EXHIBIT 10.10
OFFICE LEASE AGREEMENT
Between
1755 NORTH BROWN ROAD, L.L.C.
A GEORGIA LIMITED LIABILITY COMPANY
("Landlord")
and
KMC TELECOM HOLDINGS, INC.,
A DELAWARE CORPORATION
KMC TELECOM, INC.,
A DELAWARE CORPORATION,
KMC TELECOM II, INC.,
A DELAWARE CORPORATION,
KMC TELECOM III, INC.,
A DELAWARE CORPORATION,
(JOINTLY AND SEVERALLY "TENANT")
Date: 2/29, 2000
OFFICE LEASE
THIS LEASE is made this 29th day of February, 2000, by and between 1755
NORTH BROWN ROAD, LLC, a Georgia limited liability company ("Landlord"), and KMC
TELECOM HOLDINGS, INC., a Delaware corporation, KMC TELECOM, INC., a Delaware
corporation, KMC TELECOM II, INC., a Delaware corporation, KMC TELECOM III,
INC., a Delaware corporation, (jointly and severally "Tenant") (Each time the
word "Tenant' is used, it means one, all or any combination of the foregoing
entities).
ARTICLE 1 - LEASE OF PREMISES
SECTION 1.01. BASIC LEASE PROVISIONS AND DEFINITIONS.
A. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the entire premises (hereinafter referred to as the "Leased
Premises"), in the office building known as Hillside I, 1755 North
Brown Road, Lawrenceville, Georgia, (hereinafter referred to as the
"Building"), located in Huntcrest (the "Park" or "Project"). The
Property upon which the Building is located is more particularly
described on Exhibit "A" attached hereto and by this reference made a
part hereof (hereinafter referred to as the "Property"). Landlord's
leasing of the Leased Premises to Tenant also includes the appurtenant
right for Tenant to use, on an exclusive basis (for so long as Tenant
is the sole tenant in the Building), the parking area serving the
Building and located on the Property, as well as the right to use in
common with other tenants in the Project, all driveways, accessways and
other Common Areas within the Project.
B. The parties hereby agree that for purposes of this Lease, the Rentable
Area of the Leased Premises is 103,650 rentable square feet. This
determination of the Rentable Area shall be final and binding on both
Landlord and Tenant.
C. Tenant's Building Expense Percentage: 100%;
D. Minimum Annual Rent: Years 1 - 3 $1,331,902.50)
Years 4 - 7 $1,471,830.00
Years 8 - Expiration $1,663,582.50
E. Monthly Rental Installments: Months 1 - 36 $110,991.88
Months 37 - 84 $122,652.50
Months 85 - Expiration $138,631.87
F. Term: Approximately Ten (10) years, Nine (9) months (beginning on the
Commencement Date and ending February 28, 2011), unless earlier
terminated or extended pursuant to the terms of this Lease;
G. Target Commencement Date: June 24, 2000
H. Security Deposit: $3,109,500.00 Letter of Credit subject to future
increases or decreases as set forth in the Lease;
1
I. Broker(s): The Quin Group, Inc. is acting as Agent for Tenant in this
transaction and shall be paid a commission by Landlord under separate
agreement. Duke Realty Services Limited Partnership and Hodges Real
Estate Services, L.L.C. jointly are acting as Agent for Landlord in
this transaction and shall be paid a commission by Landlord under a
separate agreement.
J. Permitted Use: General office purposes; and all other lawful purposes
reasonably ancillary thereto including, without limitation, computer
rooms, kitchens, dining facilities, breakrooms, mailrooms, exercise
facilities and showers.
K. Address for payments and notices as follows:
Landlord: 1755 North Brown Road, LLC c/o
Duke-Weeks Realty Limited Partnership
4497 Park Drive
Norcross, GA 30093
Attn: Elizabeth C. Belden, Esq.
With copy to: 1755 North Brown Road, L.L.C.
C/o M.D. Hodges Enterprises
2410 Paces Ferry Road, Suite 200
Atlanta, GA 30339
With Rental
Payments to: Duke-Weeks Realty Limited Partnership
P. O. Box 945703
Atlanta, GA 30394-5703
Tenant: KMC Telecom Holdings, Inc.
Leased Premises
Attn: Ron Smith
With a Copy to: KMC Telecom Holdings, Inc.
1545 Route 206, Suite 300
Bedminster, New Jersey 07921
Attn: James D. Grenfell, Executive
Vice President
L. Guarantor(s): N/A;
M. Landlord's Share of Operating Expenses: $0.00
N. Protective Covenants: Huntcrest Protective Covenants, recorded in Deed
Book 18655, page 107 in the Office of the Clerk of Superior Court,
Gwinnett County, Georgia,
SECTION 1.02. LEASE OF PREMISES.
