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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO _______________
COMMISSION FILE NUMBER 0-50464
NETRIX CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE 54-1345159
(State of Incorporation) (IRS Employer Identification No.)
13595 DULLES TECHNOLOGY DRIVE, HERNDON, VIRGINIA 20171
(Address of principal executive offices) (Zip Code)
(703) 742-6000
(Registrant's telephone number, including area code)
INDICATE BY CHECK NUMBER WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES _____X____ NO _________
AT NOVEMBER 12, 1999 THERE WERE 11,609,217 SHARES OF THE REGISTRANT'S
COMMON STOCK, $.05 PAR VALUE PER SHARE, OUTSTANDING.
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EXPLANATORY NOTE
This 10-Q/A is filed for the sole purpose of filing Exhibits No. 10.9 and
10.15 hereto.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT INDEX:
Exhibits 10.9 and 10.15 were omitted from Netrix's quarterly report on
Form 10-Q filed on November 15, 1999 and are filed with this amendment.
The following exhibits have been filed as part of this report:
3.1 Amended and restated certificate of incorporation (incorporated by
reference to Exhibit 3.1 to Netrix's registration statement on Form
S-1 filed on September 18, 1992, as amended (File No.
33-50464) (the "1992 S-1").
3.2 Amendment to Certificate of Incorporation dated August 26, 1999
(incorporated by reference to Exhibit 4.8 to Netrix's registration
statement on Form S-3, filed on June 16, 1999, as amended (File No.
333-81109) (the "1999 S-3")).
3.3 Amended and restated by-laws of Netrix (incorporated into this
registration statement by reference to Exhibit 3.2 of the 1992 S-1).
4.1 Specimen certificate of common stock of the registrant (incorporated
by reference to Exhibit 4.2 to the 1992 S-1).
4.2 Certificate of designations for the form of Series A 8% convertible
preferred stock (incorporated by reference to Exhibit 4.4 to the
1999 S-3).
4.3 Supplemental certificate of designations for the form of Series A 8%
convertible preferred stock (incorporated by reference to Exhibit
4.2 to Netrix's quarterly report on Form 10-Q filed on August 16,
1999, Commission File No. 0-50464).
4.4 Form of Warrant issued to Renwick Securities, Inc. (incorporated
by reference to Exhibit 10.3 to Netrix's quarterly report on Form
10-Q filed on August 16, 1999, Commission File No. 0-50464).
4.5 Form of Warrant issued to Coast Business Credit (incorporated by
reference to Exhibit 10.2 to Netrix's quarterly report on Form 10-Q
filed on August 16, 1999).
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4.6 Form of Warrant issued to Kaufman Bros., L.P. (incorporated by
reference to Exhibit 4.6 of Netrix's quarterly report on Form 10-Q
filed on November 15, 1999).
10.1 Loan and Security Agreement dated November 18, 1997 with Coast
Business Credit, a division of Southern Pacific Bank (incorporated
by reference to Exhibit 10.8 to Netrix's annual report on Form 10-K
filed on March 31, 1998, Commission File No.
0-50464).
10.2 Amendment to Loan an Security Agreement dated April 19, 1999 with
Coast Business Credit, a division of Southern Pacific Bank
(incorporated by reference to Exhibit 10.3 to Netrix's quarterly
report on Form 10-Q filed on August 16, 1999, Commission File No.
0-50464).
10.3 Agreement and Plan of Merger dated September 30, 1999 between Netrix
Corporation and OpenROUTE Networks, Inc. (incorporated by reference
to Exhibit 2.1 to Netrix's current report on Form 8-K filed on
October 14, 1999, Commission File No. 0-50464).
10.4 Amendment to Agreement and Plan of Merger between Netrix Corporation
and OpenROUTE Networks, Inc., dated November 9, 1999 (incorporated
by reference to Exhibit 10.4 of Netrix's quarterly report on Form
10-Q filed November 15, 1999).
10.5* Employment Agreement with Steven Francesco dated March 3, 1999
(incorporated by reference to Exhibit 10.5 of Netrix's quarterly
report on Form 10-Q filed November 15, 1999).
10.6* Employment Agreement with Peter Kendrick dated August 3, 1999
(incorporated by reference to Exhibit 10.6 of Netrix's quarterly
report on Form 10-Q filed November 15, 1999).
10.7* Form of Retention Agreement with Executive Officers (incorporated by
reference to Exhibit 10.7 of Netrix's quarterly report on Form 10-Q
filed November 15, 1999).
10.8 Manufacturing Agreement, dated September 1999, with SMT Centre S.E.,
Inc. (incorporated by reference to Exhibit 10.8 of Netrix's
quarterly report on Form 10-Q filed November 15, 1999).
10.9* 1999 Long Term Incentive Plan, as amended (filed herewith).
10.10* Amended and Restated Incentive Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.1 of the Annual Report of
Form 10-K for the fiscal year ended December 31, 1995 (the "1995
10-K").
10.11* 1992 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.2 of the 1995 10-K).
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10.12* 1992 Directors Stock Option Plan (incorporated by reference to
Exhibit 10.3 of the 1995 10-K).
10.13* 1996 Stock Option Plan (incorporated by reference to Exhibit 10.4 of
the 1995 10-K).
10.14 Office Sublease, dated September 30, 1999 between Netrix and
Scoreboard, Inc. (incorporated by reference to Exhibit 10.14 of
Netrix's quarterly report on Form 10-Q filed November 15, 1999).
10.15 Office Lease Agreement, dated July 1998, by and between Netrix and
Bedminster Capital Funding LLC (filed herewith).
_________________
* This exhibit is a compensatory plan or arrangement in which executive
officers or directors of the Registrant participate.
+ Portions of this exhibit have been omitted subject to a pending
confidential treatment request.
3
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 21, 1999 NETRIX CORPORATION
By: /S/ Lynn C. Chapman
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Lynn C. Chapman
President and Chief Operating Officer
By: /S/ Peter J. Kendrick
-----------------------------------
Peter J. Kendrick
Vice President Finance and
Administration and Chief Financial
Officer (Principal Financial Officer)
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EXHIBIT INDEX
The following exhibits have been filed as part of this report:
3.1 Amended and restated certificate of incorporation (incorporated by
reference to Exhibit 3.1 to Netrix's registration statement on Form
S-1 filed on September 18, 1992, as amended (File No.
33-50464) (the "1992 S-1").
3.2 Amendment to Certificate of Incorporation dated August 26, 1999
(incorporated by reference to Exhibit 4.8 to Netrix's registration
statement on Form S-3, filed on June 16, 1999, as amended (File No.
333-81109) (the "1999 S-3")).
3.3 Amended and restated by-laws of Netrix (incorporated into this
registration statement by reference to Exhibit 3.2 of the 1992 S-1).
4.1 Specimen certificate of common stock of the registrant (incorporated
by reference to Exhibit 4.2 to the 1992 S-1).
4.2 Certificate of designations for the form of Series A 8% convertible
preferred stock (incorporated by reference to Exhibit 4.4 to the
1999 S-3).
4.3 Supplemental certificate of designations for the form of Series A 8%
convertible preferred stock (incorporated by reference to Exhibit
4.2 to Netrix's quarterly report on Form 10-Q filed on August 16,
1999, Commission File No. 0-50464).
4.4 Form of Warrant issued to Renwick Securities, Inc. (incorporated by
reference to Exhibit 10.3 to Netrix's quarterly report on Form 10-Q
filed on August 16, 1999, Commission File No.
0-50464).
4.5 Form of Warrant issued to Coast Business Credit (incorporated by
reference to Exhibit 10.2 to Netrix's quarterly report on Form 10-Q
filed on August 16, 1999, Commission File No. 0-50464).
4.6 Form of Warrant issued to Kaufman Bros., L.P.
10.1 Loan and Security Agreement dated November 18, 1997 with Coast
Business Credit, a division of Southern Pacific Bank (incorporated
by reference to Exhibit 10.8 to Netrix's annual report on Form 10-K
filed on March 31, 1998, Commission File No.
0-50464).
10.2 Amendment to Loan an Security Agreement dated April 19, 1999 with
Coast Business Credit, a division of Southern Pacific Bank
(incorporated by reference to Exhibit 10.3 to Netrix's quarterly
report on Form 10-Q filed on August 16, 1999, Commission File No.
0-50464).
10.3 Agreement and Plan of Merger dated September 30, 1999 between Netrix
Corporation and OpenROUTE Networks, Inc. (incorporated by reference
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to Exhibit 2.1 to Netrix's current report on Form 8-K filed on
October 14, 1999, Commission File No. 0-50464).
10.4 Amendment to Agreement and Plan of Merger between Netrix
Corporation and OpenROUTE Networks, Inc. dated November 9, 1999.
10.5* Employment Agreement with Steven Francesco dated March 3, 1999
(incorporated by reference to Exhibit 10.5 of Netrix's quarterly
report on Form 10-Q filed November 15, 1999).
10.6* Employment Agreement with Peter Kendrick dated August 3, 1999
(incorporated by reference to Exhibit 10.6 of Netrix's quarterly
report on Form 10-Q filed November 15, 1999).
10.7* Form of Retention Agreement with Executive Officers (incorporated by
reference to Exhibit 10.7 of Netrix's quarterly report on Form 10-Q
filed November 15, 1999).
10.8 Manufacturing Agreement dated September 1999 with SMT Centre
S.E., Inc.
10.9* 1999 Long Term Incentive Plan, as amended.
10.10* Amended and Restated Incentive Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.1 of the Annual Report of
Form 10-K for the fiscal year ended December 31, 1995 (the "1995
10-K").
10.11* 1992 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.2 of the 1995 10-K).
10.12* 1992 Directors Stock Option Plan (incorporated by reference to
Exhibit 10.3 of the 1995 10-K).
10.13* 1996 Stock Option Plan (incorporated by reference to Exhibit 10.4 of
the 1995 10-K).
10.14 Office Sublease, dated September 30, 1999 between Netrix and
Scoreboard, Inc. (incorporated by reference to Exhibit 10.14 of
Netrix's quarterly report on Form 10-Q filed November 15, 1999).
10.15 Lease Agreement, dated July, 1998, by and between Netrix and
Bedminster Capital Funding, LLC.
_____________________
* This exhibit is a compensatory plan or arrangement in which executive
officers or directors of the Registrant participate.
+ Portions of this exhibit have been omitted subject to a pending
confidential treatment request.
6
NETRIX CORPORATION
1999 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of this 1999 Long-Term Incentive Plan (the "Plan")
of Netrix Corporation, a Delaware corporation (the "Company"), is to advance the
interests of the Company and its stockholders by providing a means to attract,
retain, and reward directors, officers and other key employees and consultants
of the Company and its subsidiaries (including consultants providing services of
substantial value) and to enable such persons to acquire or increase a
proprietary interest in the Company, thereby promoting a closer identity of
interests between such persons and the Company's stockholders.
2. DEFINITIONS. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents, and Other
Stock-Based Awards, are set forth in Section 6 of the Plan. Such awards,
together with any other right or interest granted to a Participant under the
Plan, are termed "Awards." For purposes of the Plan, the following additional
terms shall be defined as set forth below:
(a) "AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing an Award.
(b) "BENEFICIARY" shall mean the person, persons, trust, or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under this Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust, or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "BOARD" means the Board of Directors of the Company.
(d) A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit plan of
the Company, acquires directly or indirectly the Beneficial Ownership (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any voting security of the Company and immediately after such
acquisition such Person is, directly or indirectly, the Beneficial Owner of
voting securities representing 50% or more of the total voting power of all
of the then-outstanding voting securities of the Company;
(ii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power of
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each such continuing holder relative to other such continuing holders not
substantially altered in the transaction; or
(iii) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or a substantial portion of the Company's assets (i.e.,
50% or more of the total assets of the Company).
(e) "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(f) "COMMITTEE" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan;
PROVIDED, HOWEVER, that to the extent necessary to comply with Rule 16b-3, the
Committee shall consist of two or more directors, each of whom is a
"disinterested person" within the meaning of Rule 16b-3.
(g) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules thereto.
(h) "FAIR MARKET VALUE" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that (i) if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date shall be based upon the last
sales price or, if unavailable, the average of the closing bid and asked prices
per share of the Stock on such date (or, if there was no trading or quotation in
the Stock on such date, on the next preceding date on which there was trading or
quotation) as provided by one of such organizations, (ii) the "fair market
value" of Stock on the date on which shares of Stock are first issued and sold
pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission shall be the Initial Public Offering price of
the shares so issued and sold, as set forth in the first final prospectus used
in such offering and (iii) the "fair market value" of Stock prior to the date of
the Initial Public Offering shall be as determined by the Board of Directors.
(i) "INITIAL PUBLIC OFFERING" shall mean an initial public offering of
shares of Stock in a firm commitment underwriting registered with the Securities
and Exchange Commission in compliance with the provisions of the 1933 Act.
(j) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(k) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board who is not
otherwise an employee of the Company or any subsidiary.
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(l) "PARTICIPANT" means a person who, at a time when eligible under Section
5 hereof, has been granted an Award under the Plan.
(m) "RULE 16B-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(n) "STOCK" means the Common Stock, $.0 1 par value, of the Company and
such other securities as may be substituted for Stock or such other securities
pursuant to Section 4.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
Participant;
(iii) to determine the number of Awards to be granted, the number of
shares of Stock to which an Award will relate, the terms and conditions of
any Award granted under the Plan (including, but not limited to, any
exercise price, grant price, or purchase price, any restriction or
condition, any schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability, or settlement of an Award,
and waivers or accelerations thereof, and waivers of or modifications to
performance conditions relating to an Award, based in each case on such
considerations as the Committee shall determine), and all other matters to
be determined in connection with an Award;
(iv) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards, or other property, or an Award
may be cancelled, forfeited, or surrendered;
(v) to determine whether, to what extent, and under what circumstances
cash, Stock, other Awards, or other property payable with respect to an
Award will be deferred either automatically, at the election of the
Committee, or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(vii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
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(viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument
hereunder; and
(ix) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Unless authority is
specifically reserved to the Board under the terms of the Plan, the Company's
Certificate of Incorporation or Bylaws, or applicable law, the Committee shall
have sole discretion in exercising authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, subsidiaries of the Company, Participants,
any person claiming any rights under the Plan from or through any Participant,
and stockholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as limiting
any power or authority of the Committee. The Committee may delegate to officers
or managers of the Company or any subsidiary of the Company the authority,
subject to such terms as the Committee shall determine, to perform
administrative functions and, with respect to Participants not subject to
Section 16 of the Exchange Act, to perform such other functions as the Committee
may determine, to the extent permitted under Rule 16b-3, if applicable, and
other applicable law.
(c) LIMITATION OF LIABILITY. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him by any officer or other employee of the Company or any subsidiary, the
Company's independent certified public accountants, or any executive
compensation consultant, legal counsel, or other professional retained by the
Company to assist in the administration of the Plan. No member of the Committee,
nor any officer or employee of the Company acting on behalf of the Committee,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Committee and any officer or employee of the Company acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by the
Company with respect to any such action, determination, or interpretation.
4. STOCK SUBJECT TO PLAN.
(a) AMOUNT OF STOCK RESERVED. The total amount of Stock that may be subject
to outstanding Awards, determined immediately after the grant of any Award,
shall not exceed [2,925,000] shares of the total number of shares of Stock
outstanding. Shares subject to ISOs, Restricted Stock or Deferred Stock Awards
shall not be deemed delivered if such Awards are forfeited, expire or otherwise
terminate without delivery of shares to the Participant. If an Award valued by
reference to Stock may only be settled in cash, the number of shares to which
such Award relates shall be deemed to be Stock subject to such Award for
purposes of this Section 4(a). Any shares of Stock delivered pursuant to an
Award may consist, in whole or in part, of authorized and unissued shares or
treasury shares.
(b) ADJUSTMENTS. In the event of any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
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combination, repurchase, or share exchange, or other similar corporate
transaction or event, affects the Stock such that an adjustment is appropriate
in order to prevent dilution or enlargement of the rights of Participants under
the Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of shares of Stock deemed to be
available thereafter for grants of Awards under Section 4(a) (including with
respect to the limitations relating to ISOs and to Restricted and Deferred
Stock), (ii) the number and kind of shares of Stock that may be delivered or
deliverable in respect of outstanding Awards, and (iii) the exercise price,
grant price, or purchase price relating to any Award (or, if deemed appropriate,
the Committee may make provision for a cash payment with respect to any
outstanding Award). In addition, the Committee is authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards (including,
without limitation, cash payments in exchange for an Award or substitution of
Awards using stock of a successor or other entity) in recognition of unusual or
nonrecurring events (including, without limitation, events described in the
preceding sentence) affecting the Company or any subsidiary or the financial
statements of the Company or any subsidiary, or in response to changes in
applicable laws, regulations, or accounting principles. The foregoing
notwithstanding, no adjustments shall be authorized under this Section 4(c) with
respect to ISOs or SARs in tandem therewith to the extent that such authority
would cause the Plan to violate Section 422(b)(1) of the Code, and no such
adjustment shall be authorized with respect to Options or other Awards granted
in accordance with Section 7(1) hereof to the extent that such authority would
cause such Options or other Awards to fail to qualify as "performance-based
compensation" under Section 162(m)(4)(C) of the Code and regulations thereunder
(including Regulation 1. 162-27(e)(2)).
5. ELIGIBILITY. Executive officers and other key employees of the Company
and its subsidiaries, including any director and persons who provide consulting
or other services to the Company deemed by the Committee to be of substantial
value to the Company, are eligible to be granted Awards under the Plan. In
addition, a person who has been offered employment by the Company or its
subsidiaries is eligible to be granted an Award under the Plan, provided that
such Award shall be cancelled if such person fails to commence such employment,
and no payment of value may be made in connection with such Award until such
person has commenced such employment. The foregoing notwithstanding,
Non-Employee Directors who are members of the Committee shall not be eligible to
be granted Awards under the Plan.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of employment or service of the
Participant. Except as provided in Sections 6(1), 6(h), or 7(a), or to the
extent required to comply with requirements of the Delaware General Corporation
Law that lawful consideration be paid for Stock, only services may be required
as consideration for the grant (but not the exercise) of any Award.
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(b) OPTIONS. The Committee is authorized to grant Options to Participants
(including "reload" options automatically granted to offset specified exercises
of options) on the following terms and conditions:
(i) EXERCISE PRICE. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part, the
methods by which such exercise price may be paid or deemed to be paid, the
form of such payment, including, without limitation, cash, Stock, other
Awards or awards granted under other Company plans, or other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the methods
by which Stock will be delivered or deemed to be delivered to Participants.
(iii) ISOS. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code, including
but not limited to the requirement that no ISO shall be granted more than
ten years after the effective date of the Plan. Anything in the Plan to the
contrary notwithstanding, no term of the Plan relating to ISOs shall not be
interpreted, amended, or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify either the Plan or
any ISO under Section 422 of the Code.
(iv) TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, upon termination of a Participant's employment with the Company
and its subsidiaries, such Participant may exercise any Options during the
three month period following such termination of employment, but only to
the extent such Option was exercisable immediately prior to such
termination of employment. Notwithstanding the foregoing, if the Committee
determines that such termination is for cause, all Options held by the
Participant shall immediately terminate.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(i) RIGHT TO PAYMENT. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the date
of exercise (or, if the Committee shall so determine in the case of
any such right other than one related to an ISO, the Fair Market Value
of one share at any time during a specified period before or after the
date of exercise), over (B) the grant price of the SAR as determined
by the Committee as of the date of grant of the SAR, which, except as
provided in Section 7(a), shall be not less than the Fair Market Value
of one share of Stock on the date of grant.
(ii) OTHER TERMS. The Committee shall determine the time or times
at which an SAR may be exercised in whole or in part, the method of
exercise, method of settlement, form of consideration payable in
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settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR.
Limited SARs that may only be exercised upon the occurrence of a
Change in Control may be granted on such terms, not inconsistent with
this Section 6(c), as the Committee may determine. Limited SARs may be
either freestanding or in tandem with other Awards.
(d) RESTRICTED STOCK. The Committee is authorized to grant Restricted Stock
to Participants on the following terms and conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any,
as the Committee may impose, which restrictions may lapse separately
or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Except to
the extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or
the right to receive dividends thereon.
(ii) FORFEITURE. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under
criteria established by the Committee) during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company;
PROVIDED, HOWEVER, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating
to Restricted Stock will be waived in whole or in part in the event of
termination resulting from specified causes. Notwithstanding anything
contained herein to the contrary (other than Section 7(g)), all
Restricted Stock Awards, other than an Award granted pursuant to
Section 7(1), shall be forfeited upon a Participant's termination of
employment or other service with the Company and its subsidiaries
within three years of the date the award is granted, provided,
however, that the Committee may make exceptions in the event such
termination is by reason of the Participant's death or disability.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing Restricted Stock are registered in the
name of the Participant, such certificates shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable
to such Restricted Stock, the Company shall retain physical possession
of the certificate, and the Participant shall have delivered a stock
power to the Company, endorsed in blank, relating to the Restricted
Stock.
(iv) DIVIDENDS. Dividends paid on Restricted Stock shall be
either paid at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends, or the payment of such dividends shall be deferred
and/or the amount or value thereof automatically reinvested in
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additional Restricted Stock, other Awards, or other investment
vehicles, as the Committee shall determine or permit the Participant
to elect. Stock distributed in connection with a Stock split or Stock
dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other
property has been distributed.
(e) DEFERRED STOCK. The Committee is authorized to grant Deferred Stock to
Participants, subject to the following terms and conditions:
(i) AWARD AND RESTRICTIONS. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected
by the Participant). In addition, Deferred Stock shall be subject to
such restrictions as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at
earlier specified times, separately or in combination, in
installments, or otherwise, as the Committee may determine.
(ii) FORFEITURE. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under
criteria established by the Committee) during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as
provided in the Award Agreement evidencing the Deferred Stock), all
Deferred Stock that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be forfeited;
PROVIDED, HOWEVER, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating
to Deferred Stock will be waived in whole or in part in the event of
termination resulting from specified causes. Notwithstanding anything
contained herein to the contrary (other than Section 7(g)), all
Deferred Stock Awards, other than an Award granted pursuant to Section
7(1), shall be forfeited upon a Participant's termination of
employment or other service with the Company and its subsidiaries
within three years of the date the award is granted, provided,
however, that the Committee may make exceptions in the event such
termination is by reason of the Participant's death or disability.
(f) BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash under other plans or compensatory
arrangements, provided that, in the case of Participants subject to Section 16
of the Exchange Act, such cash amounts are determined under such other plans in
a manner that complies with applicable requirements of Rule 16b-3 so that the
acquisition of Stock or Awards hereunder shall be exempt from Section 16(b)
liability. Stock or Awards granted hereunder shall be subject to such other
terms as shall be determined by the Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
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another Award. The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles as the Committee may
specify.
(h) OTHER STOCK-BASED AWARDS. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, shall also be authorized pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for, any other Award
granted under the Plan or any award granted under any other plan of the Company,
any subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Awards granted in addition to or in tandem with other
Awards or awards may be granted either as of the same time as or a different
time from the grant of such other Awards or awards.
(b) TERM OF AWARDS. The term of each Award shall be for such period as may
be determined by the Committee; PROVIDED, HOWEVER, that in no event shall the
term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
(c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a subsidiary
upon the grant or exercise of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, Stock, other
Awards, or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. Such payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments denominated in Stock.
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(d) RULE 16B-3 COMPLIANCE.
(i) SIX-MONTH HOLDING PERIOD. Unless a Participant could
otherwise exercise a derivative security or dispose of Stock delivered
upon exercise of a derivative security granted under the Plan without
incurring liability under Section 16(b) of the Exchange Act, (i) Stock
delivered under the Plan other than upon exercise or conversion of a
derivative security granted under the Plan shall be held for at least
six months from the date of acquisition, and (ii), with respect to a
derivative security granted under the Plan, at least six months shall
elapse from the date of acquisition of the derivative security to the
date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security.
(ii) TRANSFERABILITY. Except as otherwise provided by the
Committee, Awards under the Plan are not transferable except as
designated by the Participant by will or by the laws of descent and
distribution (or pursuant to a Beneficiary designation).
