charges, encumbrances and exceptions not caused or
created by lessor, and to all zoning rules and restrictions, regulations and
ordinances that are applicable to the leased premises on the date of conveyance
thereof to lessee and subject to any violations of building codes, fire laws and
other laws and regulations that are in existence as of said date. Lessor shall
notify lessee, or cause lessee to be notified, of the opening of the escrow and
of its deposit therein of the deed and other instruments and authorizations, if
any, necessary to convey to lessee title to the leased premises as herein above
provided, and lessee shall, on a date not later than two hundred ten (210) days
from the date of lessee's notice to lessor, deliver to the escrow holder the
purchase price, with its instructions for the completion of the escrow in
accordance with the terms thereof. If lessee purchases the Improvements and the
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Land as herein provided lessee shall pay all rent and additional rent due and
payable under this lease on or prior to the date of its purchase and all closing
costs, including the escrow fee, recording fees, premium for an owner's policy
of title insurance, the cost of federal documentary stamps and any applicable
state and local stamp taxes, grantor's taxes and other like costs and charges,
and legal fees and disbursements of counsel to lessor and lessor's mortgages.
Should written notice of the rejection of lessee's offer to purchase be
given to lessee within one hundred eighty (180) days after the date of lessee's
notice to lessor, then this lease shall terminate upon the last to occur of (a)
such rejection, and (b) the payment by lessee of all sums due hereunder through
such date of termination. In the event of such termination, all parties hereto
shall be discharged from their liability by reason of this Lease and the
provisions with respect to the purchase of the leased premises herein contained,
and this Lease shall be of no further force or effect, except as set forth in
Article Thirty-Fifth, and except that obligations and liabilities of lessee,
actual or contingent, under this Lease which arose on or prior to the date of
termination and shall vacate and remove its property from the leased premises by
such date of termination, and as of such date proper adjustment shall be made in
respect of taxes and unexpired insurance premiums.
ARTICLE TWENTY-FIRST (Plans for restoration):
In the event lessee shall be required to restore the leased premises and
the Improvements pursuant to Article Eighteenth or Article Nineteenth hereof,
lessee shall not commence such restoration until it shall have (1) given to
lessor a certification signed by a president or vice-president of lessee that
the plans and specifications for any new buildings to be constructed by lessee
will not result in an adverse change in the market value, utility or character
of the leased premises, and (2) submitted to lessor with such certification a
copy of any building permit and any other permit or approval that may be
required for such buildings. All such work shall be performed in accordance with
the provisions of Article Fourth hereof.
ARTICLE TWENTY-SECOND (Lessee's default):
If (I) lessee shall fail to pay any installment of rent, or any payment
required to be made pursuant to Article Second, or any tax, assessment, water
rent or sewer rent for five (5) days after written notice from lessor that the
same is due and payable, or (ii) lessee shall fail to pay any other additional
rent or to comply with any of the other terms, covenants, conditions or
obligations of this Lease for ten (10) days after written notice from lessor or
the agent or attorney of lessor, or (iii) lessee shall make an assignment for
the benefit of creditors or file any petition or institute any proceedings under
the Bankruptcy Act, either as such Act now exists or under any
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amendment thereof which may hereafter be enacted, or under any other Act or
Acts, either as a bankrupt or as an insolvent, wherein or whereby lessee seeks
to be adjudicated a bankrupt or to be discharged from any or all of its debts or
obligations, or to effect a plan or reorganization, or for any other similar
relief, or if a receiver, trustee or liquidator for all or a substantial part of
the business of lessee should be appointed by any court upon the petition of
lessee, or (iv) if any such petition or proceedings of the same or similar kind
or character be filed or taken against lessee, or if any receiver, trustee or
liquidator for all or a substantial part of the business of lessee should be
appointed by any court in any proceedings brought against lessee and such
petition or proceedings should not be set aside or dismissed or the appointment
of said receiver, trustee or liquidator revoked within seventy-five (75) days,
then lessor, at the option of lessor, may cancel and terminate this Lease, as
well as all of the right, title and interest of lessee hereunder, by giving to
lessee notice of such cancellation and termination, and upon the expiration of
the time fixed in such notice, this Lease and the term hereof, as well as all of
the right, title and interest of lessee hereunder, shall expire in the same
manner and with the same force and effect, except as to lessee's liability, as
if the expiration of the time fixed in such notice of cancellation and
termination were the end of the original term or then current renewal term.
In the renewal of such termination, Lessor may recover the following
amounts from Lessee: (1) the worth at the time of the award of the unpaid
installments of rent and all other amounts payable to lessor hereunder that had
been earned at the time of termination of this lease, including the applicable
payment as provided in Article Thirty-Five hereof; plus (2) the worth at the
time of the award of the amount by which (a) the unpaid installments of rent and
all other amounts payable to lessor hereunder that would have been earned after
the date of termination of the lease until the time of such award, exceeds (b)
the amount of the loss of rent that lessee proves could have been reasonably
avoided; plus (3) the worth at the time of the award of the amount by which (a)
the unpaid installments of rent and all other amounts payable to lessor
hereunder for the balance of the Term (assuming the Term did not terminate prior
to its natural expiration) after the time of such award exceeds (b) the amount
of the loss of rent that lessee proves could be reasonably avoided; plus (4) any
other amount necessary to compensate lessor for all loss or damage proximately
caused by lessee's default. "The worth at the time of the award", as used in
clauses (1) through (3) above, shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
the such award plus one percent, or, if less, the maximum rate, if any,
permitted under applicable law.
If lessor does not terminate this Lease, then pursuant to Section 1951.4 of
the
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California Civil Code lessor may enter and repair and alter the leased premises
in such manner as to lessor may seem necessary or advisable, and may otherwise
enforce all of its rights and remedies under this Lease including without
implied limitation, the appointment of a receiver to protect lessor's interest
hereunder and the re-letting of all or any part of the premises for the
remainder of the Term or any longer or shorter period. Lessor may execute any
subleases made pursuant to the foregoing in lessor's name or in lessee's name,
and lessor shall be entitled to all rents from the use, operation or occupancy
of the leased premises. No act by or on behalf of lessor under this paragraph
shall constitute a termination of the Lease unless lessor gives lessee notice of
termination. Any entry or re-entry by lessor, whether had or taken under summary
proceedings or otherwise, shall not absolve or discharge lessee from liability
hereunder. Should any rent so collected by lessor after the deduction of the
costs or re-entering, altering and/or repairing, re-letting and operating the
leased premises be insufficient fully to pay to lessor a sum equal to all such
rent and additional rent reserved herein, the balance or deficiency shall be
paid by lessee on the rent days herein specified.
To the extent permitted by law, lessee hereby expressly waives the service
of any notice of intention to re-enter, and any and all rights to recover or
regain possession of the leased premises or to reinstate or to redeem this Lease
or other right of redemption as permitted or provided by or under any statute,
law or decision now or hereafter in force and effect, in case lessee shall be
dispossessed by a judgement or by warrant of any court or judge.
In the event of a breach or a threatened breach by lessee of any of the
agreements, terms, covenants or conditions hereof , lessor shall have the right
of injunction to restrain the same and the right to invoke any remedy allowed by
law or in equity, as if specific remedies, indemnity or reimbursement were not
herein provided.
ARTICLE TWENTY-THIRD (Intentionally deleted)
ARTICLE TWENTY-FOURTH (Remedies cumulative):
No remedy herein conferred upon or reserved to lessor is intended to be
exclusive of any other remedy herein or by law provided, but each shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity by statute.
ARTICLE TWENTY-FIFTH (No waiver):
The failure of lessor to insist upon strict performance of any of the
agreements, terms, covenants and conditions hereof shall not be deemed a waiver
of any rights of remedies that lessor may have and shall not be deemed a waiver
of any subsequent breach or default in any of such agreements, terms, covenants
and conditions.
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ARTICLE TWENTY-SIXTH (Holding over):
If lessee holds over or remains in possession of the leased premises after
expiration of this Lease or after any sooner termination thereof, without any
new lease of the leased premises being entered into between the parties hereto,
or any option hereinafter contained being exercised by written notice, such
holding over or contained being exercised by written notice, such holding over
or continued possession shall, if rent is paid by lessee and accepted by lessor
for or during any period of time lessee and accepted by lessor for or during any
period of time lessee holds over or remains in possession, create a tenancy from
month to month only at the last monthy rental and upon the terms (other than
length of term, or option for renewal, purchase or cancellation) herein
specified, which may at any time be terminated by either party by thirty (30)
day's written notice given to the other party.
ARTICLE TWENTY-SEVENTH (Definitions):
The term "Depositary" shall mean a bank or trust company, selected by lessor and
acceptable to the First Mortgagee, in a city in California, having capital and
surplus of not less than $100,000,000 and willing to act hereunder as a
depositary of insurance proceeds or condemnation awards, as the case may be;
provided that if the holder of all of the First Mortgage indebtedness shall be a
single institutional lender, such institution shall be the Depositary.
The term "First Mortgage" shall mean any first mortgage or deed of trust
relating to the leased premises, as amended or supplemented from time to time,
including all indebtedness which has been foreclosed.
The term "First Mortgage" shall mean the holder or participating holders of
the First Mortgage.
The term "Improvements" shall mean all buildings and other improvements now
or hereafter located on the leased premises.
The term "lessor" as used herein shall mean only the holder of the lessor's
interest under this lease or the mortgagee in possession for the time being of
the leased premises, so that in the event of any sale or sales or assignment of
the leased premises lessor shall be and hereby is entirely freed and relieved of
all agreements, covenants and obligations of lessor hereunder, except for
obligations, if any, accrued prior to such sale or sales, or assignment or
assignments, and it shall be deemed and construed without further agreement
between the parties or their successors in interest or between the parties and
the purchaser or assignee has assumed and agreed to carry out any and all
agreements, covenants and obligations of lessor hereunder accruing from and
after the date of such sale or assignment.
ARTICLE TWENTY-EIGHTH (Article headings):
The article headings herein contained are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
or intent of this Lease nor in any way affect the terms and provisions hereof.
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ARTICLE TWENTY-NINTH (Separability clause):
If any term or provision of this Lease or any application thereof shall be
invalid or unenforceable, the remainder of this Lease and any other application
of such term or provision shall not be affected thereby.
ARTICLE THIRTIETH (Notices):
Any notice, offer or other communication provided for herein shall be in writing
and shall be given by registered or certified United States mail, return receipt
requested, postage prepaid, addressed, if to the person(s) to whom the rent is
then payable, at the address(es) to which the rent is then mailed (unless
another address for the receipt of notice has been given by such person(s)), if
to lessee, to it to the attention to its Treasurer at 620 Newport Center Drive,
Newport Beach, California 92660, if to lessor to it c/o Winthrop Financial Co.,
Inc., 225 Franklin Street, Boston, Massachusetts 02110; if to the First
Mortgagee to Shawmut Bank of Boston, N.A., Trustee, One Federal Street, Boston,
MA 02211, and to such other mortgagees as lessor may, from time to time, give
notice of to lessee. All such notices or communications shall be deemed given on
the date on which they are deposited with the U.S. postal service. The persons
and the places to which notices are to be mailed may be changed from time to
time by a party to whom notice is to be given by written notice given to the
other parties.
ARTICLE THIRTY-FIRST (Miscellaneous, Financial Statements, Lessor's Mortgagees):
Each and all of the covenants, terms, agreements and obligations of this Lease
shall extend to and bind and inure to the benefit of the successors and/or
permitted assigns of said parties hereto. Herein the singular number includes
the plural and masculine gender includes the feminine and the neuter. The
covenants, terms, agreements and obligatioins of this Lease may not be changed
orally, but may be changed only by a written lease modification agreement signed
by lessor and lessee. This Lease shall be governed by and construed in
accordance with the laws of California.
Lessee shall deliver to lessor audited consolidated financial statements of
lessee and its consolidated subsidiaries within ninety (90) days after the end
of its fiscal year, including balance sheets and statements of profit and loss
prepared in accordance with generally accepted principles of accounting
consistently applied, accompanied by an audit report and a certificate of
certified public accounts.
ARTICLE THIRTY-SECOND (Investment tax credit):
Lessor agrees to elect under the applicable provisions of the Internal Revenue
Code of 1954, as amended, (hereinafter referred to as the "Code") to pass
through to the lessee all investment tax credits which may be available from
time to time in respect of the leased premises under Section 38 of said Code.
Lessor agrees, at lessee's expense, to execute timely all documents prepared by
lessee and delivered to lessor in advance and required
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by said Code, and regulations issued thereunder, to enable lessee to obtain such
investment tax credit.
ARTICLE THIRTY-THIRD (Right of first offer):
Lessor shall not during the original term or any renewal term sell assign or
convey (other than to lessee as contemplated by this lease) all or any part of
the leased premises unless lessor first notifies lessee of lessor's intention so
to convey and simultaneously offers to sell the leased premises, or such part
thereof (which offer shall include the Land Remainder owner's interest in the
Land, at the fair market value thereof as encumbered by lessor's rights with
respect thereto), to lessee or its designee at the price and on such other terms
as lessor would accept with respect to such a sale to any other person or
entity. Within sixty (60) days after the giving of such notice and offer, lessee
or its designee may accept such offer by giving written notice to lessor. Any
such sale shall be effected in the manner provided in Article Twentieth with
conveyance of the leased premises, or such part thereof, and such Land interest
to be made within ninety (90) days after the acceptance of such offer, this
Lease shall continue in full force and effect and lessor may convey the leased
premises, or such part thereof, and such Land interest to any third party on
substantially the same conditions as set forth in the offer to lessee, provided
that (a) such sale to a third party is consummated within one (1) year after the
last date on which lessee could have accepted lessor's offer, (b) in the event
of a substantial improvement to a purchaser in any of such terms and conditions,
lessor shall again offer to sell the leased premises, or such pat thereof, and
such Land interest to lessee as above provided and (c) such third party and any
successor owner of the leased premises, or such part thereof, and such Land
interest to lessee as above provided and (c) such third party and any successor
owner of the leased premises shall be bound by the provisions of this Article.
The provisions of this Article Thirty-Third shall not apply to: (a) the
admission and substitution of limited partners and the withdrawal of general
partners in lessor or lessor's principal; (b) the transfer of lessor's interest
in the leased premises to an affiliate of lessor (which, for the purposes
hereof, shall mean any entity controlling, controlled by or in common control
with the general partner(s) of lessor or the partner(s) of such general
partner(s); (c) the foreclosure of a mortgage of the leased premises; (d) the
recording of a deed in lieu of foreclosure to the holder of such mortgage or its
nominee; or (e) the resale of the leased premises by such holder or its nominee
within twenty-four (24) months after such foreclosure or deed in lieu thereof.
If lessee shall purchase the leased premises pursuant to this Article
Thirty-Third subject to the First Mortgage, lessee agrees that (I) this Lease
and lessee's obligations hereunder shall remain in full force and effect
notwithstanding such purchase, and (ii) if, by operation of law, lessee's
interest as lessee under this Lease shall merge with lessee's interest as lessor
hereunder by reason of such purchase, then lessee shall promptly enter into and
execute the First Mortgage, or a new First Mortgage upon the same terms and
conditions as the First Mortgage, as owner of the leased premises, and take any
and all other actions and execute any and all other instruments as may
reasonably be required by First Mortgagee.
97
<PAGE>
ARTICLE THIRTY-FOURTH (Option to purchase):
Lessor hereby grants to lessee the option to purchase (the "Purchase Option")
the Improvements and the Land as of the end of the original term, or if and to
the extent lessee exercises its options to extend the term of this Lease, as of
the end of any current renewal term (the "Purchase Option Date") for a price
equal to the fair market value of the Improvements and the Land as hereinafter
determined (the "Fair Market Value") plus all closing costs, as defined in
Article Twentieth, including without limitation any applicable prepayment
penalty. Such option shall be exercised by written notice from lessee to lessor,
given not less than twelve (12) months prior to the expiration of the original
term, or, in the event lessee has previously exercised one or more extension
options hereunder, such notice shall be given not less than nine (9) months
before the expiration of the then current renewal term, as the case may be, in
each case accompanied by a statement of the Fair Market Value as hereinafter
determined.
To enable lessee to make an informed judgment with respect to the foregoing
option, and to establish the Fair Market Value as of the end of the original
term or any renewal term, as the case may be, lessee may notify lessor in
writing not more than six (6) months prior to the time by which notice of
exercise of the then applicable option must be given, stating that lessee
desires a determination of Fair Market Value, as encumbered by this Lease, of
the Improvements and the Land as of the end of the original term or the then
current renewal term, as the case may be. Thereafter, lessor and lessee shall
consult for the purpose of determining such Fair Market Value as of the end of
the term of the Lease and any value agreed upon in writing shall constitute such
Fair Market Value for the purposes of this Article. If lessor and lessee fail to
agree upon such Fair Market Value by four (4) months prior to the time by which
notice of exercise of the option must be given, such Fair Market Value shall be
determined by the appraisal procedure hereinafter described. Lessee's request
for a determination of such Fair Market Value shall not obligate lessee
exercises such option, lessee and lessor shall each pay the fees and
disbursements of any appraiser appointed by it and shall share equally the fees
and expenses of any third appraiser and any other costs and expenses of any
appraisal pursuant to this Article while, if lessee does not exercise such
option, lessee shall pay all costs and expenses of any appraisal pursuant to
this Article. If lessee exercises the Purchase Option, lessee shall pay all
costs and expenses of any appraisal pursuant to this Article. If lessee
exercises the Purchase Option, lessor shall transfer and convey or cause the
transfer and conveyance of the Improvements and the Land to the lessee in
accordance with the provisions of Article Twentieth. Such transfer and
conveyance shall occur on the Purchase Option Date, unless lessor by written
notice to lessee specifies a different date, which date may be not more than
thirty (30) days prior to or sixty (60) days after the Purchase Option Date.
There shall be no closing adjustments, other than for the net rent payable
by lessee hereunder for the month for the month in which the Purchase Option
Date occurs and other accrued obligations of lessee under this lease.
If lessor shall be unable to give title or make conveyance as stipulated,
lessor shall convey such title as it then has if lessee elects to accept the
same. The termination of this Lease prior to exercise of the Purchase Option, or
prior to or after exercise of the Purchase Option if such termination is
pursuant to Article Twenty-Second shall terminate
98
<PAGE>
all rights and obligations of lessor and lessee under this Article. If the
Purchase Option has been exercised, then the termination of this lease for any
cause except pursuant to Article Twenty-Second shall not terminate the rights
and obligations of lessee and lessor under this Article. The Purchase Option
shall not be assignable except as part of this Lease.
In the event of lessee's exercise of the Purchase Option, this Lease shall
not terminate, except pursuant to Article Twenty-Second, until the leased
premises shall have been conveyed to lessee and the purchase price therefor and
all other sums due under this Lease shall have been paid.
The term "Fair Market Value" as used in this Article shall be determined
using the standards then commonly used by professional appraisers in determining
fair market value of similarly improved real property in the State of
California, and shall mean the aggregate of the fair market value of the Land
and the Improvements as if encumbered by this Lease. If the parties hereto fail
to agree as to the Fair Market Value as above provided, such question of Fair
Market Value, as encumbered by this Lease, shall be submitted to a board of
appraisers, three in number, one named by lessor, one named by lessee, and the
third named by the two so selected, each of whom shall be a qualified member of
the American Institute of Real Estate Appraisers, or any successor of such
Institute, or if such organization or successor shall no longer be in existence,
a recognized national association or institute of appraisers. If either party
shall fail to appoint its respective appraiser within 30 days of the expiration
of the four month period referred to in the second paragraph of this Article
Thirty-Fourth then the other party may request the American Institute of Real
Estate Appraisers to appoint such appraiser, and such two appraisers named by
lessor and lessee, or appointed as aforesaid, shall have 20 days to appoint the
third appraiser, but if such appraisers fail to do so, then either party may
request the American Arbitration Association or any successor organization
thereto to appoint an appraiser within 20 days of such request, and both parties
shall be bound by any appointment so made. The determination of the appraiser
which differs most in terms of dollar amount from the determinations of the
other two appraisers shall be excluded, and 50% of the sum of the remaining two
determinations shall be final and binding upon lessor and lessee as the Fair
Market Value of the leased premises, provided that if the lowest and highest
amounts then the middle appraisal shall be the Fair Market Value. This provision
for determination by appraisal shall be specifically enforceable to the extent
such remedy is available under applicable law, and any determination hereunder
shall be final and binding upon the parties except as otherwise provided by
applicable law.
ARTICLE THIRTY-FIFTH (Payment pursuant to Schedule C):
In the event of termination of this Lease for any reason whatsoever prior to the
end of the original term, including without limitation pursuant to Articles
Eighteenth, Nineteenth, Twenieth or Twenty-Second, lessee shall immediately pay
to lessor upon such termination (a) all rent allocable to the rental month
during which the termination occurs, prorated from the beginning of the rental
month to the date of termination, and (b) in addition to all other sums due from
lessee to lessor hereunder upon termination of this lease, except in the event
of termination by reason of lessor's acceptance of lessee's
99
<PAGE>
rejectable offer pursuant to Articles Eighteenth, Nineteenth or Twentieth, the
applicable amount set forth on Schedule C.
Notwithstanding anything else to the contrary contained in this Lease, the
obligations of lessee under this Article Thirty-Fifth to pay prorated rent
allocable to the month during which this Lease terminates, and to pay the
Schedule C amount if applicable shall survive termination of this Lease for any
reason whatsoever.
ARTICLE THIRTY-SIXTH (Lessor's liability limited):
Neither the lessor nor any individual partner, trustee, stockholder, officer,
director, employee or beneficiary of lessor shall have any personal liability
for the performance or observance of lessor's obligations hereunder, and lessee
shall look solely to lessor's interest in the leased premises in pursuit of its
remedies upon an event of default by lessor hereunder.
ARTICLE THIRTY-SEVENTH (Intentionally deleted)
ARTICLE THIRTY-EIGHTH (Perpetuities):
If the Rule Against Perpetuities or any rule of law with respect to the
restitution or alienation of property shall limit the time within which such
rule may apply must be exercised not later than the expiration of 20 years after
the death of the last survivor of the following persons: Peter G. Cogan, Pamela
E. Cogan and Jonathan C. Cogan, minor children of John Kimball, Jr. of
Topsfield, Massachusetts; one David Dolan, Anne Dolan, Mary Dolan, Benedict
Dolan, Elizabeth Dolan of Winchester, Massachusetts.
In Witness Wherof, lessor and lessee have caused their respective names to
be hereunto subscribed and lessee has caused its corporate seal to be hereunto
affixed by its officer thereunto duly authorized.
SUNSET PARK WEST LIMITED PARTNERSHIP,
By: Linnaeus-Phoenix Associates
Limited Partnership,
A Massachusetts limited partnership, General Partner
By:
General Partner
AVCO FINANCIAL SERVICES, INC.,
A Delaware corporation
By:
Its Senior Vice President
100
<PAGE>
SCHEDULE A
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
ORANGE, CITY OF IRVINE AND IS DESCRIBED AS FOLLOWS:
PARCEL 1 AS SHOWN ON A MAP NO. 81-604 RECORDED IN BOOK 170, PAGES20 AND 21 OF
PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS, NATURAL GAS
RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR
UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL
RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR AND REMOVING THE
SAME FROM SAID LAND OR ANY OTHER, INCLUDING FROM LANDS OTHER THAN THOSE
HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR
ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AND TO BOTTOM SUCH
SHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS, AND SHAFTS UNDER AND
BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP,
MAINTAIN,REPAIR DEEPEN, AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT HOWEVER,
THE RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER
FIVE HUNDRED FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AS
RESERVED IN THE DEED RECORDED APRIL 29, 1970 IN BOOK 9277 PAGE 256, OFFICIAL
RECORDS.
ALSO EXCEPT ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS, NATURAL
GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN
OR UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL
RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR AND STORING IN AND
REMOVING THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE
HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR
ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AND TO BOTTOM SUCH
WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS, AND SHAFTS UNDER AND
BENEATH OR BEYOND THE EXTERIOR LIMITS THEROF, AND TO REDRILL, RETUNNEL, EQUIP,
MAINTAIN REPAIR, DEEPEN, AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT HOWEVER,
THE RIGHT TO DRILL, MINE STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE
UPPER FIVE HUNDRED FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED AS
RESERVED IN THE DEED FROM IRVINE INDUSTRIAL
101
<PAGE>
SCHEDULE A-1
COMPLEX, A CALIFORNIA CORPORATION, RECORDED OCTOBER 26, 1973, IN BOOK 10963,
PAGE 158 OF OFFICIAL RECORDS.
