EXHIBIT 10.9
1018/02
LEASE AGREEMENT
THIS LEASE is executed this 21 day of October, 2002, by and between
DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership doing business
in North Carolina as Duke Realty of Indiana Limited Partnership ("Landlord"),
and CATAPULT COMMUNICATIONS CORPORATION, a Nevada corporation ("Tenant").
WITNESSETH:
ARTICLE 1 - LEASE OF PREMISES
Section 1.01. Basic Lease Provisions and Definitions.
A. Leased Premises (shown outlined on Exhibit A attached hereto): 800
Perimeter Park Drive; Morrisville, North Carolina 27560; (the
"Building"); located in Perimeter Park (the "Park");
B. Rentable Area of Leased Premises: 30,835 rentable square feet. The
determination of Rentable Area shall conclusively be deemed correct for
all purposes hereunder.
C. Tenant's Proportionate Share: 55.53%;
D. Minimum Annual Rent: 02/01/03 - 05/31/03 $ 0.00
06/01/03 - 01/31/04 $173,703.83*
02/01/04 - 01/31/05 $267,069.64
02/01/05 - 01/31/06 $273,746.38
02/01/06 - 01/31/07 $280,590.04
02/01/07 - 01/31/08 $287,604.80
02/01/08 - 05/31/08 $ 98,264.97**
* Represents eight (8) Monthly Rental
Installments
** Represents four (4) Monthly Rental
Installments
E. Monthly Rental Installments: 02/01/03 - 05/30/03 $ 0.00
06/01/03 - 01/31/04 $ 21,712.98
02/01/04 - 01/31/05 $ 22,255.80
02/01/05 - 01/31/06 $ 22,812.20
02/01/06 - 01/31/07 $ 23,382.50
02/01/07 - 01/31/08 $ 23,967.07
02/01/08 - 05/31/08 $ 24,566.24
F. Landlord's Share of Expenses: Intentionally Omitted;
G. Lease Term: Five (5) years and Four (4) months;
H. Target Commencement Date: February 1, 2003;
I. Security Deposit: $43,425.96;
J. Guarantor(s): N/A;
K. Broker(s): Commercial Carolina representing Tenant;
L. Permitted Use: Service center, light manufacturing, research and
development, general office use and other related purposes;
M. Address for notices:
Landlord: Duke Realty Limited Partnership
1800 Perimeter Park Drive, Suite 200
Morrisville, North Carolina 27560
Attention: Andrew Kelton
With a copy to: Duke Realty Limited Partnership
3950 Shackleford Road, Suite 300
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Duluth, Georgia 30096-8268
Attention: Elizabeth C. Belden, Corporate Counsel
Tenant: Catapult Communications Corporation
160 South Whisman Road
Mountain View, CA 94041
Attention: Barbara Fairhurst
Address for rental and other payments:
Duke Realty Limited Partnership
75 Remittance Drive, Suite 3205
Chicago, Illinois 60675-3205
Section 1.02. Leased Premises. Landlord hereby leases to Tenant and
Tenant leases from Landlord, under the terms and conditions herein, the Leased
Premises.
ARTICLE 2 - TERM AND POSSESSION
Section 2.01. Term. The term of this Lease ("Lease Term") shall be for
the period of time as set forth in Section 1.01(G) hereof, and shall commence on
the date (the "Commencement Date") that is the later to occur of (i) the Target
Commencement Date and (ii) the date that all of the following have occurred: (a)
Substantial Completion (as hereinafter defined) of the Tenant Improvements (as
hereinafter defined), (b) Landlord has delivered possession of the Leased
Premises to Tenant in the condition required under this Lease, (c) Landlord has
obtained all approvals and permits from the appropriate governmental authorities
required for the legal occupancy of the Leased Premises and (d) Tenant has been
given access to the Leased Premises for fourteen (14) days with the construction
substantially complete to the extent that Tenant could install communications
equipment therein without delaying or interfering with such construction. If the
Commencement Date has not occurred on or before March 1, 2003, (which date shall
be delayed by one day for each day the Commencement Date is actually delayed due
to Force Majeure or Tenant Delay),then the date Tenant is otherwise obligated to
commence payment of Rent shall be delayed by two days for each day that the
Commencement Date is delayed beyond such date through and including March 14,
2003. Notwithstanding the foregoing, if the Commencement Date has not occurred
by March 15, 2003 (which date shall be delayed by one day for each day the
Commencement Date is actually delayed due to Force Majeure or Tenant Delay),
then commencing on March 15, 2003 (subject to Force Majeure and Tenant Delay as
aforesaid) Landlord shall promptly pay to Tenant $5,000 per day until the
Commencement Date shall occur as liquidated damages, subject to Tenant's right
to pursue equitable remedies and any remedies for tortious misconduct.
Section 2.02. Construction of Tenant Improvements.
(a) Except as otherwise set forth herein, Landlord shall have no
responsibility with respect to delivery of the Leased Premises except to (i)
construct at Landlord's sole cost and expense (except as agreed to by Tenant in
any Change Order Memorandum of Agreement (as hereinafter defined)) in a good and
workmanlike manner the Tenant Improvements in the Space Plan attached hereto as
Exhibit B (the "Tenant Improvements") free of defects and using materials and
equipment of good quality, and in accordance with all applicable laws and the
Scope of Work and preliminary plans dated October 15, 2002, incorporated herein
as Exhibit B-1 ("Scope of Work"), and with the approved Plans and Specifications
(as defined below) as prepared by Alliance Architecture, subject to events and
delays due to causes beyond its reasonable control, (ii) deliver the Leased
Premises in good, vacant, broom clean condition, with all building systems in
good working order and in compliance with all laws and (ii) obtain any and all
approvals and permits from the appropriate governmental authorities required for
the legal occupancy of the Leased Premises and the construction of the Tenant
Improvements in accordance with applicable law. Notwithstanding anything herein
to the contrary, Tenant's acceptance of the Leased Premises or submission to
Landlord of a written "punch list" shall not be deemed a waiver of Tenant's
right to have defects in the Tenant Improvements or the Leased Premises repaired
at no cost to Tenant within one year from the Commencement Date. At anytime
within one year from the Commencement Date, Tenant shall give notice to Landlord
whenever any such defect becomes reasonably apparent, and Landlord shall repair
such defect as soon as practicable. On or before October 28, 2002, (i) Landlord
shall prepare and submit to Tenant a set of plans and specifications and/or
construction drawings (the "Plans and Specifications") covering all work to be
performed by Landlord in constructing and installing the Tenant Improvements,
which shall be based on and be consistent with the Space Plan and Scope of Work
attached hereto as Exhibit B-1 and (ii) Landlord shall provide Tenant with a
gant chart detailing the daily construction schedule for the construction of the
Tenant Improvements. Tenant shall have five (5) business days after receipt of
the Plans and Specifications in which to review the Plans and
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Specifications and to give to Landlord written notice of Tenant's approval of
the Plans and Specifications or its requested changes to the Plans and
Specifications. Subject to Section 2.02(c) hereof, Tenant shall have no right to
request any leasehold improvements or any changes to the Plans and
Specifications which would materially increase the scope of work or labor or
materially alter the exterior appearance or basic nature of the Building, or the
Building systems. If Tenant requests any changes to the Plans and Specifications
pursuant to Section 2.02(c), Landlord shall make those changes which are
reasonably requested by Tenant and shall within ten (10) days of its receipt of
such request submit the revised portion of the Plans and Specifications to
Tenant that incorporate such changes. Tenant may not thereafter disapprove the
revised portions of the Plans and Specifications unless Landlord has
unreasonably failed to incorporate reasonable comments of Tenant, and, subject
to the foregoing, the Plans and Specifications, as modified by said revisions,
shall be deemed to be final upon the submission of said revisions to Tenant.
Landlord and Tenant shall at all times in their preparation and review of the
Plans and Specifications, and of any revisions thereto, act reasonably and in
good faith. Without limiting the foregoing, Tenant agrees to confirm Tenant's
consent to the Plans and Specifications in writing, within three (3) business
days following Landlord's written request therefor. Landlord shall submit the
Plans and Specifications to all appropriate governmental agencies and thereafter
the Landlord shall use its commercially reasonable efforts to obtain required
governmental approvals as soon as practicable. Tenant agrees that all work on
any subsequent tenant finish improvements shall be performed by Landlord or a
subsidiary or affiliate of Landlord, which shall receive a fee of ten percent
(10%) of the cost of such construction as Landlord's construction manager or
general contractor.
(b) Landlord shall provide Tenant with a proposed schedule for the
construction and installation of the Tenant Improvements and shall notify Tenant
of any material changes to said schedule. Landlord and Tenant agree to cooperate
with each other regarding the coordination and installation of Tenant's phone
and data wiring and any other trade related fixtures that will need to be
installed in the Leased Premises prior to Substantial Completion. In addition,
to the extent permitted by applicable laws and governmental rules and
ordinances, Tenant shall have the right to enter the Leased Premises for
fourteen (14) days prior to the scheduled date for Substantial Completion (as
may be modified from time to time) in order to install fixtures and otherwise
prepare the Leased Premises for occupancy (which right shall expressly exclude
making any structural modifications). During any entry prior to the Commencement
Date (i) Tenant shall comply with all terms and conditions of this Lease other
than the obligation to pay Rent, (ii) Tenant shall not unreasonably interfere
with Landlord's completion of the Tenant Improvements, (iii) Tenant shall cause
its personnel and contractors to comply with the reasonable terms and conditions
of Landlord's rules of conduct (which Landlord agrees to furnish to Tenant upon
request), and (iv) Tenant shall not begin operation of its business. Tenant
acknowledges that Tenant shall be responsible for obtaining all applicable
governmental permits and inspections required to permit such entry by Tenant.