2
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord under
the terms and conditions herein the Leased Premises, together with all the
appurtenant rights described in Section 1.01A above.
ARTICLE 2 - TERM AND POSSESSION
SECTION 2.01. TERM.
The term of this Lease shall be the period of time specified in ITEM F of the
BASIC LEASE PROVISIONS ("Lease Term") and shall commence on the later of (i) the
date Substantial Completion (as defined in Paragraph 2.02.B below) of the Leased
Premises has been achieved and the Tenant Improvement Certificate of Occupancy
is received for the Leased Premises, or (ii) the date Substantial Completion (as
defined in paragraph 2.02.A below) of the entire Building, parking area and
driveways has been achieved. Provided, however, that if Tenant takes possession
of and occupies the Leased Premises for the conduct of business, the Term of the
Lease shall be deemed to have commenced, notwithstanding the other requirements
contained herein. The date of commencement as defined above, hereinafter called
the "Commencement Date," the "Expiration Date" and the finally determined
Rentable Area of the Leased Premises shall be confirmed by Tenant in a Letter of
Understanding in the form attached as EXHIBIT D acknowledging (i) the
Commencement Date of this Lease, and (ii) that Tenant has accepted the Leased
Premises. If Tenant takes possession of and occupies the Leased Premises, Tenant
shall be deemed to have accepted the Leased Premises and that the condition of
the Leased Premises and the Building was at the time satisfactory and in
conformity with the provisions of this Lease in all respects, except for latent
defects. However, Landlord shall not be responsible for any delays in the
Commencement Date as a result of Tenant Delays (as defined below) and the
Commencement Date for the purpose of the date on which payment of rent commences
shall be the date Substantial Completion of the Leased Premises, Building and
other areas described above would have been achieved except for such Tenant
Delays. The term "Tenant Delays" shall mean actual delays in construction caused
by (i) Tenant's failure to deliver Premises Plans (as defined below) in
accordance with the schedule described in Section 2.02B below; (ii) delays
resulting from change orders to the Premises Plans requested by Tenant after
final approval of the Premises Plan; and (iii) any other delays directly caused
by the interference, acts or omissions by Tenant or its agents or employees with
the prosecution of the construction of the Building or Leased Premises.
SECTION 2.02. CONSTRUCTION OF IMPROVEMENTS AND POSSESSION.
A. Landlord shall cause the Building to be constructed substantially in
accordance with the Plans identified on EXHIBIT "E", attached hereto
and by this reference incorporated herein and made a part hereof, as
such plans and specifications may be revised, changed and amended from
time to time by Landlord in its sole discretion (the "Building Plans";
all improvements to be constructed substantially in accordance with the
Building Plans are herein called the "Building Improvements");
provided, however, that Landlord may not revise, change or amend the
Building Plans if any such revision, change or amendment would
materially and adversely affect the Leased Premises, or materially and
adversely lessen the quality of the Building, unless Tenant has
approved any such revision, change or amendment. Further, Landlord
acknowledges and agrees that no material changes may be made to the
3
Building Plans with respect to any of the following items without
Tenant's prior approval: (i) the exterior design of the Building; (ii)
the exterior skin of the Building; (iii) the size of the Building,
including the size of any floor plate; (iv) the level or quality of any
of the services to be delivered to the Building and Leased Premises;
(v) the location of the parking area, the total number of parking
spaces provided therein and the means of ingress and egress to the
parking area and (vi) the overall size, design and level of finishes
(including type of finishes) in the main lobby of the Building. The
cost of the Building Improvements shall be paid solely by Landlord and
shall not be included as part or paid out of the Allowance (as
hereinafter defined). Landlord shall cause Substantial Completion (as
defined below) of the Building Improvements to be achieved on or before
the last day of the Construction Period (as defined below). Landlord
shall cause the Building Improvements to be Substantially Completed in
a good, first-class and workmanlike manner and in accordance with all
applicable laws, rules, regulations and requirements of governmental
authorities and substantially in accordance with the Building Plans,
subject to completion of punchlist. The term "Substantial Completion"
with respect to the Building Improvements shall mean that Landlord has
obtained a certificate of substantial completion from the architect who
prepared the Buildings Plans and a certificate of occupancy or
temporary certificate of occupancy has been issued for the Building
shell by the appropriate jurisdiction and all of the following have
occurred: (i) all primary Building operating systems described in the
Building Plans or servicing the Leased Premises, including vertical
telephone risers and conduit to accommodate cables have been installed
and are operating ; (ii) all of the Building elevators servicing the
Leased Premises from the first floor lobby have been installed and are
operating properly; (iii) the restrooms on each of the floors of the
Building are fully operational and are substantially complete with all
finishes installed therein, except for punchlist items; and (iv) Tenant
has reasonably unimpeded access for itself, its employees and invitees
to the Building and the Leased Premises; (v) the ground floor entrances
to the Building are completed and ready for use; (vi) the sidewalks
adjacent to the Building are installed and all landscaping around the
Building has been installed or bonds have been provided to the
appropriate governmental authorities; and (vii) the parking area and
all access drives thereto have been completed, paved and striped and
are ready for use. If Tenant takes possession of and occupies the
Leased Premises, Tenant shall be deemed to have accepted the Leased
Premises and that the condition of the Leased Premises and the Building
was at the time satisfactory and in conformity with the provisions of
this Lease in all respects. Notwithstanding the foregoing, a temporary
certificate of occupancy shall not be sufficient for determining
Substantial Completion of the Building Improvements if the basis for
its "temporary" designation shall be any material deficiency in the
Building Improvements that materially, adversely affects Tenant's use
of, or access to, the Leased Premises.