SCHEDULE A-1
1. GENERAL AND SPECIAL TAXES, a lien, not yet due and payable. For Fiscal Year:
1983-84
2. THE LIEN OF SUPPLEMENTAL TAXES, IF ANY, ASSESSED PURSUANT TO THE PROVISIONS
OF CHAPTER 49B, STATUTES IF 1983 OF THE STATE OF CALIFORNIA.
3. EASEMENT, and incidents thereto,
In Favor of : THE COUNTY OF ORANGE
Recorded, Official Records: MARCH 17, 1964
Book/Reel : 6965
Page/Image: 721
Series/Instument No.: 14543
Purpose : AVIGATION
Affects : SAID LAND
4. COVENANTS, CONDITIONS AND RESTRICTIONS, omitting restrictions, if any, based
on race, color, religion or national origion, as contained in isntrument,
Recorded, Official Records: ,au 21, 1965
Book/ Reel: 7529
Page/Image: 600
Series/Instrument No.: 16662
Containing Mortgagee Protection Clause : YES
Containing Express forfeiture or reversion: NO
5. COVENANTS, CONDITIONS AND RESTRICTIONS, omitting restrictions, if any, based
on race, color, religion or nation origin, as contained in instrument,
Recorded, Official Records: July 6, 1971
Book/Reel : 9707
Page/Image: 825
Series/Instrument No.: 3871
Containing Mortgagee Protection Clause : YES
Containing Express forfeiture or reversion: NO
6. LACK OF RIGHTS of access to and from the public street: said rights having
been relinquished by the provisions of the dedication statement as shown on
the filed map of said subdivision.
Street Name: MAIN STREET
Affects : THE SOUTHWESTERLY LINE OF PARCELS 14 AND 15
OF PARCEL MAP 130 PAGES 46-49 EXCEPT AT DRIVE
ENTRY LOCATIONS
7. EASEMENT SHOWN ON FILED MAP, and incidents thereto,
102
<PAGE>
Purpose: PUBLIC UTILITY
Affects: THOSE PORTIONS OF SAID LAND 3 FEET IN WIDTH ADJACENT TO CARTWRIGHT
ROAD AND DA VINCI. AS SHOWN ON PARCEL MAP IN BOOK 130 PAGES 46-49
8. EASEMENT SHOWN ON FILED MAP, and incidents thereto,
Purpose: PUBLIC UTILITY
Affects: THE SOUTHWESTERLY 15 FEET OF PARCEL 14. AS SHOWN ON PARCEL MAP IN
BOOK 130 PAGES 46-49
9. RESTRICTIONS, omitting restrictions, if any, based on race, color, religion
or national origin, as contained in daad,
Recorded, Official Records: OCTOBER 26, 1973
Book/Reel : 10963
Page/Image: 158
Series/Instrument No.: 26017
Containing Mortgagee Protection Clause : YES
Containing Express forfeiture or reversion: YES
10. EASEMENT, and incidents thereto,
In Favor of : SOUTHERN CALIFORNIA EDISON COMPANY, A CORPORATION
Recorded, Official Records: NOVEMBER 18, 1974
Book/Reel : 11289
Page/Image : 662
Series/Instrument No.: 14326
Purpose : PUBLIC UTILITY
Affects : AS FOLLOWS:
A STRIP OF LAND FOUR (4) FEET IN WIDTH LYING WITHIN PARCEL 4 AS SHOWN ON A MAP
FILED IN BOOK 44, PAGE 47 OF PARCEL MAPS, IN THE OFFICE OF THE RECORDER OF SAID
ORANGE COUNTY, THE SOUTHWESTERLY LINE OF SAID STRIP DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE NORTHEASTERLY LINE OF MAIN STREEET 100 FEET WIDE
WHICH POINT IS LOCATED NORTH 61' 11' 45" WEST 67 FEET MEASURED FROM THE
SOUTHEASTERLY LINE OF SAID PARCEL 4; THENCE NORTH 61' 11' 45" WEST A DISTANCE OF
8 FEET.
11. EASEMENT, and incidents thereto,
In Favor of: THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY Recorded, Official
Records: DECEMBER 14, 1979
Book/Reel : 13434
Page/Image : 1946
Series/Instrument No.: 20175
Purpose : PUBLIC UTILITY
103
<PAGE>
Affects: A STRIP OF LAND 3 FEET IN WIDTH ADJACENT TO CARTWRIGHT ROAD AND DAVINCI
12. EASEMENT, and incidents thereto,
In Favor of: THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY
Recorded, Official Records: DECEMBER 14, 1979
Book/Reel: 13434
Page/Image: 1949
Series/Instrument No.: 20176
Purpose: PUBLIC UTILITY
Affects: AS FOLLOWS:
THE SOUTHWESTERLY FOURTEEN FEET OF SAID PARCEL 14, SAID FOURTEEN FOOT EASEMENT
TO BE LENGTHENED OR SHORTENED SO AS TO TERMINATE INTO THE EASTERLY LINE OF
CARTWRIGHT ROAD AS IT NOW EXISTS.
13. EASEMENT, and incidents thereto,
In Favor of: SOUTHERN CALIFORNIA EDISON COMPANY, A CORPORATION
Recorded, Official Records: MAY 3, 1982
Series/Instrument No.: 82-151150
Purpose: PUBLIC UTILITES
Affects: A STRIP OF LAND 6 FEET WIDE, LYING WITHIN PARCEL 15, AS SHOWN ON A
MAP FILED IN BOOK 130, PAGES 46 TO 49, INCLUSIVE, OF PARCEL MAPS IN THE OFFICE
OF THE RECORDER OF SAID ORANGE COUNTY, THE CENTERLINE OF SAID STRIP BEING
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHEASTERLY LINE OF MAIN STREET, 100 FEET WIDE, AS
SHOWN ON SAID PARCEL MAP, DISTANT THEREON NORTH 61' 11' 45" WEST 90 FEET FROM
THE SOUTHERLY CORNER OF SAID PARCEL; THENCE NORTH 28' 48' 15" EAST 28 FEET.
SCHEDULE B
AVCO FINANCIAL SERVICES, INC.
Lease Years: # of Months: Monthly Payment:
1 through 5 60
6 through 8 36
9 through 13 60
14 through 15 24
104
<PAGE>
16 through 20 60
21 through 25 60
--
300
SCHEDULE C
COMMENCING AT END OF LEASE MONTH
- --------------------------------
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
13.00
14.00
15.00
16.00
17.00
18.00
19.00
20.00
21.00
22.00
23.00
24.00
25.00
26.00
27.00
28.00
29.00
30.00
31.00
32.00
33.00
34.00
35.00
105
<PAGE>
36.00
37.00
38.00
39.00
40.00
41.00
42.00
43.00
44.00
45.00
46.00
47.00
48.00
49.00
50.00
51.00
52.00
53.00
54.00
55.00
56.00
57.00
58.00
59.00
60.00
61.00
62.00
63.00
64.00
65.00
66.00
67.00
68.00
69.00
70.00
71.00
72.00
73.00
74.00
75.00
76.00
77.00
78.00
79.00
80.00
81.00
106
<PAGE>
82.00
83.00
84.00
85.00
86.00
87.00
88.00
89.00
90.00
91.00
92.00
93.00
94.00
95.00
96.00
97.00
98.00
99.00
100.00
101.00
102.00
103.00
104.00
105.00
106.00
107.00
108.00
109.00
110.00
111.00
112.00
113.00
114.00
115.00
116.00
117.00
118.00
119.00
120.00
121.00
122.00
123.00
124.00
125.00
126.00
127.00
107
<PAGE>
128.00
129.00
130.00
131.00
132.00
133.00
134.00
135.00
136.00
137.00
138.00
139.00
140.00
141.00
142.00
143.00
144.00
145.00
146.00
147.00
148.00
149.00
150.00
151.00
152.00
153.00
154.00
155.00
156.00
157.00
158.00
159.00
160.00
161.00
162.00
163.00
164.00
165.00
166.00
167.00
168.00
169.00
170.00
171.00
172.00
173.00
108
<PAGE>
174.00
175.00
176.00
177.00
178.00
179.00
180.00
181.00
182.00
183.00
184.00
185.00
186.00
187.00
188.00
189.00
190.00
191.00
192.00
193.00
194.00
195.00
196.00
197.00
198.00
199.00
200.00
201.00
202.00
203.00
204.00
205.00
206.00
207.00
208.00
209.00
210.00
211.00
212.00
213.00
214.00
215.00
216.00
217.00
218.00
219.00
109
<PAGE>
220.00
221.00
222.00
223.00
224.00
225.00
226.00
227.00
228.00
229.00
230.00
231.00
232.00
233.00
234.00
235.00
236.00
237.00
238.00
239.00
240.00
241.00
242.00
243.00
244.00
245.00
246.00
247.00
248.00
249.00
250.00
251.00
252.00
253.00
254.00
255.00
256.00
257.00
258.00
259.00
260.00
261.00
262.00
263.00
264.00
265.00
110
<PAGE>
266.00
267.00
268.00
269.00
270.00
271.00
272.00
273.00
274.00
275.00
276.00
277.00
278.00
279.00
280.00
281.00
282.00
283.00
284.00
285.00
286.00
287.00
288.00
289.00
290.00
291.00
292.00
293.00
294.00
295.00
296.00
297.00
298.00
299.00
300.00
SCHEDULE D
- ----------
AVCO FINANCIAL SERVICES, INC.
RENEWAL OPTIONS: # of Months: Monthly Payment:
1 60
2 60
111
<PAGE>
3 60
4 60
5 60
6 60
- --------------------------------
360
112
<PAGE>
EXHIBIT "L"
NOT USED
113
<PAGE>
EXHIBIT "M"
MUST TAKE SPACE
On or before 10/01/2000, the 1,463 RSF set forth in Exhibit "A" shall
be added to the Premises. The Monthly Rent set forth in Exhibit "E" shall be
increased by an amount equal to the then current Monthly Rent/RSF for the
Premises as set forth in Exhibit E multiplied by the RSF of the Must Take Space.
Sublessee's Share shall be increased in accordance with the provisions of
Exhibit "I" and Additional Rent, if any, increased accordingly. All other terms
and conditions of this Sublease shall remain in full force and effect.
114
<PAGE>
Exhibit 10.20
LEASE
STERLING NETWORK EXCHANGE, LLC,
a Delaware limited liability company
("Landlord")
and
INFLOW, INC.,
a Delaware corporation
("Tenant")
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. TERM AND POSSESSION...................................4
1.1 Term......................................................4
1.2 Surrender.................................................4
1.3 Holdover..................................................4
1.4 Option to Renew...........................................4
ARTICLE 2. RENT..................................................5
2.1 Base Rent ................................................5
2.2 Adjustments...............................................6
2.3 Late Charges .............................................6
2.4 Nature of Payments .......................................6
ARTICLE 3. SECURITY DEPOSIT......................................6
ARTICLE 4. USE...................................................7
4.1 Permitted Use.............................................7
4.2 Restrictions .............................................7
4.3 Compliance with Law ......................................7
4.4 Environmental Matters.....................................8
ARTICLE 5. TAXES ...............................................10
5.1 Tenant's Taxes ..........................................10
5.2 Rental Taxes.............................................10
ARTICLE 6. PARKING AND COMMON USE AREAS.........................10
6.1 Common Facilities .......................................10
6.2 Parking .................................................10
ARTICLE 7. OPERATING COSTS, REAL PROPERTY TAXES AND UTILITIES...11
7.1 Payment .................................................11
7.2 Allocation ..............................................13
7.3 Gross-up ................................................13
ARTICLE 8. CONSTRUCTION.........................................13
8.1 Delivery.................................................13
8.2 Condition................................................13
8.3 Costs of Construction ...................................14
8.4 Tenant's Work ...........................................14
8.5 Alterations and Approval ................................14
8.6 Approval Conditions .....................................15
8.7 Performance of Tenant's Work ............................16
8.8 Additional Provisions....................................16
8.9 Provisions Concerning Installations on and
Access to Roof...........................................17
8.10 Generator................................................17
8.11 Floor Loading Capacity...................................18
8.12 Liens....................................................18
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
8.13 Security System............................................18
ARTICLE 9. REPAIR/MAINTENANCE[UTILITIES/ACCESS.......................19
9.1 Landlord's Responsibilities ...............................19
9.2 Tenant's Obligations ......................................19
9.3 Janitorial Services .......................................19
9.4 Utilities..................................................20
9.5 Telecommunication Services.................................20
9.6 Access.....................................................21
ARTICLE 10. TENANT'S WORK, ALTERATIONS AND PERSONAL PROPERTY.........21
ARTICLE 11. CERTAIN RIGHTS RESERVED BY LANDLORD......................22
ARTICLE 12. DAMAGE TO PROPERTY; INJURY TO PERSONS; INSURANCE.........23
12.1 Tenant's Responsibility....................................23
12.2 Insurance..................................................23
12.4 Waiver of Subrogation......................................24
12.5 Landlord's Insurance.......................................24
ARTICLE 13. FIRE AND CASUALTY........................................24
ARTICLE 14. CONDEMNATION.............................................25
ARTICLE 15. ASSIGNMENT AND SUBLETTING; SALE BY LANDLORD..............25
15.1 Transfer by Tenant.........................................25
15.2 Permitted Transfers .......................................26
15.3 Co-location Not a Transfer.................................27
15.4 Splitting Profits..........................................27
15.5 Continued Responsibility ..................................27
15.6 Sale of Property ..........................................27
ARTICLE 16. ESTOPPEL CERTIFICATE.....................................27
16.1 Certification..............................................27
16.2 Failure to Provide.........................................28
ARTICLE 17. LANDLORD'S REMEDIES......................................28
17.1 Events of Default..........................................28
17.2 Remedies...................................................28
17.4 Subleases..................................................29
17.5 Disputes; Arbitration......................................29
17.6 Attorneys' Fees............................................30
ARTICLE 18. NOTICES..................................................30
ARTICLE 19. SUBORDINATION/QUIET ENJOYMENT ...........................30
19.1 Subordination .............................................30
19.2 Quiet Enjoyment ...........................................30
19.3 Waiver of Landlord's Lien..................................31
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
ARTICLE 20. BROKERS.................................................31
ARTICLE 21. RELOCATION..............................................31
ARTICLE 22. SIGNAGE.................................................31
ARTICLE 23. GENERAL PROVISIONS......................................31
23.1 Force Majeure...............................................32
23.2 Rules.......................................................32
23.3 Captions....................................................32
23.4 Integration.................................................32
23.5 No Offer....................................................32
23.6 No Waiver...................................................32
23.7 Deadlines...................................................33
23.8 No Accord or Satisfaction...................................33
23.9 Non-Recourse Liability......................................33
23.10 Governing Law; Choice of Forum..............................33
23.11 Exhibit.....................................................33
23.12 Successors and Assigns......................................33
23.13 Confidentiality.............................................33
23.14 Landlord's Warranties.......................................34
23.15 Zoning......................................................34
ARTICLE 24. CO-LOCATION AND RIGHT TO SERVE OTHER TENANTS............34
24.1 Co-location ................................................34
24.2 Right to Serve Other Tenants ...............................34
EXHIBIT A - FLOOR PLAN OF THE PREMISES .............................37
EXHIBIT B - SITE PLAN OF THE PROJECT ...............................38
EXHIBIT C - WORK LETTER ............................................39
EXHIBIT D - RULES AND REGULATIONS ..................................45
EXHIBIT E - ROOFTOP INSTALLATIONS ..................................47
EXHIBIT F - GENERATOR ROOM .........................................48
- iii -
<PAGE>
LEASE
THIS LEASE is made this ____ day of February, 2000, by and between STERLING
NETWORK EXCHANGE, LLC, a Delaware limited liability company ("Landlord"), and
INFLOW, INC., a Delaware corporation ("Tenant").
Landlord hereby leases to Tenant and Tenant leases from Landlord, for the
term and upon the conditions and agreements set forth in this Lease, the
Premises (as defined below).
BASIC LEASE PROVISIONS
----------------------
A. The Premises: Suite 202 in the Building, totaling approximately 39,146
square feet of rentable area (34,040 square feet of useable area) and
Tenant's two Generator Rooms each consisting of 500 square feet of useable
area all as illustrated on the attached Exhibits A and F. Notwithstanding
that the area of both Generator Rooms is part of Premises for all other
purposes under this Lease, the 500 square foot area of one of the Generator
Rooms shall not be part of the rentable square footage used in calculating
rent and other changes hereunder. The other Generator Room shall be
included in such calculations at 575 rentable square feet, resulting in a
total rentable area of 39,721 square feet. The foregoing numbers are
subject to adjustment as provided in Section 2.2 below.
B. The Building: The building located at 120 East Van Buren Avenue, Phoenix,
Arizona, 85004.
C. Project: The Downtown Phoenix Technology Exchange, consisting of the
Building and any common facilities used in connection with the Building and
Premises as reasonably determined from time to time by Landlord. A general
Site Plan of the Project is attached hereto as Exhibit B.
D. Names of Guarantors: [INTENTIONALLY OMITTED]
E. Security Deposit: $59,581.50
F. The Initial Term: Ten (10) years, beginning on the Rent Commencement Date
(which is the date 131 days after the Commencement Date) and ending on the
last day of the calendar month during which the tenth anniversary of the
Rent Commencement Date occurs (the "Expiration Date").
G. Estimated Commencement, Rent Commencement, and Expiration Dates: June 1,
2000, October 10, 2000, and September 30, 2010, respectively.
H. Base Rent:
1
<PAGE>
<TABLE>
<CAPTION>
Period Annual Base Rent Annual Base Rent Monthly Payment
------ ---------------- ---------------- ---------------
Per Rentable Sg. Ft.
--------------------
<S> <C> <C> <C>
Commencement Date $18.00 NONE - NONE
through ABATEMENT ABATEMENT
Rent Commencement Date PERIOD PERIOD
(131 days after
Commencement Date)
Rent Commencement Date $18.00 $714,978.00 $59,581.50
through Expiration Date
</TABLE>
The foregoing chart reflects (i) a 30 day free rent period, and (ii) a $5.00 per
rentable square foot Base Rent Abatement Period between the Commencement Date
and the Rent Commencement Date, amounting to a discount of $198,605.00 (applied
from the Commencement Date on a per them Base Rent rate of $1,958.84, for 101
days, with a discount on the following month's rent of $762.16).
I. Renewal Terms: Two (2) renewal options of five (5) years each, at 100% of
the then market rate, subject to the provisions of paragraph 1.4 .
J. Description of Tenant's Business: The installation, operation, and
maintenance of equipment and facilities in connection with Tenant's
telecommuni cations business, including office use ("Permitted Use").
K. [INTENTIONALLY OMITTED).
L. Tenant's Notice Addresses:
Inflow, Inc.
938 Bannock Street, Suite 300
Denver, Colorado 80204
Attn: John W. Coons
with a copy to:
Inflow, Inc.
120 East Van Buren Avenue, Suite 202
Phoenix, Arizona 85004
Attn: General Manager
And a copy to:
Inflow, Inc.
938 Bannock Street, Suite 300
Denver, Colorado 80204
Attn: Legal Department
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<PAGE>
Telephone Numbers for Access Under Article 11(b) and (c):
303-824-3000 , or such other numbers of which
-----------------------
Tenant gives notice to Landlord from time to time.
M. Landlord's Notice Address:
Sterling Network Exchange, LLC
650 Dundee Road, Suite 370
Northbrook, IL 60062
Attn: Anthony L. Wanger
With a copy to:
Fennemore Craig
3003 North Central Avenue, Suite 2600
Phoenix, AZ 85012
Attn: Elizabeth M. Behnke (87550.009)
N. Tenant's Designated Broker: Node Com, Inc.
0. Landlord's Designated Broker: Cushman & Wakefield of Arizona, Inc.
P. Tenant's pro rata share: 13.81%, calculated on the basis of 39,721
rentable square feet in the Premises and 287,500 rentable square feet in the
Building. The parties acknowledge that the foregoing total rentable square
footage for the Building represents Landlord's good faith estimate based on
information available as of the date of this Lease. On or before the earlier of
(i) the date on which the Building is fully leased, or (ii) August 30, 2000,
Landlord will provide to Tenant its architect's certification of the actual
total rentable square footage of the Building and the Premises, calculated
pursuant to Section 2.2 below. Landlord's architect's certification shall be
subject to verification by Tenant's architect and Landlord and Tenant agree to
use good faith efforts to resolve any discrepancies.
Q. Parking: Three (3) covered, reserved parking spaces at no additional charge
for the Term (the parking ratio for the Project being 1:10,000 sf); and twenty-
seven (27) parking spaces in an adjacent parking lot owned by a third party at
the rate of $60.00 per space per month, subject to the provisions of Section
6.2.
R. Exhibits:
Exhibit A, Floor Plan of the Premises
Exhibit B, Site Plan of the Project
Exhibit C, Work Letter
Exhibit D, Rules and Regulations
Exhibit E, Rooftop Installation Area
Exhibit F, Generator Room
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<PAGE>
ARTICLE 1. TERM AND POSSESSION
1.1 Term. The Term of this Lease shall commence on the Commencement Date and
shall expire on the last day of the calendar month in which the tenth
anniversary of the Commencement Date occurs. The Commencement Date of this Lease
will be the earlier of: (i) the date that Tenant commences its business
operations in the Premises, or (ii) 90 days after the Delivery Date. The
anticipated Delivery Date is March 1, 2000. If Landlord fails to deliver the
Premises, with demising walls in place and those items in Exhibit C to be
completed prior to the Delivery Date complete, to Tenant on or before the
Delivery Date, the Commencement Date shall be delayed two days for each day past
the Delivery Date the Premises notwithstanding that Tenant has commenced
business operations in the Premises. Upon request of either party after the Term
has commenced, Landlord and Tenant shall jointly execute a memorandum confirming
the Commencement Date.
1.2 Surrender. Upon the termination or expiration of this Lease or upon the
termination of Tenant's right of possession, whether by lapse of time or
otherwise, Tenant shall at once surrender possession of the Premises to Landlord
and remove Tenant's property as provided in this Lease.
1.3 Holdover. Tenant shall have no right to hold over after the expiration of
the Term of this Lease without Landlord's consent. If, with Landlord's consent,
Tenant holds over after the expiration of this Lease, Tenant shall become a
tenant from month to month only, upon all of the terms of this Lease except that
the amount of the Base Rent shall be increased to an amount equal to 150% of the
Base Rent in effect immediately prior to the expiration.
1.4 0ption to Renew.
(a) Renewal. Provided that no material, uncured Event of Default by Tenant
exists at the time of Tenant's exercise of the option or at the commencement of
a Renewal Term, and no circumstance exists which, if continued uncured, will,
with the lapse of time or the giving of notice, or both, constitute a material
Event of Default, then Tenant shall have, and is hereby granted, the option to
extend the Initial Term for the additional periods set forth in Basic Lease
Provisions paragraph I above (each, a "Renewal Term"). Except as set forth
below, Tenant's occupancy of the Premises during the Renewal Term shall be
governed by all of the terms, conditions, covenants and provisions of the Lease
except that Tenant shall have no further option to extend the Term of this Lease
after the expiration of the final Renewal Term. If Tenant desires to exercise
its option to extend the Term, it must give Landlord notice in writing ("Option
Notice") of its intent to do so at least nine (9), but no more than twelve (12),
months prior to the expiration of the then-current Term or Renewal Term.
(b) Annual Base Rent During the Renewal Term.
(i) The Base Rent during each Renewal Term will be the "then fair
market rental value of the Premises" as defined below, but not less than the
Base Rent payable in the last year of the preceding Term (or Renewal Term, as
the case may be). Landlord and Tenant shall have thirty (30) days after Landlord
receives the Option Notice within which to agree on the
4
<PAGE>
Annual Base Rent for the Renewal Term based upon the then fair market rental
value of the Premises. If the parties agree on the Base Rent for the Renewal
Term within thirty (30) days, they shall amend this Lease by stating the Base
Rent for the Renewal Term.
(ii) If Landlord and Tenant are unable to agree on the Base Rent for
the Renewal Term within the thirty (30) day period, then the "then fair market
value of the Premises" shall be determined in accordance with the below.
(iii) The "then fair market rental value of the Premises" means the
annual per square foot amount that a willing, comparable Tenant would pay and a
willing, comparable Landlord would accept at arm's length for a new five (5)
year lease (for non-renewable and nonexpansion space, unless the renewal or
expansion are pursuant to a comparable definition of fair market rental value)
for delivery on or about the applicable delivery or effective date, for
comparable non-sublease, non-encumbered, non-renewal space in the Building. The
value of Tenant's trade fixtures and equipment and Tenant Improvements
constructed and paid for by Tenant shall not be factored into the fair market
value determination. Notwithstanding the foregoing, the then fair market rental
value of the Premises for the Renewal Tenn will not be less than the Base Rent
payable during the last year of the preceding Term.