(c) Landlord shall have no right to make changes to the Plans and
Specifications without Tenant's prior written consent, which shall not be
unreasonably withheld. Tenant shall have the right to request changes to the
Plans and Specifications at any time following its final approval thereof in
accordance with Section 2.02(b) above by way of written change order (each, a
"Change Order", and collectively, "Change Orders"). Provided such Change Order
is reasonably acceptable to Landlord, Landlord shall prepare and submit promptly
to Tenant a memorandum setting forth the impact on cost and schedule resulting
from said Change Order (the "Change Order Memorandum of Agreement"). Tenant
shall, within three (3) days following Tenant's receipt of the Change Order
Memorandum of Agreement, either (i) execute and return the Change Order
Memorandum of Agreement to Landlord, or (ii) retract its request for the Change
Order. At Landlord's option, Tenant shall pay to Landlord (or Landlord's
designee), within fifteen (15) days following Landlord's request, any increase
in the actual total cost to construct the Tenant Improvements including the cost
of construction and overhead/general conditions and fee solely resulting from
the Change Order, as set forth in the Change Order Memorandum of Agreement.
Landlord shall not be obligated to commence any work set forth in a Change Order
until such time as Tenant has delivered to Landlord the Change Order Memorandum
of Agreement executed by Tenant and, if applicable, Tenant has paid Landlord in
full for said Change Order.
(d) For purposes of this Lease (i) "Substantial Completion" (or any
grammatical variation thereof) shall mean the completion of construction of the
Tenant Improvements, subject only to punch1ist items to be identified by
Landlord and Tenant in a joint inspection of the Leased Premises prior to
Tenant's occupancy, the completion of which will not materially affect Tenant's
use and occupancy of the Leased Premises, or Landlord's ability to obtain an
occupancy permit for the Leased Premises (Tenant acknowledges that under certain
circumstances even if Landlord has Substantially Completed the Tenant
Improvements, Landlord may not be able to obtain an occupancy permit for the
Leased Premises because of the need for completion of improvements which Tenant
may desire to install in the Leased Premises), and (ii) "Tenant Delay" shall
mean any actual delay in the completion of the Tenant Improvements attributable
solely to (A) Tenant's failure to meet any time deadlines specified herein, (B)
Change Orders (not to exceed the time periods set forth in the Change Order
Memorandum of Agreement
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signed by Tenant), (C) Tenant's requirements for special work or materials,
finishes or installations other than Building standard, and (D) the performance
of any work in the Leased Premises by any person, firm or corporation employed
by or on behalf of Tenant, or any failure to complete or delay in completion of
such work and (E) any other act or omission of Tenant provided that Landlord has
given Tenant written notice at the time the delay occurred and one business day
to cure.
(e) Notwithstanding anything to the contrary contained in Section 2.01
above, if Substantial Completion of the Tenant Improvements is delayed beyond
the Target Commencement Date solely as a result of Tenant Delay, then Tenant
shall commence the payment of rent on the date the payment of rent would have
commenced except for such Tenant Delays. Without limiting the foregoing,
Landlord shall use commercially reasonable speed and diligence to Substantially
Complete the Tenant Improvements on or before the Target Commencement Date.
Promptly following the Commencement Date, Tenant shall execute Landlord's Letter
of Understanding in substantially the form attached hereto as Exhibit D and made
a part hereof, acknowledging (x) the Commencement Date of this Lease, and (y)
except for any punch1ist items and subject to the terms of this Lease, that
Tenant has accepted the Leased Premises.
Section 2.03. Surrender of the Premises. Upon the expiration or earlier
termination of this Lease, Tenant shall immediately surrender the Leased
Premises to Landlord in broom-clean condition and in the same condition and
repair as when received, reasonable wear and tear, acts of God, casualties,
condemnation, Hazardous Substances (other than those released or emitted by
Tenant) and alterations and improvements which Tenant is not required to remove
at the termination of this Lease, excepted. Tenant shall also remove its
personal property, trade fixtures and any of Tenant's alterations designated by
Landlord (excluding its initial wiring and cabling), promptly repair any damage
caused by such removal, and restore the Leased Premises to the condition
required under this Section 2.03; provided, however, that Tenant shall have no
obligation to remove any Tenant Improvements. If Tenant fails to do so, Landlord
may restore the Leased Premises to such condition at Tenant's expense, Landlord
may cause all of said property to be removed at Tenant's expense, and Tenant
hereby agrees to pay all the costs and expenses thereby reasonably incurred.
Notwithstanding the last sentence of Section 13.02(b), all Tenant property which
is not removed within ten (10) days following Landlord's written demand therefor
shall be conclusively deemed to have been abandoned by Tenant and Landlord shall
be entitled to dispose of such property at Tenant's cost in accordance with
applicable law without thereby incurring any liability to Tenant. The provisions
of this section shall survive the expiration or other termination of this Lease.
Section 2.04. Holding Over. If Tenant retains possession of the Leased
Premises after the expiration or earlier termination of this Lease, Tenant shall
become a tenant from month to month at one hundred twenty-five percent (125%) of
the Monthly Rental Installment in effect at the end of the Lease Term, and
otherwise upon the terms, covenants and conditions herein specified, so far as
applicable. Acceptance by Landlord of rent in such event shall not result in a
renewal of this Lease, and Tenant shall vacate and surrender the Leased Premises
to Landlord upon Tenant being given thirty (30) days' prior written notice from
Landlord to vacate whether or not said notice is given on the rent paying date.
This Section 2.04 shall in no way constitute a consent by Landlord to any
holding over by Tenant upon the expiration or earlier termination of this Lease,
nor limit Landlord's remedies in such event.
ARTICLE 3 - RENT
Section 3.01. Base Rent. Tenant shall pay to Landlord the Minimum Annual
Rent in the Monthly Rental Installments, in advance, without deduction or
offset, beginning on the Commencement Date and on or before the first day of
each and every calendar month thereafter during the Lease Term. The Monthly
Rental Installment for partial calendar months shall be prorated based on the
number of days in such calendar month. The parties acknowledge and agree that
the dates set forth in Sections 1.01(D) and (E) hereof assume a Target
Commencement Date of February 1, 2003, and, if the Commencement Date occurs
after February 1, 2003, such dates will be adjusted in a manner that provides
that (i) Minimum Annual Rent shall be abated for four (4) complete calendar
months from and after the Commencement Date and (ii) the specified escalation
dates for Minimum Annual Rent occur on each anniversary of the Commencement
Date.
Section 3.02. Additional Rent. In addition to the Minimum Annual Rent
Tenant shall pay to Landlord for each calendar year during the Lease Term after
the fourth (4th) full month following the Commencement Date, as "Additional
Rent," Tenant's Proportionate Share of all costs and expenses incurred by
Landlord during the Lease Term for Real Estate Taxes and Operating Expenses for
the Building and common areas (collectively "Common Area Charges"). As used
herein, the term "Rent" shall mean Minimum Annual Rent and Additional Rent.
Landlord estimates that Common Area Charges for the calendar year 2003 shall be
approximately $2.22 per rentable square foot. Tenant
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acknowledges that said amount is only an estimate and agrees to reimburse
Landlord for the actual Common Area Charges under the Lease in accordance with
this Section 3.02.
"Operating Expenses" shall mean all of Landlord's reasonable expenses
actually incurred for operation, repair, replacement and maintenance to keep the
Building and common areas in good order, condition and repair (including all
additional direct costs and expenses of operation and maintenance of the
Building that vary with occupancy which Landlord reasonably determines it would
have paid or incurred during such year if the Building had been fully occupied),
including, but not limited to, management or administrative fees; utilities;
stormwater discharge fees; license, permit, inspection and other fees; fees and
assessments imposed by any covenants or owners' association; security services;
insurance premiums and deductibles; and maintenance, repair and replacement of
the driveways, parking areas (including snow removal), exterior lighting,
landscaped areas, walkways, curbs, storm conveyance systems, sewer lines, roof
and gutters. The cost of any capital improvement shall be amortized over the
useful life of such improvement (as reasonably determined by Landlord in
accordance with generally accepted accounting principles), and only the
amortized portion shall be included in Operating Expenses.