B. Landlord shall cause the Leased Premises to be constructed and
completed substantially in accordance with the "Premises Plans" to be
prepared by Jova Daniels Busby (the "Space Architect"), as the Premises
Plans may be revised by Tenant from time to time with the approval of
Landlord, such approval not to be unreasonably withheld, conditioned or
delayed. The work to be performed in accordance with the Premises Plans
is herein called the "Landlord's Work". Landlord and Tenant shall
adhere to the schedule of deliveries, comments and approvals set forth
on EXHIBIT G attached hereto, and by this reference incorporated herein
4
and made a part hereof, which includes the requirement that Tenant
deliver to Landlord for approval final, complete Premises Plans no
later than February 25, 2000; provided, however, that Landlord is not
responsible for the Space Architect or Tenant's contractors.
Landlord and Tenant acknowledge and agree that Duke Construction
Limited Partnership (the "General Contractor") will be the general
contractor for the construction of the Leased Premises improvements
(the "Premises Improvements") in accordance with the Premises Plans.
The General Contractor's fee will be equal to the sum of 7% of the sum
of the selected subcontractor's contract amounts. The construction
contract will also include customary general conditions and overhead
equal to $110,503.00 subject to increases or decreases for change
orders. Except for the agreed fee and such general conditions and
overhead, neither the Landlord nor the General Contractor shall be
entitled to any other construction management fee, coordination fee or
other charge in connection with the construction of the Premises
Improvements. Landlord will, at Landlord's sole expense, provide
utilities, loading dock and freight elevator usage, staging and trash
removal in connection with the construction of the Premises
Improvements.
Landlord shall provide Tenant with an allowance (the "Allowance") equal
to $16.00 per rentable square foot contained within the Leased Premises
to pay the costs of the space planning design, supervision and
construction of the Premises Improvements, including, without
limitation, all costs of design, all costs of materials and labor to
install the Premises Improvements and the General Contractor's fee and
overhead (limited as described above). Landlord will pay all such costs
as and when incurred by Landlord on a timely basis only to the extent
of the Allowance and Tenant shall pay all such costs in excess of the
Allowance. Tenant shall promptly pay for all costs in excess of the
Allowance; fifty percent (50%) within ten (10) days of written notice
from Landlord to Tenant that Landlord estimates that fifty percent
(50%) of the Premises Improvements have been completed and fifty
percent (50%) upon the Substantial Completion of Landlord's Work
(except for a 10% retainage, which shall be payable only upon
completion by the General Contractor of the punchlist items, as
described in Section 2.02D below). Landlord agrees to pay Space
Architect and Tenant's other chosen architects, engineers and designers
for their costs to prepare architectural, mechanical electrical,
plumbing, finishes and/or furniture plans; and such payment shall be
made on a timely basis following Landlord's receipt of invoices
approved by Tenant, and such payments made on behalf of Tenant shall be
charged against the Allowance. In addition to providing the Allowance
described above, Landlord shall be obligated, at its sole cost and
expense, to provide the following items throughout the Leased Premises
in accordance with the Building Plans and the Premises Plans: (i)
ceiling grid; (ii) ceiling tiles purchased and stacked on each floor of
the Leased Premises; (iii) Building standard light fixtures at the
ratio of 90 fixtures per 1,000 rentable square foot purchased and
stacked on each floor of the Leased Premises; (iv) fire sprinkler
system installed throughout the Leased Premises in accordance with
applicable code requirements with heads attached per the Premises Plan;
and (v) Building standard heating, ventilating and air conditioning
system to each floor of the Leased Premises; and (vi) electrical power
equal to two (2) watts per rentable square foot for lighting and four
5
(4) watts per square foot (on demand) for outlets and convenience power
distributed to a subpanel at the Building core on each floor of the
Leased Premises all in accordance with the Building Plans.