(iii) REFORMATION TO COMPLY WITH EXCHANGE ACT RULES. It is the
intent of the Company that this Plan comply in all respects with
applicable provisions of Rule 1 6b-3 or Rule 1 6a- 1(c) (3) under the
Exchange Act in connection with any grant of Awards to or other
transaction by a Participant who is subject to Section 16 of the
Exchange Act (except for transactions exempted under alternative
Exchange Act Rules or acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any Award
Agreement relating to an Award does not comply with the requirements
of Rule 1 6b-3 or Rule 1 6a- 1(c) (3) as then applicable to any such
transaction, such provision will be construed or deemed amended to the
extent necessary to conform to the applicable requirements of Rule
16b-3 or Rule 16a-1 (c)(3) so that such Participant shall avoid
liability under Section 16(b). In addition, other provisions of the
Plan notwithstanding, the exercise price of any Award carrying a right
to exercise granted to a Participant subject to Section 16 of the
Exchange Act shall be not less than 50% of the Fair Market Value of
Stock as of the date such Award is granted if such pricing limitation
is required under Rule 16b-3 at the time of such grant.
(e) LOAN PROVISIONS. With the consent of the Committee, and subject at all
times to, and only to the extent, if any, and in accordance with, laws and
regulations and other binding obligations or provisions applicable to the
Company, the Company may make, guarantee, or arrange for a loan or loans to a
Participant with respect to the exercise of any Option or other payment in
connection with any Award, including the payment by a Participant of any or all
federal, state, or local income or other taxes due in connection with any Award.
Subject to such limitations, the Committee shall have full authority to decide
whether to make a loan or loans hereunder and to determine the amount, terms,
and provisions of any such loan or loans, including the interest rate to be
charged in respect of any such loan or loans, whether the loan or loans are to
be with or without recourse against the borrower, the terms on which the loan is
to be repaid and conditions, if any, under which the loan or loans may be
forgiven.
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(f) PERFORMANCE-BASED AWARDS TO "COVERED EMPLOYEES". Other provisions of
the Plan notwithstanding, the provisions of this Section 7(1) shall apply to any
Award the exercisability or settlement of which is subject to the achievement of
performance conditions (other than an Option or SAR granted with an exercise or
base price at least equal to 100% of Fair Market Value of Stock on the date of
grant) if such Award is granted to a person who, at the time of grant, is a
"covered employee." The definition of "covered employee," and other terms used
in this Section 7(1), shall be interpreted in a manner consistent with Section
162(m) of the Code and regulations thereunder (including Regulation 1.162-27).
The performance objectives for an Award subject to this Section 7(1) shall
consist of one or more business criteria and a targeted level or levels of
performance with respect to such criteria, as specified by the Committee but
subject to this Section 7(1). Performance objectives shall be objective and
shall otherwise meet the requirements (including the shareholder approval
requirements) of Section 162(m)(4)(C) of the Code and regulations thereunder
(including Regulation 1. 162-27(e)(2)). The following business criteria shall be
used by the Committee in connection with a performance objective:
(1) Annual earnings before payment of taxes and interest;
(2) Annual earnings per share; and/or
(3) Annual return on common equity.
Achievement of performance objectives shall be measured over a period of one,
two, three, or four years, as specified by the Committee. No business criteria
other than those named above may be used in establishing the performance
objective for an Award to a covered employee. For each such Award relating to a
covered employee, the Committee shall establish the targeted level or levels of
performance for each business criteria. Performance objectives may differ for
Awards under this Section 7(1) to different covered employees. The Committee may
determine that an Award under this Section 7(1) shall be payable upon
achievement of any one of the performance objectives or may require that two or
more of the performance objectives must be achieved in order for an Award to be
payable. The Committee may, in its discretion, reduce the amount of a payout
otherwise to be made in connection with an Award under this Section 7(1), but
may not exercise discretion to increase such amount, and the Committee may
consider other performance criteria in exercising such discretion. All
determinations by the Committee as to the achievement of performance objectives
shall be made in writing. The Committee may not delegate any responsibility
under this Section 7(1).
(g) ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding anything
contained herein to the contrary, unless otherwise provided by the Committee in
an Award Agreement, all conditions and/or restrictions relating to the continued
performance of services and/or the achievement of performance objectives with
respect to the exercisability or full enjoyment of an Award shall immediately
lapse upon a Change in Control.
8. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Company shall not
be obligated to deliver Stock upon the exercise or settlement of any Award or
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take other actions under the Plan until the Company shall have determined that
applicable federal and state laws, rules, and regulations have been complied
with and such approvals of any regulatory or governmental agency have been
obtained and contractual obligations to which the Award may be subject have been
satisfied. The Company, in its discretion, may postpone the issuance or delivery
of Stock under any Award until completion of such stock exchange listing or
registration or qualification of such Stock or other required action under any
federal or state law, rule, or regulation as the Company may consider
appropriate, and may require any Participant to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of Stock under the Plan.
(b) TRANSFERABILITY. Except as otherwise set forth in Section 7(d)(ii),
Awards and other rights of Participants under the Plan may not be transferred to
third parties, pledged, mortgaged, hypothecated, or otherwise encumbered, and
shall not be subject to claims of creditors.
(c) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee or person
providing consulting or other services the right to be retained in the employ or
service of the Company or any of its subsidiaries, nor shall it interfere in any
way with the right of the Company or any of its subsidiaries to terminate any
employee's employment or terminate any contract with a person providing
consulting or other services at any time.
(d) TAXES. The Company or any subsidiary is authorized to withhold from any
Award granted or to be settled, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any such action shall be subject to the approval of the Company's stockholders
at or before the next annual meeting of stockholders for which the record date
is after such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; PROVIDED, HOWEVER, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to
him. The Committee may waive any conditions or rights under, or amend, alter,
suspend, discontinue, or terminate, any Award theretofore granted and any Award
Agreement relating thereto; PROVIDED, HOWEVER, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under such Award.
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(f) NO RIGHTS TO AWARDS; NO STOCKHOLDER RIGHTS. No Participant, employee,
or other person shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants, employees,
and other persons. No Award shall confer on any Participant any of the rights of
a stockholder of the Company unless and until Stock is duly issued or
transferred and delivered to the Participant in accordance with the terms of the
Award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
PROVIDED, HOWEVER, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
(i) NO FRACTIONAL SHARES. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) COMPLIANCE WITH CODE SECTION 162(M). It is the intent of the Company
that Options and other Awards subject to the performance objectives specified
under Section 7(1) granted under the Plan to persons who are "covered employees"
within the meaning of Code Section 162(m) and regulations thereunder (including
Regulation 1. 162-27(c)(2)) shall constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder (including Regulation 1.162-27(e), and subject to the transition
rules under Regulation 1. 162-27(h)(2)) thereunder. Accordingly, if any
provision of the Plan or any Award Agreement relating to such an Award granted
to a "covered employee" does not comply or is inconsistent with the requirements
of Code Section 162(m) or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person discretion to increase the amount of compensation otherwise
payable to a "covered employee" in connection with any such Award upon
attainment of the performance objectives.
(k) GOVERNING LAW. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
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determined in accordance with the Delaware General Corporation Law, without
giving effect to principles of conflicts of laws, and applicable federal law.
(l) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall become effective as of
the date of its adoption by the Board and shall continue in effect until
terminated by the Board.
OFFICE LEASE AGREEMENT
BY AND BETWEEN
BEDMINSTER CAPITAL FUNDING LLC
(AS LANDLORD)
AND
NETRIX CORPORATION
(AS TENANT)
Form Approved: July, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS........................................................1
ARTICLE II PREMISES..........................................................2
ARTICLE III TERM.............................................................2
ARTICLE IV BASE RENT.........................................................2
ARTICLE V INCREASES IN OPERATING CHARGES AND REAL ESTATE TAXES...............3
ARTICLE VI USE OF PREMISES...................................................9
ARTICLE VII ASSIGNMENT AND SUBLETTING.......................................12
ARTICLE VIII MAINTENANCE AND REPAIRS........................................16
ARTICLE IX ALTERATIONS......................................................17
ARTICLE X SIGNS.............................................................19
ARTICLE XI SECURITY DEPOSIT.................................................20
ARTICLE XII INSPECTION......................................................23
ARTICLE XIII INSURANCE......................................................24
ARTICLE XIV SERVICES AND UTILITIES..........................................26
ARTICLE XV LIABILITY OF LANDLORD............................................27
ARTICLE XVI RULES...........................................................29
ARTICLE XVII DAMAGE OR DESTRUCTION..........................................29
ARTICLE XVIII CONDEMNATION..................................................30
ARTICLE XIX DEFAULT.........................................................31
ARTICLE XX BANKRUPTCY.......................................................36
ARTICLE XXI SUBORDINATION...................................................37
ARTICLE XXII HOLDING OVER...................................................39
ARTICLE XXIII COVENANTS OF LANDLORD.........................................40
ARTICLE XXIV PARKING........................................................41
ARTICLE XXV GENERAL PROVISIONS..............................................41
ARTICLE XXVI COMMUNICATIONS EQUIPMENT.......................................45
ARTICLE XXVII RENEWAL OPTION................................................48
ARTICLE XXVIII SELF-HELP....................................................49
EXHIBIT A-1 - Plan Showing Premises Located on First Floor
EXHIBIT A-2 - Plan Showing Premises Located on Second Floor
EXHIBIT B - Rules
EXHIBIT C - Form of Letter of Credit
EXHIBIT D - Form of Subordination, Non-Disturbance, and Attornment Agreement
of Holder of Current Mortgage
EXHIBIT E - List of Existing Covenants, Conditions, and Restrictions
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OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT (this "Lease") is dated as of the ____ day
of ________________, 1999, by and between BEDMINSTER CAPITAL FUNDING LLC, a New
Jersey limited liability company ("Landlord"), and NETRIX CORPORATION, a
Delaware corporation ("Tenant").
ARTICLE I
DEFINITIONS
1.1 Building: a two (2) story building containing an agreed fifty- five
thousand eight hundred eighty (55,880) square feet of rentable area as of the
date hereof and located at 13595 Dulles Technology Drive, Herndon, Virginia.
1.2 Premises: the entire Building, as more particularly designated on
Exhibits A-1 and A-2.
1.3 Tenant's Proportionate Share: 100.00% for Operating Charges and
100.00% for Real Estate Taxes.
1.4 Lease Term: one hundred twenty (120) months.
1.5 Lease Commencement Date: May 1, 1999.
1.6 Base Rent: nine hundred ninety-one thousand eight hundred sixty- nine
and 96/100 dollars ($991,869.96)for the first Lease Year, divided into twelve
(12) equal monthly installments of $82,655.83 for the first Lease Year.
1.7 Base Rent Annual Escalation Percentage: three percent (3%).
1.8 Operating Charges Base Year: calendar year 1999.
1.9 Real Estate Taxes Base Year: calendar year 1999.
1.10 Security Deposit Amount: ninety-eight thousand three hundred two
dollars ($98,302.00).
1.11 Broker: Trammell Crow Company.
1.12 Tenant Notice Address: the Premises, Attention: Norman Welsch.
1.13 Landlord Notice Address: c/o The Advance Group, Inc., 8400
Corporate Drive, Suite 115, Lanham, Maryland 20785, Attention: David J. Fisher,
with a copy to The Advance Group, Inc., 1545 State Highway 206, Suite 100,
Bedminster, New Jersey 07921, Attention: Kurt Padavano.
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1.14 Building Hours: 7:00 a.m. to 7:00 p.m. on Monday through Friday
and 9:00 a.m. to 3:00 p.m. on Saturday (excluding legal public holidays), and
such other hours, if any, as Landlord from time to time determines.
1.15 Guarantor(s): [Intentionally omitted].
1.16 Complex: that complex (of which the Building is a part) known as
Dulles Technology Center, and including all easements, rights, and appurtenances
thereto (including private streets, storm detention facilities, and any other
service facilities).
1.17 Parking Permits: two hundred eight (208).
ARTICLE II
PREMISES
2.1 Tenant leases the Premises from Landlord and Landlord leases the
Premises to Tenant for the term and upon the conditions and covenants set forth
in this Lease. At any time that Tenant is leasing the entire Building, Tenant
will have the exclusive right to use the common and public areas of the Building
and the parking areas present on the Land (as hereinafter defined) as of the
date of Landlord's execution of this Lease, subject to the rights reserved by
Landlord. Except as may otherwise be expressly provided in this Lease, the lease
of the Premises does not include the right to use the roof (except as explicitly
set forth in Article XXVI), mechanical rooms, electrical closets, janitorial
closets, telephone rooms, parking areas or other non-common or non-public areas
of the Building.
ARTICLE III
TERM
3.1 All of the provisions of this Lease shall be in full force and
effect from and after the date first above written. The Lease Term shall
commence on the Lease Commencement Date specified in Section 1.5. The Lease Term
shall also include any properly exercised renewal or extension of the term of
this Lease.
3.2 "Lease Year" shall mean a period of twelve (12) consecutive
months commencing on the Lease Commencement Date, and each successive twelve
(12) month period thereafter.
3.3 Nothing contained in this Lease shall be construed to terminate
the Prior Lease (as hereinafter defined) prior to its scheduled expiration;
provided, however, that Tenant acknowledges that this Lease is in substitution
for, and not in addition to, its option to extend the term of the Prior Lease
pursuant to Paragraph 3 of the Rider thereto.
ARTICLE IV
BASE RENT
4.1 From and after the Lease Commencement Date, Tenant shall pay the
Base Rent in equal monthly installments in advance on the first day of each
month during a Lease Year. On the first day of the second and each succeeding
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Lease Year, the Base Rent in effect shall be increased by an amount equal
to the product of (a) the Base Rent Annual Escalation Percentage, multiplied by
(b) the Base Rent in effect immediately before the increase.
4.2 All sums payable by Tenant under this Lease, whether or not
stated to be Base Rent, additional rent or otherwise, shall be paid to Landlord
in legal tender of the United States, without setoff, deduction or demand
(except as otherwise explicitly provided herein), at the Landlord Payment
Address, or to such other party or such other address as Landlord may designate
in writing. Landlord's acceptance of rent after it shall have become due and
payable shall not excuse a delay upon any subsequent occasion or constitute a
waiver of any of Landlord's rights hereunder. If any sum payable by Tenant under
this Lease is paid by check which is returned due to insufficient funds, stop
payment order, or otherwise, then: (a) such event shall be treated as a failure
to pay such sum when due; and (b) in addition to all other rights and remedies
of Landlord hereunder, Landlord shall be entitled to impose a returned check
charge of Fifty Dollars ($50.00) to cover Landlord's administrative expenses and
overhead for processing.
ARTICLE V
INCREASES IN OPERATING CHARGES AND REAL ESTATE TAXES
5.1 For the purposes of this Article V, the term "Building" shall be
deemed to include the site upon which the Building is constructed (which site is
sometimes referred to herein as the "Land"). If the Building is operated as a
part of a complex of buildings or in conjunction with other buildings or parcels
of land, then Landlord shall prorate the common expenses and costs with respect
to each such building or parcel of land in such manner as Landlord, in its sole
but not arbitrary judgment, shall determine.
5.2 (a) From and after the Lease Commencement Date, Tenant shall pay
as additional rent Tenant's Proportionate Share of the amount by which Operating
Charges (as defined in Section 5.2(b)) for each calendar year falling entirely
or partly within the Lease Term exceed a base amount (the "Operating Charges
Base Amount") equal to the Operating Charges incurred during the Operating
Charges Base Year. Tenant's Proportionate Share with respect to Operating
Charges shall be that percentage which is equal to a fraction, the numerator of
which is the number of square feet of rentable area in the Premises, and the
denominator of which is the number of square feet of office rentable area from
time to time in the Building (excluding storage, roof and garage space).
(b) "Operating Charges" shall mean the sum of all expenses incurred by
Landlord in the operation, maintenance, repair and cleaning of the Building and
the Land that are customarily incurred by the landlords of similar buildings in
the Washington, D.C., metropolitan area, including, but not limited to, the
following: (1) gas, water, HVAC, sewer and other utility charges of every type
and nature; (2) premiums and other charges for insurance; (3) management fees
and personnel costs of the Building; (4) costs of service and maintenance
contracts relating to the Building as a whole; (5) maintenance, repair and
replacement expenses and supplies which are deducted by Landlord in computing
its federal income tax liability; (6) depreciation for capital
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expenditures made by Landlord to reduce operating expenses or to comply with
legal or insurance requirements applicable to the Building (other than costs
Landlord or Tenant is required to incur as a result of Laws (as hereinafter
defined) made applicable to or enforced with respect to the Building or the Land
to the extent attributable to (i) any Alterations (as hereinafter defined) to
the Premises performed by or through Tenant, or (ii) Tenant's particular use of
the Premises, as distinct from general office use, for which Tenant is
responsible directly pursuant to Section 6.1), such capital costs to be
amortized over the useful life of the applicable item in accordance with
generally accepted accounting principles, consistently applied, together with
interest at the arms-length rate paid by Landlord on any funds borrowed for such
expenditures; (7) charges for janitorial, trash removal and cleaning services
and supplies furnished to the Building; (8) any business, professional and
occupational license tax payable by Landlord with respect to the Building; (9)
costs of snow removal; and (10) any other expense incurred by Landlord in
maintaining, repairing, operating or cleaning the Building that is customarily
incurred by the landlords of similar buildings in the Washington, D.C.,
metropolitan area. Operating Charges shall not include: (i) principal or
interest payments, points, or fees on any Mortgages (as defined in Section
21.1); (ii) leasing commissions or legal fees with respect to the negotiation of
leases; (iii) [intentionally omitted]; (iv) the costs of special services and
utilities separately paid by particular tenants of the Building; (v) costs which
are reimbursed to Landlord by insurers or by governmental authorities in eminent
domain proceedings; (vii) advertising and promotional expenditures for vacant
space in the Building; (viii) the cost of tenant improvements; (ix) ground
rents; (x) costs for capital improvements to the Building other than those
described in Section 5.2(b)(6) (it being understood and agreed that Landlord
shall not defer capital expenditures that it otherwise would perform during the
Operating Charges Base Year in order to artificially diminish the Operating
Charges Base Amount); (xi) rentals for items which if purchased, rather than
rented, would constitute a cost of a capital improvement to the Building that is
not described in Section 5.2(b)(6), except for rentals necessary to replace
malfunctioning equipment until repairs are made or new equipment is purchased;
(xii) costs incurred by Landlord to the extent that Landlord is reimbursed by
insurance proceeds or otherwise; (xiii) depreciation of the Building or any
equipment, machinery, fixtures, or improvements therein, except as provided in
Section 5.2(b)(6) above; (xiv) any amount paid to any person, firm, or
corporation related to or otherwise affiliated with Landlord, to the extent the
same exceeds arms length competitive prices paid in the Washington, D.C.,
metropolitan area for the services or goods provided; (xv) costs of acquisition
and maintenance of signs in or on the Building identifying the owner of the
Building or other tenants; (xvi) costs or expenses associated with leasing space
in the Building, including, without limitation, commissions, legal fees, or any
amount paid for or on behalf of a tenant such as space planning, moving costs,
rental, and other tenant concessions; (xvii) costs, including permit, license
and inspection costs, incurred with respect to the installation of tenants' or
other occupants' improvements or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other occupants
of the Building; (xviii) expenses incurred in connection with services or other
benefits which are not offered to Tenant or for which Tenant is charged for
directly; (xix) management fees paid or charged by Landlord in connection with
the management of the Building to the extent such management fee is in excess of
the market range of management fees customarily paid or charged by landlords of
the comparable buildings in the Washington, D.C., metropolitan area; (xx)
salaries and other benefits paid to the employees of Landlord to the extent
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included in or covered by the management fee otherwise included in Operating
Charges, provided that in no event shall Operating Charges include salaries
and/or benefits attributable to personnel above the level of property manager
and, if any such personnel devote portions of their time to buildings other than
the Building, then their salaries shall be allocated among all such buildings
based on such buildings' relative square footages; (xxi) rent for any office
space occupied by Building management personnel to the extent the size or rental
rate for such office space exceeds the size or fair market rental value of
office space occupied by management personnel of comparable buildings in the
vicinity of the Building; (xxii) any compensation paid to clerks, attendants or
other persons in commercial concessions operated by Landlord; (xxiii) costs
arising solely and directly from the negligence or willful misconduct of
Landlord or its agents or employees; (xxiv) the costs of Landlord's charitable
or political contributions; (xxv) expenses for repairs, replacement, or
improvements arising from defects in the design or workmanship of the
construction of the Building, except conditions resulting from ordinary wear and
tear; (xxvi) the costs of sculpture, paintings or other objects of art; (xxvii)
the costs of the operation of the business of the entity which constitutes
Landlord, as the same are distinguished from the costs of operation of the
Building, including accounting and legal matters, and the costs of defending any
lawsuits with any person or entity (other than Landlord's service providers for
the Building), (xxviii) costs of selling, syndicating, financing, mortgaging or
hypothecating any of Landlord's interest in the Building, (xxix) costs incurred
in connection with any disputes between Landlord and its employees, between
Landlord and Building management, or between Landlord and other tenants or
occupants; (xxx) any costs incurred by Landlord in order to prepare for,
correct, repair or test for any problems in the Building relating to the year
2000 computer problem, except to the extent the same constitute capital costs
allowed to be included in Operating Charges pursuant to Section 5.2(b)(6);
(xxxi) any other costs or expenses which would not customarily be treated as
Operating Charges by landlords of comparable buildings in the Washington, D.C.,
metropolitan area; (xxxii) costs incurred to reduce Operating Charges that are
otherwise includable pursuant to Section 5.2(b), to the extent such costs exceed
any amounts reasonably anticipated by Landlord to be saved (but without regard
to any amounts actually saved); and (xxxiii) costs of enforcing any lease with
any tenant or defending claims of default, including legal fees and expense.
(c) At any time that Tenant is not leasing the entire Building, if the
average occupancy rate for the Building during any calendar year (including the
Operating Charges Base Year) is less than one hundred percent (100%), or if any
tenant is separately paying for (or does not require) janitorial services
furnished to its premises, then Operating Charges for such year shall be deemed
to include all additional expenses, as reasonably estimated by Landlord, which
would have been incurred during such year if such average occupancy rate had
been one hundred percent (100%) and if Landlord paid for janitorial services
furnished to such premises.
(d) Tenant shall make estimated monthly payments to Landlord on account
of the amount by which Operating Charges that are expected to be incurred during
each calendar year (or portion thereof) would exceed the Operating Charges Base
Amount. At the beginning of the Lease Term and at the beginning of each calendar
year thereafter, Landlord may submit a statement setting forth Landlord's
reasonable estimate of such excess and Tenant's Proportionate Share thereof.
Tenant shall pay to Landlord on the first day of each month following receipt of
such statement, until Tenant's receipt of the
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succeeding annual statement, an amount equal to one-twelfth (1/12) of each such
share (estimated on an annual basis without proration pursuant to Section 5.4).
From time to time (but not more than once during any calendar year), Landlord
may revise Landlord's estimate and adjust Tenant's monthly payments to reflect
Landlord's revised estimate. Landlord shall submit a reasonably detailed
itemized statement showing (1) Tenant's Proportionate Share of the amount by
which Operating Charges incurred during the preceding calendar year exceeded the
Operating Charges Base Amount, and (2) the aggregate amount of Tenant's
estimated payments made on account of Operating Charges during such year.
Landlord shall use good faith efforts to provide such statement within one
hundred twenty (120) days after the end of each calendar year; provided,
however, that if Landlord fails to do so, then Tenant may notify Landlord in
writing of its failure to provide such statement within such period, in which
event Landlord shall deliver such statement within sixty (60) days after
Landlord's receipt of Tenant's notice. If such statement indicates that the
aggregate amount of such estimated payments exceeds Tenant's actual liability,
then Landlord shall credit the net overpayment toward Tenant's next payment(s)
of Base Rent (or, if any such amount remains payable upon the expiration or
earlier termination of this Lease, then, after deducting any other amounts owed
to Landlord by Tenant, any such amount shall be refunded to Tenant within thirty
(30) days after such expiration or termination). If such statement indicates
that Tenant's actual liability exceeds the aggregate amount of such estimated
payments, then Tenant shall pay the amount of such excess as additional rent.