"Operating Expenses" shall not include and Tenant shall in no event have
any obligation to perform or to pay directly, or to reimburse Landlord for, all
or any portion of the following repairs, maintenance, improvements,
replacements, premiums, claims, losses, fees, charges, costs and expenses
(collectively, "Costs"): (a) Costs occasioned by the act, omission or violation
of any law by Landlord, any other occupant of the Project, or their respective
agents, employees or contractors; (b) Costs occasioned by casualties, or by the
exercise of the power of eminent domain to the extent of condemnation proceeds
received by Landlord; provided that Landlord uses commercially reasonable
efforts to recover the maximum proceeds from such condemnation action; (c) Costs
to correct any construction defect in the Leased Premises or the Project or to
comply with any covenant, condition, restriction, underwriter's requirement or
law applicable to the Leased Premises or the Project as of the Commencement
Date; (d) Costs of any renovation, improvement, painting or redecorating of any
portion of the Project not made available for Tenant's use; (e) Costs incurred
in connection with negotiations or disputes with any other occupant of the
Project and Costs arising from the violation by Landlord or any other occupant
of the Project of the terms and conditions of any lease or other agreement: (f)
insurance Costs for coverage not customarily paid by tenants of similar projects
in the vicinity of the Premises, increases in insurance Costs caused by the
activities of another occupant of the Project, insurance deductibles in excess
of $25,000 and co-insurance payments; (g) Costs incurred in connection with the
presence of any Hazardous Substance, except to the extent caused by the release
or emission of the Hazardous Substance in question by Tenant; (h) interest,
charges and fees incurred on debt; (i) expense reserves, (j) Costs of structural
repairs to the Building and upgrades to the facade work, initial deck renovation
and roof replacement; (k) Costs which could properly be capitalized under
generally accepted accounting principles; (l) wages, compensation, and labor
burden for any employee above the level of senior property manager or any fee,
profit or compensation retained by Landlord or its affiliates for management of
the Project in excess of four (4%) of Minimum Annual Rent and (m) Costs for
which Tenant is billed directly under this Lease.
"Real Estate Taxes" shall include any form of real estate tax or
assessment or service payments in lieu thereof, and any license fee, commercial
rental tax, improvement bond or other similar charge or tax (other than
inheritance, personal income or estate taxes) imposed upon the Building or
common areas (or against Landlord's business of leasing the Building) by any
authority having the power to so charge or tax, together with costs and expenses
of contesting the validity or amount of Real Estate Taxes which at Landlord's
option may be calculated as if such contesting work had been performed on a
contingent fee basis whether charged by Landlord's counsel or representative
provided, however, that said fees are reasonably comparable to the fees charged
for similar services by others not affiliated with Landlord, but in no event
shall fees exceed thirty-three percent of the good faith estimated tax saving).
Tenant shall be entitled to a credit for any reduction of Real Estate Taxes
resulting from any such contest. Additionally, Tenant shall pay, prior to
delinquency, all taxes assessed against and levied upon Tenant's trade fixtures,
furnishings, equipment and all personal property of Tenant contained in the
Leased Premises.
"Real Estate Taxes" shall not include and Tenant shall not be required
to pay any portion of any tax or assessment expense or any increase therein (a)
in excess of the amount which would be payable if such tax or assessment expense
were paid in installments over the longest permitted term; (b) imposed on land
and improvements other than the Project; (c) attributable to Landlord's net
income, gift, transfer, or state taxes; or (d) resulting solely from a change of
ownership or transfer of any or all of the Project or the improvement of any of
the Project for the sole use of other occupants.
Section 3.03. Payment of Additional Rent. Landlord shall reasonably
estimate the total amount of Additional Rent to be paid by Tenant during each
calendar year of the Lease Term, pro-rated
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for any partial years. Commencing on the fifth month following the Commencement
Date, Tenant shall pay to Landlord each month, at the same time the Monthly
Rental Installment is due, unless otherwise agreed to, an amount equal to
one-twelfth (1/12) of the estimated Additional Rent for such year. Within a
reasonable time after the end of each calendar year, Landlord shall submit to
Tenant a statement of the actual amount of such Additional Rent together with a
computation of such amount showing a category breakdown of such Common Area
Charges and within thirty (30) days after receipt of such statement, Tenant
shall pay any deficiency between the actual amount owed and the estimates paid
during such calendar year. In the event of overpayment, Landlord shall credit
the amount of such overpayment toward the next installments of Rent.
Section 3.04. Late Charges. Tenant acknowledges that Landlord shall
incur certain additional unanticipated administrative and legal costs and
expenses if Tenant fails to timely pay any payment required hereunder. In the
event Tenant fails to pay any installment of base rent or additional rent
hereunder within fifteen days of the due date of such installment, Tenant shall
pay to Landlord on demand a late charge in an amount equal to four percent (4%)
of such installment to help defray the additional cost to Landlord for
processing such late payment. The provision for such late charge shall be in
addition to all of Landlord's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Landlord's remedies
in any manner. If, on account of any breach or default by Tenant in Tenant's
obligations under the terms and conditions of this Lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any and all reasonable attorneys' fees so
incurred.
Section 3.05. Right to Audit. Tenant will be entitled from time to time
to audit and verify the operations of the Building and the related books and
records of Landlord to assure that the Operating Expenses from time to time
reported by Landlord are in keeping with the provisions of this paragraph. As to
any calendar year, any undertaking by Tenant must be initiated within four (4)
months from its receipt of invoice for Operating Expenses from Landlord; and
absent fraud or gross negligence on Landlord's part, the Operating Expenses as
timely reported by Landlord for the calendar year will be deemed controlling
upon the expiration of Tenant's audit and verification rights for such calendar
year. In the event of any errors, the appropriate party will make a correcting
payment in full to the other party within thirty (30) days after the
determination and communication to all parties of the amount of such error.
ARTICLE 4 - SECURITY DEPOSIT
Tenant, upon execution of this Lease, shall deposit with Landlord the
Security Deposit as security for the performance by Tenant of all of Tenant's
obligations contained in this Lease. Upon the occurrence and during the
continuation of a Default by Tenant, Landlord may apply all or any part of the
Security Deposit to cure all or any part of such Default; and Tenant agrees to
promptly, upon demand, deposit such additional sum with Landlord as may be
required to maintain the full amount of the Security Deposit. All sums held by
Landlord pursuant to this section shall be without interest. At the end of the
Lease Term, except for any amounts necessary to cure any uncured Default,
Landlord shall return the Security Deposit to Tenant. At the end of the
thirty-second (32nd) month of the Lease Term, upon the request of Tenant,
Landlord shall reduce the amount of the Security Deposit to $21,712.98 and
refund such amount to Tenant provided that Tenant has not been in default beyond
applicable notice and cure periods under this Lease.
ARTICLE 5 - USE
Section 5.01. Use of Leased Premises. The Leased Premises are to be used
by Tenant solely for the Permitted Use and for no other purposes without the
prior written consent of Landlord.
Section 5.02. Covenants of Tenant Regarding Use. Tenant shall (i) use
and maintain the Leased Premises and conduct its business thereon in a safe,
careful, reputable and lawful manner, (ii) comply with all laws, rules,
regulations, orders, ordinances, directions and requirements of any governmental
authority or agency, now in force or which may hereafter be in force, including
without limitation those which shall impose upon Landlord or Tenant any duty
with respect to or triggered by a change in the use or occupation of, or any
improvement or alteration to, the Leased Premises, and (iii) comply with and
obey all reasonable rules and regulations of the Landlord, including directions
as to the non-exclusive use of, and ratio of, parking spaces, as well as the
Building Rules and Regulations attached hereto as Exhibit C and made a part
hereof. Tenant shall not do or permit anything to be done in or about the Leased
Premises or common areas which constitutes a nuisance or which interferes with
the rights of other tenants or injures them. Landlord shall not be responsible
to Tenant for the nonperformance by any other tenant or occupant of the Building
of its lease or of any rules and regulations. Tenant shall not overload the
floors of the Leased Premises. All damage to the floor structure or foundation
of the Building due to improper positioning or storage of items or materials
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shall be repaired by Landlord at the sole reasonable expense of Tenant, who
shall reimburse Landlord immediately therefor upon demand. Tenant shall not use
the Leased Premises, or allow the Leased Premises to be used, for any purpose or
in any manner which would invalidate any policy of insurance now or hereafter
carried on the Building or increase the rate of premiums payable on any such
insurance policy unless Tenant reimburses Landlord as Additional Rent for any
increase in premiums charged. Tenant shall not be required to comply with any
new rule or regulation promulgated by Landlord unless the same applies
non-discriminatorily to all occupants of the Project, does not unreasonably
interfere with Tenant's use of, access to, or parking at the Leased Premises,
and does not materially increase the obligations or decrease the rights of
Tenant under this Lease.
Section 5.03. Landlord's Rights Regarding Use. In addition to the rights
specified elsewhere in this Lease, Landlord shall have the following rights
regarding the use of the Leased Premises or the common areas, each of which may
be exercised without notice or liability to Tenant, (a) Landlord may install
such signs, advertisements, notices or tenant identification information as it
shall deem necessary or proper; (b) Landlord shall have the right at any time to
control, change or otherwise alter the common areas as it shall deem necessary
or proper; and (c) Landlord or Landlord's agent shall be permitted to inspect or
examine the Leased Premises at any reasonable time upon reasonable notice
(except in an emergency when no notice shall be required), and Landlord shall
have the right to make any repairs to the Leased Premises which are necessary
for its preservation; provided, however, that any repairs made by Landlord shall
be at Tenant's expense, except as provided in Section 7.02 hereof. Landlord
shall incur no liability to Tenant for such entry, nor shall such entry
constitute an eviction of Tenant or a termination of this Lease, or entitle
Tenant to any abatement of rent therefore; provided, however, any repairs made
by Landlord shall be at Tenant's expense, except as provided in Section 7.02
hereof. In no event shall the exercise of any of the foregoing rights
unreasonably interfere with Tenant's use of, access to or parking at the Leased
Premises or materially increase the obligations or decrease the rights of Tenant
under this Lease, and Landlord shall at all times preserve and maintain the Park
in a condition substantially similar to its current condition. Within eighteen
(18) months of the execution of this Lease (subject to extensions of time for
Force Majeure delays), Landlord shall complete, at Landlord's sole cost, in a
good and workmanlike manner, and subject to the terms of the preceding sentence,
the work in the Park described in Exhibit G attached hereto. Landlord and
Landlord's agents, except in the case of emergency, shall provide Tenant with
one (1) business day notice prior to any entry of the Leased Premises under this
Lease. Any entry by Landlord and Landlord's agents shall not impair Tenant's
operations more than reasonably necessary, and shall comply with Tenant's
reasonable security measures. Notwithstanding the foregoing, in connection with
an automated teller machine (the "ATM") owned or managed by Wachovia Bank
("Wachovia"), Wachovia or its agents and employees shall have access to the
Leased Premises to the extent necessary to repair and maintain the ATM machine
located adjacent to the Leased Premises; provided, however, that (i) any such
access shall be in accordance with the provisions and restrictions of this
Section 5.03 and shall not disrupt Tenant's business operations and (ii) a
representative of Landlord shall accompany any such agent or employee of
Wachovia at all times during such access to ensure compliance with the
provisions of this Section 5.03. Tenant shall not be responsible for any act or
negligence or damage to the Leased Premises caused by Wachovia, its agents,
employees, and invitees. Landlord shall use commercially reasonable efforts to
obtain the right to remove (if Landlord does not already have such right) and to
remove the ATM prior to the Commencement Date of the Lease at Landlord's cost
and expense and shall repair any damages to the Leased Premises caused by the
removal, at Landlord's sole cost and expense.