Provided that Tenant has delivered drawings for the Premises
Improvements by February 25, 2000, Landlord shall cause the Landlord's
Work to be completed by June 24, 2000 (herein called the "Construction
Period"). The Construction Period shall be extended for: (i) strikes,
lockouts, inability to procure materials in the ordinary course of
business in accordance with the pricing budget for the construction of
the Leased Premises (but only if Landlord notifies Tenant, at the time
the Premises Plans are approved, that such materials are not obtainable
on a timely basis), restrictive government laws or regulations, riots,
insurrection, war and adverse weather ("Force Majeure Delays"); and
(ii) Tenant Delays. In the event of any dispute between Landlord and
Tenant with respect to the number of days attributable to any Force
Majeure Delays or Tenant Delays, the dispute shall be resolved by the
Space Architect whose decision shall be conclusive and binding on both
Landlord and Tenant. If any Force Majeure Delays (limited as described
above) or Tenant Delays cause a delay in Substantial Completion of
Landlord's Work then the time for completion of such Landlord's Work
shall correspondingly increase by the amount of time reasonably
attributable to such Completion Delay, such that Landlord would have
such additional time within which to achieve Substantial Completion of
Landlord's Work. If Landlord fails to deliver to Tenant actual
possession of the Leased Premises, having achieved Substantial
Completion of both the Building Improvements and Landlord's Work, by
July 24, 2000, as extended for Force Majeure Delays and Tenant Delays,
then Landlord shall provide Tenant one (1) day's abatement of both
Minimum Annual Rental and Annual Rental Adjustment, for each day after
July 24, 2000 that Landlord fails to deliver the Leased Premises to
Tenant with Substantial Completion of both the Building Improvements
and Landlord's Work having been achieved. The abatement period shall
begin as of the delayed Commencement Date. Such abatement shall be
Tenant's only remedy for Landlord's failure to deliver the Leased
Premises as set forth above, and Tenant shall not be entitled to
damages (consequential or otherwise) as a result thereof.
Tenant must request each Tenant change order in writing and note
therein whether the change order is to be priced prior to Tenant's
formal request for the change order, or whether the change order is a
formal request for a change order to occur regardless of the price
associated therewith. Upon submission of a change order, Landlord shall
notify Tenant, within five (5) business days of Landlord's receipt
thereof, of the time period in which the change order can be completed,
and whether or not Landlord reasonably believes such change order
results in any delays or any savings of time to the Substantial
Completion of Landlord's Work. To the extent that a change order would
increase the cost of the Landlord's Work above the Allowance, then
Tenant shall pay for such work at the time of and as a condition to the
approval of the change order. Landlord must notify Tenant within five
(5) business days of the date Landlord reasonably learns of the
beginning of any Tenant Delay period and must give Tenant a reasonable
estimate of the period of the delay. If Landlord fails to give Tenant
such notice, with respect to any Tenant Delay, the applicable Tenant
Delay shall be deemed, for all purposes under this Lease, not to have
occurred.
6
As used herein, "Substantial Completion" of Landlord's Work means: (i)
the Space Architect for the Leased Premises has issued a certificate of
substantial completion for the Leased Premises, and (ii) a temporary or
permanent certificate of occupancy for the Leased Premises has been
issued; provided, however, a temporary certificate of occupancy shall
not be sufficient if the basis for its "temporary" designation shall be
any material deficiency in the Building Improvements or the Premises
Improvements that materially, adversely affects Tenant's use of, or
access to, the Leased Premises. The occurrence of Substantial
Completion shall not in any way discharge or relieve the Landlord from
its obligation to fully complete Landlord's Work in an expeditious,
good and workmanlike manner. During the course of the performance of
Landlord's Work, Landlord shall keep Tenant informed as to any material
change in Landlord's estimate of the date upon which Substantial
Completion of Landlord's Work will occur. Landlord shall allow Tenant
and Tenant's agents, employees and contractors prompt and reasonable
access to the Leased Premises (or portions thereof), beginning at least
forty-five (45) days prior to the projected date of Substantial
Completion, in order to permit Tenant and its vendors to install
cabling, wiring and telecommunication systems, and beginning at least
ten (10) days prior to the projected date of Substantial Completion, in
order to permit Tenant and its vendors to install furniture and
equipment and to perform any other similar installation work desired by
Tenant, so long as such installation and performance by or on behalf of
Tenant does not (and Tenant covenants and agrees not to) materially
interfere with Landlord's Substantial Completion of Landlord's Work on
the timetable within which such Substantial Completion is to occur, and
provided, however, that if Tenant actually occupies the Leased Premises
prior to the Commencement Date for conduct of Tenant's business, then
the Commencement Date shall be deemed to be the date upon which
occupancy of the Leased Premises by Tenant first actually occurred.