(e) For a period of three hundred sixty-five (365) days after Tenant's
receipt of such statement, Tenant shall have the right to notify Landlord in
writing of Tenant's intention to inspect and complete an audit of Landlord's
books and records relating to Operating Charges for the two (2) immediately
preceding calendar years, and, provided Tenant timely provides such notice, for
a period of sixty (60) days after such notice, Tenant, or an independent,
certified public accountant who is hired by Tenant on a noncontingent fee basis
and who offers a full range of accounting services, shall have such right,
during regular business hours and after giving at least ten (10) days' advance
written notice to Landlord, provided further that Tenant completes such audit
within such sixty (60) day period. If Landlord disagrees with the results of
Tenant's audit, then Landlord and Tenant's auditor shall together select a
neutral auditor of similar qualifications to conduct an audit of such books and
records (the fees of such neutral auditor to be shared equally by Landlord and
Tenant), and the determination of Operating Charges reached by such neutral
auditor shall be final and conclusive. Tenant shall (and shall cause its
employees, agents and consultants to) keep the results of any such audit
strictly confidential. If such audit shows that the amounts paid by Tenant to
Landlord on account of increases in Operating Charges exceed the amounts to
which Landlord is entitled hereunder, Landlord shall credit the amount of such
excess toward the next monthly payments of Base Rent due hereunder (or, if any
such amount remains payable upon the expiration or earlier termination of this
Lease, then, after deducting any other amounts owed to Landlord by Tenant, any
such balance shall be refunded to Tenant within thirty (30) days after such
expiration or termination. All costs and expenses of any such audit shall be
paid by Tenant; provided, however, that if the determinative audit shows that
Operating Charges for the subject calendar year were overstated by more than
five percent (5%), then Landlord shall reimburse Tenant for the reasonable,
out-of-pocket costs and expenses of Tenant's audit. If Tenant does not notify
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Landlord in writing of any objection to any statement within three hundred
sixty-five (365) days after receipt thereof, or complete its audit within sixty
(60) days after such notice, then Tenant shall be deemed to have waived such
objection.
5.3 (a) Tenant shall pay as additional rent Tenant's Proportionate Share of
the amount by which Real Estate Taxes (as defined in Section 5.3(b)) for each
calendar year falling entirely or partly within the Lease Term exceed a base
amount (the "Real Estate Taxes Base Amount") equal to the Real Estate Taxes
incurred during the Real Estate Taxes Base Year, as finally determined. Tenant's
Proportionate Share with respect to Real Estate Taxes shall be that percentage
which is equal to a fraction, the numerator of which is the number of square
feet of rentable area in the Premises, and the denominator of which is the
number of square feet of total rentable area from time to time in the Building
(excluding storage, roof and garage space).
(b) "Real Estate Taxes" shall mean (1) all real estate taxes, vault
and/or public space rentals, business district or arena taxes, special user
fees, rates, and assessments (including general and special assessments, if
any), ordinary and extraordinary, foreseen and unforeseen, which are imposed
upon Landlord or assessed against the Building or the Land or Landlord's
personal property used in connection therewith, (2) any other present or future
taxes or governmental charges that are imposed upon Landlord or assessed against
the Building or the Land which are in the nature of or in substitution for real
estate taxes, including any tax levied on or measured by the rents payable by
tenants of the Building, and (3) expenses (including, without limitation,
attorneys' and consultants' fees and court costs) incurred in reviewing,
protesting or seeking a reduction of real estate taxes, whether or not such
protest or reduction is ultimately successful. Subject to the foregoing, Real
Estate Taxes shall not include (i) any inheritance, estate, succession,
recordation, grantor's, transfer, gift, franchise, capital stock, corporation,
net income, net rentals, or net profits tax assessed against Landlord from the
Building or (ii) any assessments due solely and directly to improvements
constructed on the Land by or through Landlord after the date hereof to the
extent that the same are not required by Law and Tenant does not benefit
therefrom.
(c) [Intentionally omitted.]
(d) Tenant shall make estimated monthly payments to Landlord on account
of the amount by which Real Estate Taxes that are expected to be incurred during
each calendar year would exceed the Real Estate Taxes Base Amount. At the
beginning of the Lease Term and at the beginning of each calendar year
thereafter, Landlord may submit a statement setting forth Landlord's reasonable
estimate of such amount and Tenant's Proportionate Share thereof. Tenant shall
pay to Landlord on the first day of each month following receipt of such
statement, until Tenant's receipt of the succeeding annual statement, an amount
equal to one-twelfth (1/12) of such share (estimated on an annual basis without
proration pursuant to Section 5.4). From time to time during any calendar year
(but not more often than once in any calendar year), Landlord may revise
Landlord's estimate and adjust Tenant's monthly payments to reflect Landlord's
revised estimate. Landlord shall submit a statement showing (1) Tenant's
Proportionate Share of the amount by which Real Estate Taxes incurred during the
preceding calendar year exceeded the Real Estate Taxes Base Amount, and (2) the
aggregate amount of Tenant's estimated payments made during such year. Landlord
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shall use good faith efforts to provide such statement within one hundred twenty
(120) days after the end of each calendar year; provided, however, that if
Landlord fails to do so, then Tenant may notify Landlord in writing of its
failure to provide such statement within such period, in which event Landlord
shall deliver such statement within sixty (60) days after Landlord's receipt of
Tenant's notice. If such statement indicates that the aggregate amount of such
estimated payments exceeds Tenant's actual liability, then Landlord shall credit
the net overpayment toward Tenant's next estimated payment(s) pursuant to this
Section (or, if any such amount remains payable upon the expiration or earlier
termination of this Lease, then, after deducting any other amounts owed to
Landlord by Tenant, any such balance shall be refunded to Tenant within thirty
(30) days after such expiration or termination). If such statement indicates
that Tenant's actual liability exceeds the aggregate amount of such estimated
payments, then Tenant shall pay the amount of such excess as additional rent.
(e) If the Lease Term commences or expires on a day other than the
first day or the last day of a calendar year, respectively, then Tenant's
liabilities pursuant to this Article for such calendar year shall be apportioned
by multiplying the respective amount of Tenant's Proportionate Share thereof for
the full calendar year by a fraction, the numerator of which is the number of
days during such calendar year falling within the Lease Term, and the
denominator of which is three hundred sixty-five (365).
(f) Upon receiving a notice of assessment or a real estate tax bill
with respect to the Building and/or the Land, Landlord will furnish Tenant with
a copy thereof. Landlord shall make a determination whether or not to challenge
or appeal such assessment or bill based on Landlord's reasonable judgment of
which course is in the best interest of the Building, and Landlord shall inform
Tenant of such determination. In the event Landlord determines to challenge or
appeal such assessment, all reasonable, out-of-pocket fees, expenses and costs
incurred in contesting any assessment applicable to the Building and Land
incurred by Landlord as set forth above, whether or not such contest is
successful, shall be deemed Real Estate Taxes hereunder. In the event Landlord
determines not to challenge or appeal such assessment or bill and Tenant
provides Landlord with written notice that, notwithstanding Landlord's
determination, Tenant desires to appeal such assessment or bill, Landlord will
employ an independent, reputable tax consulting firm to recommend whether or not
it is appropriate to pursue an appeal. The cost of such consultant shall be
included in Real Estate Taxes hereunder, and the recommendation of such
consultant shall be binding on Landlord and Tenant. If such consultant
recommends an appeal, Landlord either, at its option, shall appeal such
assessment or shall permit Tenant to appeal such assessment in Landlord's place
and stead (and Landlord shall cooperate with Tenant to the extent reasonably
necessary in connection therewith); provided, however, that (i) such appeal or
challenge shall be undertaken at Tenant's sole cost and at no expense to
Landlord (except that, if such appeal or challenge is successful, then Tenant
may recover its reasonable, out-of-pocket costs incurred in connection with such
appeal out of the refund or reduction of Real Estate Taxes achieved), and (ii)
in the event any assessment falling within the Real Estate Taxes Base Year is
increased as a result of such appeal or challenge, then the amount of such
increase shall be deducted from the Real Estate Taxes Base Amount. Any legal or
other counsel retained by Tenant to contest the Real Estate Taxes shall be
reasonably acceptable to Landlord. Tenant and Landlord shall each keep the other
apprised of actions taken under this Section 5.3(f), including the providing of
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copies of any submissions, filings and other written or other material produced
in connection therewith. In the event any refund of Real Estate Taxes applicable
to the Building and Land is obtained, Landlord shall deliver the same to Tenant
(less the expenses incurred by Landlord in connection therewith) within thirty
(30) days of the receipt thereof; provided that Landlord shall be entitled to
the entirety of, and Tenant shall not be entitled to reimbursement for, any
portion of such refund which represents a refund of Real Estate Taxes paid or
incurred by Landlord during the Real Estate Taxes Base Year. Notwithstanding the
foregoing to the contrary, this Section 5.3(f) shall be inapplicable at any time
that Tenant leases less than the entire Building.
ARTICLE VI
USE OF PREMISES
6.1 Tenant shall use and occupy the Premises solely for (a) general
(non-medical and non-governmental) office purposes (including, without
limitation, the design and non-retail sale of computers and computer and
telecommunications equipment), and for uses ancillary thereto and (b) for the
light electronic assembly and testing of computers and computer and
telecommunications equipment, and for uses ancillary thereto (provided, however,
that not more than fifteen thousand (15,000) square feet of rentable area of the
Premises shall be used for other than general office purposes) to the extent
such use is consistent with the manner and type of use of the Premises as of the
date of this Lease with respect to the physical impact of such use on the
operation of the Building (including, without limitation, increased wear and
tear), and for no other use or purpose. Notwithstanding the foregoing to the
contrary, Tenant shall not use or occupy the Premises for any unlawful purpose,
or in any manner that will violate the certificate of occupancy for the Premises
or the Building or that will constitute waste or nuisance, or in any manner that
will increase the number of parking spaces required for the Building or its full
occupancy as required by law. Tenant shall comply with all present and future
laws (including, without limitation, the Americans with Disabilities Act (the
"ADA") and the regulations promulgated thereunder, as the same may be amended
from time to time), ordinances (including without limitation, zoning ordinances
and land use requirements), regulations, orders and recommendations (including,
without limitation, those made by any public or private agency having authority
over insurance rates) (collectively, "Laws") concerning the use, occupancy and
condition of the Building and Land and all machinery, equipment, furnishings,
fixtures and improvements therein, all of which shall be complied with in a
timely manner at Tenant's sole expense. As of the date hereof, Landlord
represents and warrants that it has no actual knowledge that the Building is in
violation of any applicable Laws existing as of the date hereof. Notwithstanding
anything to the contrary contained herein, it is understood and agreed that
costs incurred to comply with Laws (whether existing as of the date hereof or
promulgated in the future) shall be Landlord's obligation, but the costs
incurred in connection therewith may be included in Operating Charges to the
extent permitted pursuant to Section 5.2(b) above; provided, however, that
Tenant, at its sole cost and expense, shall be obligated to comply with Laws
made applicable to or enforced with respect to the Building to the extent
attributable to (i) any Alterations to the Premises performed by or through
Tenant or (ii) Tenant's particular use of the Premises, as distinct from general
office use, for which costs Tenant shall be solely and directly responsible (as
opposed to inclusion in Operating Charges), and Tenant shall not be responsible
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for any capital improvements to the Building required to comply with Laws other
than as described in clauses (i) and (ii) herein (except to the extent included
in Operating Charges pursuant to Section 5.2(b) above). If any such Law requires
an occupancy or use permit or license for the Premises or the operation of the
business conducted therein, then Tenant shall obtain and keep current such
permit or license at Tenant's expense and shall promptly deliver a copy thereof
to Landlord. Use of the Premises is subject to (x) all covenants, conditions and
restrictions of record as of the date hereof that are set forth on Exhibit E
attached hereto and (y) all covenants, conditions, and restrictions entered into
after the date hereof. Landlord shall not enter into any covenants, conditions,
or restrictions after the date hereof that materially and adversely affect
Tenant's use of the Premises for the purposes permitted hereunder. Tenant shall
not use any space in the Building for the sale of goods to the public at large
or for the sale at auction of goods or property of any kind. Tenant shall not
conduct any operations, sales, promotions, advertising or special events in the
Complex outside of the Premises.
6.2 Tenant shall pay before delinquency any business, rent or other taxes
or fees that are now or hereafter levied, assessed or imposed upon Tenant's use
or occupancy of the Premises, the conduct of Tenant's business at the Premises,
or Tenant's equipment, fixtures, furnishings, inventory or personal property. If
any such tax or fee is enacted or altered so that such tax or fee is levied
against Landlord or so that Landlord is responsible for collection or payment
thereof, then Tenant shall pay as additional rent the amount of such tax or fee.
6.3 (a) Tenant shall not cause or permit any Hazardous Materials to be
generated, used, released, stored or disposed of in or about the Building, the
Land, or the Complex, provided that Tenant may use and store reasonable
quantities of standard cleaning materials as may be reasonably necessary for
Tenant to conduct normal general office use operations in the Premises and
reasonable quantities of Hazardous Materials commonly used in light electronic
assembly and testing of computers in connection with the operations in the
Premises of which Tenant has provided Landlord prior written notice, provided
the same are handled, stored and disposed of in accordance with all Laws.
Without limiting the generality of the foregoing sentence, Landlord specifically
acknowledges that it has received notice of the use of En Solv and isopropyl
alcohol in the business being conducted at the Premises. At the expiration or
earlier termination of this Lease, Tenant shall surrender the Building and Land
to Landlord free of Hazardous Materials generated, used, released, stored, or
disposed of by Tenant or its Invitees in or about the Building and the Land and
not in violation of any Environmental Laws as a result of the acts or omissions
of Tenant or its Invitees. "Hazardous Materials" means (a) asbestos and any
asbestos containing material and any substance that is then defined or listed
in, or otherwise classified pursuant to, any Environmental Law or any other
applicable Law as a "hazardous substance," "hazardous material," "hazardous
waste," "infectious waste," "toxic substance," "toxic pollutant" or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or Toxicity Characteristic
Leaching Procedure (TCLP) toxicity, (b) any petroleum and drilling fluids,
produced waters, and other wastes associated with the exploration, development
or production of crude oil, natural gas, or geothermal resources, and (c) any
petroleum product, polychlorinated biphenyls, urea formaldehyde, radon gas,
radioactive material (including any source, special nuclear, or by-product
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material), medical waste, chlorofluorocarbon, lead or lead-based product, and
any other substance whose presence could be detrimental to the Building, the
Land, or the Complex or hazardous to health or the environment. "Environmental
Law" means any present and future Law and any amendments (whether common law,
statute, rule, order, regulation or otherwise), permits and other requirements
or guidelines of governmental authorities applicable to the Building or the Land
and relating to the environment and environmental conditions or to any Hazardous
Material (including, without limitation, CERCLA, 42 U.S.C. ss. 9601 et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss. 6901 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Federal
Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 33
U.S.C. ss. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Emergency
Planning and Community Right-To-Know Act, 42 U.S.C. ss. 1101 et seq., the
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., and any so-called
"Super Fund" or "Super Lien" law, any Law requiring the filing of reports and
notices relating to hazardous substances, environmental laws administered by the
Environmental Protection Agency, and any similar state and local Laws, all
amendments thereto and all regulations, orders, decisions, and decrees now or
hereafter promulgated thereunder concerning the environment, industrial hygiene
or public health or safety).
(b) Notwithstanding any termination of this Lease, Tenant shall
indemnify and hold Landlord, its employees and agents harmless from and against
any damage, injury, loss, liability, charge, demand or claim based on or arising
out of the presence or removal of, or failure to remove, Hazardous Materials
generated, used, released, stored or disposed of by Tenant or any Invitee in or
about the Building, whether before or after Lease Commencement Date. In
addition, Tenant shall give Landlord immediate verbal and follow-up written
notice of any actual or threatened Environmental Default, which Environmental
Default Tenant shall cure in accordance with all Environmental Laws and only
after Tenant has obtained Landlord's prior written consent, which shall not be
unreasonably withheld, conditioned, or delayed. An "Environmental Default" means
any of the following by Tenant or any Invitee: a violation of any applicable
Environmental Law; a release, spill or discharge of a Hazardous Material on or
from the Premises, the Land or the Building in violation of any applicable
Environmental Law; an environmental condition caused by Tenant or any Invitee
requiring responsive action; or an emergency environmental condition. Upon any
Environmental Default, in addition to all other rights available to Landlord
under this Lease, at law or in equity, Landlord shall have the right but not the
obligation to immediately enter the Premises, to supervise and approve any
actions taken by Tenant to address the Environmental Default, and, if Tenant
fails to immediately address same to Landlord's reasonable satisfaction, to
perform, at Tenant's sole cost and expense, any lawful action necessary to
address same. If any governmental agency shall require testing to ascertain
whether an Environmental Default is pending or threatened, then Tenant shall pay
the reasonable costs therefor as additional rent. If any lender shall require
testing to ascertain whether an Environmental Default is pending or threatened,
and such testing reveals an Environmental Default, then Tenant shall pay the
reasonable costs therefor as additional rent. Promptly upon request, Tenant
shall execute from time to time affidavits, representations and similar
documents concerning Tenant's best knowledge and belief regarding the presence
of Hazardous Materials at or in the Building, the Land or the Premises.
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6.4 Landlord at its expense (subject to reimbursement pursuant to Article V
to the extent permitted thereby) shall be responsible for compliance with Title
III of the ADA to the extent same applies directly to the access into the
Building or the path of travel, the Building Structure (as hereinafter defined),
Building Systems (as hereinafter defined), or Core Areas (as hereinafter
defined); provided, however, that to the extent any compliance with the ADA is
required in connection with (a) any Alteration to the Premises performed by or
through Tenant or (b) the particular use or occupancy of the Premises (as
distinct from general office use), then Tenant shall be obligated to comply
therewith and such compliance shall be at Tenant's sole and direct cost (as
opposed to inclusion in Operating Charges). Subject to the preceding sentence,
Tenant at its sole and direct cost and expense (as opposed to inclusion in
Operating Charges) shall be solely responsible for taking any and all measures
which are required to comply with the ADA concerning the Premises and the
business conducted therein. Any Alterations made or constructed by Tenant for
the purpose of complying with the ADA or which otherwise require compliance with
the ADA shall be done in accordance with this Lease; provided, that Landlord's
consent to such Alterations shall not constitute either Landlord's assumption,
in whole or in part, of Tenant's responsibility for compliance with the ADA, or
representation or confirmation by Landlord that such Alterations comply with the
provisions of the ADA. For purposes hereof, "Core Areas" shall mean areas of the
Building that are used to operate the Building, but to which Tenant does not
have access, such as machine rooms.
6.5 As of the date of Landlord's execution of this Lease, Landlord
represents and warrants that it has no actual knowledge of the violation of any
Environmental Law applicable to the Building or the Land which remains uncured,
and that, to its knowledge based solely on that certain Phase I Environmental
Report prepared by Dames & Moore, Inc., dated June 10, 1997, except as otherwise
set forth therein no Hazardous Materials are present in the Building or the Land
that are in violation of any Environmental Law as of the date of Landlord's
execution of this Lease. Unless caused by Tenant's or an Invitee's negligence or
willful misconduct, and subject to Section 13.4 below, Landlord shall indemnify,
defend upon request and hold harmless Tenant, its employees and agents from and
against any and all costs, damages (but not consequential damages), claims,
liabilities, expenses (including reasonable attorneys' fees) and court costs
suffered by or claimed against Tenant as the sole and direct result of the
generation, storage or release of Hazardous Materials by Landlord, its invitees,
agents, employees, contractors, family members of employees, licensees, or
guests (except to the extent the same also constitute Tenant or its Invitees) in
or about the Building, to the extent such generation, storage, or release
violates Environmental Laws. Tenant shall notify Landlord promptly in the event
a claim is made against Tenant as aforesaid.
ARTICLE VII
ASSIGNMENT AND SUBLETTING
7.1 Tenant shall not assign, transfer or otherwise encumber (collectively,
"assign") this Lease or all or any of Tenant's rights hereunder or interest
herein, or sublet or permit anyone to use or occupy (collectively, "sublet") the
Premises or any part thereof, without obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned, or
delayed, provided that no uncured Event of Default then exists, and subject to
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Landlord's rights pursuant to Section 7.4 hereinbelow. Landlord's granting or
withholding of such consent shall be based on whether or not, in Landlord's
reasonable discretion, (i) the use of the Premises pursuant to such assignment
or sublease is in compliance with Article VI hereof; (ii) the proposed assignee
or subtenant is of a type and quality consistent and compatible with comparable
flex buildings in the Washington, D.C., area and with the Building and its
tenants, if any; (iii) Landlord is reasonably satisfied (taking into account
Tenant's continuing liability under the Lease) with the financial condition of
the assignee under any such assignment or the sublessee under any such sublease;
and (iv) the initial Tenant remains fully liable as a primary obligor for the
payment of all rent and other charges hereunder and for the performance of all
its other obligations hereunder. No assignment or right of occupancy hereunder
may be effectuated by operation of law or otherwise without the prior written
consent of Landlord. Any attempted assignment, transfer or other encumbrance of
this Lease or all or any of Tenant's rights hereunder or interest herein, and
any sublet or permission to use or occupy the Premises or any part thereof not
in accordance with this Article VII shall be void and of no force or effect. Any
assignment or subletting, Landlord's consent thereto, or Landlord's collection
or acceptance of rent from any assignee or subtenant shall not be construed
either as waiving or releasing Tenant from any of its liabilities or obligations
under this Lease as a principal and not as a guarantor or surety, or as
relieving Tenant or any assignee or subtenant from the obligation of obtaining
Landlord's prior written consent to any subsequent assignment or subletting. As
security for this Lease, Tenant hereby assigns to Landlord the rent due from any
assignee or subtenant of Tenant. For any period during which Tenant is in
default hereunder beyond any applicable notice and cure period, Tenant hereby
authorizes each such assignee or subtenant to pay said rent directly to Landlord
upon receipt of notice from Landlord specifying same. Landlord's collection of
such rent shall not be construed as an acceptance of such assignee or subtenant
as a tenant. Tenant shall not mortgage, pledge, hypothecate or encumber
(collectively "mortgage") this Lease without Landlord's prior written consent,
which consent may be granted or withheld in Landlord's sole and absolute
discretion. Tenant shall pay to Landlord an administrative fee equal to five
hundred dollars ($500) plus all other expenses (including attorneys' fees and
accounting costs) incurred by Landlord in connection with Tenant's request for
Landlord to give its consent to any assignment, subletting, or mortgage. Tenant
shall notify Landlord prior to engaging a real estate broker in connection with
any proposed assignment or sublease. Any sublease, assignment or mortgage shall,
at Landlord's option, be effected on forms approved by Landlord. Tenant shall
deliver to Landlord a fully-executed copy of each agreement evidencing a
sublease, assignment or mortgage within ten (10) days after Tenant's execution
thereof.
7.2 If Tenant is a partnership, then any withdrawal or change (whether
voluntary, involuntary or by operation of law) of partners owning a controlling
interest in Tenant (including each general partner) shall be deemed a voluntary
assignment of this Lease subject to the provisions of this Article. If Tenant is
a corporation (or a partnership with a corporate general partner), then any
event (whether voluntary, concurrent or related) resulting in a merger,
consolidation or other reorganization of Tenant (or such corporate general
partner) which modifies the control of Tenant existing as of the date of this
Lease, or the sale or transfer or relinquishment of the interest of shareholders
who, as of the date of this Lease, own a controlling interest of the capital
stock of Tenant (or such corporate general partner), shall be deemed a voluntary
assignment of this Lease subject to the provisions of this Article; provided,
however, that the foregoing portion of this sentence shall not apply to
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corporations whose stock is traded through a national or regional exchange or
over-the-counter market. If Tenant is a limited liability company, then any
withdrawal or change, whether voluntary, involuntary or by operation of law, of
members owning a controlling interest in Tenant shall be deemed a voluntary
assignment of this Lease. In addition, a transfer of all or substantially all of
the assets of Tenant, either by merger, consolidation, or otherwise which
modifies the control of Tenant existing as of the date of this Lease, shall be
deemed to be an assignment under this Article VII.
7.3 If at any time during the Lease Term Tenant desires to assign, sublet
or mortgage all or part of this Lease or the Premises, then in connection with
Tenant's request to Landlord for Landlord's consent thereto, Tenant shall give
notice to Landlord in writing ("Tenant's Request Notice") containing: the
identity of the proposed assignee, subtenant or other party and a description of
its business; the terms of the proposed assignment, subletting or other
transaction; the commencement date of the proposed assignment, subletting or
other transaction (the "Proposed Sublease Commencement Date"); the area proposed
to be assigned, sublet or otherwise encumbered (the "Proposed Sublet Space");
the most recent financial statement or other evidence of financial
responsibility of such proposed assignee, subtenant or other party; and a
certification executed by Tenant and such party stating whether or not any
premium or other consideration is being paid for the assignment, sublease or
other transaction.