ARTICLE 6 - UTILITIES AND SERVICES
Landlord represents and warrants that, as of the Commencement Date, all
utilities, including, without limitation, gas, electricity, water and sewer,
will be available to serve the Leased Premises. Gas and electricity are
separately metered to the Leased Premises. Tenant shall register in its own name
and pay directly to the appropriate supplier the cost of all utilities and
services serving the Leased Premises, including, but not limited to, gas,
electricity and janitorial services. Water and sewer are jointly metered with
other property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services (at rates that
would have been payable if such utilities and services had been directly billed
by the utilities or services providers to Tenant) and Tenant shall pay such
share to Landlord within fifteen (15) days after receipt of Landlord's written
statement. Except as otherwise set forth herein, Landlord shall not be liable in
damages or otherwise for any failure or interruption of any utility or other
building service and no such failure or interruption shall entitle Tenant to
terminate this Lease or withhold sums due hereunder. In the event Landlord is
responsible for an interruption in the supply of utilities as provided herein,
and such interruption adversely affects Tenant's ability to conduct its business
in the Leased Premises for more than three consecutive business days, Tenant
shall be entitled to an abatement of base rental for each day after the third
business day during which the interruption
7
INDUSTRIAL LEASE
continues as its sole remedy for such interruption. In the event of utility
"deregulation", Landlord may choose the service provider.
ARTICLE 7 - MAINTENANCE AND REPAIRS
Section 7.01. Tenant's Responsibility. During the Lease Term, subject to
Section 7.02 hereof, Tenant shall, at its own cost and expense, maintain the
Leased Premises in good condition, regularly servicing and promptly making all
repairs and replacements thereto, including but not limited to the electrical
systems, heating and air conditioning systems, plate glass, floors, windows and
doors, and plumbing systems to the extent located within and exclusively serving
the Leased Premises, and shall obtain a preventive maintenance contract on the
heating, ventilating and air conditioning systems, and provide Landlord with a
copy thereof. The preventive maintenance contract shall meet or exceed
Landlord's standard maintenance criteria, and shall provide for the inspection
and maintenance of the heating, ventilating and air-conditioning system on not
less than a semi-annual basis.
Section 7.02. Landlord's Responsibility. During the Lease Term, Landlord
shall perform and construct, and Tenant shall have no responsibility to perform
or construct, any repair, maintenance or improvements (a) necessitated by the
acts or omissions of Landlord or any other occupant of the Building, or their
respective agents, employees or contractors, (b) for which Landlord has a right
of reimbursement from others, (c) the roof, exterior walls, foundation,
structural frame and other structural portions of the Building, (d) which could
be treated as a "capital expenditure" under generally accepted accounting
principles, and (e) to any portion of the Building and the Project outside of
the demising walls of the Leased Premises and to the parking and landscaped
areas, the costs of all of which may be included in Operating Expenses to the
extent provided in Section 3.02; provided, however, that to the extent any of
the foregoing items require repair because of the negligence, misuse, or default
of Tenant, its employees, agents, customers or invitees, Landlord shall make
such repairs solely at Tenant's expense.
Section 7.03. Alterations. Tenant shall not permit alterations in or to
the Leased Premises unless and until the plans have been approved by Landlord in
writing. Except as otherwise set forth herein, as a condition of such approval,
Landlord may require Tenant to remove the alterations and restore the Leased
Premises upon termination of this Lease; otherwise, all such alterations shall
at Landlord's option become a part of the realty and the property of Landlord,
and shall not be removed by Tenant. Tenant shall ensure that all alterations
shall be made in accordance with all applicable laws, regulations and building
codes, in a good and workmanlike manner and of quality equal to or better than
the original construction of the Building. Nothing in this Lease shall be
construed to constitute a consent by Landlord to the creation of any lien
derived through or under Tenant for any labor or material furnished to the
Leased Premises. If any lien is filed against the Leased Premises for work
claimed to have been done for or material claimed to have been furnished to
Tenant, Tenant shall cause such lien to be discharged of record within thirty
(30) days of Tenant's actual notice of filing. Tenant shall indemnify Landlord
from all costs, losses, expenses and attorneys' fees in connection with Tenant's
construction or alteration in violation of this Lease and any related lien.
Notwithstanding anything to the contrary herein, Tenant may construct only
cosmetic, non-structural alterations, additions and improvements, (excluding
alterations that impact electrical, mechanical or any of the Building systems or
that require that a permit be obtained) ("Alterations") in the Leased Premises
without Landlord's prior approval. Alterations and Tenant's trade fixtures,
furniture, equipment and other personal property installed in the Leased
Premises ("Tenant's Property") shall at all times be and remain Tenant's
property. Except for Alterations which cannot be removed without structural
injury to the Leased Premises, at any time Tenant may remove Tenant's Property
from the Leased Premises, provided that Tenant repairs all damage caused by such
removal. Landlord shall have no lien or other interest in any item of Tenant's
Property. Prior to the commencement of any Alterations, Tenant may request
Landlord to advise Tenant in writing whether it reserves the right to require
Tenant to remove any such proposed Alterations from the Leased Premises upon
termination of this Lease. Notwithstanding anything to the contrary herein, if
Landlord fails to notify Tenant upon such request that it shall require the
removal of such Alterations, then Landlord shall have no right to require Tenant
to remove such Alterations.
ARTICLE 8 - CASUALTY
Section 8.01. Casualty. In the event of total or partial destruction of
the Building or the Leased Premises by fire or other casualty, Landlord agrees
to promptly restore and repair same; provided, however, Landlord's obligation
hereunder shall be limited to the reconstruction of the Leased Premises
substantially in the condition they were prior to the casualty. Rent shall be
equitably abated based upon the extent to which Tenant's use of the Leased
Premises is diminished because of any such damage. Notwithstanding the
foregoing, if the Leased Premises are (i) so destroyed that they cannot be
repaired or rebuilt within one year from the casualty date; or (ii) destroyed by
a casualty which is not
8
INDUSTRIAL LEASE
covered by the insurance required hereunder; then, in case of a clause (i)
casualty, either Landlord or Tenant may, or, in the case of a clause (ii)
casualty, then Landlord may, upon thirty (30) days' written notice to the other
party, terminate this Lease with respect to matters thereafter accruing.
Notwithstanding the foregoing, (a) Landlord shall not have the right to
terminate the Lease if the damage to the Building is relatively minor (e.g.,
repair or restoration would cost less than ten percent (10%) of the replacement
cost of the Building) or, in the case of clause (ii) above, if Tenant reimburses
Landlord for the costs of any repairs in excess of ten percent (10%) of the cost
of the Building not covered by the insurance required and (b) Tenant shall have
the option to terminate the Lease if the Leased Premises cannot be, or are not
in fact, fully restored by Landlord to their prior condition within one hundred
eighty (180) days after the damage, as such period may be extended for Tenant
Delays and a maximum of forty-five (45) days for Force Majeure delays.
Section 8.02. All Risk Coverage Insurance. During the Lease Term,
Landlord shall maintain commercial general liability insurance in commercially
reasonable amounts and all risk coverage insurance for the full replacement cost
of the Building, but shall not protect Tenant's Property on the Leased Premises.
Notwithstanding anything to the contrary herein, the parties hereto release each
other and their respective agents, employees, successors, assignees and
subtenants from all liability for injury to any person or damage to any property
that is caused by or results from a risk which is actually insured against, or
which is required to be insured against under the Lease, without regard to the
negligence or willful misconduct of the entity so released. All of Landlord's
and Tenant's repair and indemnity obligations under the Lease shall be subject
to the release and waiver contained in this paragraph. All insurance policies
maintained by Landlord or Tenant as provided in this Lease shall contain an
agreement by the insurer waiving the insurer's right of subrogation against the
other party to this Lease.