Tenant shall indemnify and hold harmless Landlord from and against any
and all cost, losses, damages, liabilities and expenses arising out of
or relating to such entry.
C. The subcontractors shall be selected to construct the Premises
Improvements in the following manner:
(i) On EXHIBIT H, the parties have identified the major trades
and no less than three (3) and no more than five (5) potential
subcontractors for each major trade that are acceptable to the
parties to construct the respective major trade improvements
to the Leased Premises and to which the General Contractor
will bid the major trades.
(ii) After LANDLORD'S receipt of the Premises Plans, as
approved by Landlord and Tenant gives Landlord a notice to
proceed, the General Contractor shall solicit bids from each
subcontractor identified in EXHIBIT "H" hereof, which bids
shall set forth the price, terms, conditions and time schedule
that such subcontractor would require if chosen to construct
the Leased Premises.
(iii) Landlord shall, within seven (7) days after the receipt
of such bids and after consulting with Tenant (and Tenant
hereby agrees to consult with Landlord upon request), select
the subcontractor from those identified in Section 2.02 hereof
to construct the improvements to the Leased Premises. All
other factors being equal, Landlord will choose the
7
subcontractor that submits the lowest bid unless Tenant
selects a subcontractor other than the low bidder.
(iv) The subcontractor so selected may be used by Landlord to
construct any additional improvements to the Leased Premises
or expanded Leased Premises without repeating the procedures
set forth above.
D. Upon the Substantial Completion of Landlord's Work, Landlord shall
notify Tenant, and the parties hereto, within five (5) business days
after such notice, shall perform a walk-through inspection of the
Leased Premises. During such inspection the parties shall prepare a
punch-list of defective or incomplete items, if any, which items
Landlord shall cause General Contractor to correct promptly after the
date of such inspection and in any event within thirty (30) days.
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 good order, condition and repair. Tenant shall remove its personal
property and computer equipment in the Leased Premises, at its sole cost and
expense, but Tenant shall not be obligated to remove any portion of Landlord's
Work or the Premises Improvements (including any cabling and wiring). Tenant
shall, at its expense, promptly repair any damage caused by any such removal,
and shall restore the Leased Premises to the condition existing upon the
Commencement Date, reasonable wear and tear excepted. All Tenant property which
is not removed within ten (10) days following Landlord's written demand
therefore shall be conclusively deemed to have been abandoned and Landlord shall
be entitled to dispose of such property at Tenant's cost without 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 Fifty Percent (150%) of the Monthly Rental Installment and
Annual Rental Adjustment for the Leased Premises in effect upon the date of such
expiration or earlier termination and otherwise upon the terms, covenants and
conditions herein specified, so far as applicable. Acceptance by Landlord of
rent after such expiration or earlier termination shall not result in a renewal
of this Lease. 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.
8
Tenant shall pay to Landlord the Minimum Annual Rent in the Monthly Rental
Installments in advance, without deduction or offset (except as expressly
provided in this Lease) 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 Installments for partial calendar months shall be prorated.
SECTION 3.02. ANNUAL RENTAL ADJUSTMENT DEFINITIONS.
A. "ANNUAL RENTAL ADJUSTMENT" - shall mean the amount of Tenant's
Proportionate Share of Operating Expenses for a particular calendar
year.