7.4 With respect to assignments or subleases for more than fifty percent
(50%) of the Premises in the aggregate, Landlord shall have the right in its
sole and absolute discretion to terminate this Lease with respect to the
Proposed Sublet Space by sending Tenant written notice of such termination
within thirty (30) days after Landlord's receipt of Tenant's Request Notice;
provided however, that if the term of any proposed subletting does not
constitute all or substantially all of the remainder of the Lease Term, then
this Lease shall only be terminated with respect to the Proposed Sublet Space
for the proposed duration of such subletting. If the Proposed Sublet Space does
not constitute the entire Premises and Landlord exercises its option to
terminate this Lease with respect to the Proposed Sublet Space, then (a) Tenant
shall tender the Proposed Sublet Space to Landlord on the Proposed Sublease
Commencement Date and such space shall thereafter be deleted from the Premises,
and (b) as to that portion of the Premises which is not part of the Proposed
Sublet Space, this Lease shall remain in full force and effect except that Base
Rent and additional rent shall be reduced pro rata. Landlord shall be
responsible for the cost of any construction required to permit the operation of
the Proposed Sublet Space separate from the balance of the Premises. If the
Proposed Sublet Space constitutes the entire Premises and Landlord elects to
terminate this Lease, then Tenant shall tender the Proposed Sublet Space to
Landlord, and this Lease shall terminate, on the Proposed Sublease Commencement
Date. Notwithstanding the foregoing to the contrary, this Section 7.4 shall be
inapplicable to assignments or sublettings to (x) a Permitted Transferee or (y)
a Client (both as hereinafter defined). The term "Client" shall mean persons or
entities who or that (A) are occupying space on a contractual basis with Tenant
and (B) are either (I) performing services for Tenant as subcontractors, or (II)
are personnel employed by persons or entities for whom or which Tenant is
performing services on a contractual basis.
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7.5 If any sublease or assignment (whether by operation of law or
otherwise, including without limitation an assignment pursuant to the provisions
of the Bankruptcy Code or any other Insolvency Law) provides that the subtenant
or assignee thereunder is to pay any amount in excess of the sum of (a) the
rental and other charges due under this Lease, plus (b) the reasonable,
out-of-pocket expenses (including (i) the gross rent paid to Landlord by Tenant
with respect to the subject portion of the Premises during any period in which
Alterations are being performed for the assignee or subtenant prior to its
occupancy; (ii) improvement allowances or other economic concessions granted by
Tenant to the assignee or sublessee; (iii) Alterations to the subject portion of
the Premises performed solely for such assignee's or subtenant's occupancy and
paid for by Tenant; (iv) costs incurred by Tenant to buy out or take over the
previous lease of the assignee or sublessee; (v) all costs incurred by Tenant to
advertise the subject portion of the Premises for assignment or sublease; and
(vi) brokerage commissions and/or legal fees paid by Tenant in connection with
the assignment or sublease; but excluding any costs attributable to vacancy
periods or "downtime" other than those explicitly included in clause (i) above)
which Tenant reasonably incurred in connection with the procurement of such
sublease or assignment, then whether such excess be in the form of an increased
monthly or annual rental, a lump sum payment, payment for the sale, transfer or
lease of Tenant's fixtures, leasehold improvements, furniture and other personal
property (in excess of the market rates therefor), or any other form (and if the
subleased or assigned space does not constitute the entire Premises, the
existence of such excess shall be determined on a pro-rata basis), Tenant shall
pay to Landlord fifty percent (50%) of any such excess or other premium
applicable to the sublease or assignment, which amount shall be paid by Tenant
to Landlord as additional rent as the same is received by Tenant. Acceptance by
Landlord of any payments due under this Section shall not be deemed to
constitute approval by Landlord of any sublease or assignment, nor shall such
acceptance waive any rights of Landlord hereunder. Landlord shall have the right
to inspect and audit Tenant's books and records relating to any sublease or
assignment and the costs incurred in connection therewith during Building Hours
and upon reasonable prior notice.
7.6 All restrictions and obligations imposed pursuant to this Lease on
Tenant shall be deemed to extend to any subtenant, assignee, licensee,
concessionaire or other occupant or transferee, and Tenant shall cause such
person to comply with such restrictions and obligations. Any assignee shall be
deemed to have assumed obligations arising from and after such assumption as if
such assignee had originally executed this Lease as of such date. Each sublease
is subject to the condition that if the Lease Term is terminated or Landlord
succeeds to Tenant's interest in the Premises by voluntary surrender or
otherwise, at Landlord's option the subtenant shall be bound to Landlord for the
balance of the term of such sublease and shall attorn to and recognize Landlord
as its landlord under the then executory terms of such sublease.
7.7 Notwithstanding anything contained in this Article VII to the
contrary, and provided that no uncured Event of Default then exists, Tenant,
upon prior written notice to Landlord but without Landlord's prior written
consent, may assign or transfer this Lease or sublease all or any portion of the
Premises: (a) to a corporation or other business entity (herein sometimes
referred to as a "successor corporation") into or with which Tenant shall be
merged or consolidated, or to which substantially all of the assets of Tenant
may be transferred or sold, provided that (1) such successor corporation shall
have a net worth and liquidity at least equal to the net worth and liquidity of
Tenant
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immediately prior to such transfer, (2) the successor corporation shall assume
in writing all of the obligations and liabilities of Tenant under this Lease,
and (3) the use of the Premises pursuant to such assignment or sublease is in
compliance with Article VI of this Lease; or (b) to a corporation or other
business entity (herein sometimes referred to as a "related corporation") that
shall control, be controlled by or be under common control with Tenant or, if
unrelated to Tenant, that shall purchase all of the assets of Tenant, provided
that (1) such corporation shall have a net worth and liquidity at least equal to
the net worth and liquidity of Tenant immediately prior to such transfer, (2)
the corporation shall assume in writing all of the obligations and liabilities
of Tenant under this Lease and (3) the use of the Premises pursuant to such
assignment or sublease is in compliance with Article VI of this Lease. In the
event of any such assignment, transfer or subletting, Tenant shall remain fully
liable as a primary obligor for the payment of rent and other charges required
hereunder and for the performance of obligations to be performed hereunder. For
purposes of Section 7.2 and subparagraph (b) above, "control" shall be deemed to
be the ownership of fifty percent (50%) or more of the stock or other voting
interest of the controlled corporation or other business entity. A successor
corporation described in subparagraph (a) above or a related or other
corporation described in subparagraph (b) above shall be referred to sometimes
in this Lease as a "Permitted Transferee." Notwithstanding any of the foregoing
to the contrary, if Tenant structures an assignment or sublease hereunder such
that the assignee or subtenant falls within the definition of a successor or a
related corporation for the purpose of avoiding or circumventing the
restrictions on assignments and subleases provided elsewhere in this Article
VII, then any such assignee or sublessee shall be conclusively deemed not to be
a successor corporation or related corporation and shall be subject to the other
provisions of this Article VII.
ARTICLE VIII
MAINTENANCE AND REPAIRS
8.1 Tenant, at Tenant's sole cost and expense, shall promptly make all
repairs, perform all maintenance, and make all replacements in and to the
Premises that are necessary or desirable to keep the Premises in good operating
condition and repair, comparable to other buildings in the Complex, in a clean,
safe and tenantable condition, and otherwise in accordance with all Laws and the
requirements of this Lease (other than repairs, maintenance, and replacements
for which Landlord is responsible under this Lease). Tenant shall maintain all
fixtures, furnishings and equipment located in, or exclusively serving, the
Premises in clean, safe and sanitary condition, shall take good care thereof and
make all required repairs and replacements thereto. Tenant shall give Landlord
prompt written notice of any defects or damage to the structure of, or equipment
or fixtures in, the Building or any part thereof. Tenant shall suffer no waste
or injury to any part of the Premises, and shall, at the expiration or earlier
termination of the Lease Term, surrender the Premises in an order and condition
equal to or better than their order and condition on the Lease Commencement
Date, except for ordinary wear and tear and as otherwise provided in Article
XVII. Except as otherwise provided in Article XVII, all injury, breakage and
damage to the Premises and to any other part of the Building or the Land caused
by any act or omission of any invitee, agent, employee, subtenant, assignee,
contractor, family member of an employee of Tenant, licensee, customer or guest
of Tenant (collectively, "Invitees") or Tenant, shall be repaired by and at
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Tenant's expense, except that Landlord shall have the right at Landlord's option
to make any such repair and to charge Tenant for all costs and expenses incurred
in connection therewith. Landlord shall provide and install replacement tubes
for Building standard fluorescent light fixtures (subject to reimbursement
pursuant to Article V); all other bulbs and tubes for the Premises shall be
provided and installed by Tenant at Tenant's expense.
8.2 Except as otherwise provided in this Lease, Landlord shall (subject to
reimbursement pursuant to Article V) keep the exterior and demising walls, load
bearing elements, foundations, roof and common areas that form a part of the
Building, and the building standard mechanical, electrical, HVAC and plumbing
systems, pipes and conduits that are provided by Landlord in the operation of
the Building (collectively, the "Building Structure and Systems"), clean and in
good operating condition comparable to other comparable flex buildings in the
Complex of a similar age and, promptly after becoming aware of any item needing
repair, will make repairs thereto; provided, however, that to the extent any
such repairs (a) are required pursuant to applicable Law, and (b) would not have
been required but for any Alterations performed by or through Tenant or Tenant's
particular use or occupancy of the Premises (as distinct from general office
use), then the costs thereof shall be payable by Tenant, as additional rent,
within thirty (30) days after Landlord's demand therefor, and shall not be
subject to reimbursement pursuant to Article V. Notwithstanding any of the
foregoing to the contrary: (x) maintenance and repair of special tenant areas,
facilities, finishes and equipment (including, but not limited to, any special
fire protection equipment, telecommunications and computer equipment,
kitchen/galley equipment, air-conditioning equipment serving the Premises only
and all other furniture, furnishings and equipment of Tenant and all
Alterations) shall be the sole responsibility of Tenant and shall be deemed not
to be a part of the Building Structure and Systems; and (y) Landlord shall have
no obligation to make any repairs brought about by any act or neglect of Tenant
or any Invitee.
ARTICLE IX
ALTERATIONS
9.1 Tenant accepts the Premises in their "as is" condition as of the Lease
Commencement Date. Except as explicitly set forth in Section 8.2 above, Landlord
is under no obligation to make any structural or other alterations, decorations,
additions, improvements or other changes (collectively, "Alterations") in or to
the Premises or the Building.
9.2 Tenant shall not make or permit anyone to make any Alterations in or to
the Premises or the Building, without the prior written consent of Landlord,
which consent shall not unreasonably be withheld, conditioned, or delayed.
Notwithstanding the foregoing, Landlord shall retain sole and absolute
discretion to withhold its consent to (a) any Structural Alteration (as
hereinafter defined), and (b) any non-Structural Alteration, which in the
reasonable opinion of Landlord would (i) be visible from the exterior of the
Premises or (ii) exceed the capacity of, hinder the effectiveness of, or
interfere with the electrical, mechanical, heating, ventilating, air
conditioning, or plumbing systems of the Premises or the Building. "Structural
Alterations" shall be deemed to include without limitation any Alterations that
will or may necessitate any changes, replacements or additions to bearing walls,
bearing columns, or floor slabs of the Premises or the Building. Notwithstanding
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the foregoing, provided Tenant gives Landlord prior written notice, Tenant may
perform in the Premises, without obtaining Landlord's prior written consent,
minor, non-Structural Alterations of a decorative nature which are reasonably
comparable to the colors and finishes in the Premises as of the date of this
Lease and which do not require a building permit. Any Alterations made by Tenant
shall be made: (A) in a good, workmanlike, first-class and prompt manner; (B)
using new materials only; (C) by a contractor, on days, at times and under the
supervision of an architect approved in writing by Landlord; (D) in accordance
with plans and specifications prepared by an engineer or architect reasonably
acceptable to Landlord, which plans and specifications shall be approved in
writing by Landlord, which approval shall not be unreasonably withheld,
conditioned, or delayed (and, if Landlord engages an outside engineer or other
consultant to review such plans and specifications, or otherwise incurs any
other out-of-pocket costs in connection with such review, then Tenant shall pay
the reasonable, out-of-pocket costs therefor as additional rent); (E) in
accordance with all Laws and the requirements of any insurance company insuring
the Building or any portion thereof; (F) after having obtained any required
consent of the holder of any Mortgage; (G) after obtaining public liability and
worker's compensation insurance policies approved in writing by Landlord (which
approval shall not be unreasonably withheld, conditioned, or delayed), which
policies shall cover every person who will perform any work with respect to such
Alteration; and (H) upon request, after Tenant has delivered to Landlord
documentation reasonably satisfactory to Landlord evidencing Tenant's financial
ability to complete the Alteration in accordance with the provisions of this
Lease. Tenant shall obtain and deliver to Landlord from all proposed
contractors, subcontractors, laborers and material suppliers for all work, labor
and services to be performed and materials to be furnished in connection with
Alterations partial and, within thirty (30) days after the completion of the
applicable Alteration, final written unconditional waivers of mechanics' and
materialmen's liens against the Premises and the Building. If any lien (or a
petition to establish such lien) is filed in connection with any Alteration,
such lien (or petition) shall be discharged by Tenant within ten (10) days
thereafter, at Tenant's sole cost and expense, by the payment thereof or by the
filing of a bond acceptable to Landlord. If Landlord gives its consent to the
making of any Alteration, such consent shall not be deemed to be an agreement or
consent by Landlord to subject its interest in the Premises or the Building to
any liens which may be filed in connection therewith. All Alterations
(including, without limitation, those involving structural, electrical,
mechanical or plumbing work, the heating, ventilation and air conditioning
system of the Premises or the Building, and the roof of the Building) shall, at
Landlord's election, be performed by Landlord's designated contractor or
subcontractor at Tenant's expense. If Landlord elects not to so perform such
work, then Landlord shall be paid a reasonable construction supervision fee (not
to exceed five percent (5%) of the cost of any portion of such work that alters
the base building systems). Promptly after the completion of an Alteration,
Tenant at its expense shall deliver to Landlord three (3) sets of accurate
as-built drawings showing such Alteration in place.
9.3 If any Alterations that require the prior written consent of Landlord
or prior written notice to Landlord are made without the prior written consent
of Landlord or prior written notice to Landlord, as applicable, Landlord shall
have the right at Tenant's expense to remove and correct such Alterations and
restore the Premises and the Building to their condition immediately prior
thereto, or to require Tenant to do the same. All Alterations to the Premises or
the Building made by either party shall immediately become the property of
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Landlord and shall remain upon and be surrendered with the Premises as a part
thereof at the expiration or earlier termination of the Lease Term; provided,
however, that (a) if Tenant is not then in default under this Lease, then Tenant
shall have the right to remove, prior to the expiration or earlier termination
of the Lease Term, all movable furniture, furnishings and trade fixtures
installed in the Premises solely at the expense of Tenant, and (b) Tenant shall
remove all Alterations and other items in the Premises or the Building which
Landlord designates in writing for removal or restoration. Promptly after
Landlord's receipt of a written request by Tenant which specifically requests
Landlord to indicate to Tenant whether Landlord will require the removal or
restoration of any Alterations, and provided such request is given to Landlord
together with Tenant's request for Landlord's approval of any Alterations (or
Tenant's prior written notice of the performance of such Alterations, if
Landlord's approval therefor is not required hereunder), Landlord will indicate
to Tenant whether Landlord will require the removal or restoration of any such
Alterations. Movable furniture, furnishings and trade fixtures shall be deemed
to exclude without limitation any item the removal of which might cause damage
to the Premises or the Building or which would normally be removed from the
Premises with the assistance of any tool or machinery other than a dolly.
Landlord shall have the right at Tenant's expense to repair all damage and
injury to the Premises or the Building caused by such removal or to require
Tenant to do the same. If such furniture, furnishings and equipment are not
removed by Tenant prior to the expiration or earlier termination of the Lease
Term, the same shall at Landlord's option become the property of Landlord and
shall be surrendered with the Premises as a part thereof; provided, however,
that Landlord shall have the right at Tenant's expense to remove from the
Premises such furniture, furnishings and equipment and any Alteration which
Landlord designates in writing for removal or to require Tenant to do the same.
If Tenant fails to return the Premises to Landlord as required by this Section,
then Tenant shall pay to Landlord, as additional rent, all costs (including a
construction management fee) incurred by Landlord in effecting such return.
ARTICLE X
SIGNS
10.1 Landlord shall permit Tenant to retain the monument signage
identifying Tenant's corporate name existing as of the Lease Commencement Date;
provided that Tenant, at its expense, performs all repair and maintenance
necessary to keep the same in good condition comparable to other signage in the
Complex and reasonably acceptable to Landlord. No other sign, advertisement or
notice referring to Tenant shall be inscribed, painted, affixed or otherwise
displayed on any part of the exterior or interior of the Building (including
windows and doors) without the prior written approval of Landlord, which
approval shall not be unreasonably withheld, conditioned, or delayed. If any
such item that has not been approved by Landlord is so displayed, then Landlord
shall have the right to remove such item at Tenant's expense or to require
Tenant to do the same. Landlord reserves the right to install and display signs,
advertisements and notices on any part of the exterior or interior of the
Building. Notwithstanding the foregoing, at any time that Tenant is leasing more
than fifty percent (50%) of the square feet of rentable area of the Building,
Tenant shall have the right, at its sole cost and expense, to install a sign
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consisting of the name of Netrix Corporation on the exterior facade of the
Building (the "Exterior Signage"), provided that (a) no uncured Event of Default
then exists, (b) Landlord approves in writing all attributes of such signage,
including, without limitation, the location, size, appearance and manner of
installation thereof, which approval shall not be unreasonably withheld,
conditioned, or delayed, (c) such signage is in compliance with all applicable
Laws and Tenant has obtained all governmental permits and approvals required in
connection therewith, and (d) the installation, maintenance and removal of such
sign (including, without limitation, any electrical costs of lighting such sign
and the repair and cleaning of the Building facade upon removal of such signage)
is performed at Tenant's expense in accordance with the terms and conditions
governing Alterations pursuant to Article IX above and Landlord's reasonable
regulations. Notwithstanding the foregoing provisions of this Section 10.1 to
the contrary, within thirty (30) days after the date on which (i) there occurs,
and remains uncured, an Event of Default, (ii) Netrix Corporation is leasing
less than fifty percent (50%) of the square feet of rentable area of the
Building, or (iii) the Lease Term expires or is terminated, then Landlord shall
have the right to require Tenant, at its cost and expense, to remove the
Exterior Sign and restore all damage to the Building caused by the installation
and/or removal of such sign, which removal and restoration shall be performed in
accordance with the terms and conditions governing Alterations pursuant to
Article IX above. The right to the Exterior Signage granted pursuant to this
Section 10.1 is personal to (I) Netrix Corporation, (II) any assignee of Netrix
Corporation that is a Permitted Transferee, and (III) any other assignee of
Netrix Corporation approved by Landlord pursuant to Article VII for which
Landlord expressly approved the right of such assignee to maintain Exterior
Signage (provided, however, that in lieu of Exterior Signage identifying Netrix
Corporation, such Exterior Signage shall identify the corporate name of such
assignee), such approval of the Exterior Signage rights not to be unreasonably
withheld, conditioned, or delayed, and may not be exercised by any occupant,
subtenant, or other assignee of Netrix Corporation.
ARTICLE XI
SECURITY DEPOSIT
11.1 Landlord acknowledges that, as of the date of Landlord's execution of
this Lease, Landlord holds a cash security deposit in an amount equal to the sum
of eighty-nine thousand eight hundred twenty-three and 49/100 dollars
($89,823.49), plus interest accruing thereon from February 2, 1998, through the
day immediately prior to the Lease Commencement Date, at a rate of eight percent
(8%) per annum, so that such sum shall equal ninety-eight thousand three hundred
two dollars ($98,302.00) (i.e., the Security Deposit Amount) on the Lease
Commencement Date, provided that no portion of such security deposit has been
applied prior to the Lease Commencement Date by Landlord as permitted under the
Prior Lease. Any security deposit held by Landlord shall be security for the
performance by Tenant of all of Tenant's obligations, covenants, conditions and
agreements under this Lease. Landlord shall not be required to maintain such
security deposit in a separate account. Except as may be required by law, Tenant
shall not be entitled to interest on the security deposit. Within approximately
sixty (60) days after the later of the expiration or earlier termination of the
Lease Term or Tenant's vacating the Premises, Landlord shall return such
security deposit to Tenant, less such portion thereof as Landlord shall have
appropriated to satisfy any of Tenant's obligations, or any Event of Default,
under this Lease. If there shall be any Event of Default under this Lease, then
Landlord shall have the right, but shall not be obligated, to use, apply or
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retain all or any portion of the security deposit for the payment of any (a)
Base Rent, additional rent or any other sum as to which Tenant is in default
beyond any applicable notice and cure period, or (b) amount Landlord may spend
or become obligated to spend, or for the compensation of Landlord for any losses
incurred, by reason of such Event of Default (including, but not limited to, any
damage or deficiency arising in connection with the reletting of the Premises).
If any portion of the security deposit is so used or applied, then within three
(3) business days after Landlord gives written notice to Tenant of such use or
application, Tenant shall deposit with Landlord cash in an amount sufficient to
restore the security deposit to the original Security Deposit Amount, and
Tenant's failure to do so shall constitute an Event of Default under this Lease.
11.2 If Landlord transfers the security deposit to any purchaser or other
transferee of Landlord's interest in the Property, and such purchaser or other
transferee assumes Landlord's obligations hereunder, then Tenant shall look only
to such purchaser or transferee for the return of the security deposit, and
Landlord shall be released from all liability to Tenant for the return of such
security deposit. Tenant acknowledges that the holder of any Mortgage shall not
be liable for the return of any security deposit made by Tenant hereunder unless
such holder actually receives such security deposit. Tenant shall not pledge,
mortgage, assign or transfer the Security Deposit or any interest therein.
11.3 Tenant shall deliver to Landlord an unconditional, irrevocable
commercial letter of credit (the "Letter of Credit") in substitution for all or
part of the cash security deposit, as determined by Landlord in its sole and
absolute discretion, within ten (10) business days after written notice of such
determination (the "Letter of Credit Notice"). Together with such Letter of
Credit Notice, Landlord shall notify Tenant if any of the cash security deposit
has been used or applied as of such date toward Tenant's obligations under the
Prior Lease (and, if so, Tenant shall deposit with Landlord cash in an amount
sufficient to replace the amount so used or applied within three (3) business
days after such notice). The Letter of Credit shall be (a) in form and substance
reasonably satisfactory to Landlord; (b) in the Security Deposit Amount (or such
lesser amount as may be designated in writing by Landlord in its sole and
absolute discretion); (c) issued by a federally insured commercial bank
reasonably acceptable to Landlord and located in the Washington, D.C.,
metropolitan area; (d) payable in full or partial draws; (e) made expressly
transferable and assignable to the owner from time to time of the Building; and
(f) include an "evergreen" provision which provides that the Letter of Credit
shall be automatically renewed on an annual basis unless the issuer delivers
thirty (30) days prior written notice of cancellation to Landlord, such that the
Letter of Credit remains in effect through the sixtieth (60th) day after the
expiration of the Lease Term. Landlord hereby approves the form of letter of
credit attached hereto as EXHIBIT C. The annual fee for the initial Letter of
Credit shall not exceed one and one-half percent (1.5%) of the amount of such
Letter of Credit. Landlord shall be permitted to draw upon the Letter of Credit
and apply all or a portion of the proceeds thereof necessary to compensate
Landlord for any matter to which the Security Deposit is permitted to be applied
hereunder and any matter under the Prior Lease not satisfied thereunder by
Tenant, and to retain the remaining proceeds thereof for the remainder of the
Lease Term as an additional security deposit. Within three (3) days after
written notice of Landlord's use of all or a portion of the proceeds of the
Letter of Credit, Tenant shall deliver to Landlord a replacement Letter of
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Credit complying with the terms of this Section 11.3. Landlord also shall have
the right to draw upon the Letter of Credit in any of the following
circumstances, without any further notice of any kind except as expressly
specified in this Section 11.3: (i) if Tenant fails to deliver to Landlord a
replacement Letter of Credit complying with the terms of this Section 11.3 (from
a financial institution other than the issuer, or successor thereto, of the
then-current Letter of Credit) within ten (10) days after demand by Landlord
after Landlord reasonably determines that there has been a material adverse
change in the financial condition of the issuing bank (or the successor
thereto);
or (ii) if Tenant fails to provide Landlord with any renewal or replacement
Letter of Credit complying with the terms of this Section 11.3 at least thirty
(30) days prior to the expiration of the then-current Letter of Credit. Landlord
shall not be required to pay any interest on any proceeds drawn under the Letter
of Credit or to maintain any such proceeds in a separate account. Within
approximately sixty (60) days after the later of (i) the expiration of the term
of this Lease or (ii) Tenant's vacating the Premises, Landlord shall return the
Letter of Credit and all proceeds thereof being held by Landlord (less such
portions thereof as Landlord may have used to satisfy Tenant's obligations or
liabilities to Landlord and less such other sums as Landlord reasonably expects
to be due from Tenant notwithstanding any notice and/or cure period provided
pursuant to Section 19.1 below). Tenant expressly waives any right it might
otherwise have to prevent Landlord from drawing on the Letter of Credit and
agrees that an action for damages and not injunctive or other equitable relief
shall be Tenant's sole remedy in the event Tenant disputes Landlord's claim to
any such amounts. Neither the Security Deposit nor any drawing under the Letter
of Credit shall be deemed to be liquidated damages in the event of a breach by
Tenant of this Lease. Notwithstanding the foregoing provisions of this Section
11.3 to the contrary, by written notice to Tenant, Landlord may direct Tenant to
substitute a cash security deposit in an amount designated by Landlord (but not
to exceed the Security Deposit Amount) for the Letter of Credit, at least thirty
(30) days prior to the scheduled expiration of the then-current Letter of
Credit, in which event the amount of the Letter of Credit shall be reduced or
the Letter of Credit shall not be renewed, as applicable.