ARTICLE 9 - LIABILITY INSURANCE
Section 9.01. Liability. Landlord shall not be liable to Tenant or to
any other person for (i) damage to property or injury or death to persons due to
the condition of the Leased Premises, the Building or the common areas, or (ii)
the occurrence of any accident in or about the Leased Premises or the common
areas, or (iii) any act or neglect of Tenant or any other tenant or occupant of
the Building or of any other person, unless such damage, injury or death is the
result of Landlord's negligence; and Tenant hereby releases Landlord from any
and all liability for the same. Tenant shall be liable for, and shall indemnify
and defend Landlord from, any and all liability for any negligent act or willful
misconduct of Tenant and any person coming on the Leased Premises or common
areas by the license of Tenant, express or implied, Tenant's violation of any
law, order or regulation or Tenant's breach of this Lease, or any
representations under this Lease. This provision shall survive the expiration or
earlier termination of this Lease. Subject to the waiver of subrogation
provision contained in Section 8.02, Landlord shall not be released or
indemnified from, and shall indemnify, defend, protect and hold harmless Tenant
from, all losses, damages, liabilities, claims, attorneys' fees, costs and
expenses arising from the negligence or willful misconduct of Landlord or its
agents, contractors, licensees or invitees, Landlord's violation of any law,
order or regulation, or a breach of Landlord's obligations or representations
under the Lease.
Section 9.02. Tenant's Insurance. Tenant shall carry general public
liability and property damage insurance, issued by one or more insurance
companies acceptable to Landlord, with the following minimum coverages:
A. Worker's Compensation: minimum statutory amount.
B. Commercial General Liability Insurance, including blanket, contractual
liability, broad form property damage, personal injury, completed
operations, products liability, and fire damage: Not less than
$3,000,000 Combined Single Limit for both bodily injury and property
damage.
C. All Risk Coverage, Vandalism and Malicious Mischief, and Sprinkler
Leakage insurance, if applicable, for the full cost of replacement of
Tenant's property.
D. Business interruption insurance.
The insurance policies shall protect Tenant and Landlord as their interests may
appear, naming Landlord and Landlord's managing agent and mortgagee as
additional insureds on the liability policy only, and shall provide that they
may not be canceled on less than thirty (30) days' prior written notice to
Landlord. Tenant shall furnish Landlord with Certificates of Insurance
evidencing all required coverages on or before the Commencement Date. If Tenant
fails to carry such insurance and furnish Landlord with such Certificates of
Insurance after a request to do so, Landlord may obtain such insurance and
collect the cost thereof from Tenant.
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INDUSTRIAL LEASE
ARTICLE 10 - EMINENT DOMAIN
If all or any substantial part of the Leased Premises or common areas
shall be acquired by the exercise of eminent domain, Landlord may terminate this
Lease by giving written notice to Tenant on or before the date that actual
possession thereof is so taken. If all or any part of the Leased Premises or
common areas shall be acquired by the exercise of eminent domain so that the
Leased Premises shall become unusable by Tenant for the Permitted Use, Tenant
may terminate this Lease as of the date that actual possession thereof is so
taken by giving written notice to Landlord. All damages awarded shall belong to
Landlord; provided, however, that Tenant may make a claim for compensation for
Tenant's relocation expenses, damage to or loss of Tenant's Property, the
unamortized value of any alterations or improvements made to the Leased Premises
at Tenant's expense; provided that such award shall not diminish Landlord's
award hereunder. If all or any part of the Leased Premises shall be acquired by
the exercise of eminent domain and the Lease is not terminated as provided
herein, then Rent shall be equitably abated based upon the extent to which
Tenant's use of the Leased Premises is diminished because of any such taking.
ARTICLE 11 - ASSIGNMENT AND SUBLEASE
Tenant shall not assign this Lease or sublet the Leased Premises in
whole or in part without Landlord's prior written consent, which consent shall
not be unreasonably withheld, delayed or denied (provided that it shall not be
unreasonable for Landlord to withhold or deny its consent with respect to any
proposed assignment or subletting to a third party that is already a tenant in
the Building or the Park if Landlord has suitable space available for lease to
such party). In the event of any assignment or subletting, Tenant shall remain
primarily liable hereunder. The acceptance of rent from any other person shall
not be deemed to be a waiver of any of the provisions of this Lease or to be a
consent to the assignment of this Lease or the subletting of the Leased
Premises. Without in any way limiting Landlord's right to refuse to consent to
any assignment or subletting of this Lease, Landlord reserves the right to
refuse to give such consent if in Landlord's reasonable opinion (i) the Leased
Premises are or may be in any way adversely affected or (ii) the business
reputation of the proposed assignee or subtenant is unacceptable or (iii) the
financial worth of the proposed assignee or subtenant is insufficient to meet
the obligations hereunder. In the event that Tenant sublets the Leased Premises
or any part thereof, or assigns this Lease and at any time receives rent and/or
other consideration which exceeds that which Tenant would at that time be
obligated to pay to Landlord, Tenant shall pay to Landlord 50% of the gross
excess in such rent and other consideration received by Tenant from such
subtenant attributable to such sublease, less reasonable cost of subleasing
(including commissions, advertising costs, legal costs, and tenant improvement
costs) as such rent is received by Tenant or, in the case of any assignment of
this Lease by Tenant, Landlord shall receive 50% of any consideration paid to
Tenant by such assignee attributable to such assignment less the foregoing
costs. In addition, should Landlord agree to an assignment or sublease
agreement, Tenant will pay to Landlord on demand the sum of $500.00 to partially
reimburse Landlord for its costs, including reasonable attorneys' fees, incurred
in connection with processing such assignment or subletting request.
Notwithstanding any provision of this Lease to the contrary, should
Tenant receive consent from Landlord to sublease or assign its interest in the
Leased Premises and seek to sublease or assign its interest in the Leased
Premises in accordance with this paragraph, Tenant shall not use the name of
Landlord, any insignia of Landlord, or any likeness of the Building in any of
its advertising for such sublease or assignment.
Notwithstanding the foregoing, Tenant shall not assign the Lease or
sublease all or any portion of the Leased Premises to any other tenant within
the Building or the Park without Landlord's prior written consent.
Notwithstanding the foregoing, Tenant may assign the Lease or sublease
all or any portion of the Leased Premises without Landlord's consent to any of
the following (a "Permitted Transferee"): (i) any successor corporation or other
entity resulting from a merger, consolidation or reorganization of Tenant; (ii)
any purchaser of all or substantially all of Tenant's assets; or (iii) any
entity which controls, is controlled by, or is under common control with Tenant.
Tenant shall give Landlord ten (10) days prior written notice of such assignment
or sublease. A sale or transfer of Tenant's stock shall not be deemed an
assignment, subletting or any other transfer of the Lease or the Leased
Premises. Any Permitted Transferee to whom Tenant assigns the Lease shall assume
in writing all of Tenant's obligations under this Lease. Tenant shall
nevertheless at all times remain fully responsible and liable for the payment of
rent and the performance and observance of all of Tenant's other obligations
under this Lease. Nothing in this paragraph is intended to nor shall permit
Tenant to transfer its interest under this Lease as part of a fraud or
subterfuge to intentionally avoid its obligations under this Lease (for example,
transferring its interest to a shell corporation that subsequently files a
bankruptcy), and any such transfer shall constitute a Default hereunder.
10
INDUSTRIAL LEASE
ARTICLE 12 - TRANSFERS BY LANDLORD
Section 12.01. Sale of the Building. Landlord shall have the right to
sell the Building at any time during the Lease Term, subject only to the rights
of Tenant hereunder; and such sale shall operate to release Landlord from
liability hereunder after the date of such conveyance if and only if the
transferee shall agree to assume in writing the obligations and liabilities of
Landlord under the Lease after the date of the transfer.
Section 12.02. Estoppel Certificate. Within ten (10) business days
following receipt of a written request from Landlord, Tenant shall execute and
deliver to Landlord, without cost, any instrument which Landlord deems
reasonably necessary or desirable to confirm the subordination of this Lease and
an estoppel certificate in such form as Landlord may reasonably request
certifying (i) that this Lease is in full force and effect and unmodified or
stating the nature of any modification, (ii) the date to which rent has been
paid, (iii) that there are not, to Tenant's knowledge, any uncured defaults or
specifying such defaults if any are claimed, and (iv) any other matters or state
of facts reasonably required respecting the Lease. Such estoppel may be relied
upon by Landlord and by any purchaser or mortgagee of the Building.
Section 12.03. Subordination. Landlord shall have the right to
subordinate this Lease to any mortgage presently existing or hereafter placed
upon the Building by so declaring in such mortgage. Notwithstanding the
foregoing, if the mortgagee shall take title to the Leased Premises through
foreclosure or deed in lieu of foreclosure, Tenant shall be allowed to continue
in possession of the Leased Premises pursuant to the terms and conditions of
this Lease so long as Tenant shall not be in Default. The subordination of
Tenant's rights under this Lease shall be contingent upon Landlord obtaining at
its sole cost and expense, a Subordination, Non-Disturbance and Attornment
Agreement executed by holders of any mortgages on the Leased Premises providing
that (i) in the event the mortgagee files suit to foreclose the mortgage, the
mortgagee will not join Tenant in the foreclosure proceedings so long as Tenant
is not in Default under any of the terms, covenants and conditions of the Lease,
(ii) in the event mortgagee succeeds to the interest of mortgagor, as Landlord,
and Tenant is not in Default under the terms, covenants or conditions of the
Lease, the mortgagee shall be bound to Tenant under all of the terms, covenants
and conditions of the Lease, (iii) Tenant agrees to attorn to mortgagee, and
(iv) Tenant agrees to give mortgagee notice of Landlord's default and
opportunity to cure. Prior to the Commencement Date, Landlord shall either (i)
provide Tenant with a certification that there are no lenders or ground lessors
with respect to the Leased Premises or (ii) obtain from any current lenders or
ground lessors of the Leased Premises a written agreement providing for the
recognition of Tenant's interests as set forth in the immediately previous
sentence.