(iv) Within seven (7) days after the expiration of the thirty (30)
day period set forth above, Landlord and Tenant shall each appoint a real estate
appraiser with at least five full years full-time commercial appraisal
experience in the area in which the Premises are located to appraise the then
fair market rental value of the Premises. If either the Landlord or the Tenant
does not appoint an appraiser within ten days after the other has given notice
of the name of its appraiser, the single appraiser appointed shall be the sole
appraiser and shall set the then fair market rental value of the Premises. If
two appraisers are appointed pursuant to this paragraph, they shall meet
promptly and attempt to set the then fair market rental value of the Premises.
If they are unable to agree within the thirty (30) days after the second
appraiser has been appointed, they shall attempt to elect a third appraiser
meeting the qualifications stated in this paragraph within ten (10) days after
the last day the two appraisers are given to set the then fair market rental
value of the Premises. If they are unable to agree on the third appraiser,
either the Landlord or Tenant may petition the presiding civil court judge of
the Maricopa County Superior Court for the selection of a third appraiser who
meets the qualifications stated in this paragraph. Within thirty (30) days after
the selection of the third appraiser, a majority of the appraisers shall set the
then fair market rental value of the Premises. If a majority of the appraisers
are unable to set the then fair market rental value of the Premises within
thirty (30) days after selection of the third appraiser, the three appraisals
shall be averaged and the average shall be the then fair market rental value of
the Premises. Landlord and Tenant shall split equally the cost of appointing the
appraisers and of paying the appraiser's fees.
ARTICLE 2. RENT
2.1 Base Rent. Commencing on the Rent Commencement Date, Tenant shall pay to
Landlord during the Term of this Lease at the office of Landlord or at such
other place as Landlord may designate, without notice, demand, deduction, or
set-off, Base Rent in the applicable amounts as set forth in Basic Lease
Provisions paragraph H (or, for Renewal Terms,
5
<PAGE>
as determined under Article 1.4 above), subject to adjustments as provided in
Section 2.2, in advance on the first day of each calendar month. If the Rent
Commencement Date does not occur on the first day of a calendar month, Tenant
shall pay rent on the Rent Commencement Date for the actual days of the
fractional month on a pro rata basis.
2.2 Adjustments. On or before the Commencement Date, the Base Rent and all
other figures hereunder calculated on the basis of square footage, including the
Abatement Period, shall be adjusted based on the actual rentable square feet of
space in the Premises as determined by the approved plans and specifications,
provided that the "common area factor" or "load factor, shall not exceed 12% and
the useable area of the Premises shall, in addition to the load factor, be
subject to a stipulated 3% riser load factor. All references to "rentable" or
"useable" square feet shall be deemed measured in accordance with American
National Standard Z65.1-1996, as published by BOMA International, and the
calculations of the usable square footage of the Premises shall be subject to
verification by Tenant (but the rentable square footage shall be determined as
set forth in this section).
2.3 Late Charges. Any amount due from Tenant to Landlord which is not paid
within five (5) days after the date on which it is due shall bear interest at
four percent (4%) in excess of the prime rate as reported from time to time in
the Money Rates section of the Wall Street Journal, from the due date until
paid, but the payment of such interest shall not excuse or cure any default by
Tenant under this Lease.
2.4 Nature of Payments. All sums required to be paid by Tenant under this
Lease, whether or not so designated, are rent.
ARTICLE 3. SECURITY DEPOSIT
Concurrently with the execution of this Lease, Tenant shall deposit with
Landlord the sum set forth in Basic Lease Provisions Paragraph E (the "Security
Deposit"), as security for the full and faithful performance of this Lease. If
Tenant defaults with respect to any provision of this Lease, Landlord may apply
all or any part of the Security Deposit for the payment of any sum in default,
or for the payment of any other amount which Landlord may spend or become
obligated to spend by reason of Tenant's default, or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant's
default. Application of the Security Deposit shall not constitute a cure of the
default by Tenant to which the application relates unless Tenant timely
replenishes the Security Deposit as set forth in the following sentence. If any
portion of the Security Deposit is so applied, Tenant shall, within five days
after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount. Landlord
shall not be required to keep the Security Deposit separate from its general
funds, and Tenant shall be entitled to interest on the deposit at the rate of
4.5% per annum. If Tenant shall fully and faithfully perform every provision of
this Lease to be performed by Tenant, 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) promptly following the expiration of the Term.
6
<PAGE>
ARTICLE 4. USE
4.1 Permitted Use. Tenant shall use and occupy the Premises for the purposes
set forth in Basic Lease Provisions Paragraph J and shall use them for no other
purpose whatsoever without Landlord's prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed.
4.2 Restrictions. Landlord acknowledges that Tenant's use of the Premises for
the Permitted Use and installation of equipment as permitted in this Lease,
including, without limitation, Tenant's and Tenant's customers' equipment, as
well as Tenant's generators and HVAC, equipment does not violate the following
restrictions. Tenant shall, subject to the terms of this Lease:
(a) Not use or permit upon the Premises anything that would invalidate any
policies of insurance now or hereafter carried on the Premises or that will
increase the rate of insurance on the Premises, unless Tenant agrees to pay any
such increased premiums;
(b) Pay all additional insurance premiums which may be caused by the use
which Tenant shall make of the Premises;
(c) Not in any manner deface or injure the Premises, except as required in
connection with Tenant's Work and other alterations made by Tenant and approved
by Landlord;
(d) Not do anything or permit anything to be done upon the Premises in any
way tending to create a nuisance, or tending to disturb any other lessee in the
Building, including, without limitation, any of the following: the playing of
music audible outside the Premises, the placement of signs in or displayed
through any window or door (except as permitted in this Lease or otherwise
approved by Landlord); the creation of a nuisance; the releasing of offensive
odors to the exterior of the Premises, lodging, or manufacturing;
(e) Not commit or suffer to be committed any waste upon the Premises;
(f) Not violate any recorded restriction or covenant affecting the
Project of which notice has been given to Tenant by Landlord, nor use the
Premises for any purpose which would be in violation of any exclusive rights or
use granted to other tenants or occupants in the Project of which notice has
been given to Tenant by Landlord;
(g) Not install business machines or other machinery which cause noise or
vibration that may be transmitted to the structure of the Building.
4.3 Compliance with Law. Tenant, as to the Premises and Tenant's business
therein, and Landlord, as to the Common Areas and the services provided by
Landlord, shall comply with all present and future federal, state and local
laws, ordinances, orders, rules and regulations, including, without limitation
the Americans with Disabilities Act (collectively, "Laws"). Tenant shall procure
all permits, certificates, licenses and other authorizations required by
applicable Law relating to Tenant's business or Tenant's use or occupancy of the
Premises or Tenant's
7
<PAGE>
activities on the Premises. Tenant and Landlord shall make all reports and
filings required by applicable Laws. Tenant and Landlord shall defend, indemnify
and hold harmless each other and each other's present and future officers,
directors, employees, partners and agents from and against all claims, demands,
liabilities, fines, penalties, losses, costs, members, and expenses, including
but not limited to costs of compliance, remedial costs, and reasonable
attorneys' fees, arising out of or relating to any failure of Tenant or Landlord
to comply with applicable Laws.
4.4 Environmental Matters.
----------------------
(a) Hazardous Materials. Tenant shall not cause, or permit or allow any of
Tenant's employees, agents, customers, visitors, invitees, licensees,
contractors, assignees, or subtenants (collectively, "Tenant's Parties") to
cause or permit any Hazardous Materials to be brought upon, stored,
manufactured, generated, blended, handled, recycled, treated, disposed or used
on, under or about the Premises, the Building, the common facilities, or the
Project, except for (i) materials contained in the equipment and computer room
facilities for equipment such as batteries, cooling systems, and diesel
generators, or (ii) routine office and janitorial supplies in usual and
customary quantities, all stored, used, and disposed of in accordance with
applicable Environmental Laws. As used herein, "Hazardous Materials" means any
chemical, substance, material, controlled substance, object, condition, waste,
living organism or combination thereof which is or may be hazardous to human
health or safety or to the environment due to its radioactivity, ignitability,
corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity,
phytotoxicity, infectiousness or other harmful or potentially harmful properties
or effects, including, without limitation, petroleum and petroleum products,
asbestos, radon, polychlorinated biphenyls (PCBs) and all of those chemicals,
substances, materials, controlled substances, objects, conditions, wastes,
living organisms or combinations thereof which are now or become in the future
listed, defined or regulated in any manner by an Environmental Law based upon,
directly, or indirectly, such properties or effects. As used herein,
"Environmental Laws" means any and all federal, state or local environmental,
health or safety-related laws, regulations, standards, decisions of courts,
ordinances, rules, codes, orders, decrees, directives, guidelines, permits or
permit conditions, currently existing and as amended, enacted, issued or adopted
in the future which are or become applicable to Tenant, the Premises, the
Building, the common facilities or the Project. Tenant and Tenant's Parties
shall comply with all Environmental Laws and promptly notify Landlord of the
violation of any Environmental Law or presence of any Hazardous Materials, other
than the exceptions permitted above, on the Premises.
(b) Environmental Audit. Upon reasonable prior notice to Tenant, Landlord
may retain an environmental consultant or engineer to conduct an audit or
environmental assessment of the Premises and Tenant's compliance with applicable
laws, rules and regulations. Tenant shall extend its full cooperation with the
audit or investigation. If Tenant is found not to be substantially in compliance
with applicable law, the entire cost of the audit or assessment shall be paid by
Tenant to Landlord within ten (10) business days after demand; otherwise the
cost shall be borne by Landlord.
(c) Indemnification. Tenant shall indemnify, protect, defend (by counsel
reasonably acceptable to Landlord) and hold harmless Landlord and its partners,
members, directors,
8
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officers, employees, shareholders, lenders, agents, contractors and each of
their respective successors and assigns (individually and collectively,
"Indemnitees") from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses, and expense
arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (i) Tenant's or Tenant's Parties' breach of
any prohibition or provision of this Article, or (ii) the presence of Hazardous
Materials on, under or about the Premises or other property as a result
(directly or indirectly) of Tenant's or Tenant's Parties' activities in
connection with the Premises, unless and to the extent caused by any breach of
Landlord's obligations under this Lease. This indemnity shall include the cost
of any required or necessary repair, cleanup or detoxification, and the
preparation and implementation of any closure, monitoring or other required
plans, whether such action is required or necessary prior to or following the
termination of this Lease. Neither the written consent by Landlord to the
presence of Hazardous Materials on, under or about the Premises, nor the strict
compliance by Tenant with all Environmental Laws, shall excuse Tenant from
Tenant's obligation of indemnification pursuant hereto. Landlord will name
Tenant as additional insured under American International Specialty Lines
Pollution Legal Liability Select Policy (the "Environmental Insurance"). To the
extent not covered by the Environmental Insurance, Landlord shall indemnify,
protect, defend (by counsel reasonably acceptable to Tenant), and hold harmless
Tenant and its partners, members, directors, officers, employees, shareholders,
lenders, agents, contractors, and each of their respective successors and
assigns from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses, and expenses,
arising at any time during or after the term of this Lease in connection with
(i) Landlord's or Landlord's Parties breach of any prohibition or provision of
this Article, or (ii) the presence of Hazardous Materials on, under, or about
Project not caused by Tenant or Tenant's Parties . Landlord's and Tenant's
obligations pursuant to the foregoing indemnities shall survive the termination
of this Lease.
(d) To Landlord's knowledge there are or will be no Hazardous Materials,
including lead based paint or asbestos in the Premises in violation of
applicable Environmental Laws as of the Delivery Date. Landlord warrants that as
of the Delivery Date there will be no Hazardous Materials in the Premises,
including without limitation asbestos or lead based paint, that will with
Tenant's construction of improvements or use of the Premises. Landlord shall not
cause, or permit or allow any of Landlord's employees, agents, customers,
visitors, invitees, licensees, contractors, assignees, or tenants (collectively,
"Landlord's Parties") to bring upon, store, manufacture, generate, blend,
handle, recycle, treat, dispose or use Hazardous Materials on, under or about
the Building, the common facilities, or the Project, except for (i) materials
contained in the equipment and computer room facilities of Landlord's tenants
for equipment such as batteries, cooling systems, and diesel generators, (ii)
routine office and janitorial supplies in usual and customary quantities, or
(iii) materials as required by governmental agencies with jurisdiction, all
stored, used, and disposed of in accordance with applicable Environmental Laws.
Landlord and Landlord's Parties shall comply with all Environmental Laws and
promptly notify Tenant of the violation of any Environmental Law or presence of
any Hazardous Materials in the Project.
9
<PAGE>
ARTICLE 5. TAXES
5.1 Tenant's Taxes. Tenant shall pay, prior to delinquency, all taxes assessed
against or levied upon Tenant's trade fixtures, furnishings, equipment and other
personal property located in or upon the Premises. Tenant shall use reasonable
business efforts to cause the trade fixtures, furnishings, equipment and other
personal property to be assessed and billed separately from the real property of
which the Premises form a part. If any of Tenant's trade fixtures, furnishings,
equipment, and other personal property is assessed and taxed with the real
property, Tenant shall pay to Landlord Tenant's share of the taxes within ten
business days after delivery to Tenant by Landlord of a statement in writing
setting forth the amount of the taxes applicable thereto.
5.2 Rental Taxes. Tenant shall, simultaneously with the payment of any sums
required to be paid under this Lease as rent, additional rent, or otherwise, pay
Landlord for any sales, use, rental, transaction privilege, or other excise tax
imposed or levied on, or measured by, the amount paid. If any tax, surcharge or
regulatory fee is imposed by any governmental authority upon or with respect to
parking, parking fees paid or received, parking spaces, or vehicles parking in
the parking spaces in the common facilities, Tenant shall pay the same as
additional rent hereunder with the monthly installments of Base Rent or as
otherwise required from time to time by Landlord.
ARTICLE 6. PARKING AND COMMON USE AREAS
6.1 Common Facilities. All parking areas, access roads, driveways, pedestrian
sidewalks and ramps, landscaped areas, drainage facilities, exterior lighting,
signs, courtyards, corridors, elevators, entryways, public restrooms, risers,
utility vaults or closets, and other areas and improvements (all of which are
referred to as "common facilities" or "common areas") provided by Landlord for
the general use in common of tenants, their officers, agents, employees,
customers and other invitees shall at all times be subject to the exclusive
control and management of Landlord and Landlord shall have the right from time
to time to modify, enlarge, or eliminate the same so long as such modification,
enlargement, or reduction does not materially, adversely affect access to or the
use of the Premises for Tenant's business. Tenant shall, at all times, have
unrestricted access to the Premises, and Landlord shall endeavor to have at
least one elevator operational at all times. Landlord shall have the right from
time to time to establish, modify and enforce reasonable rules and regulations
with respect to the common areas as set forth in section 23.2 below. Tenant's
right to use the Premises includes the non-exclusive right to use the common
facilities.
6.2 Parking. Tenant shall be entitled to the exclusive use of the number and
type of parking space(s) in the Project as set forth in Basic Lease Provisions
paragraph Q. No storage of vehicles or parking for more than twenty-four (24)
hours is allowed without Landlord's prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed. Tenant acknowledges and
agrees that Landlord is not liable for damage, loss or theft of property or
injury to persons in, upon or about the parking area from any cause whatsoever
except Landlord's gross negligence or intentional misconduct. Landlord shall
have the right to establish, and from time to time change (including relocating
reserved covered parking spaces), alter and amend, and to enforce against all
users of the parking area such reasonable requirements
10
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and restrictions as Landlord deems necessary and advisable for the proper
operation and maintenance of the parking area. Tenant and Tenant's Parties shall
be entitled to park in Tenant's parking spaces in the Project but, unless Tenant
and Tenant's Parties participate in a sticker or vehicle tag program, Landlord
shall have no obligation to enforce the exclusivity of Tenant's parking or to
ensure that non-Tenant parties do not park in Tenant's spaces. In addition to
the above referenced parking spaces, Landlord will obtain for Tenant 27 parking
spaces in a parking lot adjacent to the Project ("Adjacent Lot') at $60.00 per
space per month. The foregoing spaces shall be on a month to month basis,
subject to all terms, conditions, rules, and regulations imposed by the owners
or operators of the Adjacent Lot, and Landlord shall not be liable for
unavailability of spaces, any increase in price of the spaces, or damage, loss,
or theft of property or injury to persons in, upon, or about the Adjacent Lot.
If spaces become unavailable in the Adjacent Lot, Landlord will use good faith
efforts to assist Tenant in obtaining additional parking in the vicinity of the
Building.
ARTICLE 7. OPERATING COSTS, REAL PROPERTY TAXES AND UTILITIES
7.1 Payment. Tenant shall pay Tenant's pro rata share of the Building's and
Project's operating costs ("Operating Costs"). The Operating Costs consist of
those reasonable costs and expenses actually incurred and directly associated
with managing, operating, maintaining, and repairing the Building and the
Project, determined in accordance with generally accepted accounting principles
consistently applied, including all electrical, heating, ventilating, air
conditioning, plumbing and other building systems (but not the cost for the
supply and use of such utilities by tenants) and the roof, any skylights,
interior and exterior walls; service and maintenance contracts; fire sprinkler
monitoring charges; energy management costs; real property taxes and general and
special assessments; wages, salaries and employee benefits of persons performing
services in connection with the Building or the Project; common area utilities;
parking lot sweeping, sealing, patching and restriping; public liability and
property damage insurance, fire and extended coverage insurance, and rent
interruption insurance; supplies, materials, tools, parts, and equipment;
equipment rental charges; bookkeeping, accounting, legal and other professional
charges and expenses; fees for permits and licenses; administrative expenses;
taxes other than real property taxes, including but not limited to transit
taxes, water and sewer rents, taxes based upon the receipt of rent (as
applicable to Operating Costs only) including, without limitation, gross
receipts taxes applicable to rent personal property taxes imposed upon fixtures,
machinery, equipment, apparatus, appurtenances, furniture and other personal
property used in connection with the Project (but specifically excluding excess
profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and
succession taxes, estate taxes, federal and state income taxes); service and
maintenance contracts; signage; landscaping; and a management fee not exceeding
10% of the other Operating Costs. The cost of capital improvements incurred by
Landlord to comply with changes after the date of this Lease in the Americans
with Disabilities Act or other Law in the common areas shall be amortized over
its useful life and the amortization amount included in Operating Costs.
Landlord shall use reasonable efforts to keep Operating Costs at reasonable
amounts while maintaining a high quality project. Operating Costs shall not
include the replacement of or structural repairs to the roof or the exterior
walls; repairs to the extent covered by warranty, indemnity agreements, surety
bonds, or actual insurance proceeds or insurance proceeds that would have been
received had Landlord maintained the insurance required by this Lease, whichever
is greater; alterations
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within leased premises of other tenants for their sole or principal benefit;
costs in excess of the arms-length cost of any goods or services acquired from
any affiliate of Landlord; costs incurred as the result of the gross negligence
or intentional misconduct of Landlord or its agents; costs, services or other
benefits which are not offered to Tenant, or for which Tenant is charged
directly but which are provided to another tenant or occupant of the Project;
costs incurred due to the violation or alleged violation by Landlord of the
terms and conditions of any lease, contract or other obligation; costs incurred
due to the violation or alleged violation by the Project of any Law which is in
effect on the date of this Lease; costs incurred due to the violation or alleged
violation by Landlord of any Law; costs arising from or related to the presence
in or about the Project or the clean-up or remediation of Hazardous Materials;
any types of utility services (including, without limitation, water, gas,
electricity, sewer and telephone) that at any time during the Term are
separately metered or contracted for and paid for by Tenant directly, or to the
extent serving any portions of the Project except the common areas; expenses for
which Landlord has, or will be required to be reimbursed from insurance, another
tenant (other than pursuant to an operating expense clause similar to this
Section) or another source; depreciation, amortization and other non-cash items;
ground rents; financing costs, including principal, interest, points, fees,
mortgage or similar taxes and other costs of obtaining and maintaining the s
ame, whether for the Project or for any equipment or other items for or used in
connection with the Project; Landlord's general overhead; capital improvements,
except as noted above; costs incurred for the repair of latent defects in the
Building; art and objects of art; common area decorations; tools and equipment
except to the extent used solely for the Building; costs of obtaining
reductions, referrals or abatements of taxes except to the extent of the savings
achieved; political contributions; and costs of marketing space in the Building,
leasing commissions, attorneys' fees, space planning costs, and other costs and
expenses incurred in connection with leasing of any portion of the Project. The
Operating Costs for the calendar year 2000 are estimated to be $3.09 per
rentable square foot. Commencing after the first full calendar year of the Term,
on the first day of each month Tenant shall pay a monthly advance charge on
account of Tenant's pro rata share of the Operating Costs. The amount of the
monthly charge shall be established by Landlord and may be adjusted from time to
time by Landlord to reflect the actual cost. Within 90 days after the end of
each fiscal year as established by Landlord, Landlord shall provide to Tenant a
reasonably detailed summary of the actual Operating Costs, including back-up
materials as reasonably requested by Tenant, showing Tenant's actual share and
the amount by which Tenant has overpaid or underpaid (the "Statement"). Any
overpayment shall be credited to Tenant's Operating Costs account no later than
the beginning of the next monthly period, except that at the end of the Term,
including any exercised Renewal Option, any overpayment shall be refunded to
Tenant. Any deficiency shall be payable within ten business days after receipt
of the Statement. Tenant may audit, inspect, or review Landlord's books and
records concerning Operating Costs for the two years preceding the year in which
the audit takes place. Tenant shall give Landlord notice within 90 days after
receipt of the Statement that Tenant wishes to audit Landlord's books and
records concerning Operating Costs at Landlord's office where such books and
records are maintained. Tenant may not audit more frequently than one time per
year. The audit shall be conducted by a qualified person within 30 days after
the notice from Tenant to Landlord. If Tenant's audit determines that an error
has been made, Landlord and Tenant shall endeavor to agree upon the matter,
failing which such matter shall be submitted to an independent certified public
accountant selected by Landlord with Tenant's approval, for a determination
which will be conclusive and binding upon Landlord and Tenant.
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All costs incurred by Tenant for Tenant's audit shall be paid for by Tenant
unless an error is determined to exist pursuant to the procedure outlined above
of more than five percent (5%) of the Operating Costs, in which event Landlord
shall reimburse Tenant for such costs. If it is determined that any portion of
the Operating Costs were not properly chargeable to Tenant, then Landlord shall
promptly credit or refund, at Tenant's option, the appropriate sum to Tenant,
and the Operating Costs payment to be made by Tenant shall be adjusted, if
required.
7.2 Allocation. Tenant's pro rata share of the Operating Costs shall be the
proportion that the rentable area of the Premises bears to the total rentable
area of the Building. Landlord's allocation methodology shall be consistent
throughout the Lease Term. The Operating Costs for the fiscal year in which this
Lease commences or terminates shall be apportioned so that Tenant shall not be
responsible for costs that relate to periods prior to or subsequent to the Term
of this Lease except any period of holding over.
7.3 Gross-up. The Operating Costs shall be adjusted to reflect level of
occupancy such that the cost of services provided to tenants, if any, which are
not provided to vacant space or are provided to vacant space to a reduced
degree, are distributed among those tenants enjoying the services. Only those
component expenses that are affected by variations in occupancy levels shall be
grossed up. The adjustment shall be made based upon generally accepted
accounting principles consistently applied to project costs at a 95% occupancy
level whenever the actual occupancy rate is less than 95%. In no event shall the
adjustment result in reimbursement to Landlord of an amount in excess of actual
costs incurred by Landlord.
ARTICLE 8. CONSTRUCTION
8.1 Delivery. If delivery of possession of the Premises to Tenant is delayed
beyond the anticipated Delivery Date because of a delay in the completion of
construction of the Premises by Landlord, then this Lease shall remain in full
force and effect, Landlord shall not be liable to Tenant for any damage
occasioned by the delay, and the Delivery Date shall be changed to the date
actual delivery of possession to Tenant is effected, with the corresponding
change in the Commencement Date as set forth in Section 2.1; provided, however,
that if Landlord has not delivered the Premises to Tenant on or before May 21,
2000, Tenant shall have the right to terminate this Lease by notice to Landlord
given before the earlier of (i) delivery of the Premises, or (ii) June 21, 2000.