11.4 Notwithstanding anything to the contrary in the Prior Lease,
immediately prior to Landlord's receipt of the Letter of Credit (provided that
Landlord is given five (5) business days prior written notice thereof), Landlord
shall deliver to the issuing bank by wire transfer of immediately available
funds the amount of any security deposit held under the Prior Lease, less any
amounts due to Landlord as of such date.
11.5 Notwithstanding anything to the contrary contained herein, Tenant
shall be responsible, at its sole cost and expense, for all fees charged for
each Letter of Credit by the bank issuing the same; provided, however, that
within approximately thirty (30) days after Tenant delivers written notice to
Landlord confirming the extension of the Letter of Credit for the year following
the initial year in which such Letter of Credit was in effect hereunder, and for
each successive year thereafter during the period that Landlord requires any
security hereunder to be in the form of a letter of credit, Landlord shall
credit the monthly installment of Base Rent next payable hereunder in an amount
equal to the fee reasonably charged for such Letter of Credit by the issuing
bank and paid by Tenant for the previous year; and provided further that if
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Tenant is in default under this Lease at the time that Landlord would otherwise
credit such amount to Tenant, then Landlord, at its option, may delay such
credit until such default is cured. In the event that the annual fee charged for
such Letter of Credit is to exceed one and one-half percent (1.5%) of the amount
of such Letter of Credit, then Tenant shall notify Landlord in writing thereof
at least sixty (60) days prior to contracting for such Letter of Credit, and
Landlord shall provide written notice to Tenant within thirty (30) days after
receipt of Tenant's notice if Landlord elects to have such Letter of Credit
converted to a cash security deposit. If Tenant does not timely provide such
notice, and the fee for such Letter of Credit exceeds one and one-half percent
(1.5%) of the amount of such Letter of Credit, then the amount credited by
Landlord to Tenant for such fee shall be an amount equal to one and one-half
percent (1.5%) of the amount of such Letter of Credit, and Tenant shall be
responsible for the remainder of such fee. As consideration for the foregoing,
the interest earned on all amounts required to be held on deposit with the
issuing bank as security for such Letter of Credit during the period in which a
Letter of Credit is required hereunder shall be paid to Landlord within thirty
(30) days following the end of each calendar year in which a Letter of Credit
was required hereunder by Landlord. Tenant shall direct such issuing bank in
writing (with a copy thereof to Landlord) to pay all such interest directly to
Landlord within thirty (30) days following the end of each calendar year in
which a Letter of Credit was required hereunder by Landlord.
ARTICLE XII
INSPECTION
12.1 At all times Tenant shall permit Landlord, its agents and
representatives, and the holder of any Mortgage, to enter the Premises during
normal business hours and upon reasonable prior written notice (except in the
event of emergency, in which event no notice shall be required and entry may be
at any time) without charge therefor and without diminution of the rent payable
by Tenant in order to examine, inspect or protect the Premises and the Building,
to make such alterations and/or repairs as Landlord is entitled to make
hereunder, or to exhibit the same to brokers, prospective tenants, lenders,
purchasers and others. Except in the event of an emergency, Landlord shall use
commercially-reasonable efforts to minimize disruption to Tenant's normal
business operations in the Premises in connection with any such entry.
12.2 By written notice to Landlord, Tenant may designate certain portions
of the Premises (but not in excess of five thousand (5,000) square feet of
rentable area in the aggregate) as "Secure Areas". Except in the event of
emergency, Landlord, its employees and agents shall not access such Secure Areas
unless accompanied by a designee of Tenant; provided, however, that Tenant's
refusal or failure to provide such a designee in a particular instance during
normal Building Hours after reasonable prior notice shall permit Landlord, its
employees and agents unaccompanied access to the Secure Areas in such instance.
If Tenant provides access to such Secure Areas to the provider of janitorial
services to the remainder of the Premises, and pays directly (and not as part of
Operating Charges) any premium charged by such provider due to the restricted
access to the Secure Area or the nature of such Secure Area, then such
janitorial services shall be provided as set forth in Article XIV; provided,
however, that notwithstanding anything in Article XIV to the contrary, if Tenant
fails to provide such access, then (a) Landlord shall not be responsible for
providing janitorial services to any Secure Areas, (b) Tenant shall be required
to provide janitorial services to such areas, and (c) Tenant shall not receive
any reduction of Base Rent or abatement of increases in Operating Charges in
connection with the lack of janitorial services to such areas. Tenant shall
reimburse Landlord for, and shall indemnify, defend upon request and hold
Landlord, its employees and agents harmless from and against, all costs,
damages, claims, liabilities, expenses (including reasonable attorneys' fees),
losses and court costs suffered by or claimed against Landlord, directly or
indirectly, based on or arising out of, in whole or in part, the limitation of
Landlord's access to any Secure Area.
ARTICLE XIII
INSURANCE
13.1 If Tenant conducts or permits to be conducted any specific activity,
or places or permits to be placed any equipment or other item in or about the
Premises or the Building, which in any way increases the rate of fire insurance
or other insurance on the Building, then (whether or not Landlord has consented
to such activity, equipment or other item) Tenant shall pay as additional rent
due hereunder the amount of such increase. The statement of any applicable
insurance company or insurance rating organization (or other organization
exercising similar functions in connection with the prevention of fire or the
correction of hazardous conditions) that an increase is due to any such
activity, equipment or other item shall be conclusive evidence thereof.
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13.2 (a) Throughout the Lease Term, Tenant shall obtain and maintain (1)
commercial general liability insurance (written on an occurrence basis)
including contractual liability coverage insuring the obligations assumed by
Tenant under this Lease (including those set forth in Sections 6.3 and 15.2),
premises and operations coverage, broad form property damage coverage and
independent contractors coverage, and containing an endorsement for personal
injury, (2) business interruption insurance, (3) all-risk property insurance,
(4) comprehensive automobile liability insurance (covering automobiles owned by
Tenant, if any), (5) worker's compensation insurance, and (6) employer's
liability insurance. Such commercial general liability insurance shall be in
minimum amounts typically carried by prudent tenants engaged in similar
operations, but in no event shall be in an amount less than Two Million Dollars
($2,000,000) combined single limit per occurrence with a Four Million Dollar
($4,000,000) annual aggregate. Such business interruption insurance shall be in
minimum amounts typically carried by prudent tenants engaged in similar
operations, but in no event shall be in an amount less than the Base Rent then
in effect during any Lease Year. Such property insurance shall be in an amount
not less than that required to replace all Alterations performed by or through
Tenant and all other contents of the Premises (including, without limitation,
Tenant's trade fixtures, decorations, furnishings, equipment and personal
property). Such automobile liability insurance shall be in an amount not less
than One Million Dollars ($1,000,000) for each accident. Such worker's
compensation insurance shall carry minimum limits as defined by the law of the
jurisdiction in which the Building is located (as the same may be amended from
time to time). Such employer's liability insurance shall be in an amount not
less than One Million Dollars ($1,000,000) for each accident, One Million
Dollars ($1,000,000) disease-policy limit, and One Million Dollars ($1,000,000)
disease-each employee.
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(b) All such insurance shall: (1) be issued by a company that is
licensed to do business in the jurisdiction in which the Building is located,
that has been approved in advance by Landlord and that has a rating equal to or
exceeding A:XI from Best's Insurance Guide; (2) name Landlord, the managing
agent of the Building, The Advance Group, Bedminster Capital Funding LLC, and
the holder of any Mortgage of which Tenant is given written notice as additional
insureds and/or loss payees (as applicable); (3) contain an endorsement that
such policy shall remain in full force and effect notwithstanding that the
insured may have waived its right of action against any party prior to the
occurrence of a loss; (4) provide that the insurer thereunder waives all right
of recovery by way of subrogation against Landlord, its partners, agents,
employees, and representatives, in connection with any loss or damage covered by
such policy; (5) be acceptable in form and content to Landlord; (6) be primary
and non-contributory; (7) contains an endorsement for cross liability and
severability of interests; and (8) contain an endorsement prohibiting
cancellation, failure to renew, reduction of amount of insurance or change in
coverage without the insurer first giving Landlord thirty (30) days' prior
written notice (by certified or registered mail, return receipt requested) of
such proposed action. No such policy shall contain any deductible provision
except as otherwise approved in writing by Landlord, which approval shall not be
unreasonably withheld. Landlord reserves the right from time to time to require
Tenant to obtain higher minimum amounts or different types of insurance if it
becomes customary for other landlords of comparable flex buildings in the
Washington, D.C., metropolitan area to require similar sized tenants in similar
industries to carry insurance of such higher minimum amounts or of such
different types of insurance. Tenant shall deliver a certificate of all such
insurance and receipts evidencing payment therefor (and, upon request, copies of
all required insurance policies, including endorsements and declarations) to
Landlord concurrently with Tenant's execution of this Lease and at least
annually thereafter. Tenant shall give Landlord notice promptly after becoming
aware of any instance of fire, theft or accident in the Premises, and in the
case of fire, theft or accident in the Building if involving Tenant, its agents,
employees or Invitees. Neither the issuance of any insurance policy required
under this Lease nor the minimum limits specified herein shall be deemed to
limit or restrict in any way Tenant's liability arising under or out of this
Lease.
13.3 Landlord agrees to carry and maintain all-risk property insurance
(with replacement cost coverage) covering the Building and Landlord's property
therein in an amount required by its insurance company to avoid the application
of any coinsurance provision. Landlord also agrees to carry and maintain
commercial general liability insurance in limits it reasonably deems appropriate
(but in no event less than the limits required of Tenant pursuant to Section
13.2). All such insurance shall: (a) be issued by a company that is licensed to
do business in the jurisdiction in which the Building is located, that has been
approved in advance by Landlord and that has a rating equal to or exceeding A:XI
from Best's Insurance Guide; (b) provide that the insurer thereunder waives all
right of recovery by way of subrogation against Tenant, its partners, agents,
employees, and representatives, in connection with any loss or damage covered by
such policy; and (c) be primary and non-contributory. Landlord shall deliver a
certificate of all such insurance to Tenant upon Tenant's written request
therefor (but not more often than once in any twelve (12) month period). No such
insurance shall contain any deductible that is not commercially reasonable
considering the practices of owners of buildings comparable to the Building.
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13.4 Notwithstanding anything to the contrary contained herein, Landlord
and Tenant each hereby waive any and all right to recover against the other (or
against their respective officers, directors, trustees, partners, joint
venturers, employees or agents) for any loss or damage to such waiving party
arising from any cause covered by any property damage insurance required to be
carried by such party pursuant to this Lease or, if greater, actually carried by
such party. Landlord and Tenant shall secure appropriate waivers of subrogation
from their respective insurance carriers; and each party will, upon request,
deliver to the other a certificate evidencing such waiver of subrogation by the
insurer.
ARTICLE XIV
SERVICES AND UTILITIES
14.1 Subject to Tenant's obligations specified in this Lease: (a) Landlord
will furnish to the Premises air-conditioning and heating during the seasons
they are commercially reasonably required (and Tenant shall pay the costs of the
electricity therefor pursuant to Section 14.4 below); and (b) Landlord will
provide janitorial service on Monday through Friday (or, at Landlord's option,
Sunday through Thursday) only (excluding legal public holidays), water for
lavatory and drinking purposes, elevator service (with at least one (1) elevator
in operation at all times, except in the event of an emergency), and exterior
window-cleaning service. Landlord covenants that, except during periods of
repair and force majeure conditions and events, the base building HVAC system
shall operate within the manufacturer's specified range of design specifications
(to be calculated based on the amount of heat energy introduced into or removed
from the Premises, and not based on the actual temperature in the Premises);
provided, however, that Landlord shall not be liable for any failure to maintain
comfortable atmosphere conditions in all or any portion of the Premises due to
excessive heat generated by any equipment or machinery installed by Tenant (with
or without Landlord's consent), due to any impact that Tenant's furniture,
equipment, machinery or millwork may have upon the delivery of HVAC to the
Premises or due to the occupancy load (collectively, the "External Factors").
Notwithstanding anything above to the contrary, Tenant shall have access to the
Building twenty-four (24) hours per day each day of the year (except in the
event of an emergency).
14.2 [Intentionally omitted].
14.3 Tenant shall reimburse Landlord for the cost of any excess water and
sewer usage in the Premises. Excess usage shall mean the excess of the estimated
usage in the Premises (per square foot of rentable area) during any billing
period over the average usage (per square foot of rentable area) during the same
period for buildings comparable to the Building, as reasonably calculated by
Landlord. With respect to any building standard HVAC system installed after the
date hereof, (a) Tenant shall reimburse Landlord for the costs of any excess
usage of the building standard HVAC system; (b) excess usage of the building
standard HVAC system shall mean the operation of such system more than sixty-six
(66) hours per week (excluding any operation of such system outside of Building
Hours to the extent necessary to maintain non-Building Hour temperatures
customary for buildings comparable to the Building); and (c) the costs of such
excess usage shall be deemed to be the accelerated depreciation of such system
based on the excess usage thereof. The depreciation of such system shall be
reasonably determined by Landlord. If Tenant disagrees with such schedule, then
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Landlord shall select a reputable, independent engineer to determine such
depreciation schedule, and the findings of such engineer shall be determinative.
The costs of any such engineer shall be divided equally between Landlord and
Tenant.
14.4 Tenant shall timely pay directly to the appropriate utility all
charges for all electricity furnished to the Premises, as measured by the meter
located at the Building. Tenant shall be responsible, at its expense, for
depositing with such utility all bonds required for the provision of electrical
service to the Premises and direct billing to Tenant from and after the Lease
Commencement Date, in the absence of any bond deposited by Landlord being held
by such utility.
14.5 If any utility or service is interrupted for any reason and such
interruption shall continue for more than three (3) consecutive business days
after written notice of such interruption to Landlord, and if such interruption
or failure shall render any portion of the Premises unusable for the normal
conduct of Tenant's business, and if Tenant in fact does not use or occupy such
portion of the Premises during the period of such interruption, then all Base
Rent and additional rent payable hereunder with respect to such unusable portion
of the Premises shall be abated for the period beginning on the fourth (4th)
consecutive business day after such notice and such rental abatement shall
continue until such portion of the Premises is tenantable again or Tenant
recommences use or occupancy of such portion of the Premises, whichever occurs
first. Notwithstanding any other provision of this Lease to the contrary, the
provisions of this Section 14.5 shall be Tenant's exclusive remedy in the event
of an interruption of a utility or service that is outside of Landlord's
reasonable control.
ARTICLE XV
LIABILITY OF LANDLORD
15.1 Except as explicitly hereinafter set forth, Landlord, its employees
and agents shall not be liable to Tenant, any Invitee or any other person or
entity for any damage (including indirect and consequential damage), injury,
loss or claim (including claims for the interruption of or loss to business)
based on or arising out of any cause whatsoever (except as otherwise provided in
this Article), including without limitation the following: repair to any portion
of the Premises or the Building; interruption in the use of the Premises or any
equipment therein; any accident or damage resulting from any use or operation
(by Landlord, Tenant or any other person or entity) of elevators or heating,
cooling, electrical, sewerage or plumbing equipment or apparatus; termination of
this Lease by reason of damage to the Premises or the Building; any fire,
robbery, theft, vandalism, mysterious disappearance or any other casualty;
actions of any other tenant of the Building or of any other person or entity;
failure or inability to furnish any service specified in this Lease; and leakage
in any part of the Premises or the Building from water, rain, ice or snow that
may leak into, or flow from, any part of the Premises or the Building, or from
drains, pipes or plumbing fixtures in the Premises or the Building. If any
condition exists which may be the basis of a claim of constructive eviction,
then Tenant shall give Landlord written notice thereof and a reasonable
opportunity to correct such condition, and in the interim Tenant shall not claim
that it has been constructively evicted or is entitled to a rent abatement
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(except as explicitly set forth in Sections 14.5, 17.1, and 18.1). Any property
placed by Tenant or any Invitee in or about the Premises or the Building shall
be at the sole risk of Tenant, and Landlord shall not in any manner be held
responsible therefor. Any person receiving an article delivered for Tenant shall
be acting as Tenant's agent for such purpose and not as Landlord's agent. For
purposes of this Article, the term "Building" shall be deemed to include the
Land. Notwithstanding the foregoing provisions of this Section, but subject to
Section 13.4, Landlord shall not be released from liability to Tenant for any
physical injury to any natural person (including death) or damage to Tenant's
property caused solely and directly by Landlord's negligence or willful
misconduct to the extent such injury is not covered by insurance (a) carried by
Tenant or such person, or (b) required by this Lease to be carried by Tenant;
provided, however, that Landlord shall not under any circumstances be liable for
any consequential or indirect damages.
15.2 (a) Except to the extent caused by Landlord's negligence or willful
misconduct, and subject to Section 13.4 above, Tenant shall reimburse Landlord,
its employees and agents for (as additional rent), and shall indemnify, defend
upon request and hold them harmless from and against all costs, damages (but not
consequential damages), claims, liabilities, expenses (including reasonable
attorneys' fees), losses, penalties and court costs suffered by or claimed
against them, to the extent resulting solely and directly from (i) use and
occupancy of the Premises by Tenant or any Invitee or the business conducted
therein by Tenant or any Invitee, or (ii) any negligence or willful misconduct
by Tenant or any Invitee.
(b) Except to the extent caused by Tenant's negligence or willful
misconduct, and subject to Section 13.4 above, Landlord shall reimburse Tenant,
its employees and agents for, and shall indemnify, defend upon request and hold
them harmless from and against all costs, damages (but not consequential
damages), claims, liabilities, expenses (including reasonable attorneys' fees),
losses, penalties and court costs suffered by or claimed against them, to the
extent resulting solely and directly from Landlord's negligence or willful
misconduct in connection with the management, operation or repair of the
Building.
15.3 In the event of any transfer, assignment, or other conveyance of the
fee to the Building and the Land, such transferor, assignor, or conveyor shall
be automatically freed and relieved, from and after the date of such transfer,
assignment, or conveyance, of all liability in connection with the performance
of any covenant or obligation on the part of Landlord contained in this Lease
thereafter to be performed and, without further agreement, the transferee of
such title shall be deemed to have assumed and agreed to observe and perform any
and all such future obligations of Landlord hereunder during its ownership of
the Building and Land. Within five (5) days after request, Tenant shall attorn
to such transferee and execute, acknowledge and deliver any document submitted
to Tenant confirming such attornment.
15.4 Except as explicitly permitted under this Lease, Tenant shall not have
the right to set off, recoup, abate, or deduct any amount allegedly owed to
Tenant pursuant to any claim against Landlord from any rent or other sum payable
to Landlord. Except as explicitly set forth in Section 14.5 above, Tenant's sole
remedy for recovering upon such claim shall be to institute an independent
action against Landlord, which action shall not be consolidated with any action
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of Landlord; provided, however, that Tenant may initiate any mandatory
counterclaim in connection therewith.
15.5 If Tenant or any Invitee is awarded a money judgment against Landlord,
then recourse for satisfaction of such judgment shall be limited to execution
against Landlord's estate and interest in the Building and Land, including
Landlord's interest in all rents, income, profits, insurance proceeds,
condemnation proceeds and sales proceeds arising therefrom, subject to the
rights of any mortgagee in accordance with the terms of Article XXI below. No
other asset of Landlord, any partner, director, member, officer or trustee of
Landlord (each, an "officer") or any other person or entity shall be available
to satisfy or be subject to such judgment, nor shall any officer or other person
or entity be held to have personal liability for satisfaction of any claim or
judgment against Landlord or any officer.
ARTICLE XVI
RULES
16.1 Tenant and Invitees shall at all times abide by and observe the rules
specified in Exhibit B. Tenant and Invitees shall also abide by and observe any
other rule that Landlord may reasonably promulgate from time to time for the
operation and maintenance of the Building, provided that notice thereof is given
and such rule is not inconsistent with the provisions of this Lease. All rules
shall be binding upon Tenant and enforceable by Landlord as if they were
contained herein. Nothing contained in this Lease shall be construed as imposing
upon Landlord any duty or obligation to enforce such rules, or the terms,
conditions or covenants contained in any other lease, as against any other
tenant, and Landlord shall not be liable to Tenant for the violation of such
rules by any other tenant or its employees, agents, assignees, subtenants,
invitees or licensees. Landlord shall use reasonable efforts not to enforce any
rule or regulation in a manner which unreasonably discriminates among similarly
situated tenants.
ARTICLE XVII
DAMAGE OR DESTRUCTION
17.1 If the Premises or the Building are totally or partially damaged or
destroyed, then Landlord shall diligently repair and restore the Premises and
the Building to substantially the same condition they were in prior to such
damage or destruction; provided, however, that if in the judgment of an
independent architect and/or general contractor designated by Landlord (written
notice of which (the "Restoration Estimate") shall be delivered to Tenant within
seventy-five (75) days of such damage or destruction), such repair and
restoration cannot be completed within two hundred seventy (270) days after the
date of such damage or destruction (which estimated restoration period shall
take into account the time needed for effecting a satisfactory settlement with
any insurance company involved, removing debris, preparing plans, and receiving
all required governmental permits), then Landlord and Tenant each shall have the
right to terminate this Lease by giving written notice of termination to the
other within thirty (30) days after delivery to Tenant of the Restoration
Estimate. If this Lease is terminated pursuant to this Article, then rent shall
be apportioned (based on the portion of the Premises which is usable after such
damage or destruction) and paid to the date of termination. If this Lease is not
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terminated as a result of such damage or destruction, then until such repair and
restoration of the Premises are substantially complete, Tenant shall be required
to pay rent only for the portion of the Premises that is usable while such
repair and restoration are being made. After receipt of all insurance proceeds
(including proceeds of insurance maintained by Tenant) but not later than one
hundred twenty-five (125) days after the date of such damage or destruction,
Landlord shall proceed with and bear the expenses of such repair and restoration
of the Premises and the Building; provided, however, that (a) if such damage or
destruction was caused by the negligent act or omission of Tenant or any
Invitee, then Tenant shall pay Landlord's deductible and the amount by which
such expenses exceed the insurance proceeds, if any, actually received by
Landlord on account of such damage or destruction (or, if Landlord fails to
carry the insurance required pursuant to this Lease, the amount that would have
been received had Landlord carried such insurance), and (b) Landlord shall not
be required to repair or restore any Alterations or any other contents of the
Premises (including, without limitation, Tenant's trade fixtures, decorations,
furnishings, equipment or personal property). Notwithstanding anything herein to
the contrary, Landlord shall have the right to terminate this Lease by written
notice to Tenant not later than one hundred twenty-five (125) days after the
date of the damage or destruction if (1) despite Landlord's maintenance of the
insurance required to be maintained pursuant to Section 13.3 above, insurance
proceeds are insufficient to pay the full cost of such repair and restoration
(Landlord hereby agreeing diligently to pursue the receipt of such proceeds, and
to inform Tenant of the status of such pursuit upon written notice from Tenant),
(2) the holder of any Mortgage fails or refuses to make such insurance proceeds
available for such repair and restoration, (3) zoning or other applicable Laws
or regulations do not permit such repair and restoration, or (4) such damage or
destruction occurs during the last three (3) years of the then-current Lease
Term and the Building is damaged by fire or casualty (whether or not the
Premises has been damaged) to such an extent that Landlord decides, in its sole
and absolute discretion, not to rebuild or reconstruct the Building.