B. "OPERATING EXPENSES" - shall mean the amount of all of Landlord's
reasonable, customary costs and expenses paid or incurred in operating,
repairing, and maintaining the Building (including the Common Areas as
defined below) in good condition and repair for a particular calendar
year, including by way of illustration and not limitation: all Real
Estate Taxes, as hereinafter defined, insurance premiums for all
insurance required of Landlord under this Lease and commercially
reasonable deductibles, water, sewer, electrical and other utility
charges other than the separately billed electrical and other charges
paid by Tenant as provided in this Lease; service and other charges
incurred in the repair, operation and maintenance of the elevators and
the heating, ventilation and air-conditioning system; cleaning and
other janitorial services; tools and supplies; repair costs; landscape
maintenance costs; security services; license, permit and inspection
fees; management or administrative fees (not to exceed 3% of the
Minimum Annual Rental and Annual Rental Adjustment payable hereunder);
supplies, costs, wages and related employee benefits payable for the
management, maintenance and operation of the Building, but only for
employees at or below the level of Building Manager; maintenance and
repair of the driveways, parking and sidewalk areas (including snow and
ice removal), landscaped areas, and lighting; maintenance and repair
costs, fees and assessments incurred under the Protective Covenants (as
currently allocated, without any change in such allocation method and
without any change in the costs, fees and amounts currently provided
for therein). Notwithstanding anything to the contrary set forth
hereinabove, Operating Expenses shall not include any of the following:
(i) Landlord's ownership expenses, as distinguished from costs of
operating the Building, such as partnership accounting and legal
matters, and costs in connection with any sales or financings of the
Building or the Project; (ii) costs incurred in connection with the
original construction of the Building, Common Areas or any
infrastructure serving the Building; (iii) depreciation, interest and
principal payments under any mortgages or other financings; (iv) costs
of correcting defects in the initial design or construction of the
Building; (v) legal fees, design fees, broker's commissions,
advertising expenses or costs of leasehold improvements in connection
with any development or leasing of the Building; (vi) costs for which
Landlord is reimbursed by way of insurance, warranties, other tenants
or any other source; (vii) costs of services provided to any other
tenants of the Building in excess of the services made available to
Tenant under this Lease; (viii) fines and penalties resulting from
Landlord's late payment of any Real Estate Taxes or other amounts; (ix)
rental under any ground leases; (x) any capital expenditures other than
capital expenditures made to comply with laws first enacted after the
date of this Lease (or amendments to existing laws first enacted after
the date of this Lease) or to reduce Operating Expenses, but, in either
9
event, such capital expenditures must be amortized over the useful life
of the item in question and only the annual amortization may be
included in Operating Expenses and, with respect to cost saving capital
expenditures, the amortization may be included only up to the level of
the reasonably projected savings; (xi) any costs paid to subsidiaries,
affiliates or parties related to Landlord for services in the Building
to the extent the costs exceed fair market value for those services;
(xii) rental payments for base building equipment (such as elevators or
air conditioning equipment) that would ordinarily considered to be
capital equipment; (xiii) tenant electrical costs if Tenant directly
pays for the electricity for its space; (xiv) costs to repair or
restore any portion of the Building or Property following a
condemnation or casualty (except to the extent of a commercially
reasonable deductible amount which shall be included as an Operating
Expense); (xv) any costs incurred by Landlord to correct any violation
of laws, ordinances, rules, regulations, pennits or licenses in effect
as of the Commencement Date; and (xvi) costs incurred to remove,
encapsulate or remediate asbestos or any other hazardous materials
unless caused by Tenant, its agents, contractors and invitees.
C. "TENANT'S PROPORTIONATE SHARE OF OPERATING EXPENSES" - shall be an
amount equal to the remainder of (i) the product of Tenant's Building
Expense Percentage times the Building Operating Expenses less (ii)
Landlord's Share of Operating Expenses, provided that such amount shall
not be less than zero.
D. "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, state franchise taxes assessed on tangible
property, improvement bond or other similar charge or tax (other than
franchise business license fees, impact fees, inheritance income or
estate taxes) imposed upon the Building or Common Areas (hereinafter
defined) or against Landlord's receipt of lease payments by any
authority having the power to so charge or tax, together with the
reasonable actual costs and expenses of contesting the validity or
amount of Real Estate Taxes. Tenant shall notify Landlord on August 1
of each year if it desires to review the tax assessment and whether or
not Tenant desires that Landlord file a dispute. If Landlord notifies
Tenant that Landlord will not file any dispute of the Real Estate
Taxes, Tenant shall have the right to dispute the Real Estate Taxes and
Landlord shall cooperate fully with Tenant in facilitating such dispute
including signing any reasonably required documents. In the event
Tenant determines that it will file a dispute and hire a real estate
tax consultant to handle such dispute, Landlord shall have the right to
approve such consultant, such approval not to be unreasonably withheld.
If Tenant succeeds in obtaining a reduction of the Real Estate Taxes,
all of the reduction shall be paid directly to Tenant. Notwithstanding
anything to the contrary set forth hereinabove, any special assessments
which are included in Real Estate Taxes and which the applicable
governmental authority allows to be paid in installments shall be
deemed to be paid in the maximum number of permissible installments and
only the minimal annual installment required to be paid may be included
in Operating Expenses during any calendar year.
E. "COMMON AREAS" - shall mean the areas of the Building and the land
which are designed for use in common by all tenants of the Building and
their respective employees, agents, customers, invitees and others, and
includes, by way of illustration and not limitation, entrances and
10
exits, hallways and stairwells, elevators, restrooms, sidewalks,
driveways, parking areas, landscaped areas and other areas as may be
designated by Landlord as part of the Common Areas of the Building. For
so long as Tenant is the sole tenant in the Building, Tenant shall have
the exclusive use of the Common Areas inside the Building and the
parking areas allocated to the Building.