8.2 Condition. Landlord, at Landlord's sole cost and expense shall construct in
a thoroughly first class, professional and workmanlike manner and in accordance
with all applicable Laws, the Code and the other provisions of this Lease, the
work ("Landlord's Work") described in Part I of Exhibit C. Landlord's Work shall
be completed on or before June 9, 2000, or such specific earlier date set forth
in Part I of Exhibit C. Landlord has no obligation to design or construct
improvements or to make alterations in the Premises except as specifically set
forth in Part I of Exhibit C as Landlord's Work. Any changes in Exhibit C shall
be subject to approval by both Landlord and Tenant, which approval shall not be
unreasonably withheld, conditioned or delayed. Any defects in the alterations or
additions constructed by Landlord in accordance with Exhibit C (except for
latent defects) shall automatically be waived unless specified in a written
punchlist delivered to Landlord within forty-five (45) days after the
Commencement Date.
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Landlord shall promptly correct all defects set forth in the punchlist. Landlord
shall provide Tenant with a shell certificate of occupancy or the equivalent on
or before June 9, 2000. If Landlord has not completed Landlord's Work on or
before June 9, 2000, the Rent Commencement Date shall be delayed by two (2) days
for each day past June 9, 2000 that Landlord's Work is not completed, and if
Landlord has not completed Landlord's Work on or before June 24, 2000, the Rent
Commencement Date shall be delayed by three (3 )) days for each day past June
24, 2000, that Landlord's Work is not completed. If Landlord's Work is not
completed by July 9, 2000, then Tenant may terminate this Lease by notice to
Landlord.
8.3 Costs of Construction. Tenant shall pay all costs of designing, installing,
and constructing Tenant's Work, as defined below (but not Landlord's Work).
8.4 Tenant's Work. Prior to the Commencement Date, commencing on the date this
Lease is fully executed, Landlord shall permit Tenant and Tenant's
representatives to enter the Premises so that Tenant may do such work as may be
required by Tenant make the Premises ready for Tenant's use and occupancy
(excluding Landlord's Work) ("Tenant's Work", as generally outlined in Exhibit
C. Such permission shall be subject to all the terms of this Lease except
Tenant's obligation to pay Base Rent and Operating Costs. Tenant acknowledges
and agrees that Landlord is not liable in any way for any injury, loss, or
damage which may occur to Tenant, its agents, contractors, employees, or
invitees or to Tenant's Work and installations made in the Premises, except
injury, loss or damage arising from Landlord's negligence or intentional acts,
all of the same being at Tenant's sole risk. Tenant acknowledges that Landlord
will be conducting Landlord's Work in the Premises and other work in the Project
concurrently with Tenant's Work, and Tenant and Landlord each agrees to
reasonably cooperate with the other in order to avoid interference with the
other party's construction activities. Tenant shall have the right to perform
the initial Tenant's Work and any other alterations or installations 24 hours
per day, seven days per week, 365 days per year from the date of this Lease
throughout the Term, and shall have reasonable access to the parking areas,
roof, loading dock and other common areas. Landlord shall not receive any profit
from but may charge (pass through) reasonable fees for inspection of Tenant's
Work, or any other alterations performed by Tenant, made in order to assure that
such work was performed in accordance with approved plans and specifications.
Landlord shall provide reasonable utilities for Tenant's use during Tenant's
construction at no cost to Tenant.
8.5 Alterations and Approval. After delivery of the Premises, Tenant shall
commence construction of Tenant's Work, at Tenant's sole cost and expense, by
delivering to Landlord plans and specifications (the "Design Plans") showing
Tenant's Work, for Landlord's approval and consent, which shall not be
unreasonably withheld, conditioned or delayed, except that Landlord reserves the
right to withhold consent in Landlord's sole discretion for Tenant's Work
adversely affecting the structure, safety, efficiency, or security of the
Building in which the Premises is located, the systems ("Systems") and equipment
("Equipment") which affect the Premises and other space in the Building, or the
appearance of the Premises from any common or public areas. To the extent of
Tenant's initial Work, the Design Plans shall include all improvements
contemplated under this Article 8, including, without limitation, generators,
antennae or satellite dishes, HVAC, conduits, cabling, fibre optics, and all
other matters which Landlord is entitled to approve. At the time Tenant submits
the Design Plans to Landlord, Tenant shall provide Landlord with notice of
whether Tenant's Work will involve or affect any
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Hazardous Materials, whether such materials are customary and usual based on
standard industry practices, and all other reasonable details relating thereto.
Landlord will promptly review the Design Plans and any changes thereto as well
as any plans and specifications for other alterations to be performed by Tenant
during the Term (the "Other Plans"), making reasonable efforts to complete
Landlord's review within five (5) business days after Landlord's receipt of the
initial Design Plans or the Other Plans, and will give Tenant notice detailing
Landlord's reasonable objections thereto, if any. If Landlord has not given
notice to Tenant within the five (5) business day period provided that Landlord
approves or objects to the Design Plans or Other Plans, then Tenant may give
notice to Landlord and if Landlord does not respond to the Design Plans or Other
Plans with objections or approval within three (3) business days thereafter,
Landlord will be deemed to have approved the Design Plans or Other Plans. Within
ten (10) business days after receipt by Tenant of Landlord's objections to the
Design Plans or Other Plans (including omissions therefrom) Tenant shall revise
and resubmit the Design Plans or Other Plans for Landlord's review. If,
notwithstanding diligent, good faith efforts on the part of the parties to
arrive at mutually acceptable Design Plans, the parties are unable to do so on
or before the date which is 30 days after the date on which the Design Plans are
submitted by Tenant to Landlord, then either party may terminate this Lease by
notice to the other. The final Design Plans approved by Tenant and Landlord are
the "Final Plans". Landlord shall, in the notice given to Tenant approving the
Final Plans or any Other Plans, notify Tenant which of the improvements,
fixtures and equipment must be removed at the end of the Term, which of the
improvements, fixtures and equipment may (but do not have to) be removed at the
end of the Term, and which of the improvements, fixtures and equipment shall not
be removed at the end of the Term. In any event, notwithstanding the foregoing,
Tenant shall have the right to elect not to remove conduit, cabling, piping,
electrical conductors or standard office improvements, and Tenant shall have the
right to remove any or all of its equipment, including, without limitation,
generators, HVAC, batteries, and UPS systems, at any time during the Term.
8.6 Approval Conditions. Landlord reserves the right to impose reasonable
requirements as a condition of such consent or otherwise in connection with
Tenant's Work, including requirements that Tenant: (i) submit for Landlord's
information the names, addresses and background information concerning all of
the major architects, engineers, contractors, subcontractors and suppliers
Tenant proposes to use, (ii) obtain and post permits, (iii) submit conditional
and final lien waivers in compliance with Arizona law for all architects,
engineers, contractors, subcontractors, and suppliers performing Tenant's Work,
(iv) permit Landlord or its representatives, upon reasonable notice, to inspect
Tenant's Work at reasonable times, (v) use a contractor specified by Landlord
for all work affecting the Building fire detection system, and (vi) comply with
such other reasonable requirements as Landlord may impose concerning the manner
and times in which Tenant's Work shall be done so as to facilitate coordination
of Landlord's and Tenant's Work and work being performed by or on behalf of
other tenants. Landlord reserves the right to reasonably approve and review the
work of the architects, engineers, contractors, subcontractors, and suppliers
who will design and perform Tenant's Work and supply materials affecting the
operation of Building Systems and Equipment, floor slabs or other load-bearing
structural elements so as to assure itself that the Work is being performed in
accordance with approved plans and specifications. Within 30 days after
completion of Tenant's Work, Tenant shall provide Landlord with a copy of the
complete construction drawings for the build-out (as-built drawings) of the
Premises.
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8.7 Performance of Tenant's Work. Tenant shall use Tenant's commercially
reasonable efforts not to unreasonably disrupt other tenants of the Building
during the build-out and installation of Tenant's Work. Tenant's Work shall be
performed: (i) in a thoroughly first class, professional and workmanlike manner,
(ii) only with materials that are new, high quality, and free of material
defects, (iii) strictly in accordance with the Final Plans approved by Landlord,
(iv) so as not to adversely affect the Systems and Equipment or the structure of
the Building or the Project, (v) diligently to completion and so as to avoid any
unreasonable disturbance, disruption or inconvenience to other tenants and the
operation of the Building, (vi) in compliance with all applicable Laws, the
Code, and other provisions of this Lease, and (vii) such other reasonable
requirements as Landlord may impose concerning the manner and times in which
Tenant's Work shall be done so as to facilitate coordination of Landlord's and
Tenant's Work and work being performed by or on behalf of other tenants. If
Tenant fails to perform Tenant's Work as required herein or the materials
supplied fail to comply herewith or with the specifications approved by
Landlord, and Tenant fails to cure such failure within 10 business days after
notice by Landlord (except notice shall not be required in emergencies),
Landlord shall have the right to stop Tenant's Work until such failure is cured
(which shall not be in limitation of Landlord's other remedies). Landlord shall
cooperate with Tenant's Work and the exercise of any rights granted to Tenant in
this Lease.
8.8 Additional Provisions. Tenant may at Tenant's sole cost at anytime during
the Term at no additional charge, with prior written notice to Landlord and
Landlord's written permission, which shall not be unreasonably withheld,
conditioned, or delayed, install certain heating, air conditioning, and
ventilation units on the roof of the Building in the areas designated on Exhibit
E attached hereto, with additional rooftop area, if any is requested by Tenant,
subject to availability. During the term of this Lease, Tenant may add HVAC
capacity or expand existing HVAC, including supply and return piping and drains
and ducts. Landlord's prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed, shall be obtained as to location,
machinery, and plans and specifications. Subject to Exhibit C, Tenant may
install the required conduits to connect the HVAC system to Tenant's emergency
generators. Tenant shall have the right to remove or cap any heating system or
supply an air system serving the Premises, to install drains for the HVAC
equipment, to discard any HVAC wastewater into the Building's sewage system, and
to relocate the reconnect primary air ductwork and/or secondary water piping
located in the Premises. At any time during the Term, Tenant may at Tenant's
expense, and subject to Landlord's prior approval (not to be unreasonably
conditioned, withheld, or delayed) of location, screening, design, and
equipment, install coolant lines to support air conditioning systems in the
Premises or elsewhere serving the Premises and install and operate separate and
independent chillers or other cooling system. All such installation shall be
done in compliance with the provisions of this Article 8 and Tenant shall use
all due care and shall not injure the roof of the Building in such installation.
Subject to Landlord's prior approval of plans and specifications therefor, which
approval shall not be unreasonably withheld, conditioned or delayed, Tenant, at
Tenant's sole expense and at any time during the Term, may (i) convert the
present sprinkler system within the Premises to a dry pipe pre-action system,
(ii) relocate or encase any watermains or other water pipes running through or
adjacent to the Premises, (iii) install an FM 200 gas system in the Premises,
(iv) install any other fire suppression system approved by Landlord (such system
may be connected with the Building life
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safety system, if compatible, at Tenant's sole expense, (v) place a UPS system
and associated batteries, transient voltage surge suppressor (TVSS) equipment,
ATS equipment, power distribution cabinets, and equipment and power panels in
the Premises in a location approved in advance by Landlord, which approval shall
not be unreasonably withheld, conditioned or delayed, and to integrate building
power into such systems. Tenant may, at any time during the Term, or (vi) tie
into Building grounding systems.
8.9 Provisions Concerning Installations on and Access to Roof The weight and
size of any installations on the roof of the Building are subject to Landlord's
approval, which approval shall not be unreasonably withheld, conditioned or
delayed. All costs of installation and maintenance of installations on the roof
shall be borne by Tenant. Any such installation shall: (i) be done in a manner
that does not affect coverage or protection afforded by any roof warranty or
maintenance contract (unless Tenant negotiates binding revisions to such
warranty or contract at no additional cost to Landlord); (ii) not result in any
penetration of the roof membrane, except for the installation of conduit and
pipes as approved by Landlord in connection with Landlord's approval of the
Final Plans (unless approved in advance by Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed); (iii) be consistent with
structural support requirements, as reviewed and approved by Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed; (iv) be
performed under Landlord's supervision in accordance with approved plans, which
approval shall not be unreasonably withheld, conditioned or delayed; (v) include
reasonable measures to the extent practicable to make the same be screened from
view at ground level from any portion of the Project common areas or neighboring
properties by screening approved by Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed; and (vi) be maintained, serviced,
powered, and repaired at Tenant's sole cost and expense. Landlord shall be
entitled to establish reasonable restrictions on roof access as necessary to
protect coverage or protection afforded by any roof warranty or maintenance
contract, provided that Tenant shall always have a way to obtain immediate
access for repair of malfunctioning equipment. Subject to availability of
rooftop space, Landlord agrees to not unreasonably withhold, condition or delay
its consent to the placement of rooftop antenna, satellite dishes and other
telecommunications equipment at any time during the Term. Subject to all other
provisions of this Article, including approval of location and screening,
Landlord shall provide an area of approximately 200 square feet on the rooftop,
as shown on Exhibit E, to accommodate Tenant's dishes, antennae, and other
telecommunications equipment, at no charge during the Term of this Lease, and
additional rooftop space (subject to availability) at a reasonable charge.
Landlord is hereby released from all liability and responsibility for, and
Tenant will be solely responsible for, all costs and expenses, including, but
not limited to, those arising from roof leaks, resulting from Tenant's
installation, maintenance, use, or operation of any satellite dish, antenna, or
related equipment and provided that, once such satellite dishes, antennas or
related equipment are installed by Tenant, Landlord shall not install or permit
the installation of any objects that will materially interfere with Tenant's
satellite dishes, antennas and related equipment. Tenant represents and warrants
to Landlord that Tenant's reception and transmission equipment will not
materially interfere with the reception and transmission of signals by the
equipment of other tenants and occupants of the Building.
8.10 Generators. Tenant, at Tenant's sole expense and at any time during the
Term, may install two diesel emergency generators, including fuel tanks and
grounding systems, in Tenant's
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Generator Rooms, as shown in Exhibit F and described above, according to plans
and specifications approved in advance by Landlord, which approval shall not be
unreasonably withheld, conditioned, or delayed, and in compliance with all
applicable Laws. Each generator must be located in side a Generator Room and no
Generator Room will be larger than 500 usable square feet. Tenant shall have the
right to install a generator plug on the outside of the building adjacent to the
loading dock areas for the purpose of connecting the Premises to a portable
generator in the event of a Building power failure. Landlord shall provide, at
no additional charge, if necessary, riser space to connect such generators.
Tenant shall have the right to test Tenant's generator on a weekly basis at
times reasonably agreed upon between Landlord and Tenant in advance (or as set
forth in reasonable rules formulated by Landlord), and Tenant shall be
responsible, at Tenant's sole expense, for maintaining, testing, refueling, and
cleaning the generator and any fuel tanks, all in compliance with applicable
law. Tenant may place a DC power plant and associated batteries within the
Premises, subject to Landlord's prior approval of location, which approval shall
not be unreasonably withheld, conditioned or delayed.
8.11 Floor Loading Capacity. Tenant may, at Tenant's sole expense and at any
time during the Term, subject to Landlord's prior consent, which consent shall
not be unreasonably withheld, conditioned or delayed, and the requirements of
this Lease, reasonably reinforce the floor loading capacity of the Premises, so
long as the reinforcement does not adversely affect the floor to ceiling height
of the space below the Premises. If Tenant does so with Landlord's consent,
Tenant shall not be required to return the reinforced areas to their original
condition.
8.12 Liens. Tenant shall pay all costs for Tenant's Work when due. Tenant shall
keep the Project and the Premises free from any mechanic's, materialmen's,
architect's, engineer's or similar liens or encumbrances, and any claims
therefor, in connection with any of Tenant's Work. Tenant shall remove any
claim, lien, or encumbrance of record relating to, caused by or resulting from
Tenant's Work, by bond or otherwise within 30 days after notice from Landlord.
If Tenant fails to do so Landlord may pay the amount (or any portion thereof) or
take such other action as Landlord reasonably deems necessary to remove such
claim, lien, or encumbrance, without being responsible for investigating the
validity thereof. The amount so paid and costs incurred by Landlord shall be
deemed additional rent under this Lease payable within thirty (30) days after
demand, without limitation as to other remedies available to Landlord. Nothing
contained in this Lease shall authorize Tenant to do any act which subjects
Landlord's title to, or any lender's interest in, the Building or any part of it
to any such claims, liens, or encumbrances, whether claimed pursuant to statute
or other law or express or implied contract.
8.13 Securily System. Tenant may, at Tenant's sole expense at any time during
the Term, subject to Landlord's prior written approval, which approval shall not
be unreasonably withheld, conditioned or delayed, install one or more security
systems (such as a cardkey system) for access to the Premises, retain
supplemental security services with respect to the Premises, and create a
special security area within the Premises to encompass Tenant's equipment room.
Landlord will cooperate with Tenant in maintaining the security for the Premises
and such area. Tenant may install security with non-building standard locks and
other access controls which restrict access to Tenant and its customers, so long
as Tenant provides Landlord with a reasonable means of access to the Premises
through such security system to allow Landlord to exercise its rights and
perform its obligations under this Lease, subject to the terms of this Lease,
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and if such systems are changed or modified, Tenant shall immediately notify
Landlord and provide such means of access. Tenant may fence or cage any
equipment or facilities installed by Tenant outside the Premises with Landlord's
prior approval, which approval shall not be unreasonably withheld, conditioned
or delayed. Any entry shall be subject to the provisions of Section 11 below.
ARTICLE 9. REPAIR/MAINTENANCE/UTILITIES/ACCESS
9.1 Landlord's Responsibilities. Subject to the provisions of Article 7,
Landlord shall maintain the Building and the Project in good condition and
repair at least equivalent to that maintained in similar buildings in the
Central Phoenix Business District, including plate glass, doors, and all
heating, air conditioning, ventilation, electrical and plumbing systems
(excluding those installed by Tenant or exclusively serving the Premises, as
contemplated hereunder), the common facilities, including, without limitation,
the parking area, the roof and structural elements of the Premises, and all
utility lines below grade or in the common facilities. Landlord shall not be
responsible to make any non-routine repairs or perform any non-routine
maintenance unless written notice of the need for such repairs or maintenance is
given by Tenant. In the event Tenant or Tenant Parties misuse or intentionally
or negligently damage the Premises, the improvements contained therein, or the
Project, Tenant shall reimburse Landlord for the cost of repair or maintenance
related to the misuse or damage, plus a ten percent (10%) administrative fee for
such work, within ten (10) business days after written request therefor,
accompanied by evidence reasonably supporting such costs. Landlord shall use
commercially reasonable efforts to make available to the Premises water,
electricity, gas, sewer services, and elevator service of a quantity and quality
at least equivalent to such services provided in comparable or similar buildings
in the Central Phoenix Business District. Except as provided in this Lease,
there shall be no abatement of rent and no liability of Landlord by reason of
any entry to the Premises, interruption of services or facilities, temporary
closure of common facilities, or temporary interference with Tenant's business
arising from the making of any repairs or maintenance; provided, however, that
Tenant shall at all times have unrestricted access to the Premises, and Landlord
shall use reasonable efforts to provide at least one elevator operational at all
times, and Landlord shall use reasonable efforts to minimize any disturbance or
interference with Tenant's ordinary business operations. Notwithstanding
anything to the contrary in this Section 9.1 (but subject to Section 9.4 below),
if Tenant's utilities are interrupted in the Premises for a period of more than
three days, Base Rent and Operating Costs shall abate for such a period of time,
retroactive to the date of utility interruption, that Tenant is unable to
conduct its ordinary business operations in the Premises. So long as Landlord
complies with the terms of this Article 9, rent abatement shall be Tenant's sole
remedy for such interruption.
9.2 Tenant's Oblintions. Tenant shall maintain the interior of the Premises and
the improvements installed by Tenant in good condition and repair. If Tenant
does not comply with its obligations under this Article, Landlord may, upon
reasonable prior notice to Tenant, but need not, make such repairs and
replacements or obtain maintenance and service contracts, and Tenant shall pay
Landlord the cost within ten (10) business days after demand.
9.3 Janitorial Services. Tenant shall be responsible for providing janitorial
services for the Premises as determined by Tenant.
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9.4 Utilities. All utility charges for the Premises shall be separately metered
or submetered. Tenant shall pay directly to any public utility for any utility
which it uses in the Premises that is separately metered by such utility and
shall pay to Landlord, prior to delinquency, for any utilities supplied to the
Premises that are measured by a submeter which is part of a master meter for the
Project or any portion thereof. Notwithstanding the foregoing, Tenant shall be
entitled to the exclusive use of 3,200 Amps of power during the term and any
Renewal Terms. Tenant shall have the right at any time during the Term to tap
into Building water supply in order to operate a humidifier system in the
Premises, provided that Tenant pays to Landlord a reasonable charge to reimburse
Landlord for Tenant's excess water usage (but not including any profit component
for Landlord). Landlord and Tenant acknowledge that Landlord may from time to
time, upon reasonable prior notice to Tenant, upgrade, perform routine
maintenance, or change the utilities available to the Building and the Premises
to comply with local law or the requirements of the power suppliers, and that
these activities may involve interruptions in Tenant's utility service. Landlord
will (i) use reasonable efforts to avoid outages during such upgrades,
maintenance, and changes, (ii) except when impracticable, give Tenant sufficient
notice before the same to permit Tenant to take additional measures, including
without limitation payment of additional costs to minimize or avoid outages, and
(iii) use reasonable efforts to schedule such upgrades, maintenance, and changes
as much as practicable at low usage times so as to minimize the impact. So long
as Landlord complies with the provisions of this Article, Landlord shall have no
liability for interruption of utilities.
9.5 Telecommunication Services. Subject to Landlord's prior approval, which
approval shall not be unreasonably withheld, conditioned or delayed, Tenant may
have access at no additional rental cost or other charge (but at Tenant's sole
expense) and at any time during the Term to empty conduit and riser space in the
Building for Tenant's use in accordance with plans and specifications approved
in advance by Landlord and subject to Landlord's reasonable restrictions. Tenant
shall have the right at no additional rental cost or other charge (but at
Tenant's sole expense) and at any time during the Term (a) to use fiber optic
cabling in the Building to be installed by Landlord in connection with
Landlord's Work, or, at Tenant's election, to construct additional
telecommunications entrances into the Building and into the Premises (including,
without limitation, multiple and redundant entrances), (b) to install any
additional conduit and facilities required in order to connect Tenant's
generators, power, HVAC equipment and piping, antennas, grounding, and related
equipment and for any other purpose not inconsistent with the design of the
conduit and riser space, (c) to install manholes adjacent to the Building for
bringing telecommunications fiber into the Building, and (d) to use Landlord's
planned telecommunication entrances. As to any of the foregoing work which
concerns or affects parts of the Building or the Project not within the
Premises, Landlord may require that the work be inspected by Landlord or its
contractors for conformance with approved plans and specifications (as
reasonably approved by Landlord), at Tenant's expense, for reimbursement under
the terms set forth in Exhibit C. All such work shall comply with the provisions
of Article 8 above. Subject to Landlord's prior consent as to location and
installation (which consent shall not be unreasonably conditioned, withheld, or
delayed), Tenant may run telecommunication cables from the Premises to exit the
Building and to the boundary of the land on which the Building is located.
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9.6 Access. Tenant and its representatives and customers shall have access to
and the right to enter the Premises and the location of any of Tenant's
equipment seven days per week, 24-hours per day, 365 days per year without the
requirement of prior notice. In addition, if and to the extent necessary to
access any of its cabling, conduit or equipment located outside the Premises,
upon reasonable prior notice to Landlord (which may be verbal or telephonic in
the event of emergency repairs), Tenant shall have access to the common areas,
power and telephone closets serving the Premises, parking area and loading dock,
seven days per week, 24-hours per day, 365 days per year; provided, however,
Tenant acknowledges that a building engineer may be required to accompany any
persons gaining access to areas outside the Premises (unless such engineer is
not immediately available with respect to any emergency repairs, in which case
Tenant shall give such notice as is practicable, within not more than 24 hours).
ARTICLE 10. TENANT'S WORK, ALTERATIONS AND PERSONAL PROPERTY
Tenant shall not commence Tenant's Work or any alterations, additions or
improvements to the Premises, including signs, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed, it being acknowledged that, except as otherwise provided in this Lease,
Landlord shall have sole discretion in matters affecting the Building structure,
Systems, Equipment, safety, and the rights of other tenants or occupants.