ARTICLE XVIII
CONDEMNATION
18.1 If twenty-five percent (25%) or more of any of the Premises, the use
or occupancy thereof, or the Parking Permits, shall be taken or condemned by any
governmental or quasi-governmental authority for any public or quasi-public use
or purpose or sold under threat of such a taking or condemnation (collectively,
"condemned"), then this Lease shall terminate on the day prior to the date title
thereto vests in such authority and rent shall be apportioned as of such date.
If less than twenty-five percent (25%) of each of the Premises, the use or
occupancy thereof, or the Parking Permits is condemned, then this Lease shall
continue in full force and effect as to the part of the Premises not so
condemned, except that as of the date title vests in such authority Tenant shall
not be required to pay rent with respect to the part of the Premises so
condemned.
18.2 All awards, damages and other compensation paid on account of such
condemnation shall belong to Landlord, and Tenant assigns to Landlord all rights
to such awards, damages and compensation. Tenant shall not make any claim
against Landlord or such authority for any portion of such award, damages or
compensation attributable to damage to the Premises, value of the unexpired
portion of the Lease Term, loss of profits or goodwill, leasehold improvements
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or severance damages. Nothing contained herein, however, shall prevent Tenant
from pursuing a separate claim against the authority for relocation expenses and
for the value of furnishings, equipment and trade fixtures installed in the
Premises at Tenant's expense and which Tenant is entitled pursuant to this Lease
to remove at the expiration or earlier termination of the Lease Term, provided
that such claim shall in no way diminish the award, damages or compensation
payable to or recoverable by Landlord in connection with such condemnation.
ARTICLE XIX
DEFAULT
19.1 Each of the following shall constitute an "Event of Default": (a)
Tenant's failure to make when due any payment of the Base Rent, additional rent
or other sum; provided, however, that not more than two (2) times in any twelve
(12) month period, no Event of Default shall be deemed to have occurred unless
such failure continues for a period of ten (10) days after Landlord delivers
written notice thereof to Tenant; (b) Tenant's failure to perform or observe any
covenant or condition of this Lease not otherwise specifically described in this
Section 19.1, which failure continues for thirty (30) days after Landlord
delivers written notice thereof to Tenant, or such shorter period as is
appropriate if such failure can be cured in a shorter period or, if such failure
is not capable of being cured in such period, then Tenant shall have such
additional time (up to an additional sixty (60) days) as is reasonably necessary
to effect such cure, provided that Tenant promptly commences and thereafter
diligently pursues the same); provided, however, that during any period that
Tenant is leasing less than the entire Building, such cure period shall not be
applicable if, in Landlord's sole and absolute discretion, such failure raises a
life/safety issue with respect to the Building or its occupants or visitors,
including but not limited to, a threat of personal injury or continuing physical
injury to the Building, or if such failure is affecting another tenant's use or
occupancy of the Building or its premises; (c) an Event of Bankruptcy as
specified in Article XX; (d) Tenant's dissolution or liquidation; (e) any
Environmental Default as specified in Section 6.3; or (f) any default by Tenant
under that certain Lease between Landlord (as successor-in-interest to Dulles
Technology Center) and Tenant dated December 9, 1988 (the "Prior Lease"), which
continues beyond any notice and cure period applicable thereto.
19.2 If there shall be an Event of Default (even if prior to the Lease
Commencement Date), then the provisions of this Section shall apply. Landlord
shall have the right, at its sole option, to terminate this Lease. In addition,
with or without terminating this Lease, Landlord may re-enter, terminate
Tenant's right of possession and take possession of the Premises. The provisions
of this Article shall operate as a notice to quit, and Tenant hereby waives any
other notice to quit or notice of Landlord's intention to re-enter the Premises
or terminate this Lease. If necessary, Landlord may proceed to recover
possession of the Premises under applicable Laws, or by such other proceedings,
including re-entry and possession, as may be permitted under applicable Laws. If
Landlord elects to terminate this Lease and/or elects to terminate Tenant's
right of possession, everything contained in this Lease on the part of Landlord
to be done and performed shall cease without prejudice, however, to Tenant's
liability for all Base Rent, additional rent and other sums specified herein.
Landlord may relet the Premises or any part thereof, alone or together with
other premises, for such term(s) (which may extend beyond the date on which the
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Lease Term would have expired but for the Event of Default) and on such terms
and conditions (which may include any concessions or allowances granted by
Landlord) as Landlord, in its reasonable discretion, may determine, but Landlord
shall not be liable for, nor shall Tenant's obligations hereunder be diminished
by reason of, any failure by Landlord to relet all or any portion of the
Premises or to collect any rent due upon such reletting. Notwithstanding the
previous sentence to the contrary, provided there has occurred an Event of
Default, Landlord has commenced the exercise of its remedies, and Tenant has
vacated the Premises, Landlord thereafter shall use commercially reasonable
efforts to remarket the Premises. Whether or not this Lease and/or Tenant's
right of possession is terminated or any suit is instituted, Tenant shall be
liable for any Base Rent, additional rent, or other sum which may be due and
unpaid prior to such Event of Default, and for all costs, fees and expenses
(including, but not limited to, reasonable attorneys' fees and costs, brokerage
fees, expenses incurred in enforcing any of Tenant's obligations under the Lease
or in placing the Premises in good and rentable condition, advertising expenses,
and any concessions or allowances granted by Landlord) incurred by Landlord in
pursuit of its remedies hereunder and/or in recovering possession of the
Premises and renting the Premises to others from time to time plus other actual
or consequential damages suffered or incurred by Landlord on account of such
Event of Default (including, but not limited to, late fees or other charges
incurred by Landlord under any Mortgage). Tenant also shall be liable for
additional damages which at Landlord's election shall be either one or a
combination of the following: (a) an amount equal to the Base Rent and
additional rent due or which would have become due from the date of such Event
of Default through the remainder of the Lease Term, less the amount of rental,
if any, which Landlord receives during such period from others to whom the
Premises may be rented (other than any additional rent received by Landlord as a
result of any failure of such other person to perform any of its obligations to
Landlord), which amount shall be computed and payable in monthly installments,
in advance, on the first day of each calendar month following such Event of
Default and continuing until the date on which the Lease Term would have expired
but for such Event of Default, it being understood that separate suits may be
brought from time to time to collect any such damages for any month(s) (and any
such separate suit shall not in any manner prejudice the right of Landlord to
collect any damages for any subsequent month(s)), or Landlord may defer
initiating any such suit until after the expiration of the Lease Term (in which
event such deferral shall not be construed as a waiver of Landlord's rights as
set forth herein and Landlord's cause of action shall be deemed not to have
accrued until the expiration of the Lease Term), and it being further understood
that if Landlord elects to bring suits from time to time prior to reletting the
Premises, Landlord shall be entitled to its full damages through the date of the
award of damages without regard to any Base Rent, additional rent or other sums
that are or may be projected to be received by Landlord upon reletting of the
Premises; or (b) an amount equal to the sum of (i) all Base Rent, additional
rent and other sums due or which would be due and payable under this Lease as of
the date of such Event of Default through the end of the scheduled Lease Term,
plus (ii) all expenses (including reasonable broker and attorneys' fees) and
value of all vacancy periods projected by Landlord to be incurred in connection
with the reletting of the Premises, minus (iii) any Base Rent, additional rent
and other sums which would be received by Landlord upon reletting of the
Premises from the end of the vacancy period projected by Landlord through the
expiration of the scheduled Lease Term. Such amounts shall be discounted using a
discount factor equal to the yield of the Treasury Note or Bill, as appropriate,
having a maturity period approximately commensurate to the remainder of the
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Term, and such resulting amount shall be payable to Landlord in a lump sum on
demand, it being understood that upon payment of such liquidated and agreed
final damages, Tenant shall be released from further liability under this Lease
with respect to the period after the date of such payment. Landlord may bring
suit to collect any such damages at any time after an Event of Default shall
have occurred. In the event Landlord relets the Premises together with other
premises or for a term extending beyond the scheduled expiration of the Lease
Term, it is understood that Tenant will not be entitled to apply any base rent,
additional rent or other sums generated or projected to be generated by either
such other premises or in the period extending beyond the scheduled expiration
of the Lease Term (collectively, the "Extra Rent") against Landlord's damages.
Similarly in proving the amount that would be received by Landlord upon a
reletting of the Premises as set forth in clause (iii) above, Tenant shall not
take into account the Extra Rent. The provisions contained in this Section shall
be in addition to, and shall not prevent the enforcement of, any claim Landlord
may have against Tenant for anticipatory breach of this Lease. Nothing herein
shall be construed to affect or prejudice Landlord's right to prove, and claim
in full, unpaid rent accrued prior to termination of this Lease. If Landlord is
entitled, or Tenant is required, pursuant to any provision hereof to take any
action upon the termination of the Lease Term, then Landlord shall be entitled,
and Tenant shall be required, to take such action also upon the termination of
Tenant's right of possession.
19.3 (a) Tenant hereby expressly waives, for itself and all persons
claiming by, through or under it, any right of redemption, re-entry or
restoration of the operation of this Lease under any present or future Law,
including without limitation any such right which Tenant would otherwise have in
case Tenant shall be dispossessed for any cause, or in case Landlord shall
obtain possession of the Premises as herein provided.
(b) All rights and remedies of Landlord and Tenant set forth in this
Lease are cumulative and in addition to all other rights and remedies available
to Landlord and Tenant at law or in equity, including those available as a
result of any anticipatory breach of this Lease. The exercise by Landlord or
Tenant of any such right or remedy shall not prevent the concurrent or
subsequent exercise of any other right or remedy. No delay or failure by
Landlord or Tenant to exercise or enforce any of such party's rights or remedies
or the other party's obligations shall constitute a waiver of any such rights,
remedies or obligations. Neither Landlord nor Tenant shall be deemed to have
waived any default by the other unless such waiver expressly is set forth in a
written instrument signed by the applicable party. If Landlord or Tenant waives
in writing any default by the other party, such waiver shall not be construed as
a waiver of any covenant, condition or agreement set forth in this Lease except
as to the specific circumstances described in such written waiver.
19.4 If Landlord or Tenant shall institute proceedings against the other
and a compromise or settlement thereof shall be made, then the same shall not
constitute a waiver of the same or of any other covenant, condition or agreement
set forth herein, nor of any of the applicable party's rights hereunder. Neither
the payment by Tenant of a lesser amount than the monthly installment of Base
Rent, additional rent or of any sums due hereunder nor any endorsement or
statement on any check or letter accompanying a check for payment of rent or
other sums payable hereunder shall be deemed an accord and satisfaction.
Landlord may accept the same without prejudice to Landlord's right to recover
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the balance of such rent or other sums or to pursue any other remedy.
Notwithstanding any request or designation by Tenant, Landlord may apply any
payment received from Tenant to any payment then due. No re-entry by Landlord,
and no acceptance by Landlord of keys from Tenant, shall be considered an
acceptance of a surrender of this Lease.
19.5 If Tenant fails to make any payment to any third party or to do any
act herein required to be made or done by Tenant, and such failure continues
beyond any applicable notice and cure period, then Landlord may, but shall not
be required to, make such payment or do such act. The taking of such action by
Landlord shall not be considered a cure of such default by Tenant or prevent
Landlord from pursuing any remedy it is otherwise entitled to in connection with
such default. If Landlord elects to make such payment or do such act, then all
expenses incurred by Landlord, plus interest thereon at a rate (the "Default
Rate") equal to the rate per annum which is three (3) whole percentage points
higher than the prime rate published in the Money Rates section of the WALL
STREET JOURNAL, from the date incurred by Landlord to the date of payment
thereof by Tenant, shall constitute additional rent due hereunder; provided,
however, that nothing contained herein shall be construed as permitting Landlord
to charge or receive interest in excess of the maximum rate then allowed by law.
19.6 If Tenant fails to make any payment of Base Rent, additional rent or
any other sum on or before the date that is five (5) days after the date on
which such payment is due and payable (without regard to any grace period
specified in Section 19.1), then Tenant shall pay to Landlord a late charge of
five percent (5%) of the amount of such payment. In addition, such payment and
such late fee shall bear interest at the Default Rate from the date such payment
or late fee, respectively, became due to the date of payment thereof by Tenant;
provided, however, that nothing contained herein shall be construed as
permitting Landlord to charge or receive interest in excess of the maximum rate
then allowed by law. Such late charge and interest shall constitute additional
rent due hereunder without any notice or demand. Notwithstanding the first two
(2) sentences of this Section 19.6, Landlord shall waive such late charge and
interest for the first such failure in any twelve (12) month period, provided
that such payment is made within five (5) days after Landlord delivers written
notice thereof to Tenant.
19.7 As security for the performance of Tenant's obligations, Tenant grants
to Landlord a lien upon and a security interest in Tenant's existing or
hereafter acquired personal property, inventory, furniture, furnishings,
fixtures, equipment, licenses, permits and all other tangible and intangible
property, assets and accounts, and all additions, modifications, products and
proceeds thereof, including, without limitation, such tangible property which
has been used at the Premises, purchased for use at the Premises, located at any
time in the Premises or used or to be used in connection with the business
conducted or to be conducted in the Premises, whether or not the same may
thereafter be removed from the Premises, and including, without limitation, all
stock and partnership interests now or hereafter owned by Tenant, legally or
beneficially, in any entity which manages, owns or operates the business to be
conducted in or upon the Premises. Such lien shall be in addition to all rights
of distraint available under applicable law. Within five (5) days after request
from time to time, Tenant shall execute, acknowledge and deliver to Landlord a
financing statement and any other document evidencing or establishing such lien
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and security interest which may be requested by Landlord. During the Lease Term,
Tenant shall not sell, transfer or remove from the Premises any of the
aforementioned tangible property without Landlord's prior written consent,
unless the same is undertaken in the ordinary course of Tenant's business or is
promptly replaced with similar items of comparable value. At any time that there
exists an Event of Default, Tenant shall not sell, transfer or remove from the
Premises any of the aforementioned tangible property, except in the ordinary
course of Tenant's business. In order to further assure Tenant's performance of
its obligations under this Lease, Tenant covenants that during the Lease Term,
it will not convey or otherwise transfer its assets or permit its assets to be
encumbered to the extent that any such conveyance, transfer or encumbrance is
not done in the ordinary course of Tenant's business or would materially and
adversely affect the net worth of Tenant. Notwithstanding any of the foregoing
to the contrary, Landlord will agree to subordinate its lien obtained pursuant
to this Section 19.7 to any lien or security interest then being granted to a
bona fide third party financial institution by Tenant in or to any of Tenant's
personal property or equipment as security for indebtedness incurred for the
operation of Tenant's business provided that the secured party agrees in writing
to provide notice of any defaults under such financing to Landlord and to
promptly repair any damage to the Premises that occurs if the secured party
removes its collateral. Nothing contained herein or in any subordination
agreement shall be deemed to alter or expand Tenant's rights to remove any
furniture, fixtures or equipment from the Premises as hereinabove provided in
Article IX.
19.8 If more than one natural person or entity shall constitute Tenant,
then the liability of each such person or entity shall be joint and several. If
Tenant is a general partnership or other entity the partners or members of which
are otherwise subject to personal liability, then Landlord agrees that no
general partner or member of Tenant shall have personal liability for any
obligations under this Lease. No waiver, release or modification of the
obligations of any such person or entity shall affect the obligations of any
other such person or entity.
19.9 Each of the following shall constitute a "Landlord Default": (a)
Landlord's failure to make when due any payment to Tenant required under this
Lease, which failure continues for ten (10) days after Tenant delivers written
notice thereof to Landlord, and (b) Landlord's failure to perform or observe any
covenant or condition of this Lease not otherwise specifically set forth in this
Section 19.9, which failure continues for thirty (30) days after Tenant delivers
written notice thereof to Landlord, provided, however, that if such failure is
not reasonably capable of being cured within such thirty (30) day period, and
Landlord promptly commences and thereafter diligently takes all steps reasonably
necessary to complete such cure, then Landlord shall have such additional time
as is reasonably necessary to cure such failure.
19.10 Tenant represents and warrants that, as of the date of Tenant's
execution of this Lease, Tenant's net worth (without considering any good will)
("Tenant's Net Worth") equals or exceeds Thirteen Million Dollars
($13,000,000.00). If, at any time, or from time to time during the Lease Term,
Tenant's Net Worth is reduced to or below an amount equal to Seven Million
Dollars ($7,000,000.00), then, in each and every such event, Tenant shall notify
Landlord thereof in writing within one (1) business day thereafter. During the
period or periods, if any, commencing on the date on which Tenant's Net Worth
has been reduced to or below an amount equal to Seven Million Dollars
($7,000,000.00), and expiring (if at all) on the date on which Tenant provides
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written notice to Landlord certifying that Tenant's Net Worth next equals or
exceeds an amount equal to Ten Million Dollars ($10,000,000.00), then,
notwithstanding anything to the contrary contained in Section 19.1(a) above,
Tenant's failure to make when due any payment of the Base Rent, additional rent
or other sum due hereunder shall be deemed an Event of Default, without any
notice and/or cure period being applicable thereto. It is understood and agreed
that the terms of this Section 19.10 shall be applicable anytime and from time
to time that Tenant's Net Worth is equal to or less than Seven Million Dollars
($7,000,000), notwithstanding that Tenant's Net Worth previously may have
increased to Ten Million Dollars ($10,000,000) or more.
ARTICLE XX
BANKRUPTCY
20.1 An "Event of Bankruptcy" is the occurrence with respect to any of
Tenant, a Guarantor or any other person liable for Tenant's obligations
hereunder (including, without limitation, any general partner (or, if Tenant is
a limited liability company, any member of Tenant) of Tenant (a "General
Partner")) of any of the following: (a) such person becoming insolvent, as that
term is defined in Title 11 of the United States Code (the "Bankruptcy Code") or
under the insolvency laws of any state (the "Insolvency Laws"); (b) appointment
of a receiver or custodian for all or substantially all of the property of such
person, or the institution of a foreclosure or attachment action upon all or
substantially all of the property of such person; (c) filing by such person of a
voluntary petition under the provisions of the Bankruptcy Code or Insolvency
Laws; (d) filing of an involuntary petition against such person as the subject
debtor under the Bankruptcy Code or Insolvency Laws, which either (1) is not
dismissed within ninety (90) days after filing, or (2) results in the issuance
of an order for relief against the debtor; or (e) such person making or
consenting to an assignment for the benefit of creditors or a composition of
creditors; (f) such person submitting (either before or after execution hereof)
to Landlord any written financial statement containing any material inaccuracy
or omission upon which Landlord has relied in taking or failing to take any
action under this Lease. At any time that Tenant is not a corporation, the stock
of which is traded on a recognized national exchange or over-the-counter, upon
not less than twenty (20) days' prior written notice (as often as reasonably
necessary in connection with an actual or proposed sale or refinancing of the
Building or any interest therein but otherwise not more often than once in any
twelve (12) month period), Tenant shall submit such information concerning the
financial condition of any such person as Landlord may reasonably request. At
any time that Tenant is a corporation, the stock of which is traded on a
recognized national exchange or over-the-counter, upon not less than twenty (20)
days' prior written notice, Tenant shall deliver to Landlord the most recent
annual and quarterly reports of Tenant. Tenant warrants that all such
information heretofore and hereafter submitted is and shall be correct and
complete.
20.2 Upon occurrence of an Event of Bankruptcy, Landlord shall have all
rights and remedies available pursuant to Article XIX; provided, however, that
while a case (the "Case") in which Tenant is the subject debtor under the
Bankruptcy Code is pending, Landlord's right to terminate this Lease shall be
subject, to the extent required by the Bankruptcy Code, to any rights of Tenant
or its trustee in bankruptcy (collectively, "Trustee") to assume or assume and
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assign this Lease pursuant to the Bankruptcy Code. After the commencement of a
Case: (i) Trustee shall perform all post-petition obligations of Tenant under
this Lease; and (ii) if Landlord is entitled to damages (including, without
limitation, unpaid rent) pursuant to the terms of this Lease, then all such
damages shall be entitled to administrative expense priority pursuant to the
Bankruptcy Code. Any person or entity to which this Lease is assigned pursuant
to the Bankruptcy Code shall be deemed without further act or deed to have
assumed all of the obligations arising under this Lease on and after the date of
assignment, and any such assignee shall upon request execute and deliver to
Landlord an instrument confirming such assumption. Trustee shall not have the
right to assume or assume and assign this Lease unless Trustee promptly (a)
cures all defaults under this Lease, (b) compensates Landlord for damages
incurred as a result of such defaults, (c) provides adequate assurance of future
performance on the part of Trustee as debtor in possession or Trustee's
assignee, and (d) complies with all other requirements of the Bankruptcy Code.
If Trustee fails to assume or assume and assign this Lease in accordance with
the requirements of the Bankruptcy Code within sixty (60) days after the
initiation of the Case, then Trustee shall be deemed to have rejected this
Lease. If this Lease is rejected or deemed rejected, then Landlord shall have
all rights and remedies available to it pursuant to Article XIX. Adequate
assurance of future performance shall require, among other things, that the
following minimum criteria be met: (1) Tenant's gross receipts in the ordinary
course of business during the thirty (30) days preceding the Case must be
greater than ten (10) times the next monthly installment of Base Rent and
additional rent due; (2) Both the average and median of Tenant's monthly gross
receipts in the ordinary course of business during the seven (7) months
preceding the Case must be greater than the next monthly installment of Base
Rent and additional rent due; (3) Trustee must pay its estimated pro-rata share
of the cost of all services performed or provided by Landlord (whether directly
or through agents or contractors and whether or not previously included as part
of Base Rent) in advance of the performance or provision of such services; (4)
Trustee must agree that Tenant's business shall be conducted in a first-class
manner, and that no liquidating sale, auction or other non-first-class business
operation shall be conducted in the Premises; (5) Trustee must agree that the
use of the Premises as stated in this Lease shall remain unchanged and that no
prohibited use shall be permitted; (6) Trustee must agree that the assumption or
assumption and assignment of this Lease shall not violate or affect the rights
of other tenants of the Building and the Complex; (7) Trustee must pay at the
time the next monthly installment of Base Rent is due, in addition to such
installment, an amount equal to the monthly installments of Base Rent, and
additional rent due for the next six (6) months thereafter, such amount to be
held as a security deposit; (8) Trustee must agree to pay, at any time Landlord
draws on such security deposit, the amount necessary to restore such security
deposit to its original amount; (9) Trustee must comply with all duties and
obligations of Tenant under this Lease; and (10) All assurances of future
performance specified in the Bankruptcy Code must be provided.
ARTICLE XXI
SUBORDINATION
21.1 This Lease is subject and subordinate to the lien, provisions,
operation and effect of all mortgages, deeds of trust, ground leases or other
security instruments which may now or hereafter encumber the Building or the
Land (collectively, "Mortgages"), to all funds and indebtedness intended to be
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secured thereby, and to all renewals, extensions, modifications, recastings or
refinancings thereof; provided, however, that if Tenant is leasing more than
fifty percent (50%) of the square feet of rentable area of the Building, then
this Lease shall not be subject or subordinate to any future Mortgage unless
such holder agrees to enter into a subordination, non-disturbance and attornment
agreement with Tenant on such holder's standard form. The holder of any Mortgage
to which this Lease is subordinate shall have the right (subject to any required
approval of the holders of any superior Mortgage) at any time to declare this
Lease to be superior to the lien, provisions, operation and effect of such
Mortgage and Tenant shall execute, acknowledge and deliver all documents
required by such holder in confirmation thereof.