SECTION 3.03. PAYMENT OF ADDITIONAL RENT.
In addition to the Minimum Annual Rent specified in this Lease, Tenant shall pay
to Landlord as "Additional Rent" for the Leased Premises, in each calendar year
or partial calendar year, during the Lease Term, an amount equal to the Annual
Rental Adjustment for such calendar year. The Annual Rental Adjustment shall be
reasonably estimated annually by Landlord, and written notice thereof shall be
given to Tenant prior to January 1 for the upcoming calendar year. Tenant shall
pay to Landlord each month, at the same time the Monthly Rental Installment is
due, an amount equal to one-twelfth (1/12) of the estimated Annual Rental
Adjustment. If Real Estate Taxes or the cost of utility or janitorial services
increase during a calendar year, Landlord may, on not more than one (1) occasion
each year, increase the estimated Annual Rental Adjustment during such year by
giving Tenant written notice to that effect, and thereafter Tenant shall pay to
Landlord, in each of the remaining months of such year, an amount equal to the
amount of such increase in the estimated Annual Rental Adjustment divided by the
number of months remaining in such year. On or before March 31, after the end of
each calendar year, Landlord shall prepare and deliver to Tenant a detailed
statement showing the actual Annual Rental Adjustment. Within thirty (30) days
after receipt of the aforementioned statement, but subject to Tenant's audit and
dispute rights below, Tenant shall pay to Landlord, or Landlord shall credit
against the next rent payment or payments due from Tenant, as the case may be,
the difference between the actual Annual Rental Adjustment for the preceding
calendar year and the estimated amount paid by Tenant during such year. The
estimated Annual Rental Adjustment for the calendar year 2000 is $5.34 per
rentable square foot. Tenant shall have ninety (90) days following its receipt
of Landlord' statement to audit Landlord's books and records with respect to the
Operating Expenses for the year in question. Landlord will make such books and
records available to Tenant in the property management office in Atlanta during
normal business hours beginning on any business day within five (5) business
days of Tenant's notice to Landlord that Tenant desires to conduct such audit.
Such review of Landlord's books and records shall not exceed five (5) business
days. If, based on such audit, Tenant believes that certain of the Operating
Expenses charged by Landlord are not properly included within Operating Expenses
or that Landlord has erred in calculating the Operating Expenses or that any
amounts included therein are not commercially reasonable, Tenant shall notify
Landlord, within two weeks of the end of such audit that Tenant disputes some
portion of the Operating Expenses. Promptly upon receipt of such notice,
Landlord and Tenant shall meet and negotiate in good faith to resolve their
disagreement concerning the Operating Expenses. If, within thirty (30) days of
Tenant's notice, Landlord and Tenant are unable to resolve Tenant's objections,
then, within fifteen (15) days after the expiration of the aforesaid thirty (30)
day period, Landlord and Tenant shall agree on one of the "big five" accounting
firms which does not currently work for either Landlord or Tenant and shall
submit the disputed portion of the Operating Expenses to such "big five"
accounting firm for resolution. The "big five" accounting firm shall resolve the
dispute and determine the proper amount of Operating Expenses for the year in
question and its decision shall be final and binding on both parties. The fees
of the "big five" accounting firm shall be paid by Tenant, in the event that the
11
total of any errors on the part of Landlord equal less than 3% of the Annual
Rental Adjustment for that calendar year. In the event that the total of any
errors on the part of Landlord are in excess of 3% of the Annual Rental
Adjustment for that calendar year, Landlord will reimburse Tenant for all costs
of the accounting firm.
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. Therefore, in addition to the other remedies
available to Landlord hereunder, if any payment required to be paid by Tenant to
Landlord hereunder shall become overdue, such unpaid amount shall bear interest
from the due date thereof to the date of payment at the prime rate (as reported
in the Wall Street Journal) of interest ("Prime Rate") plus four percent (4%)
per annum. Notwithstanding the foregoing, Tenant shall not be obligated to pay
the late charge described hereinabove on the first two occasions in any calendar
year unless Landlord provides Tenant written notice that the payment is past due
and Tenant fails to make the past due payment within five (5) business days
following such notice from Landlord.