ARTICLE 13 - DEFAULT AND REMEDY
Section 13.01. Default. The occurrence of any of the following shall be
a "Default":
(a) Tenant fails to pay any Monthly Rental Installment or Additional
Rent within five (5) days after the same is due, or Tenant fails to pay any
other amounts due Landlord from Tenant within ten (10) days after Tenant's
receipt of written notice from Landlord that the same is due. Tenant shall be
allowed two (2) written notices of default from Landlord in any twelve (12)
month period before being declared in Default.
(b) Tenant fails to perform or observe any other term, condition,
covenant or obligation required under this Lease for a period of thirty (30)
days after receipt of written notice thereof from Landlord; provided, however,
that if the nature of Tenant's default is such that more than thirty days are
reasonably required to cure, then such default shall be deemed to have been
cured if Tenant commences such performance within said thirty-day period and
thereafter diligently completes the required action within a reasonable time.
(c) Tenant shall assign or sublet all or a portion of the Leased
Premises in contravention of the provisions of Article 11 of this Lease.
(d) All or substantially all of Tenant's assets in the Leased Premises
or Tenant's interest in this Lease are attached or levied under execution (and
Tenant does not discharge the same within sixty (60) days thereafter); a
petition in bankruptcy, insolvency or for reorganization or arrangement is filed
by or against Tenant (and Tenant fails to secure a stay or discharge thereof
within sixty (60) days thereafter); Tenant is insolvent and unable to pay its
debts as they become due; Tenant makes a general assignment for the benefit of
creditors; Tenant takes the benefit of any insolvency action or law; the
appointment of a receiver or trustee in bankruptcy for Tenant or its assets if
such receivership has not
11
INDUSTRIAL LEASE
been vacated or set aside within thirty (30) days thereafter; or, dissolution or
other termination of Tenant's corporate charter if Tenant is a corporation
(except as permitted under Article 11 hereof).
(e) Tenant shall fail to vacate the Leased Premises upon termination of
the Lease.
Section 13.02. Remedies. Upon the occurrence and during the continuance
of any Default, Landlord shall have the following rights and remedies, in
addition to those allowed by law or in equity, any one or more of which may be
exercised without further notice to Tenant:
(a) Landlord may apply the Security Deposit or re-enter the Leased
Premises and cure any default of Tenant, and Tenant shall reimburse Landlord as
additional rent for any reasonable costs and expenses which Landlord thereby
incurs; and Landlord shall not be liable to Tenant for any loss or damage which
Tenant may sustain by reason of Landlord's action.
(b) Landlord may terminate this Lease or, without terminating this
Lease, terminate Tenant's right to possession of the Leased Premises as of the
date of such Default, and thereafter (i) neither Tenant nor any person claiming
under or through Tenant shall be entitled to possession of the Leased Premises,
and Tenant shall immediately surrender the Leased Premises to Landlord; and (ii)
Landlord may re-enter the Leased Premises and dispossess Tenant and any other
occupants of the Leased Premises by any lawful means and may remove their
effects, without prejudice to any other remedy which Landlord may have. Landlord
shall have the right to secure the Premises against unauthorized entry and allow
Tenant supervised access to the Leased Premises to remove those items belonging
to Tenant. Upon the termination of this Lease, Landlord may declare the present
value (discounted at the Prime Rate) of all rent which would have been due under
this Lease for the balance of the Lease Term to be immediately due and payable,
whereupon Tenant shall be obligated to pay the same to Landlord, together with
all loss or damage which Landlord may sustain by reason of Tenant's default
("Default Damages"), which shall include without limitation, to the extent
allocable to the remainder of the Lease Term, expenses of preparing the Leased
Premises for re-letting, demolition, repairs, brokers' commissions and
attorneys' fees, it being expressly understood and agreed that the liabilities
and remedies specified in this subsection (b) shall survive the termination of
this Lease. Landlord waives any right of distraint, distress for rent or
landlord's lien that may arise at law.
(c) Landlord may, without terminating this Lease, re-enter the Leased
Premises and re-let all or any part thereof for a term different from that which
would otherwise have constituted the balance of the Lease Term and for rent and
on terms and conditions different from those contained herein, Landlord shall
have the right to secure the Premises against unauthorized entry, allow Tenant
supervised access to the Leased Premises to remove those items belonging to
Tenant which are not the subject of a security interest by Landlord and Tenant
shall be immediately obligated to pay to Landlord as liquidated damages the
present value (discounted at the Prime Rate) of the difference between the rent
provided for herein and that provided for in any lease covering a subsequent
re-letting of the Leased Premises, for the period which would otherwise have
constituted the balance of the Lease Term, together with all of Landlord's
Default Damages.
(d) Landlord may sue for injunctive relief or to recover damages for any
loss resulting from the Default.
(e) If Landlord has terminated this Lease or Tenant's right to
possession, Landlord agrees to use commercially reasonable efforts to mitigate
its damages. Landlord shall be required only to use reasonable efforts to
mitigate, which shall not exceed such efforts as Landlord generally uses to
lease other space in the Building. Landlord will not be deemed to have failed to
mitigate if Landlord leases any other portions of the Building before reletting
all or any portion of the Leased Premises. Landlord shall not be deemed to have
failed to mitigate if it incurs Default Damages. Tenant shall bear the burden of
proof that Landlord failed to mitigate.
Section 13.03. Landlord's Default and Tenant's Remedies. Landlord shall
be in default if it fails to perform any term, condition, covenant or obligation
required under this Lease for a period of thirty (30) days after written notice
thereof from Tenant to Landlord; provided, however, that if the term, condition,
covenant or obligation to be performed by Landlord is such that it cannot
reasonably be performed within thirty (30) days, such default shall be deemed to
have been cured if Landlord commences such performance within said thirty-day
period and thereafter diligently undertakes to complete the same. Upon the
occurrence of any such default, Tenant may sue for injunctive relief or to
recover damages for any loss directly resulting from the breach, or Tenant may
perform the obligations of Landlord after first giving Landlord thirty (30) days
(or such lesser time as is required in an emergency) prior written notice of its
intent to cure such default by Landlord and Tenant shall have Landlord
reimburse Tenant on demand for any reasonable and necessary costs and expenses
which
12
INDUSTRIAL LEASE
Tenant may have incurred, but Tenant shall not be entitled to terminate this
Lease or withhold, offset or abate any sums due hereunder.
Section 13.04. Limitation of Landlord's Liability. If Landlord shall
fail to perform any term, condition, covenant or obligation required to be
performed by it under this Lease and if Tenant shall, as a consequence thereof,
recover a money judgment against Landlord, Tenant agrees that it shall look
solely to Landlord's right, title and interest in and to the Building for the
collection of such judgment; and Tenant further agrees that no other assets of
Landlord shall be subject to levy, execution or other process for the
satisfaction of Tenant's judgment.
Section 13.05. Nonwaiver of Defaults. Neither party's failure or delay
in exercising any of its rights or remedies or other provisions of this Lease
shall constitute a waiver thereof or affect its right thereafter to exercise or
enforce such right or remedy or other provision. No waiver of any default shall
be deemed to be a waiver of any other default. Landlord's receipt of less than
the full rent due shall not be construed to be other than a payment on account
of rent then due, nor shall any statement on Tenant's check or any letter
accompanying Tenant's check be deemed an accord and satisfaction. No act or
omission by Landlord or its employees or agents during the Lease Term shall be
deemed an acceptance of a surrender of the Leased Premises, and no agreement to
accept such a surrender shall be valid unless in writing and signed by Landlord.
Section 13.06. Attorneys' Fees. If either party defaults in the
performance or observance of any of the terms, conditions, covenants or
obligations contained in this Lease and the non-defaulting party obtains a
judgment against the defaulting party, then the defaulting party agrees to
reimburse the non-defaulting party for reasonable attorneys' fees incurred in
connection therewith.
ARTICLE 14 - INTENTIONALLY OMITTED
ARTICLE 15 - TENANT'S RESPONSIBILITY REGARDING
ENVIRONMENTAL LAWS AND HAZARDOUS SUBSTANCES.
Section 15.01. Definitions.
a. "Environmental Laws" - All present or future federal, state and
municipal laws, codes, orders, decrees, ordinances, rules and regulations as
well as the rules and regulations of the Federal Environmental Protection Agency
or any other federal, state or municipal agency or governmental board or entity
regulating, relating to, or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous, waste, substance, or material, gas
or petroleum product.
b. "Hazardous Substances". For purposes of this Lease, "Hazardous
Substances" means and includes any hazardous or toxic substance, pollutant,
contaminant, gas, or petroleum product defined as such in (or for purposes of)
any Environmental Laws.
Section 15.02. Compliance. Tenant, at its sole cost and expense, shall
promptly comply with the Environmental Laws including any notice from any source
issued pursuant to the Environmental Laws or issued by any insurance company
which shall impose any duty upon Tenant with respect to the use of Hazardous
Substances by Tenant in the Leased Premises whether such notice shall be served
upon Landlord or Tenant.