21.2 Tenant shall at Landlord's request promptly execute any requisite or
appropriate document confirming the foregoing subordination within five (5) days
after Landlord's request therefor. Tenant waives the provisions of any statute
or rule of law now or hereafter in effect which may give or purport to give
Tenant any right to terminate or otherwise adversely affect this Lease and
Tenant's obligations hereunder in the event any foreclosure proceeding is
prosecuted or completed or in the event the Building, the Land or Landlord's
interest therein is transferred by foreclosure, by deed in lieu of foreclosure
or similar transfer. If this Lease is not extinguished upon any such transfer or
by the transferee following such transfer, then, at the request of such
transferee, Tenant shall attorn to such transferee and shall recognize such
transferee as the landlord under this Lease. Tenant agrees that upon any such
attornment, such transferee shall not be (a) bound by any payment of the Base
Rent or additional rent more than one (1) month in advance, except prepayments
in the nature of security for the performance by Tenant of its obligations under
this Lease, but only to the extent such prepayments have been delivered to such
transferee, (b) bound by any amendment of this Lease made without the consent of
the holder of each Mortgage existing as of the date of such amendment, (c)
liable for damages for any breach, act or omission of any prior landlord, or (d)
subject to any offsets or defenses which Tenant might have against any prior
landlord; provided, however, that after succeeding to Landlord's interest under
this Lease, such transferee shall agree to perform in accordance with the terms
of this Lease all obligations of Landlord arising or continuing after the date
of transfer. Within five (5) days after the request of such transferee, Tenant
shall execute, acknowledge and deliver any requisite or appropriate document
submitted to Tenant confirming such attornment.
21.3 If any prospective or current holder of a Mortgage requires that
modifications to this Lease be obtained, and provided that such modifications
(a) are reasonable, (b) do not adversely affect in a material manner Tenant's
use of the Premises as herein permitted or Tenant's rights or obligations under
this Lease, and (c) do not increase the rent and other sums to be paid by
Tenant, then Landlord may submit to Tenant an amendment to this Lease
incorporating such required modifications, and Tenant shall execute, acknowledge
and deliver such amendment to Landlord within five (5) days after Tenant's
receipt thereof.
21.4 If (a) the Building or the Land, or both, are at any time subject to a
Mortgage, (ii) this Lease and rent payable hereunder is assigned to the holder
of the Mortgage, and (iii) the Tenant is given notice of such assignment,
including the name and address of the assignee, then, in that event, Tenant
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shall not terminate this Lease or make any abatement in the rent payable
hereunder for any default on the part of the Landlord without first giving
notice, in the manner provided elsewhere in this Lease for the giving of
notices, to the holder of such Mortgage, specifying the default in reasonable
detail, and affording such holder a reasonable opportunity to make performance,
at its election, for and on behalf of the Landlord, except that (x) such holder
shall have at least thirty (30) days to cure the default; (y) if such default
cannot be cured with reasonable diligence and continuity within thirty (30)
days, such holder shall have any additional time (up to a maximum of one hundred
eighty (180) days) as may be reasonably necessary to cure the default with
reasonable diligence and continuity (provided that such holder in fact
continuously pursues such cure with commercially reasonable diligence); and (z)
if the default cannot reasonably be cured without such holder having obtained
possession of the Building, such holder shall have such additional time as may
be reasonably necessary under the circumstances to obtain possession of the
Building and thereafter to cure the default with reasonable diligence and
continuity. If more than one such holder makes a written request to Landlord to
cure the default, the holder making the request whose lien is the most senior
shall have such right.
21.5 Landlord shall obtain a subordination, non-disturbance, and attornment
agreement from the current holder of the Mortgage on the form attached hereto as
Exhibit D. At any time that Tenant is leasing more than fifty (50%) of the
square feet of rentable area of the Building, Landlord shall, upon written
request from Tenant (provided that Landlord has provided written notice to
Tenant, which may be in the form of an estoppel certificate, of the holder of
each such Mortgage), obtain a subordination, non-disturbance and attornment
agreement from the holder of any future Mortgage on such holder's standard form.
ARTICLE XXII
HOLDING OVER
22.1 Tenant acknowledges that it is extremely important that Landlord have
substantial advance notice of the date on which Tenant will vacate the Premises,
because Landlord will require an extensive period to locate a replacement tenant
and because Landlord plans its entire leasing and renovation program for the
Building in reliance on its lease expiration dates. Tenant also acknowledges
that if Tenant fails to surrender the Premises or any portion thereof at the
expiration or earlier termination of the Lease Term, then it will be
conclusively presumed that the value to Tenant of remaining in possession, and
the loss that will be suffered by Landlord as a result thereof, far exceed the
Base Rent and additional rent that would have been payable had the Lease Term
continued during such holdover period. Therefore, if Tenant (or anyone claiming
through Tenant) does not immediately surrender the Premises or any portion
thereof upon the expiration or earlier termination of the Lease Term, then the
rent payable by Tenant hereunder shall be increased to equal one hundred fifty
percent (150%) of the greater of (1) the fair market rent for the entire
Premises, or (2) the Base Rent, additional rent and other sums that would have
been payable pursuant to the provisions of this Lease if the Lease Term had
continued during such holdover period. Such rent shall be computed by Landlord
and paid by Tenant on a monthly basis and shall be payable on the first day of
such holdover period and the first day of each calendar month thereafter during
such holdover period until the Premises have been vacated. Notwithstanding any
other provision of this Lease, Landlord's acceptance of such rent shall not in
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any manner adversely affect Landlord's other rights and remedies, including
Landlord's right to evict Tenant and to recover all damages. Any such holdover
shall be deemed to be a tenancy-at-sufferance and not a tenancy-at-will or
tenancy from month-to-month. In no event shall any holdover be deemed a
permitted extension or renewal of the Lease Term, and nothing contained herein
shall be construed to constitute Landlord's consent to any holdover or to give
Tenant any right with respect thereto.
ARTICLE XXIII
COVENANTS OF LANDLORD
23.1 Landlord covenants that it has the right to enter into this Lease, and
that if Tenant shall perform timely all of its obligations hereunder, then,
subject to the provisions of this Lease, Tenant shall during the Lease Term
peaceably and quietly occupy and enjoy the full possession of the Premises
without hindrance by Landlord or any party claiming through or under Landlord.
23.2 Landlord reserves the following rights: (a) to change the street
address and name of the Building; (b) to change the arrangement and location of
entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets
or other public parts of the Building if required by applicable Law; (c) to
erect, use and maintain pipes, wires, structural supports, ducts and conduits in
and through the Premises to the extent required to perform Landlord's
obligations under this Lease; (d) to resubdivide the Land or to combine the Land
with other lands (provided that the calculation of Operating Charges shall be
equitably adjusted to the extent necessary in connection therewith); (e) if
Tenant vacates the Premises prior to the expiration of the Lease Term and there
has occurred an Event of Default under this Lease, to make Alterations to or
otherwise prepare the Premises for reoccupancy without relieving Tenant of its
obligation to pay all Base Rent, additional rent and other sums due under this
Lease through such expiration; (f) to construct improvements (including kiosks)
on the Land and in the public and common areas of the Building (provided,
however, that costs associated with such improvements shall only be included in
Operating Charges to the extent Tenant is permitted use thereof, or otherwise
benefits therefrom); (g) to prohibit smoking in the entire Building or portions
thereof (including the Premises) and on the Land, so long as such prohibitions
are in accordance with applicable law; and (h) if any excavation or other
substructure work shall be made or authorized to be made upon land adjacent to
the Building or the Land, to enter the Premises for the purpose of doing such
work as is required to preserve the walls of the Building and to preserve the
land from injury or damage and to support such walls and land by proper
foundations; provided, however, that in no event shall Landlord's exercise of
any of the foregoing rights materially and adversely affects the operations of
Tenant's business in the Premises. Landlord shall use commercially reasonable
efforts to minimize any such interference. Landlord may exercise any or all of
the foregoing rights without being deemed to be guilty of an eviction, actual or
constructive, or a disturbance of Tenant's business or use or occupancy of the
Premises.
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ARTICLE XXIV
PARKING
24.1 During the Lease Term, Tenant shall have the exclusive right to use
the Parking Permits (as defined in Section 1.17 hereinabove) for the unreserved
parking of passenger automobiles in the parking areas located on the Land (the
"Parking Area"); provided, however, that at any time that Tenant is not leasing
all of the rentable area in the Building, the use of the Parking Permits shall
be on a non-exclusive, first-come, first-served basis.
24.2 Landlord reserves the right to establish and modify or amend
reasonable rules and regulations governing the use of such parking areas. Tenant
shall be prohibited from using the Parking Area for purposes other than for
parking registered vehicles. The storage or repair of vehicles in the Parking
Area shall be prohibited.
24.3 Tenant shall not assign, sublet or transfer any parking permits except
in connection with an assignment or subletting permitted under this Lease. Any
other attempted assignment, sublet, or transfer shall be void. Tenant and its
employees shall observe reasonable safety precautions in the use of the Parking
Area and shall at all times abide by all rules and regulations governing the use
of the Parking Area reasonably promulgated by Landlord or the Parking Area
operator. Landlord reserves the right to close the Parking Area during periods
of unusually inclement weather or for repairs. Landlord does not assume any
responsibility, and shall not be held liable, for any damage or loss to any
automobile or personal property in or about the Parking Area, or for any injury
sustained by any person in or about the Parking Area; provided, however, that
Landlord shall not be released from liability to Tenant for physical injury to a
natural person caused solely and directly by the negligence or willful
misconduct of Landlord, unless the same was contributed to by the criminal act
of a third party.
ARTICLE XXV
GENERAL PROVISIONS
25.1 Tenant acknowledges that neither Landlord nor any broker, agent or
employee of Landlord has made any representation or promise with respect to the
Premises or the Building except as herein expressly set forth, and no right,
privilege, easement or license is being acquired by Tenant except as herein
expressly set forth.
25.2 Nothing contained in this Lease shall be construed as creating any
relationship between Landlord and Tenant other than that of landlord and tenant.
Tenant shall not use the name of the Building for any purpose other than as the
address of the business to be conducted by Tenant in the Premises, use the name
of the Building as Tenant's business address after Tenant vacates the Premises,
or do or permit to be done anything in connection with Tenant's business or
advertising which in the reasonable judgment of Landlord may reflect unfavorably
on Landlord or the Building or confuse or mislead the public as to any apparent
connection or relationship between Landlord, the Building and Tenant.
25.3 Landlord and Tenant each warrants to the other that in connection with
this Lease it has not employed or dealt with any broker, agent or finder, other
than the Broker. Landlord acknowledges that Landlord shall pay any commission or
fee
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due to the Broker pursuant to a separate agreement. Tenant shall indemnify and
hold Landlord harmless from and against any claim for brokerage or other
commissions asserted by any broker, agent or finder employed by Tenant or with
whom Tenant has dealt, other than the Broker. Landlord shall indemnify and hold
Tenant harmless from and against any claim for brokerage or other commissions
asserted by any broker, agent or finder employed by Landlord or with whom
Landlord has dealt, other than the Broker.
25.4 At any time and from time to time, upon not less than five (5) days'
prior written notice, Tenant and each subtenant, assignee, licensee or
concessionaire or occupant of Tenant shall execute, acknowledge and deliver to
Landlord and/or any other person or entity designated by Landlord, a written
statement certifying: (a) that this Lease is unmodified and in full force and
effect (or if there have been modifications, that this Lease is in full force
and effect as modified and stating the modifications); (b) the dates to which
the rent and any other charges have been paid; (c) to the best of Tenant's
knowledge, whether or not Landlord is in default in the performance of any
obligation, and if so, specifying the nature of such default; (d) the address to
which notices to Tenant are to be sent; (e) whether or not this Lease is subject
and subordinate to all Mortgages encumbering the Building or the Land of which
Tenant has received written notice (including the Mortgage existing as of the
date hereof), which notice may be in the form of such estoppel certificate; (f)
that Tenant has accepted the Premises and that all work thereto has been
completed (or if such work has not been completed, specifying the incomplete
work); and (g) such other matters as Landlord may reasonably request. Any such
statement may be relied upon by any owner of the Building or the Land, any
prospective purchaser of the Building or the Land, any holder or prospective
holder of a Mortgage or any other person or entity.
25.5 LANDLORD, TENANT, ALL GUARANTORS AND ALL GENERAL PARTNERS OF TENANT
EACH WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, TENANT'S USE
OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE. TENANT
CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY SUCH ACTION AT
THE PREMISES; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE CONSTRUED AS
REQUIRING SUCH SERVICE AT THE PREMISES. LANDLORD, TENANT, ALL GUARANTORS AND ALL
GENERAL PARTNERS OF TENANT EACH WAIVES ANY OBJECTION TO THE VENUE OF ANY ACTION
FILED IN ANY COURT SITUATED IN THE JURISDICTION IN WHICH THE BUILDING IS
LOCATED, AND WAIVES ANY RIGHT, CLAIM OR POWER, UNDER THE DOCTRINE OF FORUM NON
CONVENIENS OR OTHERWISE, TO TRANSFER ANY SUCH ACTION TO ANY OTHER COURT.
25.6 All notices or other communications required under this Lease shall be
in writing and shall be deemed duly given and received when delivered in person
(with receipt therefor), on the next business day after deposit with a
recognized overnight delivery service, or on the second day after being sent by
certified or registered mail, return receipt requested, postage prepaid, to the
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following addresses: (a) if to Landlord, at each of the Landlord Notice
Addresses specified in Article I; (b) if to Tenant, at the Tenant Notice Address
specified in Article I. Either party may change its address for the giving of
notices by notice given in accordance with this Section. If Landlord or the
holder of any Mortgage notifies Tenant that a copy of any notice to Landlord
shall be sent to such holder at a specified address, then Tenant shall send (in
the manner specified in this Section and at the same time such notice is sent to
Landlord) a copy of each such notice to such holder, and no such notice shall be
considered duly sent unless such copy is so sent to such holder. Any such holder
shall have the rights set forth in Section 21.4. Any cure of Landlord's default
by such holder shall be treated as performance by Landlord.
25.7 Each provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law. If any provision of this Lease or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, then such provision shall be deemed to be replaced by the
valid and enforceable provision most substantively similar to such invalid or
unenforceable provision, and the remainder of this Lease and 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. Nothing contained in
this Lease shall be construed as permitting Landlord to charge or receive
interest in excess of the maximum rate allowed by law.
25.8 Feminine, masculine or neuter pronouns shall be substituted for those
of another form, and the plural or singular shall be substituted for the other
number, in any place in which the context may require such substitution.
25.9 The provisions of this Lease shall be binding upon and inure to the
benefit of the parties and each of their respective representatives, successors
and assigns, subject to the provisions herein restricting assignment or
subletting.
25.10 This Lease (and, with respect to any time prior to the Lease
Commencement Date, the Prior Lease) contains and embodies the entire agreement
of the parties hereto and supersedes all prior agreements, negotiations, letters
of intent, proposals, representations, warranties, understandings, suggestions
and discussions, whether written or oral, between the parties hereto. Any
representation, inducement, warranty, understanding or agreement that is not
expressly set forth in this Lease shall be of no force or effect. This Lease may
be modified or changed in any manner only by an instrument signed by both
parties. This Lease includes and incorporates all Exhibits attached hereto.
25.11 This Lease shall be governed by the Laws of the jurisdiction in which
the Building is located. There shall be no presumption that this Lease be
construed more strictly against the party who itself or though its agent
prepared it, it being agreed that all parties hereto have participated in the
preparation of this Lease and that each party had the opportunity to consult
legal counsel before the execution of this Lease.
25.12 Headings are used for convenience and shall not be considered when
construing this Lease.
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25.13 The submission of an unsigned copy of this document to Tenant shall
not constitute an offer or option to lease the Premises. This Lease shall become
effective and binding only upon execution and delivery by both Landlord and
Tenant.
25.14 Time is of the essence with respect to each of Tenant's obligations
hereunder.
25.15 This Lease may be executed in multiple counterparts, each of which
shall be deemed an original and all of which together constitute one and the
same document. Faxed signatures shall have the same binding effect as original
signatures.
25.16 Neither this Lease nor a memorandum thereof shall be recorded.
25.17 [Intentionally omitted].
25.18 Any elimination or shutting off of light, air, or view by any
structure which may be erected by a person or entity other than Landlord on
lands adjacent to the Building shall in no way affect this Lease or impose any
liability on Landlord.
25.19 Except as otherwise provided in this Lease, any additional rent or
other sum owed by Tenant to Landlord (other than Base Rent), and any cost,
expense, damage or liability incurred by Landlord for which Tenant is liable,
shall be considered additional rent payable pursuant to this Lease to be paid by
Tenant no later than ten (10) days after the date Landlord notifies Tenant of
the amount thereof.
25.20 Landlord's and Tenant's liabilities and obligations with respect to
the period prior to the expiration or earlier termination of the Lease Term
shall survive such expiration or earlier termination.
25.21 If Landlord or Tenant is in any way delayed or prevented from
performing any obligation (except the obligations to pay rent and other sums due
under this Lease) due to fire, act of God, governmental act or failure to act,
strike, labor dispute, inability to procure materials, or any cause beyond
Landlord's or Tenant's (as applicable) reasonable control (whether similar or
dissimilar to the foregoing events), then the time for performance of such
obligation shall be excused for the period of such delay or prevention and
extended for a period equal to the period of such delay, interruption or
prevention.
25.22 Landlord's review, approval and consent powers (including the right
to review plans and specifications) are for its benefit only. Such review,
approval or consent (or conditions imposed in connection therewith) shall be
deemed not to constitute a representation concerning legality, safety or any
other matter.
25.23 The deletion of any printed, typed or other portion of this Lease
shall not evidence the parties' intention to contradict such deleted portion.
Such deleted portion shall be deemed not to have been inserted in this Lease.
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25.24 At the expiration or earlier termination of the Lease Term, Tenant
shall deliver to Landlord all keys and security cards to the Building and the
Premises, whether such keys were furnished by Landlord or otherwise procured by
Tenant, and shall inform Landlord of the combination of each lock, safe and
vault, if any, in the Premises.
25.25 Tenant and the person executing and delivering this Lease on Tenant's
behalf each represents and warrants that such person is duly authorized to so
act; and has the power and authority to enter into this Lease; and that all
action required to authorize Tenant and such person to enter into this Lease has
been duly taken. Tenant represents that Tenant is duly organized, is qualified
to do business in the jurisdiction in which the Building is located, is in good
standing under the Laws of the state of its organization and the Laws of the
jurisdiction in which the Building is located.
25.26 This Lease is contingent upon Wells Fargo Bank, National Association,
the lender that currently holds the first lien which encumbers the Building,
approving the Lease. In the event that such lender does not approve the Lease,
Landlord shall have the right to terminate this Lease. The delivery to Tenant by
Landlord of a fully-executed copy of this Lease along with a non-disturbance
agreement executed by Wells Fargo Bank, National Association, shall be deemed to
constitute the consent by Wells Fargo Bank, National Association, to this Lease.
25.27 For purposes of Section 55-2, Code of Virginia (1950), as amended,
this Lease is and shall be deemed a deed of lease. For purposes of Section
55-218.1, Code of Virginia (1950), as amended, Landlord's resident agent is
Edward R. Parker, 5511 Staples Mill Road, Richmond, Virginia 23228.
25.28 If any Base Rent or additional rent is collected by or through an
attorney or if Landlord requires the services of an attorney to cause Tenant to
cure any default, to evict Tenant or to pursue any other remedies to which
Landlord is entitled hereunder, Tenant shall pay the reasonable fees of such
attorney together with all reasonable costs and expenses incurred by Landlord in
connection with such matters, whether or not any legal proceedings have been
commenced. Notwithstanding the foregoing sentence to the contrary, in the event
Landlord or Tenant is required or elects to take legal action against the other
party to enforce the provisions of this Lease, then the prevailing party in such
action shall be entitled to collect from the other party its costs and expenses
incurred in connection with the legal action (including, without limitation,
reasonable attorneys' fees and court costs).
ARTICLE XXVI
COMMUNICATIONS EQUIPMENT
26.1 Tenant shall have the non-exclusive right to install and maintain roof
antennas and satellite dishes (the "Communications Equipment") on the roof of
the Building throughout the Lease Term, subject to the following terms and
conditions:
(a) The number location, size, weight, height and all other features and
specifications of the Communications Equipment and the manner of initial
installation of the same shall be subject to Landlord's prior written approval,
which approval shall not be unreasonably withheld, conditioned or delayed.
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Tenant shall reimburse Landlord for Landlord's reasonable out-of-pocket expenses
incurred in such review. All repair and installation required after the initial
installation of the Communications Equipment also shall be subject to Landlord's
prior written approval (not to be unreasonably withheld, conditioned, or
delayed).
(b) Tenant, at its sole cost and expense, shall procure all necessary
governmental permits and licenses for the construction and maintenance of the
Communications Equipment, and shall at all times comply with all requirements of
laws, ordinances, orders, rules and regulations of all public authorities and
insurance companies which shall impose any order or duty upon Landlord or Tenant
with respect to or affecting the Communications Equipment or arising out of
Tenant's use or manner of use thereof. The failure by Tenant to procure any such
permits shall not in any way affect Tenant's obligations under this Lease.
(c) Tenant shall pay and discharge all reasonable out-of-pocket costs and
expenses incurred by Landlord in connection with the furnishing, installation,
maintenance, operation and removal of the Communications Equipment within thirty
(30) business days after written demand therefor.
(d) Installation of the Communications Equipment shall be at Tenant's sole
expense and risk. The Communications Equipment shall be approved by Landlord and
shall be screened from view from the grounds adjacent to the Building in a
manner and with materials reasonably acceptable to Landlord. Tenant shall not
disturb the roof membrane or make any other penetration on the roof or the
exterior facade of the Building except as otherwise approved in writing by
Landlord, which approval shall not be unreasonably withheld, conditioned, or
delayed. Tenant shall be permitted access to the roof only upon prior notice to
Landlord, provided that, at Landlord's option, Tenant is accompanied by
Landlord's agent or representative. Any change or attachment to the roof system
to which Landlord may consent shall be performed at Tenant's cost by a
contractor approved by Landlord.
(e) Tenant shall maintain the Communications Equipment in a clean and safe
manner throughout the entire Lease Term, and shall comply with all applicable
laws, ordinances and regulations, as well as such rules and regulations as
Landlord had adopted or shall adopt from time to time. In addition, all repairs
to the Building made necessary by reason of the furnishing, installation,
maintenance, operation or removal of the Communications Equipment or any
replacements thereof (including, without limitation, any invalidation of the
roof warranty due to Tenant's actions) shall be at Tenant's sole cost. Not later
than the expiration or termination of this Lease, Tenant agrees that it will
remove promptly the Communications Equipment and any wiring or accessories
associated with the Communications Equipment and shall repair any damage to the
Building or Land caused by the installation or removal of the Communications
Equipment and related equipment and restore the Building to its preexisting
condition, normal wear and tear excepted. In the event Tenant fails to remove
the Communications Equipment and associated equipment, Landlord may remove and
dispose of the Communications Equipment and associated equipment and charge
Tenant the entire cost thereof.
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(f) Landlord may notify Tenant when in Landlord's reasonable judgment it is
necessary to move any Communications Equipment to another part of the roof or to
another location on the Land, provided that such relocation will not materially
adversely affect Tenant's ability to use such Communications Equipment, in which
event Tenant shall promptly move such Communications Equipment to such location
as designated by Landlord. Landlord shall reimburse Tenant for the reasonable
out-of-pocket costs, if any, incurred by Tenant in connection with any such
relocation required by Landlord. If it becomes unlawful for Tenant's
Communications Equipment to remain on the roof for any reason, then Tenant shall
promptly remove same after receipt of notice from Landlord demanding such
removal thereof. Tenant hereby acknowledges and agrees that the requirement that
Tenant relocate or remove altogether any Communications Equipment shall not
result in any credit or abatement in the rent payable under this Lease.
(g) Tenant shall pay to the utility company all amounts incurred in
connection with the electricity consumed by the Communications Equipment in
accordance with Section 14.4.
(h) Tenant's Communications Equipment shall not interfere with the
operation of the property, the structure of the Building, any of the Building
systems, or the equipment (including airwaves reception and other equipment) of
any other tenant in the Building.
(i) Tenant shall maintain such insurance as is appropriate with respect to
the installation, operation and maintenance of the Communications Equipment.