Notwithstanding the foregoing, for Work which (i) will cost less than $50,000
annually, in the aggregate, and (ii) does not affect the Building structure,
Systems, Equipment, safety, riser and shaft capacity, or the rights of other
tenants or occupants, Landlord's consent is not required, but such Work shall be
performed in compliance with all other requirements of this Article and Sections
8.3 through 8.13. All Tenant's Work, alterations, additions, or improvements
shall be made or done in accordance with plans and specifications approved by
Landlord and shall be subject to the provisions of Sections 8.3 through 8.13
above. Other than for the initial Tenant's Work contemplated hereunder, if
Landlord reasonably deems it necessary, Landlord may condition its consent upon
provision of a payment bond, in amount and form reasonably satisfactory to
Landlord, covering the work to be done by Tenant's contractor. In the event
Landlord consents to the making of any alterations, additions or improvements to
the Premises by Tenant, they shall be made by Tenant at Tenant's sole cost and
expense. Any contractor or person selected by Tenant to perform work within the
Premises must first be approved in writing by Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed, and Landlord may require by
notice to Tenant given at the time that Landlord approves the plans for such
work, that Tenant either use certain contractors in connection with work on or
directly affecting Building Systems or arrange for supervision or review of
Tenant's Work by such contractor. Tenant's Work and all alterations and
improvements shall be constructed of new materials, in a good workmanlike
manner, in accordance with applicable laws and codes, including without
limitation the Americans with Disabilities Act. Upon the expiration or sooner
termination of the Term of this Lease or of Tenant's right to possession, Tenant
shall, upon demand by Landlord, at Tenant's sole cost and expense, forthwith
remove any alterations, additions or improvements made by Tenant, designated by
Landlord (as provided in this Lease at the time of Landlord's approval of the
plans for the improvement) as requiring removal, and Tenant shall, forthwith at
its sole cost and expense, repair any damage to the Premises caused by such
removal and restore the Premises to a condition reasonably comparable to their
condition at the commencement of the Lease (reasonable wear and tear and loss by
casualty excluded);
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provided, that Tenant may leave in the Premises those alterations, additions or
improvements made by Tenant, designated by Landlord (as provided in this Lease
at the time of Landlord's approval of plans for the improvement) as not
requiring removal.
ARTICLE 11. CERTAIN RIGHTS RESERVED BY LANDLORD
Landlord shall have the right:
(a) To change the Project's name or street address after thirty (30) days
prior notice to Tenant;
(b) To enter the Premises either personally or by a designated
representative, upon no less than 24 hours prior notice to Tenant and, at
Tenant's option, escorted by Tenant's representative, for the purpose of access
to risers, examination, inspection, or performing Landlord's obligations
hereunder (except in the event of an emergency when no notice or escort shall be
required), and in showing the Premises to prospective lenders or purchasers;
(c) To enter the Premises either personally or by a designated
representative, at Tenant's option accompanied by a representative of Tenant,
upon 24 hours prior notice to Tenant during the last six months of the Initial
Term or Renewal Period, as the case may be (if Tenant has not elected to
exercise its renewal rights), for purposes of showing the Premises to
prospective tenants;
(d) Notwithstanding anything in this Article or this Lease, Landlord or its
agents shall enter Tenant's secured equipment area only after at least twenty-
four (24) hours notice to Tenant and when accompanied by Tenant, except when
failure to comply with the foregoing will cause imminent danger to the Premises
or other portions of the Building or any person. Any entry by Landlord will be
conducted with reasonable caution under the circumstances to prevent damage to
or interference with any of the equipment in the area.
(e) To grant to anyone the exclusive right to conduct any business or
render any service in or to the Project, provided such exclusive right shall not
operate to exclude Tenant from the use expressly permitted under Article 4 or
the conduct of Tenant's business in the Premises and provided that no such
exclusive rights will be granted with respect to the provision of
telecommunication or power services to the Project;
(f) Subject to the provisions of Section 8.13, to retain at all times and
to use, subject to the foregoing limitations, keys (including card keys) to all
doors within and into the Premises. This provision shall not apply to Tenant's
safes or security cabinets for equipment within the equipment room of the
Premises, or other areas maintained by Tenant for the safety and security of
monies, securities, negotiable instruments or like items; and
(g) To restrict or prohibit vending or dispensing machines of any kind in
or about the Premises, except to the extent such machines are used solely for
the personal use of Tenant, its employees, licensees, and agents and are not
visible from the common facilities.
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ARTICLE 12. DAMAGE TO PROPERTY; INJURY TO PERSONS; INSURANCE
12.1 Tenant's Responsibility. Tenant shall defend, indemnify and hold Landlord
harmless from any and all claims arising from Tenant's use of the Premises or
the conduct of its business or from any activity, work, or thing done, permitted
or suffered by Tenant in or about the Premises, regardless of fault or
negligence which is imputed to Landlord as the owner of the Project but which
involves a condition of the Premises within the control of Tenant, its employees
or contractors, but excluding claims arising from Landlord's or its agents' or
employees' actual negligence or intentional acts. Tenant shall further defend,
indemnify and hold Landlord harmless from any and all claims arising from any
breach or default in the performance of this Lease by Tenant, or arising from
any act or negligence of Tenant, or of its agents or employees, and from all
costs, attorneys' fees, expenses and liabilities incurred as a result of any
such claim. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons, in, upon, or about
the Premises from any cause, and Tenant hereby waives all claims in respect
thereof against Landlord, unless caused by active negligence or intentional acts
of Landlord, its agents or employees. Landlord shall not be liable for loss of
or damage to any property by theft or otherwise, or for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of any building or from
the pipes, appliances or plumbing works therein, or from the roof, street or
subsurface, or from any other place resulting from dampness or any other cause
whatsoever, except to the extent caused by the negligence or intentional acts of
Landlord, its agents or employees. Landlord shall not be liable for interference
with the natural light. Tenant shall give immediate notice to Landlord of any
fire, accident or defect discovered with the Premises or the Building. Tenant
acknowledges that it can protect itself to its satisfaction by procuring
appropriate insurance.
12.2 Insurance. Throughout the Term of this Lease Tenant shall maintain special
perils property insurance, including building and machinery coverage as
applicable, in an amount equal to one hundred percent of the replacement value
of Tenant's trade fixtures, equipment, and other personal property located on
the Premises together with such other insurance as may be reasonably required by
Landlord's lender or by any government agency. All proceeds of Tenant's policy
of property insurance shall be payable to Tenant, and all proceeds of policies
of insurance procured by Landlord shall be payable to Landlord. Tenant hereby
waives any right to recovery from Landlord and Landlord hereby waives any right
of recovery from Tenant for any loss or damage (including consequential loss)
resulting from any of the perils insured against in the special form property
insurance policy with extended coverage endorsement. During the Term of this
Lease, Tenant shall, at Tenant's expense, maintain commercial general liability
insurance against claims for personal injury, death or property damage occurring
in, upon or about the Premises in an amount not less than $2,000,000 per
occurrence and $2,000,000 annual aggregate (with a separate general aggregate
limit for the Premises), automobile liability insurance with a combined single
limit not less than $1,000,000, and workers' compensation insurance as required
by law. Tenant's policies of liability insurance shall name Landlord as an
additional insured, shall provide coverage for blanket contractual liability,
premises, products/completed operations, and personal and advertising injury
coverage, to the extent normally included in policies maintained by Tenant.
Tenant's policies of insurance shall be primary and not contributory as to other
insurance purchased by or available to Landlord, and
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shall have retentions or deductibles reasonably acceptable to Landlord. A
certificate of the insurance required to be carried by Tenant under this Article
12 shall be delivered to Landlord prior to the Commencement Date and thereafter
at least thirty days prior to the expiration of the then current policies. Upon
the written request of Landlord, copies of such policies shall also be delivered
to Landlord. Each policy shall contain an endorsement prohibiting cancellation
or nonrenewal without at least ten (10) days prior notice to Landlord for
nonpayment of premium and otherwise without thirty (30) days prior notice to
Landlord.
12.4 Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant hereby waive and release each other of and
from any and all right of recovery, claim, action or cause of action, against
each other, their agents, officers and employees, for any loss or damage that
may occur to the Premises or the Building, by reason of fire or the elements,
regardless of cause or origin, including negligence of Landlord or Tenant and
their agents, officers and employees. Landlord and Tenant agree immediately to
give their respective insurance companies which have issued special perils
policies of property insurance, written notice of the terms of the mutual
waivers contained in this Section, and to have the insurance policies properly
endorsed, if necessary, to prevent the invalidation of the insurance coverage by
reason of the mutual waivers. The waiver does not apply to claims caused by a
party's willful misconduct. If, despite a party's best efforts, it cannot find
an insurance company meeting the criteria above that will give the waiver at
reasonable commercial rates, then it shall give notice to the other party within
thirty (30) days after the Commencement Date. The other party shall then have
thirty (30) days to find an insurance company that will issue the waiver. If the
other party also cannot find such an insurance company, then both parties shall
be released from their obligation to obtain the waiver. If an insurance company
is found but it will give the waiver only at rates greater than reasonable
commercial rates, then the parties can agree to pay for the waiver under any
agreement they can negotiate. If the parties cannot in good faith negotiate an
agreement, then both parties shall be released from their obligation to obtain
the waiver.
12.5 Landlord's Insurance. Landlord shall carry full replacement special perils
property insurance, including building and machinery coverages and commercial
general liability insurance in an amount not less than $2,000,000 per
occurrence.
ARTICLE 13. FIRE AND CASUALTY
Except as hereafter provided, if the Premises are wholly or partially destroyed
or damaged by fire or other casualty, Landlord shall restore the Premises with
reasonable diligence; provided, however, that Landlord shall have no obligation
to restore improvements not originally provided by Landlord or to replace any of
Tenant's fixtures, furnishings, equipment, or personal property and Tenant shall
be responsible for refixturizing the Premises and reinstalling its equipment.
Landlord need not commence repairs until a substantial portion of the insurance
proceeds are available. Proceeds of Landlord's insurance payable with respect to
a fire or other casualty shall be received and held by Landlord. Proceeds of
Tenant' s insurance payable with respect to a fire or other casualty shall be
received and held by Tenant. In the event the Premises are destroyed or damaged
by any fire or casualty not covered by the insurance maintained by Landlord, or
insurance required under this Lease to be maintained by Landlord, whichever is
greater, or to the extent of not less than twenty-five percent of the
replacement cost thereof, or if the fire or
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casualty occurs within the last year of the Term of the Lease, or if the
Premises cannot reasonably be repaired within ninety (90) days from the date of
the casualty, then Landlord or Tenant shall have the option to terminate this
Lease by giving notice to the other party within sixty days after the occurrence
of such damage or destruction, in which case Landlord shall retain all insurance
proceeds payable with respect to its insurance with respect to the Premises as
its own property, and Tenant shall retain all insurance proceeds payable with
respect to its insurance with respect to the Premises as its own property. If
Landlord or Tenant does not terminate this Lease as provided above, this Lease
shall continue in full force and effect, but Base Rent and Operating Costs shall
be equitably abated with respect to the portion of the Premises that is not
usable by Tenant for its normal business operations until the restoration is
substantially complete. The provisions of this Lease shall govern when this
Lease is terminable as a result of a fire or casualty and no other rule or
statute on the subject applies.
ARTICLE 14. CONDEMNATION
If any portion of the Premises or the Building is appropriated or taken under
the power of eminent domain which Tenant determines in its reasonable judgment
renders the Premises unusable by Tenant for its normal business operations,
either Landlord or Tenant shall have the right to terminate this Lease, as of
the date Tenant is required to vacate or can no longer use the affected part of
the Premises or the Building, by giving notice in writing of such election
within thirty days after receipt by Tenant from Landlord of written notice that
Tenant's Premises or the Building have been or will be so appropriated or taken.
Notwithstanding the foregoing, Landlord may only exercise its option to
terminate this Lease under this Article 14 if Landlord terminates the leases of
all other similarly situated tenants occupying premises in the Building which
are also subject to the taking. If neither Landlord nor Tenant elects to
terminate this Lease, then Landlord shall restore the Premises to the extent
practicable to their condition prior to the taking, and the Base Rent and
Operating Costs shall be reduced on an equitable basis from the date of the
taking, taking into account the relative value of the portion of the Premises
taken as compared to the portion remaining. All awards or compensation for any
taking of any part of the Premises, whether payable to Landlord or Tenant, shall
be the sole property of Landlord. Notwithstanding anything to the contrary
contained herein, Tenant shall be entitled to pursue an award of compensation
relating to damage to or loss of tenant improvements made by Tenant, trade
fixtures or other personal property belonging to Tenant, moving expenses,
inconvenience and business interruption. Landlord shall be under no obligation
to restore or replace Tenant's furnishings, trade fixtures, equipment and
personal property. For the purposes of this Article 14, a voluntary sale or
conveyance in lieu of condemnation shall be deemed an appropriation or a taking
under the power of eminent domain.
ARTICLE 15. ASSIGNMENT AND SUBLETTING; SALE BY LANDLORD
15.1 Transfer by Tenant. Except as otherwise provided in this Article 15, Tenant
shall not, either voluntarily or by operation of law, assign, hypothecate, or
transfer this Lease, or sublet the Premises or any part thereof, without
Landlord's prior written consent, which shall not be unreasonably withheld,
conditioned, or delayed, provided the proposed assignee or sublessee is
reasonably satisfactory to Landlord as to credit and character and will occupy
the Premises for purposes not inconsistent with Tenant's purposes as stated in
Article 4. Landlord shall be under
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no obligation to give or withhold consent until after all information reasonably
required by Landlord with respect to the identity, background, experience and
financial worth of the proposed assignee, transferee, or subtenant has been
provided to Landlord, after which Landlord will give notice to Tenant within
five (5) business days of Landlord's consent or nonconsent. No hypothecation,
assignment, sublease or other transfer to which Landlord has consented shall be
effective for any purpose until such time as fully executed documents of such
transaction have been provided to Landlord, and, in the case of an assignment,
the assignee has attorned directly to Landlord, or, in the case of a sublease,
the sublessee has acknowledged that the sublease is subject to all of the terms
and conditions of this Lease. Any assignment, mortgage, transfer or subletting
of this Lease which is not in compliance with the provisions of this Article 15
shall be voidable and shall, at the option of Landlord, terminate this Lease.
The consent by Landlord to an assignment or subletting shall not be construed as
relieving Tenant from obtaining the express written consent of Landlord to any
further assignment or subletting or as releasing Tenant from any liability or
obligation hereunder, whether or not then accrued. Except as provided in this
Article, this Lease shall be binding upon and inure to the benefit of the
successors and assigns of the parties. The term "assignment" includes the
following, whether accomplished directly or indirectly: (a) if Tenant is a
partnership or limited liability company, the withdrawal or change, voluntarily,
involuntarily or by operation of law, of a majority of the partners or members,
or a transfer of a majority of ownership interests, in the aggregate on a
cumulative basis, or the dissolution of the partnership or limited liability
company; and (b) if Tenant is a private corporation (i.e., whose stock is not
publicly held and traded through an exchange or over the counter), the: (i)
dissolution, merger, consolidation or other reorganization of Tenant; (ii) sale
or other transfer of more than a cumulative aggregate of 50% of the voting
shares of Tenant (other than to immediate family members by reason of gift or
death); or (iii) sale, mortgage, hypothecation or pledge of more than a
cumulative aggregate of 50% of Tenant's net assets.
15.2 Permitted Transfers. Notwithstanding the foregoing, Tenant may assign its
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interest under this Lease or sublease any portion of the Premises to an
Affiliate (as defined below), provided that (i) the Affiliate is a reputable
entity with a tangible net worth, determined on a consolidated basis, if
applicable, in accordance with generally accepted accounting principles, that is
at least equal to the greater of (X) Tenant's tangible net worth immediately
prior to such transaction, and (Y) Tenant's tangible net worth on the date of
this Lease, and (ii) except with respect to assignment by operation of Law, an
instrument is executed by the assignee or subtenant under which the transferee
assumes all obligations of Tenant under this Lease, and such instrument is
delivered to Landlord on or prior to or promptly after the effective date of
such transaction. As used in this Lease, the term "Affiliate" means an entity
which (i) controls, is controlled by, or is under common control with INFLOW,
INC., or (ii) is Tenant's successor by merger, acquisition (whether structured
as a stock acquisition or the acquisition of substantially all of Tenant's
assets), or consolidation, (iii) acquires the business being conducted in the
Premises, (iv) has at least a ten percent (10%) ownership interest in Tenant, or
(v) is owned at least ten percent (10%) by Tenant. As used herein, "control" of
an entity means the possession, directly or indirectly, of the power to direct
that entity's management and policies, whether through the ownership of voting
securities or otherwise. A transfer under this Section 15.2 is a "Permitted
Transfer" So long as Tenant is not a publicly traded corporation and subject to
the confidentiality provisions of Article 23.13 below, from time to time, within
a reasonable time following written request by Landlord, Tenant shall promptly
provide Landlord with a statement certified by an authorized
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officer of Tenant which provides the following information: (i) the names of
Tenant's shareholders, partners, limited partners, or members, and their
ownership interests at the time of the statement; (ii) the state in which Tenant
is incorporated or organized; and (iii) any information regarding a material
change in Tenant's structure, including, without limitation, a merger or
consolidation. Landlord may not request such a statement more than one time per
year.
15.3 Co-location Not a Transfer. The co-location of equipment or the providing
of short-term rights to use portions of the Premises to Tenant's customers and
vendors is not an assignment or sublease by Tenant, provided that, as between
Landlord and Tenant, any rights and liabilities with respect to the co-location
or the co-located equipment shall be the sole responsibility of Tenant,
including, without limitation, the movement thereof, in and out of the Premises
in the same manner and to the same extent as if the co-locators were Tenant and
their equipment belonged to Tenant.
15.4 Splitting Profits. If Landlord has approved an assignment of this Lease or
a sublease of the Premises as provided above or Tenant has made a Permitted
Transfer, then Tenant shall pay to Landlord when and as received by Tenant fifty
percent of any consideration received by Tenant in excess of the Base Rent and
other charges then payable by Tenant hereunder (calculated on a per square foot
basis), after Tenant has recovered Tenant's reasonable costs, fees, and expenses
incurred in connection with such assignment or sublease, including reasonable
brokerage commissions, reasonable costs of architectural and engineering fees,
and leasehold improvements required by the assignee or subtenant.
15.5 Continued Responsibility. Tenant shall remain fully liable for performance
of this Lease, notwithstanding any assignment or sublease, for the entire Lease
Term, including any Renewal Periods as to which the transferee exercises its
option.
15.6 Sale of Propgrty. In the event of a sale or conveyance by Landlord of the
Premises, provided that Landlord's successor in interest assumes all obligations
under this Lease, Landlord shall be relieved of all future liability for the
covenants or conditions, express or implied, in favor of Tenant, and Tenant
shall look solely to Landlord's successor in interest. Provided that Landlord's
successor in interest assumes all obligations under this Lease, this Lease shall
not be affected by any sale, and Tenant shall attorn to the successor-in-
interest. If any Security Deposit has been made by Tenant, the successor-in-
interest shall be obligated to return it in accordance with the terms hereof and
Landlord shall be discharged from any further liability in reference thereto.
ARTICLE 16. ESTOPPEL CERTIFICATE
16.1 Certification. Tenant and Landlord shall each at any time and from time to
time upon not less than fifteen (15) days' prior written notice from the other
party execute, acknowledge and deliver to the other party a statement in writing
(i) certifying that this Lease is unmodified and in full force and effect (or if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the dates to which the
rental and other charges are paid in advance, if any; (ii) acknowledging that
there are not, to the certifying party's
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knowledge, any uncured defaults on the part of the other party hereunder, or
specifying such defaults if they are claimed; and (iii) certifying such other
matters relating to this Lease as the requesting party may reasonably request.
Any such statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the real property of which the Premises
are a part.
16.2 Failure to Provide. Either party's failure to deliver a statement within
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the fifteen (15) day time period prescribed above shall be conclusive upon such
party (i) that this Lease is in full force and effect, without modification
except as may be represented by the requesting party, (ii) that there are no
uncured defaults in the requesting party's performance, and (iii) that not more
than one month's rental has been paid in advance.
ARTICLE 17. LANDLORD'S REMEDIES
17.1 Events of Default. The following are Events of Default:
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(a) Tenant's failure to pay rent or any other amount due under this Lease
within ten (10) days after notice of nonpayment.
(b) Tenant's failure to execute, acknowledge and return an estoppel
certificate which complies with the requirements of Article 16 or a
subordination agreement which complies with the requirements of Article 19,
within five (5) business days after request by Landlord following the expiration
of the periods provided for in Articles 16 and 19.
(c) Tenant's failure to perform any other obligation under this Lease
within fifteen (15) days after notice of nonperformance; provided, however, that
if the breach is of such a nature that it cannot be cured within fifteen (15)
days after receipt of written request, Tenant shall be deemed to have cured if
cure is commenced promptly (in no event later than fifteen (15) days after
notice of nonperformance) and diligently pursued to completion; but if a breach
involves an imminent threat to health or safety, Landlord may in its notice of
breach reduce the period for cure to such shorter period as may be reasonable
under the circumstances.
17.2 Remedies. After the occurrence of an Event of Default, Landlord, without
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further notice or demand, may exercise any one or more of the following remedies
concurrently or in succession:
(a) Terminate Tenant's right to possession of the Premises by legal
process, with or without terminating this Lease, and by judicial process retake
exclusive possession of the Premises.
(b) From time to time relet all or portions of the Premises, using
reasonable efforts to mitigate Landlord's damages. In connection with any
reletting, Landlord may relet for a period less than or extending beyond the
Term of this Lease and may make alterations or improvements to the Premises
without releasing Tenant of any liability. Upon a reletting of all or
substantially all of the Premises, Landlord shall be entitled to recover all of
its then prospective damages for the balance of the Term of the Lease measured
by the difference between amounts payable under
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this Lease and the anticipated net proceeds of reletting; provided, however,
that if the new lease term extends beyond the Term or the Premises covered
thereby includes other premises not part of the Premises, a fair apportionment
of the expenses of reletting will be made, and any rental concessions will be
amortized over the term of the new lease. In no event shall Tenant be entitled
to receive any amount representing the excess of avails of reletting over
amounts payable hereunder.
(c) From time to time recover accrued and unpaid rent and damages arising
from Tenant's breach of the Lease, regardless of whether the Lease has been
terminated, together with applicable late charges and interest at the rate of
18% per annum or the highest lawful rate, whichever is less; provided, however,
that Landlord shall use reasonable efforts to relet the Premises in order to
mitigate Landlord's damages.
(d) Recover all reasonable attorneys' fees and other expenses incurred by
Landlord in connection with enforcing this Lease, recovering possession, and
collecting amounts owed.
(e) Perform the obligation on Tenant's behalf or remove equipment
installed in contravention of the terms of this Lease and recover from Tenant,
upon demand, the entire amount expended by Landlord plus fifteen percent (15%)
of such amounts for handling, supervision, and overhead.
(f) Terminate this Lease for any breach and recover from Tenant all
reasonable damages it may incur by reason of such breach, including the
reasonable cost of recovering the Premises, and including the worth at the time
of such termination of the excess, if any, of the amount of Base Rent and
charges equivalent to rent reserved in this Lease for the remainder of the
stated Term over the then reasonable rental value of the Premises for the
remainder of the stated Term, all of which amounts shall be immediately due and
payable from Tenant to Landlord.
(g) Pursue any other remedies available at law or in equity.
17.4 Subleases. Upon a termination of Tenant's right to possession, whether or
---------
not this Lease is terminated, subtenancies and other rights of persons claiming
under or through Tenant: (i) shall be terminated or (ii) Tenant's interest shall
be assigned to Landlord. Landlord may separately elect termination or assignment
with respect to each such subtenancy or other matter.
17.5 Disputes, Arbitration. Notwithstanding anything to the contrary in this
---------------------
Article, Landlord and Tenant agree to resolve disputes between Landlord and
Tenant concerning denial of consent and matters involving $50,000.00 or less, by
final binding arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"), including the Expedited
Procedures, provided, however, that neither party shall be required to submit to
arbitration if the dispute involves: (i) any issue that may requiring the
joinder or testimony of a third party, and such third party refuses to
participate in the arbitration proceedings; or (ii) the exercise of remedies for
non-payment of rent, where there is no pending good faith dispute with respect
to the amount owed. Absent a showing of good cause, the hearing shall be
conducted within 90 days from the service of the statement of claim. All
proceedings shall be governed by
29
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the Federal Arbitration Act. Each party shall bear the expense of its own
attorneys, experts and out of pocket costs as well as fifty percent of the
expense of administration and arbitrator fees. Depositions, other than those
taken in lieu of live testimony, shall not be taken except upon the
arbitrator(s) finding of special need. Parties shall be entitled to conduct
document discovery in accordance with a procedure where responses to information
requests shall be made within twenty days from their receipt. Either party shall
be entitled to pursue remedies for emergency judicial relief in any court of
competent jurisdiction, except that immediately following the preliminary
adjudication of such request for emergency relief, the parties hereby consent to
a stay of the judicial proceedings pending a determination of the dispute on the
merits by arbitration as herein provided.