Section 15.03. Restrictions on Tenant. Tenant shall operate its business
in compliance with all Environmental Laws. Tenant shall not cause the use,
generation, release, manufacture, refining, production, processing, storage or
disposal of any Hazardous Substances on, under or about the Leased Premises, or
the transportation to or from the Leased Premises of any Hazardous Substances or
permit its employees, agents or contractors to cause the same, except as
necessary and appropriate for its Permitted Use in which case the use, storage
or disposal of such Hazardous Substances shall be performed in compliance with
the Environmental Laws and the highest standards prevailing in the industry.
Section 15.04. Notices. Affidavits, Etc. Tenant shall immediately notify
Landlord of (i) any violation by Tenant, its employees, agents, representatives,
customers, invitees or contractors of the Environmental Laws on, under or about
the Leased Premises, or (ii) Tenant's actual knowledge of the presence or
suspected presence of any Hazardous Substances on, under or about the Leased
Premises and shall immediately deliver to Landlord any notice received by Tenant
relating to (i) and (ii) above from any source. Tenant shall execute affidavits,
representations and the like within five (5) days of Landlord's request
therefore concerning Tenant's best knowledge and belief regarding the presence
of any Hazardous Substances released or emitted by Tenant or its employees,
agents, invitees or contractors on, under or about the Leased Premises.
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INDUSTRIAL LEASE
Section 15.05. Landlord's Rights. Landlord and its agents shall have the
right, but not the duty, upon advance notice (except in the case of emergency
when no notice shall be required) to inspect the Leased Premises and conduct
tests thereon to determine whether or the extent to which there has been a
violation of Environmental Laws by Tenant or whether there are Hazardous
Substances on, under or about the Leased Premises. In exercising its rights
herein, Landlord shall use reasonable efforts to minimize interference with
Tenant's business but such entry shall not constitute an eviction of Tenant, in
whole or in part, and, Landlord shall not be liable for any interference, loss,
or damage to Tenant's property or business caused thereby.
Section 15.06. Tenant's Indemnification. Tenant shall indemnify Landlord
and Landlord's managing agent from any and all claims, losses, liabilities,
costs, expenses and damages, including attorneys' fees, costs of testing and
remediation costs, incurred by Landlord in connection with any breach by Tenant
of its obligations under this Article 15. The covenants and obligations under
this Article 15 shall survive the expiration or earlier termination of this
Lease. Notwithstanding anything contained in this Article 15 to the contrary,
Tenant shall not have any liability to Landlord under this Article 15 resulting
from any conditions existing, or events occurring, or any Hazardous Substances
existing or generated, at, in, on, under or in connection with the Leased
Premises which are not released or emitted by Tenant, its employees, agents,
contractors or invitees.
Section 15.07. Landlord's Representation. Prior to Tenant's execution of
this Lease, Landlord shall provide Tenant with a true, correct and complete copy
of that certain Environmental Report prepared by S&ME, Inc., Project No.
1051-96-073. To the best of Landlord's actual knowledge and belief, Landlord
represents that as of the Commencement Date of the term hereof (i) no Hazardous
Substance is present on the Project or the soil, surface water or groundwater
thereof, (ii) no underground storage tanks are present on the Project, (iii) no
action, proceeding or claim is pending or threatened regarding the Project
concerning any Hazardous Substance or pursuant to any Environmental Law and (iv)
the Leased Premises shall be in compliance with all governmental codes,
ordinances, rules and regulations (including but not limited to all
environmental laws). Landlord shall hold harmless and indemnify Tenant for, from
and against any clean up costs, remedial costs, losses, preventative costs
and/or any governmental fees, costs, expenses, charges or the like arising from
any presence or alleged presence of any hazardous or toxic substances (as those
terms are defined in any state or federal statute or regulation) on, in or under
the Leased Premises which were present on the Leased Premises prior to the
commencement of the term of the Lease or which were released by Landlord at the
property containing the Leased Premises. Nothing in this paragraph shall be
interpreted as imposing any liability on Landlord for any other costs or
expenses incurred by Tenant including any lost sales or profits of Tenant
resulting from any such presence or alleged presence. The covenants and
obligations under this Article 15 shall survive the expiration or earlier
termination of this Lease.
ARTICLE 16 - MISCELLANEOUS
Section 16.01. Benefit of Landlord and Tenant. This Lease shall inure to
the benefit of and be binding upon Landlord and Tenant and their respective
successors and assigns.
Section 16.02. Governing Law. This Lease shall be governed in accordance
with the laws of the State where the Building is located.
Section 16.03. Guaranty. In consideration of Landlord's leasing the
Leased Premises to Tenant, Tenant shall provide Landlord with a Guaranty of
Lease executed by the guarantor(s) described in the Basic Lease Provisions, if
any.
Section 16.04. Force Majeure. Landlord and Tenant (except with respect
to the payment of any monetary obligation) shall be excused for the period of
any delay in the performance of any obligation hereunder when such delay is
occasioned by causes beyond its control, including but not limited to work
stoppages, boycotts, slowdowns or strikes; shortages of materials, equipment,
labor or energy; unusual weather conditions; or acts or omissions of
governmental or political bodies, except to the extent set forth in Sections
2.01 and 8.01.
Section 16.05. Examination of Lease. Submission of this instrument for
examination or signature to Tenant does not constitute a reservation of or
option for Lease, and it is not effective as a Lease or otherwise until
execution by and delivery to both Landlord and Tenant.
Section 16.06. Indemnification for Leasing Commissions. Each party
hereby represents and warrants that it has not dealt with any real estate
brokers in the negotiation and execution of this Lease except the Brokers. Each
party shall indemnify the other from any and all liability for the breach of
this representation and warranty on its part.
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INDUSTRIAL LEASE
Section 16.07. Notices. Any notice required or permitted to be given
under this Lease or by law shall be deemed to have been given if it is written
and delivered in person or by overnight courier or mailed by certified mail,
postage prepaid, to the party who is to receive such notice at the address
specified in Article 1. If delivered in person, notice shall be deemed given as
of the delivery date. If sent by overnight courier, notice shall be deemed given
as of the first business day after sending. If mailed, the notice shall be
deemed to have been given on the date which is three business days after
mailing. Either party may change its address by giving written notice thereof to
the other party.
Section 16.08. Partial Invalidity; Complete Agreement. If any provision
of this Lease shall be held to be invalid, void or unenforceable, the remaining
provisions shall remain in full force and effect. This Lease represents the
entire agreement between Landlord and Tenant covering everything agreed upon or
understood in this transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof or in effect between the
parties. No change or addition shall be made to this Lease except by a written
agreement executed by Landlord and Tenant.
Section 16.09. Financial Statements. If at any time during the Lease
Term and any extensions thereof, Tenant's financial statements are not publicly
available, Tenant shall provide to Landlord, upon Landlord's request, a copy of
Tenant's most recent financial statements (certified and audited if the Minimum
Annual Rent hereunder exceeds $100,000) prepared as of the end of Tenant's
fiscal year. Such financial statements shall be signed by Tenant who shall
attest to the truth and accuracy of the information set forth in such
statements. All financial statements provided by Tenant to Landlord hereunder
shall be prepared in conformity with generally accepted accounting principles,
consistently applied.
Section 16.10. Representations and Warranties. The undersigned represent
and warrant that (i) such party is duly organized, validly existing and in good
standing (if applicable) in accordance with the laws of the state under which it
was organized and if such state is not the state in which the Leased Premises is
located, that it is authorized to do business in such state; and (ii) the
individual executing and delivering this Lease has been properly authorized to
do so, and such execution and delivery shall bind such party.
Section 16.11. Approvals. Whenever the Lease requires an approval,
consent, determination, selection or judgment by either Landlord or Tenant,
unless another standard is expressly set forth, such approval, consent,
determination, selection or judgment and any conditions imposed thereby shall be
reasonable and shall not be unreasonably withheld or delayed and, in exercising
any right or remedy hereunder, each party shall at all times act reasonably and
in good faith.
Section 16.12. Reasonable Expenditures. Any expenditure by a party
permitted or required under the Lease, for which such party demands
reimbursement from the other party, shall be limited to the fair market value of
the goods and services involved, shall be reasonably incurred, and shall be
substantiated by documentary evidence available for inspection and review by the
other party.
Section 16.13. Option to Extend.
A. Grant and Exercise of Option. Provided that (i) there is no current
Default hereunder, and (ii) the current use of the Leased Premises is consistent
with the Permitted Use hereunder, Tenant shall have one (1) option (the
"Extension Option") to extend the original Term of this Lease (the "Original
Term") for one (1) additional period of five (5) years (the "Extension Term")
commencing when the Original Term expires. The Extension Term shall be upon the
same terms and conditions contained in this Lease (as amended from time to time
by the parties in accordance with the provisions of this Lease) for the Original
Term except (i) Tenant shall not have any further option to extend and (ii) the
Minimum Annual Rent shall be the Fair Market Rent (as defined below). Tenant
shall exercise such option by delivering to Landlord, no later than nine (9)
months prior to the expiration of the Original Term, written notice of Tenant's
desire to extend the Original Term. Tenant's failure to properly exercise such
option shall waive it. If Tenant properly exercises its option to extend,
Landlord shall notify Tenant of the rent adjustment no later that fifteen (15)
business days after receipt of Tenant's written notice of Tenant's desire to
exercise the Extension Option. Tenant shall be deemed to have accepted the rent
adjustment if it fails to deliver to Landlord a written objection thereto within
fifteen (15) business days after receipt thereof; provided, however, that Tenant
may rescind its notice to exercise the Extension Option by giving Landlord
written notice of such election to rescind within such fifteen (15) day period.