Landlord shall have no liability on account of any damage to or interference
with the operation of the Communications Equipment except for physical damage
caused solely and directly by Landlord's negligence or willful misconduct and
Landlord expressly makes no representations or warranties with respect to the
capacity for Communications Equipment placed on the roof of the Building to
receive or transmit signals. The operation of the Communications Equipment shall
be at Tenant's sole and absolute risk. Tenant shall in no event interfere with
the use of any other communications equipment of Landlord located on the roof of
the Building and necessary to operate, maintain or service the Building.
(j) The Communications Equipment may be used by Tenant only in the conduct
of Tenant's primary business.
(k) (1) In the event Tenant's equipment causes adverse interference to
equipment located on the roof of the Building prior to the installation of
Tenant's equipment, the Building Structure or Building Systems, Tenant will take
all steps necessary to correct and eliminate the interference. If said
interference cannot be eliminated within a reasonable length of time, not to
exceed ten (10) days after notice thereof to Tenant, Tenant agrees to cease
using the equipment that is creating the interference except for short tests
necessary for the elimination of the interference. In the event of an emergency
or other situation requiring immediate resolution, as determined by Landlord
(including without limitation, interference to the Building Structure, the
Building Systems, or any other equipment, whether or not located on the roof of
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the Building), Landlord shall have the right, but not the obligation, without
any prior notice to Tenant to attempt to correct or eliminate such interference,
at Tenant's sole cost and expense.
(2) In the event that the equipment of another entity, which equipment is
installed in the Building subsequent to the date on which Tenant's equipment is
installed, shall adversely interfere with Tenant's transmission and/or reception
from its equipment, then, in such event, Landlord shall cause the owner of such
subsequently installed equipment to take all steps necessary to correct and
eliminate the interference (except for short tests necessary for the elimination
of the interference).
(l) Tenant's rights under this Section may be exercised only by Netrix
Corporation, an assignee of this Lease that is a Permitted Transferee of Netrix
Corporation, and, provided Tenant leases the entire Building, any other assignee
of this Lease approved by Landlord pursuant to Article VII, and may not be
exercised by any other entity.
ARTICLE XXVII
RENEWAL OPTION
27.1 Landlord hereby grants to Tenant the conditional right exercisable at
Tenant's option, to renew the term of this Lease for one (1) term of five (5)
years. If exercised, and if the conditions applicable thereto have been
satisfied, the renewal term (the "Renewal Term") shall commence immediately
following the end of the initial Lease Term. The rights of renewal herein
granted to Tenant shall be subject to, and shall be exercised in accordance
with, the following terms and conditions:
(a) Tenant shall exercise its right of renewal with respect to the Renewal
Term by giving Landlord written notice thereof not earlier than three hundred
ninety (390) days nor later than three hundred sixty (360) days prior to the
expiration of the initial Lease Term (the "Renewal Notice"). If Tenant timely
provides such Renewal Notice, the base rent, escalation factor, parking charge
and additional rent for the Renewal Term shall be the Market Rate (as
hereinafter defined), provided the parties agree on the same after negotiating
in good faith. For thirty (30) days after Landlord's timely receipt of the
Renewal Notice, the parties shall negotiate in good faith on the existing
"market rate" base rent, escalation factor, parking charge and additional rent
(collectively, the "Market Rent"). Among the factors to be considered by the
parties during such negotiations shall be the general office rental market in
the Reston/Herndon, Virginia, area, and the rental rates then being offered by
Landlord to comparable tenants for comparable space in the Building. If, based
upon the above factors, Landlord and Tenant are able to agree on the Market
Rent, then the base rent, escalation factor, parking charge and additional rent
which shall be payable during the Renewal Term shall be such Market Rent. In no
event, however, shall Landlord be under any obligation to agree to a base rent,
escalation factor, parking charge or additional rent for the Renewal Term which
is less than the Base Rent, escalation factor, parking charge or additional rent
in effect under this Lease during the Lease Year immediately preceding the
commencement of the Renewal Term. If during such thirty (30) day period the
parties agree on such base rent, escalation factor, parking charge and
additional rent payable during each year of such Renewal Term, and all other
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terms and conditions, then they shall promptly execute an amendment to this
Lease stating the rent and charges and other terms and conditions so agreed
upon. If during such thirty (30) day period the parties are unable after
negotiating in good faith as required above, for any reason whatsoever, to agree
on such base rent, escalation factor, parking charge and additional rent payable
and all other terms and conditions, then Tenant's rights with respect to the
Renewal Term shall lapse and be of no further force or effect.
(b) If the Renewal Notice is not given timely, then Tenant's rights of
renewal pursuant to this Section 27.1 shall lapse and be of no further force or
effect.
(c) If more than three (3) Events of Default have occurred during the Lease
Term, or there exists an Event of Default under this Lease on the date the
Renewal Notice is given to Landlord, or at any time thereafter prior to
commencement of the Renewal Term, or there has been a material adverse change in
Tenant's financial condition or liquidity, then, at Landlord's option, the
Renewal Term shall not commence and the term of this Lease shall expire at the
expiration of the initial Lease Term.
(d) If at any time fifty percent (50%) or more of the Premises has been
terminated pursuant to Section 7.4 above, subleased or assigned (other than an
assignment or sublease to a Permitted Transferee, or a sublease to a Client),
then Tenant's rights pursuant to this Section 27.1 shall lapse and be of no
further force or effect.
(e) Tenant's right of renewal under this Section 27.1 may be exercised only
by Netrix Corporation, any assignee that is a Permitted Transferee, and any
other assignee of Netrix Corporation approved by Landlord pursuant to Article
VII for which Landlord expressly approved the right of such assignee to exercise
this renewal right, and may not be exercised by any other transferee, sublessee
or assignee of Tenant.
ARTICLE XXVIII
SELF-HELP
28.1 If (a) Landlord fails to perform any repair or maintenance obligations
of Landlord under this Lease (the "Delayed Repair"), (b) such Delayed Repair
materially, adversely affects Tenant's ability to conduct the business conducted
in the Premises or causes a life/safety concern with respect to the Building,
its occupants or visitors, (c) the performance of such Delayed Repair is within
Landlord's control, (d) such Delayed Repair shall not be performed within thirty
(30) days after written notice thereof to Landlord, (e) such interruption is not
the result of the negligence or willful misconduct of Tenant or any Invitee, and
(f) Tenant reasonably believes that it could perform the Delayed Repair more
quickly than Landlord, without sacrificing the quality of the repair proposed by
Landlord, then Tenant shall have the right to notify Landlord and the holder of
Landlord's Mortgage in writing of Tenant's intention to perform such Delayed
Repair (the "Repair Notice"). The Repair Notice shall (i) include a statement
that Tenant intends to exercise this right to self help, (ii) identify in
reasonable detail both the basis for the self help and the actions Tenant
intends to take to perform such repair and (iii) demonstrate that Tenant will be
able to effect a faster completion of the Delayed Repair than Landlord, without
sacrificing the quality of the repair proposed by Landlord. If Landlord or the
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holder of Landlord's mortgage commences and diligently pursues such Delayed
Repair within fifteen (15) days after receipt of the Repair Notice, then Tenant
shall have no further rights under this Article XXVIII (unless and until
Landlord or the holder of Landlord's mortgage fails to diligently proceed with
such Delayed Repair). If Landlord or the holder of Landlord's mortgage fails to
commence or diligently proceed with such Delayed Repair within such fifteen (15)
day period, then Tenant shall have the right to perform the Delayed Repair, in
accordance with the terms and conditions of this Article XXVIII. Notwithstanding
anything to the contrary contained herein, Tenant's self help right contained
herein is conditioned upon strict compliance by Tenant with the following
requirements: (w) Tenant shall ensure that all such work is performed solely by
contractors, subcontractors (to the extent performing work on the Building
Structure or Building Systems) and design consultants, as applicable, set forth
on any list submitted by Tenant and approved by Landlord from time to time and
only after the entity performing such work has obtained public liability and
worker's compensation insurance policies covering all persons who will perform
such work and meeting standards comparable to those required by landlords of
buildings comparable to the Building for work performed at such buildings; (x)
Tenant shall cause all such work is performed in accordance with all applicable
rules, laws and regulations applicable to the Building, including without
limitation all applicable building codes, clauses (A), (B), and (E) of Section
9.2 above, (y) no such work shall exceed the capacity of, hinder the
effectiveness of, or interfere with the electrical, mechanical, heating,
ventilating, air conditioning, or plumbing systems of the Premises or the
Building, and (z) no mechanic's or materialman's liens shall be filed against
the Building or the Land in connection with any such work. If Tenant performs
such Delayed Repair in accordance with all of the terms and conditions contained
herein, Landlord shall reimburse Tenant for reasonable, out-of-pocket costs and
expenses incurred by Tenant solely and directly as a result thereof, within
thirty (30) days after receipt of invoices evidencing such costs.
Notwithstanding anything to the contrary contained herein, in no event shall
Tenant have any right whatsoever to set-off against any amounts payable by
Tenant to Landlord under this Lease any amounts incurred by Tenant in connection
with such Delayed Repair.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
WITNESS/ATTEST: LANDLORD:
BEDMINSTER CAPITAL FUNDING LLC,
a New Jersey limited liability company
By: Advance Realty Advisors, Inc.,
Managing Agent
____________________ By: _________________[SEAL]
Name: _______________________
Title: _______________________
-50-
<PAGE>
WITNESS/ATTEST: TENANT:
NETRIX CORPORATION, a Delaware corporation
____________________ By: _______________________[SEAL]
Name: __________________________
Title: __________________________
-51-
<PAGE>
EXHIBIT A-1
PLAN SHOWING PREMISES LOCATED ON FIRST FLOOR
[to be attached]
A-1-1
<PAGE>
EXHIBIT A-2
PLAN SHOWING PREMISES LOCATED ON SECOND FLOOR
[to be attached]
A-2-1
<PAGE>
EXHIBIT B
RULES AND REGULATIONS
The following rules and regulations have been formulated for the
safety and well-being of all tenants of the Building. Strict adherence to these
rules and regulations is necessary to guarantee that every tenant will enjoy a
safe and undisturbed occupancy of its premises. Any violation of these rules and
regulations by Tenant shall constitute a default by Tenant under the Lease. The
rules and regulations are as follows:
1. Tenant shall not obstruct or encumber or use for any purpose other
than ingress and egress to and from the Premises any sidewalk, entrance,
passage, court, elevator, vestibule, stairway, corridor, hall or other part of
the Building not exclusively occupied by Tenant. No bottles, parcels or other
articles shall be placed, kept or displayed on window ledges, in windows or in
corridors, stairways or other public parts of the Building. Tenant shall not
place any showcase, mat or other article outside the Premises.
2. At any time that Tenant leases less than the entire Building, (a)
Landlord shall have the right to control and operate the public portions of the
Building and the facilities furnished for common use of the tenants, in such
manner as Landlord deems best for the benefit of the tenants generally, (b)
Tenant shall not permit the visit to the Premises of persons in such numbers or
under such conditions as to interfere with the use and enjoyment of the
entrances, corridors, elevators and other public portions or facilities of the
Building by other tenants, (c) Tenant shall coordinate in advance with
Landlord's property management department all deliveries to the Building so that
arrangements can be made to minimize such interference, (d) Tenant shall not
permit its employees and invitees to congregate in the elevator lobbies or
corridors of the Building, and (e) canvassing, soliciting and peddling in the
Building are prohibited, and Tenant shall cooperate to prevent the same.
3. Tenant shall not attach, hang or use in connection with any window
or door of the Premises any drape, blind, shade or screen, without Landlord's
prior written consent, which consent shall not be unreasonably withheld,
conditioned, or delayed. All awnings, drapes projections, curtains, blinds,
shades, screens and other fixtures shall be of a quality, type, design and
color, and shall be attached in a manner, approved in writing by Landlord, which
consent shall not be unreasonably withheld, conditioned, or delayed. Any
Tenant-supplied window treatments shall be installed behind Landlord's standard
window treatments so that Landlord's standard window treatments will be what is
visible to persons outside the Building. Drapes (whether installed by Landlord
or Tenant) which are visible from the exterior of the Building shall be cleaned
by Tenant at least once a year, without notice from Landlord, at Tenant's own
expense.
4. Tenant shall not use the water fountains, water and wash closets,
and plumbing and other fixtures for any purpose other than those for which they
were constructed, and Tenant shall not place any debris, rubbish, rag or other
substance therein (including, without limitation, coffee grounds). All damages
from misuse of fixtures shall be borne by the tenant causing same.
B-1
<PAGE>
5. Tenant shall not construct, maintain, use or operate within the
Premises any electrical device, wiring or apparatus in connection with a
loudspeaker system or other sound system, in connection with any excessively
bright, changing, flashing, flickering or moving light or lighting device, or in
connection with any similar device or system, without Landlord's prior written
consent, which consent shall not be unreasonably withheld, conditioned, or
delayed. Tenant shall not construct, maintain, use or operate any such device or
system outside of its Premises or within such Premises so that the same can be
heard or seen from outside the Premises. No flashing, neon or search lights
shall be used which can be seen outside the Premises.
6. Tenant shall not bring any bicycle, vehicle, animal, bird or pet of
any kind into the Building, except seeing-eye or hearing-ear dogs for
handicapped persons visiting the Premises.
7. Except as specifically provided to the contrary in the Lease,
Tenant shall not cook or permit any cooking on the Premises, except for
microwave cooking and use of coffee machines by Tenant's employees for their own
consumption. Tenant shall not install any microwave oven or coffee machine in
the Premises without Landlord's prior written approval of such equipment and its
location within the Premises, which consent shall not be unreasonably withheld,
conditioned, or delayed. Tenant shall not cause or permit any unusual or
objectionable odor to be produced upon or emanate from the Premises.
8. Tenant shall not make any unseemly or disturbing noise or disturb
or interfere with occupants of the Building.
9. Tenant shall not place on any floor a load exceeding the floor load
per square foot which such floor was designed to carry. Landlord shall have the
right to prescribe the weight, position and manner of installation of safes and
other heavy equipment and fixtures. Landlord shall have the right to repair at
Tenant's expense any damage to the Premises or the Building caused by Tenant's
moving property into or out of the Premises or due to the same being in or upon
the Premises or to require Tenant to do the same. Tenant shall not receive into
the Building or carry in the elevators any safes, freight, furniture, equipment
or bulky item except as approved by Landlord, and any such furniture, equipment
and bulky item shall be delivered only through the designated delivery entrance
of the Building and the designated freight elevator at designated times. Tenant
shall remove promptly from any sidewalk adjacent to the Building any furniture,
furnishing, equipment or other material there delivered or deposited for Tenant.
10. Tenant shall not place additional locks or bolts of any kind on
any of the doors or windows, and shall not make any change in any existing lock
or locking mechanism therein, without Landlord's prior written approval, which
consent shall not be unreasonably withheld, conditioned, or delayed. Tenant
shall keep doors leading to a corridor or main hall closed at all times except
as such doors may be used for ingress or egress and shall lock such doors during
all times the Premises are unattended. Tenant shall, upon the termination of its
tenancy: (a) restore to Landlord all keys and security cards to stores, offices,
storage rooms, toilet rooms, the Building and the Premises which were either
furnished to, or otherwise procured by, Tenant, and in the event of the loss of
any keys so furnished, Tenant shall pay the replacement cost thereof; and (b)
B-2
<PAGE>
inform Landlord of the combination of any lock, safe and vault in the Premises.
At Landlord's request, a charge of three dollars ($3.00) per key shall be paid
for all keys in excess of two (2) for each public entrance door to the Premises.
Tenant's key system shall be consistent with that for the rest of the Building.
11. Tenant shall not install or operate in the Premises any
electrically operated equipment or machinery without obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned, or delayed. Landlord may condition such consent upon Tenant's
payment of additional rent in compensation for the excess consumption of water
or other utilities and for the cost of any additional wiring or apparatus that
may be occasioned by the operation of such equipment of machinery. Tenant shall
not install any equipment of any type or nature that will or may necessitate any
changes, replacements or additions to, or changes in the use of, the water
system, heating system, plumbing system, air-conditioning system, electrical
system or life safety system of the Premises or the Building, without obtaining
Landlord's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed provided Tenant complies with the terms of
Section 9.2 of the Lease. If any machine or equipment of Tenant causes noise or
vibration that may be transmitted to such a degree as to be objectionable to
Landlord or any tenant in the Building, then Landlord shall have the right to
install at Ten ant's expense vibration eliminators or other devices sufficient
to reduce such noise and vibration to a level satisfactory to Landlord or to
require Tenant to do the same.
12. Landlord reserves the right to exclude from the Building at all
times any person who does not properly identify himself to the Building
management or attendant on duty. Landlord shall have the right to exclude any
undesirable or disorderly persons from the Building at any time. Landlord may
require all persons admitted to or leaving the Building to show satisfactory
identification and to sign a register.
13. Tenant shall not permit or encourage any loitering in or about the
Premises and shall not use or permit the use of the Premises for lodging,
dwelling or sleeping.
14. Tenant, before closing and leaving the Premises at any time, shall
see that all windows are closed and all lights and equipment are turned off,
including, without limitation, coffee machines.
15. Tenant shall not request Landlord's employees to perform any work
or do anything outside of such employees' regular duties without Landlord's
prior written consent. Tenant's special requirements will be attended to only
upon application to Landlord, and any such special requirements shall be billed
to Tenant in accordance with the schedule of charges maintained by Landlord from
time to time or as is agreed upon in writing in advance by Landlord and Tenant.
Tenant shall not employ any of Landlord's employees for any purpose whatsoever
without Landlord's prior written consent.
16. There shall not be used in any space, or in the public halls of
the Building, either by any tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
B-3
<PAGE>
and side guards. Tenant shall be responsible for any loss or damage resulting
from any deliveries made by or for Tenant.
17. Tenant shall not install or permit the installation of any wiring
for any purpose on the exterior of the Premises.
18. Tenant acknowledges that it is Landlord's intention that the
Building be operated in a manner which is consistent with the highest standards
of cleanliness, decency and morals in the community which it serves. Toward that
end, Tenant shall not sell, distribute, display or offer for sale any item
which, in Landlord's judgment, is inconsistent with the quality of operation of
the Building or may tend to impose or detract from the moral character or image
of the Building. Tenant shall not use the Premises for any immoral or illegal
purpose.
19. Unless otherwise expressly provided in the Lease, Tenant shall not
use, occupy or permit any portion of the Premises to be used or occupied for the
storage, manufacture, or sale of liquor.
20. Tenant shall purchase or contract for waxing, rug shampooing,
venetian blind washing, interior glass washing, furniture polishing, janitorial
work, removal of any garbage from any dining or eating facility or for towel
service in the Premises, only from contractors, companies or persons approved by
Landlord, which consent shall not be unreasonably withheld, conditioned, or
delayed.
21. Tenant shall not remove, alter or replace the ceiling light
diffusers or air diffusers in any portion of the Premises without the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed provided Tenant complies with the terms of Section 9.2 of
the Lease.
22. Tenant shall not purchase water, ice, coffee, soft drinks, towels,
or other merchandise or services from any company or person whose repeated
violation of Building regulations has caused, in Landlord's opinion, a hazard to
the Building and/or its occupants (to the extent there are any occupants other
than Tenant).
23. At any time that Tenant leases less than the entire Building,
Tenant shall not pay any employee on the Premises except those actually employed
therein; nor shall Tenant use the Premises as headquarters for large scale
employment of workers for other locations.
24. Landlord shall have the right, upon written notice to Tenant, to
require Tenant to refrain from or discontinue any advertising by Tenant that
refers to the Building, the Building's address, or Landlord and which, in
Landlord's opinion, tends to impair the reputation of the Building or its
desirability for offices.
25. Tenant shall not in any manner deface any part of the Premises or
the Building. No stringing of wires, boring or cutting shall be permitted except
with Landlord's prior written consent. Any floor covering installed by Tenant
shall have an under layer of felt rubber, or similar sound deadening substance,
B-4
<PAGE>
which shall not be affixed to the floor by cement or any other non-soluble
adhesive materials.
26. Should Tenant's use and occupancy of the Premises require the
installation of supplemental cooling, and should the Building contain a closed
loop, Tenant agrees that its supplemental cooling requirements will be serviced
by tapping into the Building's closed loop. Tenant shall be responsible for the
cost of connecting into the loop, which consent shall not be unreasonably
withheld, conditioned, or delayed provided Tenant complies with the terms of
Section 9.2 of the Lease. Should the Building not contain a closed loop, Tenant
agrees to be responsible for fees associated with placing equipment on the roof
of the Building.
27. Each Tenant shall handle its newspapers and "office paper" in the
manner required by Law and shall conform with any reasonable recycling plan
instituted by Landlord (it being agreed that any such plan instituted to comply
with Law shall conclusively be deemed reasonable).
28. Subject to Article VI of the Lease, Tenant shall not bring or
keep, or permit to be brought or kept, in the Building any weapon or flammable,
combustible or explosive fluid, chemical or substance.
29. Tenant shall comply with all workplace smoking Laws. There shall
be no smoking in bathrooms, elevator lobbies, elevators, and other common areas.
30. Landlord may, upon request of Tenant, waive Tenant's compliance
with any of the rules, provided that (a) no waiver shall be effective unless
signed by Landlord, (b) no waiver shall relieve Tenant from the obligation to
comply with such rule in the future unless otherwise agreed in writing by
Landlord, (c) no waiver granted to any tenant shall relieve any other tenant
from the obligation of complying with these rules and regulations, and (d) no
waiver shall relieve Tenant from any liability for any loss or damage resulting
from Tenant's failure to comply with any rule.
B-5
<PAGE>
EXHIBIT C
ACCEPTABLE FORM OF LETTER OF CREDIT
Irrevocable Letter of Credit No. _____________
________________________, 19___
- -------------------
c/o The Advance Group
8400 Corporate Drive, Suite 115
Lanham, Maryland 20785
Account Party: Netrix Corporation
Beneficiary: ______________, its transferees and assigns
Amount: $98,302.00 U.S. Dollars
Expiration Date: ____________________, _______
Ladies and Gentlemen:
We hereby issue this irrevocable, unconditional letter of credit
number ________ (the "Credit") in your favor, payable in immediately available
funds in one or more draws of any sum or sums not exceeding in the aggregate
ninety-eight thousand three-hundred two dollars ($98,302.00), by your draft(s)
at sight presented at _____________________________, together with the following
statement:
"The undersigned, an authorized representative of
Beneficiary, hereby certifies that Beneficiary is entitled to
the amount drawn hereunder pursuant to the terms of Section
11.3 of that certain Lease dated _______________, 1999, by and
between ___________________, as landlord, and Netrix
Corporation, as tenant."
This Credit shall be automatically renewed from year to year commencing
on the first anniversary of the date hereof unless we shall give thirty (30)
days prior written notice to Beneficiary, by certified mail, return receipt
requested, at the address set forth above, of our intent not to renew this
Credit at the expiration of such thirty (30) day period. During such thirty (30)
day period, this Letter of Credit shall remain in full force and effect and
Beneficiary may draw up to the full amount hereof when accompanied by the
statement described in this Credit.
We will accept any and all such representatives as authorized and any
and all statements delivered hereunder as conclusive, binding and correct
without having to investigate or having to be responsible for the accuracy,
truthfulness, correctness or validity thereof, and notwithstanding the claim of
any person to the contrary.
C-1
<PAGE>
Drafts presented under this Credit shall specify the number of this
Credit as set forth above and shall be presented on or before the Expiration
Date hereof.
This Credit is assignable and transferable and may be transferred one
or more times, without charge, upon our receipt of your written notice that an
agreement has been executed to transfer or assign this Credit.
We hereby engage with you that drafts drawn under and in compliance
with the terms of this Credit will be duly honored upon presentation to us.
This Credit sets forth in full the terms of our undertaking and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein, or by any
document, instrument or agreement in which this Credit is referred to, or to
which this Credit relates, and any such reference shall not be deemed to
incorporate herein by reference any such document, instrument or agreement.
Except as otherwise expressly stated herein, this Credit is subject to
the Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500, and to the extent not
inconsistent therewith, the laws of the Commonwealth of Virginia, including
without limitation, the Uniform Commercial Code in effect therein.
[BANK]
By: ______________________________
Authorized Officer
C-2
<PAGE>
EXHIBIT D
FORM OF SUBORDINATION, NON-DISTURBANCE, AND
ATTORNMENT AGREEMENT OF HOLDER OF CURRENT MORTGAGE
[To be inserted]
D-1
<PAGE>
EXHIBIT E
LIST OF EXISTING COVENANTS, CONDITIONS, AND RESTRICTIONS
[To be inserted]