17.6 Attorneys' Fees. The prevailing party in any action related to this Lease
shall be awarded reasonable attorneys' fees, court costs and expenses from the
other party.
17.7. Limitation on Landlord's Remedies. Notwithstanding anything in this
Section, under no circumstances may Landlord withhold services under this Lease
as a remedy for Tenant's default.
ARTICLE 18. NOTICES
Notices required or permitted hereunder must be given in writing, personally
delivered or sent by registered or certified mail, return receipt requested,
postage prepaid, or by a nationally recognized overnight courier service (e.g.,
Federal Express, UPS) at the addresses set forth in Sections L and M of the
Basic Lease Provisions or at any other address designated by Landlord or Tenant
in writing, and any such notice of communication shall be deemed to have been
given as of the date of delivery, if hand- or courier-delivered (including
Federal Express or other established overnight service which obtains a signed
receipt upon delivery), or as of three days after the date of mailing if mailed
certified, return receipt requested, postage prepaid.
ARTICLE 19. SUBORDINATION/QUIET ENJOYMENT
19.1 Subordination. Landlord expressly reserves the right at any time to place
liens and encumbrances on and against the Premises and the Project, superior in
lien and effect to this Lease and the estate created hereby, and Tenant shall
execute upon request subordination agreements in a form reasonably satisfactory
to Tenant to that effect; provided however, that Tenant's execution of the
subordination agreement shall be conditioned upon the holder of the encumbrance
recognizing Tenant's rights, notwithstanding any foreclosure of the lien or
encumbrance, and execution of a nondisturbance agreement, reasonably
satisfactory to Tenant, by such holder of the encumbrance. Landlord warrants to
Tenant that as of the date of this Lease, there is no deed of trust or mortgage
encumbering the Project or the Premises.
19.2 Quiet Enjoyment. Subject to the other provisions of this Lease and so long
as Tenant faithfully pays all rent and additional rent and other amounts owed
under this Lease and performs and complies with the obligations and conditions
to be performed and complied with by Tenant under this Lease, Tenant shall enjoy
and have throughout the Term of the Lease the quiet and undisturbed possession
of the Premises and the right to use the common areas and the other areas in
which Tenant is given rights under this Lease.
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19.3 Waiver of Landlord's Lien. Landlord hereby waives any lien under ARS
---------------------------
(S)(S)33-361 and 362, and any other liens Landlord may have under law or
otherwise, in any of Tenant's furniture, trade fixtures, equipment, inventory,
or other personal property, whether located on or within the Premises or
otherwise, and whether now or hereafter owned by Tenant or any of Tenant's
customers or co-locators. Within twenty (20) days after written request
therefor, Landlord will confirm such waiver in writing in form and substance
reasonably acceptable to Landlord and providing that a lender or other holder of
an interest in Tenant's personal property may take possession of the Premises
for purposes of foreclosure on Tenant's property for no longer than 30 days,
subject to payment of rent and all other charges hereunder.
ARTICLE 20. BROKERS
Both Landlord and Tenant represent that they have dealt with no other broker
than as set forth in Sections N and 0 of the Basic Lease Provisions in
connection with the negotiation, execution and delivery of this Lease (the
"Broker"). Landlord agrees to pay a reasonable commission to the Broker, subject
to the terms of a separate agreement between Landlord and Broker. If any person
other than the Broker shall assert a claim to a finder's fee, brokerage
commission or other compensation on account of alleged employment as finder or
broker or performance of services as a finder or broker in connection with this
transaction, the party through whom the finder or broker is claiming to be owed
a finder's fee, brokerage commission or other compensation shall indemnify and
hold the other party harmless from and against any such claim and all costs,
expenses and liabilities incurred in connection with such claim or any action or
proceeding brought thereon, including but not limited to attorneys' fees and
court costs in defending such claim.
ARTICLE 21. RELOCATION [INTENTIONALLY OMITTED]
ARTICLE 22. SIGNAGE
Landlord shall retain control over the exterior appearance of the Building and
the Premises as viewed from the public. Tenant shall not install or permit to be
installed any drapes, shutters, signs, lettering, decoration, advertising or any
items on the outside of the Premises or in the interior of the Premises which
are visible from the outside of the Premises and in any way adversely alter the
exterior appearance of the Building or the Premises, except as described in the
Final Plans or any Other Plans approved by Landlord. Landlord will provide
Tenant with standard lobby signage. Tenant may at its sole expense install an
identification sign to be located on or near the entryway to the Premises using
Tenant's standard graphics, subject to Landlord's prior written consent as to
size and location, which consent shall not be unreasonably withheld, conditioned
or delayed. Notwithstanding the foregoing, Tenant shall have the right to remove
or block up the windows in the exterior walls of the Premises, subject to
Landlord's prior review and approval of the methods and materials, which
approval shall not be unreasonably withheld, conditioned or delayed.
ARTICLE 23. GENERAL PROVISIONS
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23.1 Force Majeure. This Lease and the obligations of Tenant and Landlord
hereunder shall not be affected or impaired because Landlord or Tenant is unable
to fulfill any of its obligations hereunder or is delayed in doing so if such
inability or delay is caused by reason of any strike, lockout, civil commotion,
war-like operations, war, riot, fuel shortage, police activities, invasion,
rebellion, hostilities, military or usurped power, sabotage, governmental
regulations or controls, inability to obtain any material, service or financing,
Act of God, or other cause beyond the control of the Landlord or Tenant, as
applicable, except that this provision does not under any circumstances excuse
non-payment of rent or additional rent.
23.2 Rules. Tenant and its officers, agents, employees, and customers shall
comply with the rules and regulations established by Landlord and attached
hereto as Exhibit D (the "Rules and Regulations") and with such modifications
and additions as Landlord may hereafter make for the Project; provided, however,
that such rules and regulations shall not be inconsistent with this Lease (and,
in the event of any inconsistency between the rules and regulations and this
Lease, the terms and provisions of this Lease shall prevail). Any violation of
the rules and regulations shall constitute a breach of this Lease, subject to
the notice and cure provisions of Article 17. Landlord shall enforce all Rules
and Regulations in a non-discriminatory and equitable manner, and no change in
any of the Rules and Regulations shall be effective until thirty (30) days after
notice thereof is given to Tenant, result in an increase in any of Tenant's
monetary obligations under this Lease or adversely affect Tenant's ability to
use the Premises for the Permitted Use or the conduct of Tenant's business in
accordance with the terms of this Lease. In the event of any conflict between
the Rules and Regulations and the terms and conditions of the Lease, the terms
and conditions of the Lease shall control.
23.3 Captions. The article captions contained in this Lease are for convenience
only and shall not be considered in the construction or interpretation of any
provision.
23.4 Integration. This Lease contains all of the agreements of the parties
hereto with respect to any matter covered or mentioned in this Lease, and no
prior agreement or understanding pertaining to any matter shall be effective for
any purpose. No provision of this Lease may be amended or added to except by an
agreement in writing signed by the parties hereto or their respective successors
in interest.
23.5 No Offer. Submission of this instrument for examination shall not bind
Landlord in any manner, and no lease or obligations of Landlord shall arise
until this instrument is signed and delivered by Landlord and Tenant.
23.6 No Waiver. No waiver by Landlord of any provision of this Lease or any
breach by Tenant hereunder shall be deemed to be a waiver of any other provision
hereof, or of any subsequent breach by Tenant of the same or any other
provision. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to render unnecessary the
obtaining of Landlord's consent to or approval of any subsequent act of Tenant,
whether or not similar to the act so consented to or approved. No act or thing
done by Landlord or Landlord's agent during the Term of this Lease shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
a surrender shall be valid unless in writing and signed by Landlord. No employee
of Landlord or of Landlord's agents shall have any power
32
<PAGE>
to accept the keys to the Premises prior to the termination of this Lease, and
the delivery of the keys to any employee shall not operate as a termination of
the Lease or a surrender of the Premises.
23.7 Deadlines. Time is of the essence of this Lease.
23.8 No Accord or Satisfaction. No payment by Tenant or receipt by Landlord
of a lesser amount than the rent and other sums due hereunder shall be deemed to
be other than on account of the earliest rent or other sums due, nor shall any
endorsement or statement on any check or accompanying any check or payment be
deemed an accord and satisfaction; and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such rental or
other sum and the pursue any other remedy provided in this Lease.
23.9 Non-Recourse Liability. If Landlord fails to perform any of its
obligations under this Lease and, as a consequence of such nonperformance,
Teneant recovers a money judgment against Landlord, such judgement shall be
satisfied only out of Landlord's interest in the Project. Landlord, its
affiliates, shareholders, members, partners, officers, directors, heirs,
personal representatives, successors or assigns, shall have no liability
whatsoever for any deficiency, and no other assets of Landlord, its affiliates,
shareholders, members, partners, officers, directors, heirs, personal
representatives, successors or assigns, shall be subject to levy, execution or
other enforcement procedures as a result of such judgement. Notwithstanding any
provision of this Lease, Tenant shall not be entitled to recover consequential
or speculative damages for any default by Landlord.
23.10 Governing Law; Choice of Forum. This Lease shall be deemed to be made
under, shall be construed in accordance with, and shall be governed by the
internal, substantive laws of the State of Arizona (without reference to choice
of law principles). Any action brought to interpret, enforce, or construe any
provision of this Lease shall be commenced and maintained in the Superior Court
of the State of Arizona in and for the County of Maricopa (or, as may be
appropriate, in the Justice Courts of Maricopa County or in the United States
District Court for the District of Arizona, if, but only if, the superior court
lacks or declines jurisdiction over such action). The parties irrevocably
consent to jurisdiction and venue in such courts for such purposes and agree not
to seek transfer or removal of any action commenced in accordance with the terms
of this paragraph.
23.11 Exhibit. All Exhibits referred to herein and attached hereto are a part
hereof.
23.12 Successors and Assigns. This Lease shall be binding upon and inure to
the benefit of the parties and their respective successors in interest and
permitted assigns, provided, however, Tenant may not assign this Lease except
as provided herein.
23.13 Confidentiality. If Landlord has access to or obtains confidential
information concerning Tenant's business, facilities, operations, plans,
customers, proprietary software, technology, products, ownership structure (so
long as Tenant is a privately held company), and finances, ("Confidential
Information"), Landlord agrees that it will not use such informtion for its own
account or the account of any third party except as expressly permitted under
this Lease, and
37
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Landlord will take reasonable precautions to protect the confidentiality of such
information and will not disclose the Confidential Information to third parties
(except as required by law, to Landlord's attorneys, accountants, third party
consultants and other advisors, mortgagees and lenders, or prospective
purchasers of the Building, as reasonably necessary, requiring such parties to
take reasonable precautions to protect the confidentiality of the Confidential
Information).
23.14 Landlord's Warranties. Landlord represents and warrants to Tenant that (i)
Landlord holds fee title to the Building, including, without limitation, the
Premises; (ii) the Building and the Premises, as of the date of this Lease, are
not subject to any ground lease, deed of trust, or mortgage; (iii) the person
executing this Lease on behalf of Landlord has full power and authority to sign
this Lease on behalf of Landlord and to bind Landlord to its terms; (iv) no
other person or entity has the right to occupy and use the Premises from and
after the date of this Lease; (v) as of the Delivery Date, the Premises will be
in compliance with Laws; and (vi) the Project is not within the 100 year flood
plain.
23.15 Zoning. Landlord and Tenant acknowledge that the Project is zoned Downtown
Core District under the City of Phoenix Zoning Ordinance. To Landlord's
knowledge and belief, the use of the Premises as contemplated hereunder as of
the date of execution of this Lease is in allowable thereunder.
ARTICLE 24. CO-LOCATION AND RIGHT TO SERVE OTHER TENANTS
24.1 Co-location. Tenant may co-locate customer equipment in the Premises.
Notwithstanding anything in this Lease to the contrary, the installation of
Tenant's customers' equipment in the Premises shall not require the prior
consent of Landlord, so long as the customer equipment does not exceed the floor
load capacity of the Premises. Tenant shall defend, indemnify, and hold Landlord
harmless from, for, and against any and all claims of and from such customers
relating to such co-location. Tenant shall not be required to pay to or share
with Landlord any profits or co-location fees or charges Tenant receives from
the customers whose equipment is co-located. No tenancy or subtenancy shall be
created by co-location of equipment allowed under this Article, nor shall co-
location under this provision be considered an assignment or transfer under
Article 15 of this Lease.
24.2 Right to Serve Other Tenants. Tenant shall have the right to interconnect
its telecommunications facilities with or provide telecommunications services to
other tenants of the Building. Tenant may, but is not obligated to, make such
connections with other tenants through an authorized "meet me room," and, in
connection therewith, Tenant shall pay reasonable, uniformly applied charges
assessed by the operator of the meet me room. Tenant shall not make carrier-to-
carrier connections outside the "meet me room" except for Tenant's own primary
use or in connection with provision of service to Tenant's customers or
affiliates. Subject to the foregoing, Tenant shall be permitted reasonable
access to the Building for the purpose of installing, operating, repairing, and
maintaining the facilities and equipment connecting Tenant's network to the
Building's other tenants. Tenant will consult with Landlord in advance to
determine an appropriate entrance plan and Tenant will not proceed with
installation until Landlord's written approval has been obtained, such approval
not to be unreasonably withheld,
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conditioned or delayed. Tenant will perform any installation in accordance with
Article 10 above and in such a manner as to not unreasonably disrupt Building
operations. Tenant will restore the Building to its original condition, and bear
all costs for rearrangements or restoration, as necessary.
[SIGNATURES ON FOLLOWING PAGE]
35
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LANDLORD: TENANT:
STERLING NETWORK EXCHANGE, LLC INFLOW, INC., a Delaware corporation
a Delaware limited liability company
By: Sterling Network Manager By: /s/ Arthur H. Zeile
Its: Managing Member --------------------
Name: Arthur H. Zeile
By: /s/ Anthony [Illegible] -----------------
-----------------------
Title: President, C.E.O.
Name: Anthony [Illegible] ----------------
----------------------
Date signed: 2/14/00
Title: SVP ----------
---------------------
Date signed: 2-11-00
<PAGE>
Exhibit A
Floorplan Graphic of
Downtown
Phoenix
Technology
Exchange
<PAGE>
EXHIBIT B
SITE PLAN OF THE PROJECT
38
<PAGE>
EXHIBIT C
WORK LETTER
I. DESCRIPTION OF LANDLORD'S WORK
------------------------------
The following is a description of the improvements to be provided by Landlord in
the Premises, at Landlord's cost except as designated to be at Tenant's cost,
and excluding Tenant's Work, as defined in the Lease. As to all building
materials and equipment which Landlord may be obligated to supply under the
"Description of Landlord's Work", Landlord will provide Tenant with
construction, by standard methods, of good and workmanlike quality, and in
compliance with plans and specifications approved by Tenant as follows:
Landlord's architects and engineers shall prepare plans and specifications for
the Building and submit them to Tenant and Setter, Leach, and Linstrom (whose
address is 1100 Peavey Building, 730 Second Avenue South, Minneapolis, MN
55402). Tenant shall have 3 business days to review the plans and specifications
and approve or disapprove them. If Tenant disapproves the plans and
specifications, and Landlord declines to make changes to accommodate Tenant's
objections, then Tenant may terminate this Lease by notice to Landlord. The
approved plans and specification shall be the "Plans for Landlord's Work".
A. STRUCTURE
---------
The building is an existing structure of Type II One Hour construction in
accordance with the Uniform Building Code, originally designed for industrial
and office functions. The various areas of the building were designed for the
following live loads: 100 PSF, up to 250 PSF Landlord warrants that the Premises
load capacity is 125 PSF except that those areas designated on Exhibit A as 250
PSF, which have a 250 PSF capacity. See the structural report for more detailed
information on where the various loadings occur. The existing structural systems
will be maintained without significant alteration. The addition of structural
supports required to meet tenant requirements shall be at the Tenant's expense.
Floor is exposed concrete over 100% of the lease space and shall be sealed by
Landlord at Landlord's expense.
B. ROOF
----
1. Roof System: Tremco BURmastic 200, 5-layer composite ply cold process
roof system with at least a 15 year warranty. Landlord will complete the Roof on
or before May 26, 2000, making commercially reasonable efforts to have the Roof
substantially watertight by April 21,2000.
2. Landlord will complete the screening and parapet for the roof on or
before the Commencement Date.
C. INTERIOR FINISHES
-----------------
1. Asbestos has been removed from the building.
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2. Corridor and public spaces within the building shall be finished by
Landlord with painted gypsum board, have vinyl tile floor coverings with 4"
vinyl base, ceilings of exposed, painted structure, and wall mounted fluorescent
lighting.
3. Common toilet rooms shall be finished by Landlord with painted gypsum
board walls and ceilings, baked enamel toilet partitions, resilient sheet
flooring with resilient sheet cove base, and fluorescent light fixtures, except
that the restroom adjacent to Tenant's Premises (as designated on Exhibit A)
shall have ceramic tile floor, and laminate countertops. Tenant shall have the
right to further upgrade this restroom at Tenant's sole expense and with
Landlord's prior approval as to the same.
4. Landlord shall install the demising wall as soon as possible following
issuance of the applicable building permit, with metal studs, wire lath, and
sheetrock on the common area side from floor to underside of deck above. The
Premises side of the demising wall is Tenant's responsibility.
D. WALKWAYS. EMERGENCY EXITS
-------------------------
If an emergency exit/service door is required, such a door will be provided at a
location determined by Landlord, and exit signs and emergency lighting provided.
Emergency lighting will be provided by Landlord only in public and common use
spaces. All emergency lighting required in the Premises will be provided by the
Tenant at Tenant's expense.
E. UTILITIES
---------
1. Water and sewer lines currently serve the existing building and shall
remain in place to serve the new building toilet facilities. Any toilet
facilities constructed for the public or common use spaces to meet code
requirements will be by Landlord. Any toilet spaces requested to be included in
the Premises shall be subject to Landlord approval and provided by Tenant.
2. The building is served by a wet-pipe automatic sprinkler system. The
system will be modified by Landlord to provide dry-pipe sprinklers in the public
and common spaces, with a sprinkler main on each level with tap-off valves to
serve tenant spaces. The system will be designed to provide a dry-pipe pre-
action sprinkler system if required by Tenant. All work associated with the
sprinkler system from the sprinkler main tap-off valve throughout the tenant
space shall be by Tenant at Tenant's expense.
3. The current building fire alarm system will be removed and replaced with
a Class "A" multi-plexed addressable system in all the public and common use
areas. The system will be capable of connecting to Tenant fire alarm systems
within the tenant spaces. All fire alarm work inside the tenant spaces shall be
by Tenant at Tenant's expense. Tenant will be required to provide to the
building fire alarm system, the monitoring points required per the authority
having jurisdiction.
4. The existing HVAC system will be replaced by the Landlord to include
all public and common use spaces. A condenser water distribution system with
tie-in valves will be
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available to all tenants at 150 BTU/SF with N + I redundancy. Extension of the
piping will be from the tie-in valves located in common chases throughout the
building. Common chases will be made available to all tenants to use for piping,
if required, to connect to equipment that may be located on the roof, such
piping to be installed by Landlord at Tenant's expense. Extension of piping,
refrigerant piping, dry coolers and condensing units are at Tenant's expense.
All such equipment and its location shall be subject to all local ordinances and
Landlord's approval as to location, installation, and screening, which approval
shall not be unreasonably withheld, conditioned or delayed.
5. The current 4-4,000 Amp electrical distribution system will be renovated
and upgraded to provide electrical service to all tenants. Landlord will provide
power and electrical outlets for all public and common use spaces. Landlord will
provide for use by Tenant 3,200 Amp 480 Volt 3 phase single panel power, through
two 1600 Amp feeds in electrical room. Connections to the building distribution
system shall be made by Landlord's contractor at Tenant's expense, reimbursed to
Landlord on the earlier of 10 days following invoice by Landlord for such
service or Tenant's opening for business in the Premises. Transformation and
installation of electrical systems within the Premises shall be by Tenant at
Tenant's expense. Landlord reserves the right to reasonably designate point of
connection and internal building routing.
6. Landlord will provide emergency power generation equipment within the
building public and common use spaces to provide code required emergency power
for critical functions in those areas.
7. Fiber optic telephone lines are currently located in Second Street, Van
Buren, and First Street with an existing fiber vault into the building on Second
Street. On or before the Delivery Date, Landlord will have constructed a second
vault to allow connection to a second source of fiber optic cabling. Connection
to the fiber optic cables and distribution of signal to the tenant spaces shall
be by Tenant. Tenant may bring its fiber optic cabling from the street to the
Premises subject to Landlord's approval of the route over (or through) which the
cabling is run, which approval shall not be unreasonably withheld, conditioned,
or delayed.
8. Power generation equipment consisting of batteries required by the
tenants shall be Tenant's responsibility at Tenant's sole cost. It is expected
that battery rooms will require construction to meet Article 64 of the NTPA per
the City of Phoenix. Compliance with code requirements will be Tenant's
responsibility and at Tenant's expense.
9. Electrical utility is provided by Arizona Public Service. Four utility
circuits are supplied from the Downtown network.
10. Landlord will provide a building security system consisting of card-
access and door monitoring.
11. Landlord will provide Tenant with any existing non-proprietary CAD
drawings of the Building and one-line drawings of the systems of the Building
which are in Landlord's possession or control, in electronic format, if
possible. Landlord will provide Tenant with
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documentation regarding Building
systems in Landlord's possession or control, as reasonably requested by Tenant.
F. GROUNDING AND LIGHTNING PROTECTION
----------------------------------
1. Landlord shall provide a UL Certified Master Seal Lightning Protection
System for the Building.
2. Landlord will provide a Building AC Grounding System with a 1 to 5 Ohm
Resistance. Landlord, shall provide a DC Grounding System with connection points
on each floor.
3. Lightning protection and grounding will comply with National Electric
Code Requirements and Bellcore Standards.
G. GENERATOR CUBICLES: FUELING FACILITIES: EXHAUST; AND RADIATORS
--------------------------------------------------------------
1. Tenant has been assigned Generator Cubicle(s) under Section 8 of the
Lease, as shown on Exhibit F. Construction of Tenant's Generator Cubicles and
all associated general construction is at Tenant's expense and will be
responsibility of Tenant. Cubicles shall be limited to 500 usable square feet in
area, and shall be designed to meet H-3 Classification per City of Phoenix
requirements. Tenant is responsible for obtaining required permits and payment
of all associated fees and construction costs.
2. Landlord will design and construct Fuel Line Header from Refueling Port
at exterior of the Building to a Solenoid Valve Tap-off within ten (10) feet of
the Generator Cubicle (the entire fueling system is referred to as the "Fueling
Port System"). Tenant, at Tenant's expense, is responsible for design and
construction of the Fuel Line from Valve to Fuel Tank as well as associated
conduit, power and control wiring to Fueling Port Station. Landlord directs
where conduit and control piping can be run in the Building and may require that
all such conduit be constructed and installed by Landlord at Tenant's expense.
All Tenant piping is subject to City of Phoenix permit requirements. Tenant will
pay pro rata cost of Fueling Port System and main Fuel Header Line based on the
proportion of the total number of Generator Cubicles used by Tenant to the total
number shown on Exhibit F.
3. Landlord, at Tenant's expense, will design and construct a Generator
Exhaust System from the Generator Motor Exhaust Port to the rooftop termination.
Tenant shall provide requirements for Exhaust Duct Diameter based on Tenant
Generator size. All Generator Exhaust Piping shall be Selkirk IPS. Tenant shall
have right to inspect exhaust pipe installation, and provide written acceptance
of the installation. If such inspection identifies corrective action, Tenant
shall advise Landlord, in writing, of proposed corrective action in sufficient
time for Landlord to effect repairs prior to Tenant's Commencement Date.
4. Landlord, at Tenant's expense, will design and construct a Radiator
Cooling Loop from Tenant's Generator Cubicle(s) to rooftop location of Radiator
Platform and extend piping two (2) feet onto Platform. Tenant will be provided
with structural platform above the roof to
42
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locate Generator Radiator(s), in the locations specified in Exhibit E. Landlord
is installing the Radiator Platform, and Tenant shall pay to Landlord Tenant's
share of the cost of the Radiator Platform calculated based on the pro rata
portion of the Platform dedicated to Tenant's Radiator(s). (For example: Four
(4) radiator locations on a Platform. Tenant installs one (1) Radiator. Tenant's
cost is one-fourth (1/4) of total Platform construction cost.) Tenant at its own
expense shall be responsible for installing and securing the Radiator(s) and
make final connection of Cooling Piping. Tenant at its own expense shall also
provide any Sound Attenuation Devices required by local ordinances or required
by City of Phoenix with respect to Tenant's equipment, and Landlord shall
provide any Sound Attenuation Devices required for the Building.