If Tenant properly exercises its option to extend, Landlord and Tenant shall
execute an amendment to the Lease reflecting the commencement and expiration
dates of the Extension Term and the agreed upon Fair Market Rent within thirty
(30) days after Tenant's acceptance of the rent adjustment.
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INDUSTRIAL LEASE
B. Fair Market Rent. The Minimum Annual Rent for the applicable
Extension Term shall be the then-fair market rental value, which shall be
determined as follows (the "Fair Market Rent"):
(a) If Landlord and Tenant are unable to agree on the Minimum Annual
Rent for the Extension Term(s) within fifteen (15) business days after Tenant's
receipt of Landlord's written notice to Tenant of the rent adjustment, then the
Minimum Annual Rent for the Extension Term(s) will be the then-fair market
rental value of the Leased Premises as determined in accordance with paragraph
(d) below.
(b) The "then-fair market rental value of the Leased Premises" means
what a Landlord under no compulsion to lease the Leased Premises and a Tenant
under no compulsion to lease the Leased Premises would determine as rents for
the Extension Term, as of the commencement of the Extension Term, taking into
consideration the uses permitted under this Lease, the quality, size, design,
and location of the Leased Premises, and the rent for comparable buildings
located in the vicinity of the Leased Premises.
(c) Within seven (7) days after the expiration of the fifteen (15)
business day period set forth in paragraph (a) above, Landlord and Tenant will
each appoint a real estate appraiser to appraise the then-fair market rental
value of the Leased Premises. The two appraisers will meet promptly and attempt
to set the then-fair market rental value of the Leased Premises. If they are
unable to agree within ten (10) days, they will select a third appraiser within
ten (10) days to set the then fair market rental value of the Leased Premises.
Landlord and Tenant will bear one-half (1/2) of the cost of appointing the third
appraiser and of paying the third appraiser's fee.
(d) Within ten (10) days after the selection of the third appraiser, a
majority of the appraisers will set the then-fair market rental value of the
Leased Premises. If a majority of the appraisers are unable to set the then-fair
market rental value of the Leased Premises within ten (10) days after selection
of the third appraiser, the three appraisals will be averaged and the average
will be the then-fair market rental value of the Leased Premises.
Section 16.14. Right of First Refusal. If, at any time during the
Original Term and any Extension Term, Landlord shall solicit or receive a bona
fide offer in writing (an "Offer") from a third party to lease all or any
portion of space adjacent to the Leased Premises shown striped on the attached
Exhibit E containing approximately 24,802 rentable square feet of space (the
"Refusal Space"), Tenant shall have a right of first refusal ("Right of First
Refusal") to lease the Refusal Space upon the same terms and conditions as set
forth in the Offer; provided, that (i) there is no current Default hereunder and
(ii) the financial capacity of Tenant meets Landlord's then current criteria for
leasing spaces of similar size with similar economic terms, as are then being
offered by Landlord, (iii) Tenant and/or a Permitted Transferee remains in
possession of the entire Leased Premises; and (iv) the current use of the Leased
Premises is consistent with the Permitted Use hereunder, Landlord, promptly
following Landlord's receipt of the Offer, shall deliver written notice to
Tenant specifying the terms and conditions contained in the Offer. Tenant shall
exercise its Right of First Refusal by providing Landlord with written notice of
its exercise within five (5) business days after the date of receipt of
Landlord's notice regarding the Offer. If Tenant exercises its Right of First
Refusal within the five (5) business-day period, Landlord and Tenant promptly
shall execute an amendment to the Lease relating to the Refusal Space, which
includes the terms and conditions set forth in the Offer. If Tenant fails to
provide Landlord with its written notice of exercise within the five (5)
business-day period, then Tenant shall be deemed to have elected not to
exercise its Right of First Refusal with respect to the particular Offer at
issue. Notwithstanding the foregoing, if Landlord negotiates with the proposed
tenant lease terms materially more favorable then those offered to Tenant but
rejected, Landlord shall be required to submit the more favorable terms to
Tenant for its review. Tenant shall have three (3) business days after receipt
of the more favorable terms to accept or reject the Refusal Space. If Tenant
rejects the more favorable terms, Landlord shall be free to enter a lease with
the proposed tenant on such terms. Tenant's Right of First Refusal shall be
continuous during the Term of the Lease and any extension thereof. Tenant's
rejection of any particular Offer shall not relieve Landlord of its obligation
to again offer any Refusal Space to Tenant at any time that the Refusal Space
subsequently becomes available.
Section 16.15. Parking. Tenant shall have the right to use on an
unreserved basis, at no additional charge, not less than four (4) parking spaces
per 1,000 rentable square feet of the Leased Premises in the parking lot
adjacent to the Leased Premises as shown on Exhibit F hereto. All spaces shall
be unreserved on a first-come, first-served basis.
Section 16.16. Signage. Landlord, at its cost and expense, shall provide
Tenant with Building standard suite signage on or near the door of the Leased
Premises. Tenant shall have the non-exclusive right to install a sign on the
parapet of the Building. The sign shall be installed, maintained and repaired by
Tenant at its sole cost and expense and shall comply with all laws. Landlord
shall have the right to approve the sign, including the location, size, color
and style. Upon the expiration or early
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INDUSTRIAL LEASE
termination of this Lease, Tenant shall remove the sign and repair any damage
caused by such removal at Tenant's sole cost and expense.
Section 16.17. Rent Abatement. Tenant is currently a subtenant pursuant
to those certain Sublease Agreements (Buildings 1 and 2), each dated July 15,
2002 (the "Sublease Agreements") with Tekelec ("Tekelec"), for 44,806 rentable
square feet of space at 5200 West and East Paramount Parkway as more
particularly described in the Sublease Agreements (the "Subleased Premises")
under which Landlord is the master Landlord. Landlord and Tekelec are
negotiating a rent abatement in connection with the Subleased Premises wherein
Landlord will give Tekelec a rent abatement in an amount equal to that portion
of Tekelec's base rent applicable to the Subleased Premises (the "Abatement
Amount") for the period from the execution of this Lease to the Commencement
Date (the "Abatement Period") and Tekelec will agree to modify the Sublease
Agreements to fully abate all rent due thereunder during the Abatement Period.
In the event Landlord and Tekelec have not entered into a lease amendment
regarding the rent abatement by the execution of this Lease and Tekelec has not
agreed to modify the Sublease Agreements to abate rent thereunder for the
Abatement Period prior to the execution of this Lease, then Landlord shall abate
base rent under this Lease for an additional four (4) months (without extending
the term hereof) so that Tenant will have a total of eight (8) calendar months
of free base rent hereunder.
Section 16.18. Landlord's Compliance with Laws. Landlord shall ensure
that as of the Commencement Date, the Building shall be in compliance with all
laws governing the Building. Landlord shall be responsible for the cost and
expense to ensure that the Building is in compliance with all laws governing the
Building enacted as of the date of execution of this Lease. Tenant shall be
responsible during the term of this Lease for such costs and expenses as may be
required as a direct result of Tenant's manner of use of the Leased Premises or
Tenant's alterations, leasehold improvements or modifications to the Leased
Premises. If Landlord receives a written notice from a governmental authority
that the Premises, Common Areas or the Building are not in compliance with a
requirement enacted after full execution of this Lease and such non-compliance
is not a result of Tenant's manner of use or improvements or alterations by
Tenant to the Leased Premises, then Landlord agrees to make the appropriate
alteration, the cost of which will be included in Operating Expenses to the
extent permitted in Section 3.02. Further, if as a result of Tenant's manner of
use or improvements, alterations or modifications made by Tenant, Landlord
receives notice from a governmental authority of noncompliance with respect to
the Leased Premises, Tenant shall have the option to cause the same to comply or
to remove or modify its alterations or modify its use so as to fully remedy the
non-compliance. In the event of any conflict between the provisions of this
Section 16.18 and Section 5.02 hereof, the provisions of this Section 16.18
shall control. Landlord represents and warrants that it has no knowledge of, and
has received no notice of, any pending changes to the laws governing the
Building.
(SIGNATURES CONTAINED ON FOLLOWING PAGE)
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INDUSTRIAL LEASE
IN WITNESS WHEREOF, the parties hereto have executed this Lease under
seal as of the day and year first above written.
LANDLORD:
DUKE REALTY LIMITED PARTNERSHIP,
an Indiana limited partnership doing
business in North Carolina as Duke
Realty of Indiana Limited
Partnership
By: Duke Realty Corporation,
its General Partner
By: /s/ H. ANDREW KELTOW [SEAL]
-----------------------------
Printed: H. Andrew Keltow
------------------------
Title: Senior VP
--------------------------
Witness/Attest: TENANT:
- ---------------------------------- CATAPULT COMMUNICATIONS CORPORATION,
a Nevada corporation
Print Name:
----------------------- By: /s/ DAVID W. MAYFIELD [SEAL]
Title: ---------------------------------
---------------------------- Printed: David W. Mayfield
----------------------------
Title: President & COO
------------------------------
[CORPORATE SEAL] CATAPULT COMMUNICATIONS CORPORATION
Corporate Seal
Nevada
Witness/Attest:
/s/ BARBARA J. FAIRHURST
- ----------------------------------
Print Name: Barbara J. Fairhurst
-----------------------
Title: VP Operations
----------------------------
[CORPORATE SEAL]
18