5. Tenant, at Tenant's expense, shall install a Foam Fire Suppression
System for its Generator Cubicles in accordance with City of Phoenix
requirements. Landlord will provide piping to allow Fire Department to introduce
Fire Suppression Foam into Generator Farm Area, if required, and Tenant shall
pay its proportionate share of the cost of such piping and the installation
thereof, based on the proportion of the total number of Generator Cubicles used
by Tenant to the total number of Generator Cubicles in the generator farm area.
H. ROOFTOP DRY COOLER LOCATIONS
----------------------------
Landlord will provide a Grillage above the roof for Tenant Dry Coolers, the
cost of which will be charged to Tenant on pro rata basis based on number of Dry
Coolers actually installed by Tenant. Landlord reserves the right to reasonably
approve the routing of condenser piping and conduit, and Landlord may, at
Landlord's option, install the same at Tenant's expense from the Premises to the
Grillage. Tenant, at its expense, will be required to distribute piping to each
of six shafts currently located in Tenant space. Tenant is responsible for
installation of Dry Coolers and associated piping, power, and controls to meet
City of Phoenix requirements, at Tenant's sole expense. Dry Cooler locations for
Tenant are as indicated on attached plan identified as Exhibit E.
11. DESCRIPTION OF TENANT IMPROVEMENTS WITHIN THE PREMISES
------------------------------------------------------
A. In addition to those items specified as Tenant responsibility above,
Tenant shall construct Improvements in the Premises in accordance with the Final
Plans approved by both parties. Tenant's construction and installation of such
Improvements is subject to the master plans and specifications of the Building.
Landlord will cooperate in good faith with Tenant on the permitting and approval
of Tenant's Improvements.
B. COST OF WORK PERFORMED BY LANDLORD ON BEHALF OF TENANT. As to work
described above to be performed by Landlord at Tenant's expense, Landlord shall
provide to Tenant as soon as is practicable, but no later than March 1, 2000, a
good faith estimate as to the cost of such work. Tenant shall notify Landlord
within five (5) business days as to whether Tenant approves the cost of such
work. If Tenant does not approve the cost of such work, or if Landlord does not
provide the cost estimates on or before March 1, 2000, then Tenant may obtain
its own estimates and perform the work (or have the work performed) itself, and
Landlord will reasonably cooperate with Tenant on the same. All such work will
under all
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<PAGE>
circumstances be subject to Landlord's prior approval of plans, specifications,
and routing of pipes and conduits, such approval not to be unreasonably
withheld, conditioned, or delayed. As to items which are to be prorated between
Tenant and other tenants, if Tenant elects hereunder to perform the work
hereunder, then Tenant shall pay for its pro rata share of such work and
Landlord will pay the remainder.
C. INSPECTIONS: REIMBURSEMENTS FOR WORK DONE BY LANDLORD AT TENANT EXPENSE.
Tenant shall have the right to have its architects and engineers inspect
Landlord's Work for compliance with the Lease, including, without limitation,
this Exhibit C, and the Plans for Landlord's Work. In each instance above where
work is be performed by Landlord at Tenant's expense, Tenant shall reimburse
Landlord for such work within thirty (30) days after notice and presentation of
an invoice for such work in accordance with this provision and the requirements
of the Lease, provided that Tenant's architects and engineers have confirmed
that the work represented by such invoice has been completed in compliance with
this Lease and the Plans for Landlord's Work. If Tenant notifies Landlord that
Tenant or its architects and engineers have reasonably determined that the work
represented by an invoice has not been completed in compliance with this lease
and the Plans for Landlord's Work, Landlord and Tenant shall use commercially
reasonable good faith efforts to resolve any such disagreement, and if such
disagreement cannot be resolved by Landlord and Tenant, they shall submit the
matter to arbitration as provided in Section 17.4 of this Lease. Landlord may
present multiple invoices from time to time as work is in progress or completed.
Tenant's failure to reimburse Landlord or to notify Landlord within ten (10)
business days after Tenant's receipt of notice with a copy of Landlord's invoice
that Tenant is contesting the amount claimed due shall be deemed a failure to
pay additional rent under the Lease. Reimbursement amounts not paid within
thirty (30) days after presentation of the invoice to Tenant shall bear
interest at the rate of 18% per annum or the highest rate allowed by law,
whichever is lower. Landlord shall give notice with copies of invoices in
accordance with the notice provisions of Article 18 of the Lease.
44
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be inscribed,
displayed, printed or affixed on or to any part of the outside of the Premises
or the surrounding area without the prior written consent of the Landlord. If
Landlord consents, it may regulate the manner of display of the sign, placard,
picture, advertisement, name or notice. Without notice to and at the expense of
Tenant, Landlord may remove any sign, placard, picture, advertisement, name or
notice which has not been approved by Landlord or is being displayed in a non-
approved manner. Tenant shall not place anything or allow anything to be placed
near the glass of any window, door, partition or wall which may appear unsightly
from outside of the Building.
2. Tenant shall not obstruct sidewalks, halls, passages, exits and entrances in
the Building or the Project and shall not use sidewalks, halls, passages, exits
and entrances for any purpose other than ingress and egress. The halls,
passages, exits and entrances are not for the use of the general public other
than persons who are making use of the services offered by Tenant, and Landlord
retains the right to the control thereof and may prevent access by persons whose
presence, in the judgment of the Landlord, is prejudicial to the safety,
character, reputation and interest of the Building; provided, however, that
nothing herein contained shall be construed to prevent access by persons with
whom a Tenant normally deals in the ordinary course of that Tenant's business.
Except as provided in the Lease, no Tenant and no employees or invitees of any
Tenant shall go upon the roof of the Building without Landlord's prior consent.
Except as provided in the Lease, Tenant shall not alter any lock or install
any new additional locks or any bolts on any door of the Premises without the
prior written consent of Landlord. Tenant shall provide Landlord with copies of
keys or key cards for all locks and locking systems.
4. The toilet rooms, urinals, wash bowls and other apparatus 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. The expense of any
breakage, stoppage or damage resulting from a violation of this rule shall be
borne by the Tenant who, or whose employees or invitees, caused it.
5. Except as permitted with respect to Tenant's Work, Tenant shall not mark on
or drive nails, screw or drill into the partitions, woodwork or plaster (except
as may be incidental to the hanging of wall decorations), and shall not in any
way deface the Premises.
6. Tenant shall not cause any unnecessary labor by reason of Tenant's
carelessness or indifference in the preservation of good order and cleanliness.
7. Except "helper animals" and seeing eye dogs, animals and birds are
prohibited in or about the Premises.
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8. No cooking shall be done or permitted by Tenant in the Premises, except by
Tenant's employees, using an Underwriters' Laboratory approved microwave oven or
equipment for brewing coffee, tea, hot chocolate and similar beverages provided
that such equipment and use is in accordance with all applicable federal, state
and city laws, codes, ordinances, rules and regulations. Kitchen and lunchroom
facilities and equipment as set forth in the foregoing sentence are allowed only
for the use of Tenant's employees and customers.
9. Tenant shall not use or keep within the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material except for
use in connection with Tenant's generators and other equipment of Tenant and
Tenant's customers.
10. The directory of the Building will be provided exclusively for the display
of the name and location of tenants only and Landlord reserves the right to
exclude any other names therefrom.
11. Tenant shall not place a load upon any floor which exceeds the load per
square foot which such floor was designed to carry and which is allowed by law.
12. Except as provided in the Lease, Tenant shall not install any radio or
television antenna, satellite dish, loudspeaker or other device on the roof or
exterior walls of the Building. Tenant shall not unreasonably interfere with
radio or television broadcasting or reception from or in the Building or
elsewhere.
13. Tenant shall store all its trash and garbage within its Premises or in an
outside receptacle provided by or acceptable to Landlord. Tenant shall not place
in any trash box or receptacle any material which cannot be disposed of in the
ordinary and customary manner of trash and garbage disposal. All garbage and
refuse disposal shall be made in accordance with directions issued from time to
time by Landlord.
14. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regular
duties unless under special instruction from Landlord, and no employee of
Landlord will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.
15. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Project.
16. 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 terms, covenants,
agreements and conditions of any lease of premises in the Project. Tenant shall
be responsible for the observance of all of the foregoing rules by Tenant's
employees, agents, clients, customers, invitees and guests.
<PAGE>
Exhibit E graphic portraying the Downtown Phoenix Technology Exchange roof level
equipment plan.
<PAGE>
Exhibit 10.22
INFLOW, INC.
FORM OF 2000 STOCK INCENTIVE PLAN
---------------------------------
Article One
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 2000 Stock Incentive Plan is intended to promote the interests of
Inflow, Inc., a Delaware corporation, by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into five separate equity incentive
programs:
(i) the Discretionary Option Grant Program under which
eligible persons may, at the discretion of the Plan Administrator, be granted
options to purchase shares of Common Stock,
(ii) the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary invested
each year in special options,
(iii) the Stock Issuance Program under which eligible persons
may, at the discretion of the Plan Administrator, be issued shares of Common
Stock directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or Subsidiary),
(iv) the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive options at periodic
intervals to purchase shares of Common Stock, and
(v) the Director Fee Option Grant Program under which
non-employee Board members may elect to have all or any portion of their
annual retainer fee otherwise payable in cash applied to a special option
grant.
B. The provisions of Articles One and Seven shall apply to all equity
programs under the Plan and shall govern the interests of all persons under
the Plan.
<PAGE>
III. ADMINISTRATION OF THE PLAN
A. Prior to the Section 12 Registration Date, the Discretionary
Option Grant and Stock Issuance Programs shall be administered by the Board
unless otherwise determined by the Board. The following provisions shall
govern the administration of the Plan:
(i) The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to
Section 16 Insiders but may delegate such authority in whole or in part to
the Primary Committee.
(ii) Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate
in those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons.
(iii) The Board (or Primary Committee) shall select the Section
16 Insiders and other highly compensated Employees eligible to participate
in the Salary Investment Option Grant Program. However, all option grants
under the Salary Investment Option Grant Program shall be made in
accordance with the terms of that program and the Plan Administrator shall
not exercise any administrative discretion with respect to option grants
made under the program.
(iv) Administration of the Automatic Option Grant and Director
Fee Option Grant Programs shall be self-executing in accordance with the
terms of those programs.
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority
subject to the provisions of the Plan:
(i) to establish such rules as it may deem appropriate for
proper administration of the Plan, to make all factual determinations, to
construe and interpret the provisions of the Plan and the awards thereunder
and to resolve any and all ambiguities thereunder;
(ii) to determine, with respect to awards made under the
Discretionary Option Grant and Stock Issuance Programs, which eligible
persons are to receive such awards, the time or times when such awards are
to be made, the number of shares to be covered by each such award, the
vesting schedule (if any) applicable to the award, the status of a granted
option as either an Incentive Option or a Non-Statutory Option and the
maximum term for which the option is to remain outstanding;
(iii) to amend, modify or cancel any outstanding award with the
consent of the holder or accelerate the vesting of such award; and
(iv) to take such other discretionary actions as permitted
pursuant to the terms of the applicable program.
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Decisions of each Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties.
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any options or stock issuances under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.
C. Only non-employee Board members shall be eligible to participate
in the Automatic Option Grant and Di rector Fee Option Grant Programs.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed
___________________ (____________) shares. Such reserve shall consist of (i) the
number of shares estimated to remain available for issuance, as of the Plan
Effective Date, under the Predecessor Plan, including the shares subject to the
outstanding options to be incorporated into the Plan and the additional shares
which would otherwise be available for future grant, plus (ii) an increase of
___________________ (____________) shares authorized by the Board subject to
stockholder approval prior to the Section 12 Registration Date.
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<PAGE>
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January
each calendar year during the term of the Plan, beginning with the calendar
year 2001, by an amount equal to three percent (3%) of the total number of
shares of Common Stock outstanding on the last trading day in December of the
immediately preceding calendar year, but in no event shall such annual
increase exceed one million five hundred thousand (1,500,000) shares.
C. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances
for more than nine hundred fifty thousand (950,000) shares of Common Stock in
the aggregate per calendar year.
D. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plan) shall be
available for subsequent issuance under the Plan to the extent those options
expire, terminate or are cancelled for any reason prior to exercise in full.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise or issue price paid per share, pursuant
to the Corporation's repurchase rights under the Plan shall be added back to
the number of shares of Common Stock reserved for issuance under the Plan and
shall accordingly be available for reissuance through one or more subsequent
options or direct stock issuances under the Plan. However, should the
exercise price of an option under the Plan be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an option or the vesting of a stock
issuance under the Plan, then the number of shares of Common Stock available
for issuance under the Plan shall be reduced by the gross number of shares
for which the option is exercised or which vest under the stock issuance, and
not by the net number of shares of Common Stock issued to the holder of such
option or stock issuance. Shares of Common Stock underlying one or more stock
appreciation rights exercised under the Plan shall not be available for
subsequent issuance.
E. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the number and/or class of securities by which the share
reserve is to increase each calendar year pursuant to the automatic share
increase provisions of the Plan, (iii) the number and/or class of securities
for which any one person may be granted options, separately exercisable stock
appreciation rights and direct stock issuances under the Plan per calendar
year, (iv) the number and/or class of securities for which grants are
subsequently to be made under the Automatic Option Grant Program to new and
continuing non-employee Board members, (v) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option under the Plan and (vi) the number and/or class of securities and
price per share in effect under each outstanding option incorporated into
this Plan from the Predecessor Plan. Such adjustments to the outstanding
options are to be effected in a manner which shall preclude the enlargement
or dilution of rights and benefits under such options. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive.
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<PAGE>
Article Two
DISCRETIONARY OPTION GRANT PROGRAM
----------------------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan
Administrator at the time of the option grant and may be less than, equal to or
greater than the Fair Market Value per share of Common Stock on the option grant
date.
2. The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section II of Article
Seven and the documents evidencing the option, be payable in one or more of the
following forms:
(i) in cash or check made payable to the Corporation;
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date,
or
(iii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.
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<PAGE>
C. Cessation of Service.
1. The following provisions shall govern the exercise of any
options outstanding at the time of the Optionee's cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the Optionee's
cessation of Service. Upon the expiration of the applicable exercise period or
(if earlier) upon the expiration of the option term, the option shall terminate
and cease to be outstanding for any vested shares for which the option has not
been exercised. However, the option shall, immediately upon the Optionee's
cessation of Service, terminate and cease to be outstanding to the extent the
option is not otherwise at that time exercisable for vested shares.
(iv) Should the Optionee's Service be terminated for
Misconduct or should the Optionee engage in Misconduct while his or her
options are outstanding, then all such options shall terminate immediately
and cease to be outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding:
(i) to extend the period of time for which the option is
to remain exercisable following the Optionee's cessation of Service to such
period of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term, and/or
(ii) to permit the option to be exercised, during the
applicable post-Service exercise period, for one or more additional
installments in which the Optionee would have vested had the Optionee
continued in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to
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<PAGE>
repurchase, at the exercise price paid per share, any or all of those unvested
shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.
F. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than to a Beneficiary following the
Optionee's death. Non-Statutory Options shall be subject to the same
restrictions, except that a Non-Statutory Option may, to the extent permitted by
the Plan Administrator, be assigned in whole or in part during the Optionee's
lifetime (i) as a gift to one or more members of the Optionee's immediate
family, to a trust in which Optionee and/or one or more such family members hold
more than fifty percent (50%) of the beneficial interest or to an entity in
which more than fifty percent (50%) of the voting interests are owned by one or
more such family members or (ii) pursuant to a domestic relations order. The
terms applicable to the assigned portion shall be the same as those in effect
for the option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Six shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options
when issued under the Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Exercise Price. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
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<PAGE>
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Each option outstanding at the time of a Change in Control but not
otherwise fully-vested shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Change in Control, become
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (i) such option is, in connection with the Change in
Control, assumed or otherwise continued in full force and effect by the
successor corporation (or parent thereof) pursuant to the terms of the Change in
Control, (ii) such option is replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Change in Control on the shares of Common Stock for which the option is not
otherwise at that time exercisable and provides for subsequent payout in
accordance with the same vesting schedule applicable to those option shares or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. Each option outstanding
at the time of the Change in Control shall terminate as provided in Section
III.C. of this Article Two.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force and effect
pursuant to the terms of the Change in Control or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.
C. Immediately following the consummation of the Change in Control,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof) or otherwise
expressly continued in full force and effect pursuant to the terms of the Change
in Control.
D. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted, immediately after such Change in
Control, to apply to the number and class of securities which would have been
issuable to the Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control. Appropriate
adjustments to reflect such Change in Control shall also be made to (i) the
exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same, (ii)
the maximum number and/or class of securities available for issuance over the
remaining term of the Plan and (iii) the maximum number and/or class of
securities for which any one person may be granted options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year. To the extent the actual holders of the Corporation's
outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation may, in
connection with the assumption of the outstanding options, substitute one or
more shares of its own common stock with a fair market value equivalent to the
cash consideration paid per share of Common Stock in such Change in Control.
8
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E. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Change in Control,
whether or not those options are assumed or otherwise continued in full force
and effect pursuant to the terms of the Change in Control. Any such option shall
accordingly become exercisable, immediately prior to the effective date of such
Change in Control, for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. In addition, the Plan Administrator may at any time
provide that one or more of the Corporation's repurchase rights shall not be
assignable in connection with such Change in Control and shall terminate upon
the consummation of such Change in Control.
F. The Plan Administrator may at any time provide that one or more
options will automatically accelerate upon an Involuntary Termination of the
Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of any Change in Control in which those
options do not otherwise accelerate. Any options so accelerated shall remain
exercisable for fully-vested shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1) year period measured from
the effective date of the Involuntary Termination. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall immediately terminate upon such Involuntary Termination.
G. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Hostile Take-Over.
Any such option shall become exercisable, immediately prior to the effective
date of such Hostile Take-Over, for all of the shares of Common Stock at the
time subject to that option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. In addition, the Plan Administrator may
at any time provide that one or more of the Corporation's repurchase rights
shall terminate automatically upon the consummation of such Hostile Take-Over.
Alternatively, the Plan Administrator may condition such automatic acceleration
and termination upon an Involuntary Termination of the Optionee's Service within
a designated period (not to exceed eighteen (18) months) following the effective
date of such Hostile Take-Over. Each option so accelerated shall remain
exercisable for fully-vested shares until the expiration or sooner termination
of the option term.
H. The portion of any Incentive Option accelerated in connection with
a Change in Control or Hostile Take Over shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a Non-
Statutory Option under the Federal tax laws.
IV. STOCK APPRECIATION RIGHTS
The Plan Administrator may, subject to such conditions as it may
determine, grant to selected Optionees stock appreciation rights which will
allow the holders of those rights to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the
excess of (a) the Option Surrender Value of the number of shares for which the
option is surrendered over (b) the aggregate exercise price payable for such
shares. The distribution may
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be made in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
10
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ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
--------------------------------------
I. OPTION GRANTS
The Primary Committee may implement the Salary Investment Option Grant
Program for one or more calendar years beginning after the Plan Effective Date
and select the Section 16 Insiders and other highly compensated Employees
eligible to participate in the Salary Investment Option Grant Program for each
such calendar year. Each selected individual who elects to participate in the
Salary Investment Option Grant Program must, prior to the start of each calendar
year of participation, file with the Plan Administrator (or its designate) an
irrevocable authorization directing the Corporation to reduce his or her base
salary for that calendar year by an amount not less than five thousand Dollars
($5,000) nor more than seventy five thousand Dollars ($75,000). Each individual
who files such a timely election shall be granted an option under the Salary
Investment Grant Program on the first trading day in January for the calendar
year for which the salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the Optionee's
base salary for the calendar year, and
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B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.
D. Cessation of Service. Each option outstanding at the time of
the Optionee's cessation of Service shall remain exercisable, for any or all of
the shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the option term or (ii) the
expiration of the three (3)-year period following the Optionee's cessation of
Service. To the extent the option is held by the Optionee at the time of his or
her death, the option may be exercised by his or her Beneficiary. However, the
option shall, immediately upon the Optionee's cessation of Service, terminate
and cease to remain outstanding with respect to any and all shares of Common
Stock for which the option is not otherwise at that time exercisable.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over while
the Optionee remains in Service, each outstanding option shall automatically
accelerate so that each such option shall, immediately prior to the effective
date of the Change in Control or Hostile Take-Over, become fully exercisable
with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for any or all of those shares as fully-
vested shares of Common Stock. Each such option accelerated in connection with a
Change in Control shall terminate upon the Change in Control, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the terms of the Change in
Control. Each such option accelerated in connection with a Hostile Take-Over
shall remain exercisable until the expiration or sooner termination of the
option term.
B. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted to apply to the number and class of
securities which would have been issuable to the Optionee in consummation of
such Change in Control had the option been exercised immediately prior to such
Change in Control. Appropriate adjustments shall also be made to the exercise
price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same. To the extent
the actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the
outstanding options, substitute one or more shares of its own common stock with
a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Change in Control.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an
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<PAGE>
amount equal to the excess of (i) the Option Surrender Value of the shares of
Common Stock at the time subject to each surrendered option (whether or not the
Optionee is otherwise at the time vested in those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the surrender of the option to the
Corporation.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for options made
under the Discretionary Option Grant Program.
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Article Four
STOCK ISSUANCE PROGRAM
----------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening options. Shares
of Common Stock may also be issued under the Stock Issuance Program pursuant to
share right awards which entitle the recipients to receive those shares upon the
attainment of designated performance goals or Service requirements. Each such
award shall be evidenced by one or more documents which comply with the terms
specified below.
A. Purchase Price.
1. The purchase price per share of Common Stock subject to
direct issuance shall be fixed by the Plan Administrator and may be less than,
equal to or greater than the Fair Market Value per share of Common Stock on the
issue date.
2. Subject to the provisions of Section II of Article Seven,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. Vesting/Issuance Provisions.
1. The Plan Administrator may issue shares of Common Stock which
are fully and immediately vested upon issuance or which are to vest in one or
more installments over the Participant's period of Service or upon attainment of
specified performance objectives. Alternatively, the Plan Administrator may
issue share right awards which shall entitle the recipient to receive a
specified number of vested shares of Common Stock upon the attainment of one or
more performance goals or Service requirements established by the Plan
Administrator.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her unvested
shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
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<PAGE>
3. The Participant shall have full stockholder rights with respect
to the issued shares of Common Stock, whether or not the Participant's interest
in those shares is vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock, or should the performance
objectives not be attained with respect to one or more such unvested shares of
Common Stock, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to the
surrendered shares.
5. The Plan Administrator may waive the surrender and cancellation
of one or more unvested shares of Common Stock (or other assets attributable
thereto) which would otherwise occur upon the cessation of the Participant's
Service or the non-attainment of the performance objectives applicable to those
shares. Such waiver shall result in the immediate vesting of the Participant's
interest in the shares of Common Stock as to which the waiver applies. Such
waiver may be effected at any time, whether before or after the Participant's
cessation of Service or the attainment or non-attainment of the applicable
performance objectives.
6. Outstanding share right awards shall automatically terminate, and
no shares of Common Stock shall actually be issued in satisfaction of those
awards, if the performance goals or Service requirements established for such
awards are not attained. The Plan Administrator, however, shall have the
authority to issue shares of Common Stock in satisfaction of one or more
outstanding share right awards as to which the designated performance goals or
Service requirements are not attained.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. All of the Corporation's outstanding repurchase rights shall
terminate automatically, and all the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Change in
Control, except to the extent (i) those repurchase rights are assigned to the
successor corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.
B. The Plan Administrator may at any time provide for the automatic
termination of one or more of those outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those terminated
rights upon (i) a Change in Control or Hostile Take-Over or (ii) an Involuntary
Termination of the Participant's Service within a designated period (not to
exceed eighteen (18) months) following the effective date of any
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<PAGE>
Change in Control or Hostile Take-Over in which those repurchase rights are
assigned to the successor corporation (or parent thereof) or otherwise continue
in full force and effect.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
16
<PAGE>
Article Five
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
I. OPTION TERMS
A. Grant Dates. Options shall be made on the dates specified below:
1. Each individual who is first elected or appointed as a non-
employee Board member at any time after the Plan Effective Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase fifteen thousand (15,000) shares of Common
Stock, provided that individual has not previously been in the employ of the
Corporation (or any Parent or Subsidiary).
2. On the date of each Annual Stockholders Meeting beginning with
the 2001 Annual Stockholder Meeting, each individual who is to continue to serve
as a non-employee Board member shall automatically be granted a Non-Statutory
Option to purchase five thousand (5,000) shares of Common Stock, provided that
individual has served as a non-employee Board member for at least six (6)
months.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any unvested shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each option shall vest, and the
Corporation's repurchase right shall lapse upon the Optionee's completion of one
(1) year of Board service measured from the option grant date.
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<PAGE>
E. Cessation of Board Service. The following provisions shall govern
the exercise of any options outstanding at the time of the Optionee's cessation
of Board service:
(i) Any option outstanding at the time of the Optionee's
cessation of Board service for any reason shall remain exercisable for a
twelve (12)-month period following the date of such cessation of Board
service, but in no event shall such option be exercisable after the
expiration of the option term.
(ii) Any option exercisable in whole or in part by the Optionee
at the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) Following the Optionee's cessation of Board service, the
option may not be exercised in the aggregate for more than the number of
shares for which the option was exercisable on the date of such cessation
of Board service. Upon the expiration of the applicable exercise period or
(if earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for which the
option has not been exercised. However, the option shall, immediately upon
the Optionee's cessation of Board service, terminate and cease to be
outstanding for any and all shares for which the option is not otherwise at
that time exercisable.
(iv) However, should the Optionee cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at the
time subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over, the
shares of Common Stock at the time subject to each outstanding option but not
otherwise vested shall automatically vest in full so that each such option may,
immediately prior to the effective date of such Change in Control or Hostile
Take-Over, became fully exercisable for all of the shares of Common Stock at the
time subject to such option and maybe exercised for all or any of those shares
as fully-vested shares of Common Stock. Each such option accelerated in
connection with a Change in Control shall terminate upon the Change in Control,
except to the extent assumed by the successor corporation (or parent thereof) or
otherwise continued in full force and effect pursuant to the terms of the Change
in Control. Each such option accelerated in connection with a Hostile Take-Over
shall remain exercisable until the expiration or sooner termination of the
option term.
B. All outstanding repurchase rights shall automatically terminate and
the shares of Common Stock subject to those terminated rights shall immediately
vest in full, in the event of any Change in Control or Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have
a thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding options. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an
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<PAGE>
amount equal to the excess of (i) the Option Surrender Value of the shares of
Common Stock at the time subject to each surrendered option (whether or not the
option is otherwise at the time exercisable for those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the surrender of the option to the
Corporation.
D. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted to apply to the number and class of securities
which would have been issuable to the Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments shall also be made to the exercise price
payable per share under each outstanding option, provided the aggregate exercise
price payable for such securities shall remain the same. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the
outstanding options, substitute one or more shares of its own common stock with
a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Change in Control.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for options made under
the Discretionary Option Grant Program.
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<PAGE>
ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
---------------------------------
I. OPTION GRANTS
The Board may implement the Director Fee Option Grant Program as of
the first day of any calendar years beginning after the Underwriting Date. Upon
such implementation of the Program, each non-employee Board member may elect to
apply all or any portion of the annual retainer fee otherwise payable in cash
for his or her service on the Board to the acquisition of a special option grant
under this Director Fee Option Grant Program. Such election must be filed with
the Corporation's Chief Financial Officer prior to the first day of the calendar
year for which the election is to be in effect. Each non-employee Board member
who files such a timely election with respect to the annul retainer fee shall
automatically be granted an option under this Director Fee Option Grant Program
on the first trading day in January in the calendar year for which that fee
would otherwise be payable.
II. OPTION TERMS
Each option shall be a Non-Statutory Option governed by the terms and
conditions specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject to the non-
employee Board member's election, and
B is the Fair Market Value per share of Common Stock on the option
grant date.
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<PAGE>
C. Exercise and Term of Options. The option shall become exercisable in
a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each month of Board service during the calendar year in
which the option is granted. Each option shall have a maximum term of ten (10)
years measured from the option grant date.
D. Cessation of Board Service. Should the Optionee cease Board service
for any reason (other than death or Permanent Disability) while holding one or
more options, then each such option shall remain exercisable, for any or all of
the shares for which the option is exercisable at the time of such cessation of
Board service, until the earlier of (i) the expiration of the ten (10)-year
option term or (ii) the expiration of the three (3)-year period measured from
the date of such cessation of Board service. However, each option held by the
Optionee at the time of such cessation of Board service shall immediately
terminate and cease to remain outstanding with respect to any and all shares of
Common Stock for which the option is not otherwise at that time exercisable.
E. Death or Permanent Disability. Should the Optionee's service as a
Board member cease by reason of death or Permanent Disability, then each option
held by such Optionee shall immediately become exercisable for all the shares of
Common Stock at the time subject to that option, and the option may be exercised
for any or all of those shares as fully-vested shares until the earlier of (i)
the expiration of the ten (10)-year option term or (ii) the expiration of the
three (3)-year period measured from the date of such cessation of Board service.
Should the Optionee die after cessation of Board service but while
holding one or more options, then each such option may be exercised, for any or
all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Board service (less any shares subsequently purchased by
Optionee prior to death), by the Optionee's Beneficiary. Such right of exercise
shall lapse, and the option shall terminate, upon the earlier of (i) the
expiration of the ten (10)-year option term or (ii) the three (3)-year period
measured from the date of the Optionee's cessation of Board service.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over while the
Optionee remains in Board service, each outstanding option held by such Optionee
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Change in Control or Hostile Take-Over, become
fully exercisable with respect to the total number of shares of Common Stock at
the time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. Each such option accelerated in
connection with a Change in Control shall terminate upon the Change in Control,
except to the extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the terms of
the Change in Control. Each such option accelerated in connection with a
Hostile Take-Over shall remain exercisable until the expiration or sooner
termination of the option term.
B. Upon the occurrence of a Hostile Take-Over, the Optionee shall have
a thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding options. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an
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<PAGE>
amount equal to the excess of (i) the Option Surrender Value of the shares of
Common Stock at the time subject to each surrendered option (whether or not the
Optionee is otherwise at the time vested in those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the surrender of the option to the
Corporation.
C. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Change in Control had the option been
exercised immediately prior to such Change in Control. Appropriate adjustments
shall also be made to the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption of the outstanding options under the
Director Fee Option Grant Program, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director Fee
Option Grant Program shall be the same as the terms in effect for options made
under the Discretionary Option Grant Program.
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<PAGE>
ARTICLE SEVEN
MISCELLANEOUS
-------------
I. NO IMPAIRMENT OF AUTHORITY
Outstanding awards shall in no way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
II. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares (less the par value of
such shares) plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or the issuance or vesting of such shares under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Withholding Taxes incurred by such holders in connection with the
exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:
Stock Withholding: The election to have the Corporation withhold,
from the shares of Common Stock otherwise issuable upon the exercise of such
Non-Statutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the percentage of the Withholding
Taxes (not to exceed one hundred percent (100%)) designated by the holder.
Stock Delivery: The election to deliver to the Corporation, at the
time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Withholding
Taxes) with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
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<PAGE>
IV. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on _______, 2000. The Plan shall
become effective immediately upon the Plan Effective Date. However, the Salary
Investment Option Grant and Director Fee Option Grant Programs shall not be
implemented until such time as the Primary Committee or the Board may deem
appropriate. Options may be granted under the Discretionary Option Grant Program
at any time on or after the Plan Effective Date. However, no options granted
under the Plan may be exercised, and no shares shall be issued under the Plan,
until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the Plan
Effective Date, then all options previously granted under this Plan shall
terminate and cease to be outstanding, and no further options shall be granted
and no shares shall be issued under the Plan.
B. The Plan shall serve as the successor to the Predecessor Plan, and
no further options or direct stock issuances shall be made under the Predecessor
Plan after the Plan Effective Date. All options outstanding under the
Predecessor Plan on the Plan Effective Date shall be incorporated into the Plan
at that time and shall be treated as outstanding options under the Plan.
However, each outstanding option so incorporated shall continue to be governed
solely by the terms of the documents evidencing such option, and no provision of
the Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such incorporated options with respect to their acquisition of
shares of Common Stock.
C. One or more provisions of the Plan, including (without limitation)
the option/vesting acceleration provisions of Article Two relating to Changes in
Control, may, in the Plan Administrator's discretion, be extended to one or more
options incorporated from the Predecessor Plan which do not otherwise contain
such provisions.
D. The Plan shall terminate upon the earliest of (i) March 31, 2010,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the provisions
of the documents evidencing such grants or issuances.
V. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in
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excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under those programs shall be held in
escrow until there is obtained stockholder approval of an amendment sufficiently
increasing the number of shares of Common Stock available for issuance under the
Plan. If such stockholder approval is not obtained within twelve (12) months
after the date the first such excess issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to
the Optionees and the Participants the exercise or purchase price paid for any
excess shares issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held
in escrow, and such shares shall thereupon be automatically cancelled and cease
to be outstanding.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
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APPENDIX
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The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option
grant program in effect under the Plan.
B. Beneficiary shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by an
Optionee or Participant, pursuant to such procedure, to succeed to such person's
rights under any outstanding awards held by him or her at the time of death. In
the absence of such designation or procedure, the Beneficiary shall be the
personal representative of the estate of the Optionee or Participant or the
person or persons to whom the award is transferred by will or the laws of
inheritance.
C. Board shall mean the Corporation's Board of Directors.
D. Change in Control shall mean a change in ownership or control of
the Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by
the Corporation's stockholders, unless securities representing more than
fifty percent (50%) of the total combined voting power of the voting
securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the same
proportion, by the persons who beneficially owned the Corporation's
outstanding voting securities immediately prior to such transaction,
(ii) any stockholder-approved transfer or other disposition
of all or substantially all of the Corporation's assets, or
(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board recommends such
stockholders accept.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation's voting common stock.
G. Corporation shall mean Inflow, Inc., a Delaware corporation, and
any corporate successor to all or substantially all of the assets or voting
stock of Inflow, Inc. which shall by appropriate action adopt the Plan.
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H. Director Fee Option Grant Program shall mean the director fee option
grant program in effect under the Plan.
I. Discretionary Option Grant Program shall mean the discretionary
option grant program in effect under the Plan.
J. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
K. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
L. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported on the Nasdaq National Market or any successor system and in The
Wall Street Journal. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange and reported in The Wall Street Journal. If
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(iii) For purposes of any option grants made on the Underwriting
Date, the Fair Market Value shall be deemed to be equal to the price per
share at which the Common Stock is to be sold in the initial public
offering pursuant to the Underwriting Agreement.
(iv) For purposes of any options made prior to the Underwriting
Date, the Fair Market Value shall be determined by the Plan Administrator,
after taking into account such factors as it deems appropriate.
M. Hostile Take-Over shall mean:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing
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more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
N. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.
O. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a change
in his or her position with the Corporation or Parent or Subsidiary
employing the individual which materially reduces his or her duties and
responsibilities or the level of management to which he or she reports, (B)
a reduction in his or her level of compensation (including base salary,
fringe benefits and target bonus under any corporate-performance based
bonus or incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual's place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is
effected by the Corporation without the individual's consent.
P. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any intentional wrongdoing by such
person, whether by omission or commission, which adversely affects the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material
manner. This shall not limit the grounds for the dismissal or discharge of any
person in the Service of the Corporation (or any Parent or Subsidiary).
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
R. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
S. Option Surrender Value shall mean the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation or, in the
event of a
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Hostile Take-Over, effected through a tender offer, the highest reported price
per share of Common Stock paid by the tender offeror in effecting such Hostile
Take-Over, if greater. However, if the surrendered option is an Incentive
Option, the Option Surrender Value shall not exceed the Fair Market Value per
share.
T. Optionee shall mean any person to whom an option is granted under the
Discretionary Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.
U. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Participant shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.
W. Permanent Disability or Permanently Disabled shall mean the inability
of the Optionee or the Participant to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more. However, solely for purposes of the Automatic Option Grant and Director
Fee Option Grant Programs, Permanent Disability or Permanently Disabled shall
mean the inability of the non-employee Board member to perform his or her usual
duties as a Board member by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of
twelve (12) months or more.
X. Plan shall mean the Corporation's 2000 Stock Incentive Plan, as set
forth in this document.
Y. Plan Administrator shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under
those programs with respect to the persons under its jurisdiction. However, the
Primary Committee shall have the plenary authority to make all factual
determinations and to construe and interpret any and all ambiguities under the
Plan to the extent such authority is not otherwise expressly delegated to any
other Plan Administrator.
Z. Plan Effective Date shall mean _________________, the date on which
the Common Stock is first registered under Section 12(g) of the 1934 Act.
AA. Predecessor Plan shall mean the Corporation's pre-existing 1997 Stock
Option/Stock Issuance Plan in effect immediately prior to the Plan Effective
Date hereunder.
BB. Primary Committee shall mean the committee of two (2) or more non-
employee Board members appointed by the Board to administer the Discretionary
Option Grant
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and Stock Issuance Programs with respect to Section 16 Insiders and to
administer the Salary Investment Option Grant Program with respect to all
eligible individuals.
CC. Salary Investment Option Grant Program shall mean the salary
investment grant program in effect under the Plan.
DD. Secondary Committee shall mean a committee of one (1) or more Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.
EE. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
FF. Service shall mean the performance of services for the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
GG. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
HH. Stock Issuance Program shall mean the stock issuance program in
effect under the Plan.
II. Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
JJ. 10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
KK. Withholding Taxes shall mean the Federal, state and local income and
employment withholding tax liabilities to which the holder of Non-Statutory
Options or unvested
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shares of Common Stock may become subject in connection with the exercise of
those options or the vesting of those shares.
A-6
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Exhibit 10.23
INFLOW, INC.
EMPLOYEE STOCK PURCHASE PLAN
----------------------------
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the
interests of Inflow, Inc., a Delaware corporation, by providing eligible
employees with the opportunity to acquire a proprietary interest in the
Corporation through participation in a payroll-deduction based employee stock
purchase plan designed to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Section 423 of the Code. Decisions of the Plan Administrator
shall be final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
which may be issued in the aggregate under the Plan shall not exceed
seven hundred fifty thousand (750,000) shares.
B. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, (i) appropriate adjustments
shall be made to the maximum number and class of securities issuable in the
aggregate under the Plan, (ii) the maximum number and class of securities
purchasable per Participant and in the aggregate on any one Purchase Date and
(iii) the number and class of securities and the price per share in effect under
each outstanding purchase right in order to prevent the dilution or enlargement
of benefits thereunder.
<PAGE>
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering period. However, the initial offering period shall
commence at the Effective Time and terminate on the last business day in April
2002. Subsequent offering periods shall commence as designated by the Plan
Administrator.
C. Each offering period shall be comprised of a series of one or
more successive Purchase Intervals. Purchase Intervals shall run from the first
business day in May each year to the last business day in October of the same
year and from the first business day in November each year to the last business
day in April of the following year. However, the first Purchase Interval in
effect under the initial offering period shall commence at the Effective Time
and terminate on the last business day in October 2000.
D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within an offering period be less than the Fair Market Value per
share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date. The new offering
period shall have a duration of twenty (24) months, unless a shorter duration is
established by the Plan Administrator within five (5) business days following
the start date of that offering period.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date
of an offering period under the Plan may enter that offering period on such
start date or on any subsequent Semi-Annual Entry Date within that offering
period, provided he or she remains an Eligible Employee.
B. Each individual who first becomes an Eligible Employee after
the start date of an offering period may enter that offering period on any
subsequent Semi-Annual Entry Date within that offering period on which he or she
is an Eligible Employee.
C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering period.
D. To participate in the Plan for a particular offering period,
the Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.
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<PAGE>
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock during an offering period may be
any multiple of one percent (1%) of the Base Salary paid to the Participant
during each Purchase Interval within that offering period, up to a maximum of
fifteen percent (15%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction to become effective as
soon as possible after filing the appropriate form with the Plan
Administrator. The Participant may not, however, effect more than one (1)
such reduction per Purchase Interval.
(ii) The Participant may, prior to the commencement of any new
Purchase Interval within the offering period, increase the rate of his or
her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the fifteen percent
(15%) maximum) shall become effective on the start date of the first
Purchase Interval following the filing of such form.
B. Payroll deductions shall begin on the first pay day
administratively feasible following the Participant's Entry Date into the
offering period and shall (unless sooner terminated by the Participant) continue
through the pay day ending with or immediately prior to the last day of that
offering period. The amounts so collected shall be credited to the Participant's
book account under the Plan, but no interest shall be paid on the balance from
time to time outstanding in such account. The amounts collected from the
Participant shall not be required to be held in any segregated account or trust
fund and may be commingled with the general assets of the Corporation and used
for general corporate purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance with the
provisions of the Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
-----------------------
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive installments over
the remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.
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Under no circumstances shall purchase rights be granted under the
Plan to any Eligible Employee if such individual would, immediately after the
grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded pursuant to the Termination of Purchase Right
provisions below) on each such Purchase Date. The purchase shall be effected by
applying the Participant's payroll deductions for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.
C. Purchase Price. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall be equal to eighty-five percent (85%) of the lower of
(i) the Fair Market Value per share of Common Stock on the Participant's Entry
Date into that offering period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed one thousand (1,000) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization. In addition, the
maximum number of shares of Common Stock purchasable in the aggregate by all
Participants on any one Purchase Date shall not exceed one hundred eighty-seven
thousand five hundred (187,500) shares, subject to periodic adjustments in the
event of certain changes in the corporation's capitalization.
E. Excess Payroll Deductions. Any payroll deductions not applied
to the purchase of shares of Common Stock on any Purchase Date because they are
not sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable on the Purchase Date
shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next scheduled
Purchase Date in the offering period, terminate his or her outstanding
purchase right by filing the appropriate form with the Plan Administrator
(or its designate), and no further payroll deductions shall be collected
from the Participant with
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respect to the terminated purchase right. Any payroll deductions collected
during the Purchase Interval in which such termination occurs shall, at
the Participant's election, be immediately refunded or held for the
purchase of shares on the next Purchase Date. If no such election is made
at the time such purchase right is terminated, then the payroll deductions
collected with respect to the terminated right shall be refunded as soon
as possible.
(ii) The termination of such purchase right shall be irrevocable,
and the Participant may not subsequently rejoin the offering period for
which the terminated purchase right was granted. In order to resume
participation in any subsequent offering period, such individual must
re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date into that
offering period.
(iii) Should the Participant cease to remain an Eligible Employee
for any reason (including death, disability or change in status) while his
or her purchase right remains outstanding, then that purchase right shall
immediately terminate, and all of the Participant's payroll deductions for
the Purchase Interval in which the purchase right so terminates shall be
immediately refunded. However, should the Participant cease to remain in
active service by reason of an approved unpaid leave of absence, then the
Participant shall have the right, exercisable up until the last business
day of the Purchase Interval in which such leave commences, to (a)
withdraw all the payroll deductions collected to date on his or her behalf
for that Purchase Interval or (b) have such funds held for the purchase of
shares on his or her behalf on the next scheduled Purchase Date. In no
event, however, shall any further payroll deductions be collected on the
Participant's behalf during such leave. Upon the Participant's return to
active service (i) within ninety (90) days following the commencement of
such leave or, (ii) prior to the expiration of any longer period for which
such Participant's right to reemployment with the Corporation is
guaranteed by either statute or contract, his or her payroll deductions
under the Plan shall automatically resume at the rate in effect at the
time the leave began. However, should the Participant's leave of absence
exceed ninety (90) days and his or her re-employment rights not be
guaranteed by either statute or contract, then the Participant shall be
treated as a new Employee for purposes of the Plan and must, in order to
resume participation in the Plan, re-enroll in the Plan (by making a
timely filing of the prescribed enrollment forms) on or before his or her
scheduled Entry Date into the offering period.
G. Change in Control. Each outstanding purchase right shall
-----------------
automatically be exercised, immediately prior to the effective date of any
Change in Control, by applying the payroll deductions of each Participant for
the Purchase Interval in which such Change in Control occurs to the purchase of
whole shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
Stock on the Participant's Entry Date into the offering period in which such
Change in Control occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Change in Control. However, the
applicable limitation on the number of shares of
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Common Stock purchasable by all Participants in the aggregate shall not apply to
any such purchase.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.
H. Proration of Purchase Rights. Should the total number of shares
----------------------------
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. The purchase right shall be exercisable only by
-------------
the Participant and shall not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations to the
purchase rights granted under the Plan, the following provisions shall be in
effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue in a series of installments on each successive
Purchase Date during the offering period on which such right remains
outstanding.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock under
one (1) or more other purchase rights at a rate equal to Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock (determined on the basis
of the Fair Market Value per
6
<PAGE>
share on the date or dates of grant) for each calendar year such rights
were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of
a Participant does not accrue for a particular Purchase Interval, then the
payroll deductions which the Participant made during that Purchase Interval with
respect to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of
this Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on ______________, 2000 and
shall become effective at the Effective Time, provided no purchase rights
--------
granted under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration of
the shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval is not obtained, or such compliance is not effected, within
twelve (12) months after the date on which the Plan is adopted by the Board, the
Plan shall terminate and have no further force or effect, and all sums collected
from Participants during the initial offering period hereunder shall be
refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in April, 2010, (ii) the date on
--------
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Corporate Transaction. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.
X. AMENDMENT/TERMINATION OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan at
any time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the recognition of compensation
expense in the absence of such amendment or termination.
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B. In no event may the Board effect any of the following
amendments or revisions to the Plan without the approval of the Corporation's
stockholders: (i) increase the number of shares of Common Stock issuable under
the Plan, except for permissible adjustments in the event of certain changes in
the Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify eligibility requirements for participation in the
Plan.
XI. GENERAL PROVISIONS
A. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
B. All costs and expenses incurred in the administration of the
Plan shall be paid by the Corporation; however, each Plan Participant shall bear
all costs and expenses incurred by such individual in the sale or other
disposition of any shares purchased under the Plan.
C. The provisions of the Plan shall be governed by the laws of the
State of Colorado without regard to that State's conflict-of-laws rules.
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Schedule A
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Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
------------------------
Inflow, Inc.
<PAGE>
APPENDIX
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The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Base Salary shall mean the base salary payable to a Participant
-----------
by one or more Participating Corporations during such individual's period of
participation in one or more offering periods under the Plan. Base Salary does
not include any overtime payments, bonuses, commissions, current profit-sharing
distributions, other incentive-type payments or any contributions (other than
Code Section 401(k) or Code Section 125 contributions) made on the Participant's
behalf by the Corporation or any Corporate Affiliate to any employee benefit or
welfare plan now or hereafter established. Base Salary shall be calculated
before deduction of (A) any income or employment tax withholdings or (B) any
pre-tax contributions made by the Participant to any Code Section 401(k) salary
deferral plan or any Code Section 125 cafeteria benefit program now or hereafter
established by the Corporation or any Corporate Affiliate.
C. Change in Control shall mean a change in ownership of the
-----------------
Corporation pursuant to any of the following transactions:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly, by a person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by or is under common
control with the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
----
E. Common Stock shall mean the Corporation's voting common stock.
------------
F. Corporate Affiliate shall mean any parent or subsidiary
-------------------
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
A-1
<PAGE>
G. Corporation shall mean Inflow, Inc., a Delaware corporation,
-----------
and any corporate successor to all or substantially all of the assets or voting
stock of Inflow, Inc. which shall by appropriate action adopt the Plan.
H. Effective Time shall mean the time at which the Underwriting
--------------
Agreement is executed. Any Corporate Affiliate which becomes a Participating
Corporation after such Effective Time shall designate a subsequent Effective
Time with respect to its employee-Participants.
I. Eligible Employee shall mean any person who is employed by a
-----------------
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. Entry Date shall mean the date an Eligible Employee first
----------
commences participation in the offering period in effect under the Plan. The
earliest Entry Date under the Plan shall be the Effective Time.
K. Fair Market Value per share of Common Stock on any relevant
-----------------
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) For purposes of the initial offering period which begins
at the Effective Time, the Fair Market Value shall be deemed to be equal
to the price per share at which the Common Stock is sold in the initial
public offering pursuant to the Underwriting Agreement.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
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M. Participant shall mean any Eligible Employee of a
-----------
Participating Corporation who is actively participating in the Plan.
A-2
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated February 4, 2000 relating to the financial statements of Inflow,
Inc., which appears in such Registration Statement. We also consent to the
references to us under the headings "Experts" and "Selected Financial Data" in
such Registration Statement.
PricewaterhouseCoopers LLP
Broomfield, Colorado
March 27, 2000