ARTICLE 4 - LETTER OF CREDIT
Landlord and Tenant agree that, subject to any provisions herein related to
increases, the amount of the initial security deposit to be held as security for
the performance by Tenant of Tenant's covenants and obligations under the Lease
is THREE MILLION ONE HUNDRED NINE THOUSAND FIVE HUNDRED AND NO/100 DOLLARS
($3,109,500.00). The obligation to post such Security Deposit shall be satisfied
by Tenant's delivering to Landlord, contemporaneously with the execution of this
Lease, an irrevocable and unconditional standby letter of credit (the "Original
Letter of Credit"), in the amount of the initial Security Deposit, issued for
the benefit of Landlord (such Original Letter of Credit and any substituted or
replacement letter of credit issued in accordance with this Lease are
hereinafter collectively referred to as the "Letter of Credit"; the Letter of
Credit, the proceeds thereof and any other monies paid hereunder are hereinafter
collectively referred to as the "Security Deposit"), shall have an initial
expiration date not earlier than 365 days from issuance, shall be issued by
First Union Bank or another national or commercial bank as may be approved by
Landlord in writing, shall be assignable by Landlord concurrently with an
assignment by Landlord of this Lease and the assumption of Landlord's
obligations hereunder by the assignee. The approved form of Letter of Credit is
attached to this Lease as EXHIBIT "F-1".
If no uncured Default then exists under this Lease or Landlord has not drawn on
the Letter of Credit, then the amount of the Letter of Credit shall be reduced
(the "Reduced Security Deposit") annually commencing at the end of the fifth
year of the Lease Term, in five equal installments until it reaches the
equivalent of two month's rent at which time it will remain until the end of the
Term as shown in EXHIBIT "F".
Subject to the immediately following paragraph and not less than thirty (30)
days prior to the expiration of the Original Letter of Credit and each year
thereafter, Tenant shall deliver to Landlord a substituted or replacement letter
of credit issued for the benefit of Landlord in an amount equal to the Reduced
Security Deposit and with an expiration date not earlier than 365 days from
12
issuance, and in the same form and content as the Original Letter of Credit.
Landlord may draw on the Letter of Credit in the event that, among other things,
Tenant fails to deliver to Landlord such substituted or replacement Letter of
Credit in the time and manner required by this Section. Upon delivery of a
replacement Letter of Credit, Landlord shall return the existing Letter of
Credit to Tenant.
From and after execution of this Lease, if Tenant (i) fails at any time to pay
any amount due when due (after notice from Landlord and the expiration of any
applicable grace, notice or cure periods), or (ii) breaches any material
covenant or obligation of this Lease and such breach continues following notice
from Landlord and the expiration of any applicable cure period, then Landlord
may, but shall be under no obligation to, from time to time and without
prejudice to any other right or remedies, draw upon such Letter of Credit (in
its entirety or in partial drawings from time to time), in which case Landlord
shall use the resulting monies to the extent necessary to pay any such amount
due, to cure any such breach or to compensate Landlord for its damages incurred
by reason of such breach and for no other purpose.
In the event that Landlord applies the Security Deposit or a portion thereof as
provided in this Section, Tenant shall immediately upon notice from Landlord of
such application restore the Letter of Credit to its original amount, it being
the intent of the parties that the Security Deposit to be held by Landlord
always be the amount stated herein. It is expressly understood and agreed,
however, that the Security Deposit shall not be considered an advance payment of
rent or a measure of Landlord's damages in the event of a default by Tenant.
Upon Tenant's vacation of the Leased Premises upon the expiration or other
termination of the Lease, and provided that Tenant is not then in default under
the Lease, the Security Deposit shall be returned by Landlord to Tenant without
interest.
On June 1, 2000 and every June 1 thereafter during the term of this Lease,
Tenant shall deliver to Landlord, Tenant's most recent annual, audited financial
statements and any other financial materials and information reasonably
requested by Landlord; provided, however, that if Tenant's financial information
is available from the Securities and Exchange Commission or otherwise publicly
available, then Landlord shall obtain all such Landlord-required financial
information with respect to Tenant in satisfaction of this paragraph from such
other sources. Landlord will waive the requirement for the Letter of Credit if
(a) Tenant's tangible net worth (defined as shareholders' equity as reflected in
Tenant's audited annual financial statements or unaudited quarterly financial
statements, as the case may be, net of the book value of goodwill and other
intangible assets specifically identified as such in those same financial
statements), at any time during the Term, equals or exceeds Thirty-Six Million
Dollars ($36,000,000.00) for a period of at least one (1) year, while during
that same one (1) year period Tenant has a market value of its common equity of
at least $500,000,000.00 (market value of common equity being determined by
multiplying Tenant's public stock price by its fully diluted shares outstanding
(computed consistent with the Treasury Stock method)), or (b) the Lease is
guaranteed by a company with an investment rating of Moody's Baa or better,
using a guaranty agreement substantially similar to EXHIBIT I. For the purposes
of this last paragraph in Article 4, the Tenant shall be deemed to be all of the
entities comprising "Tenant" under the Lease in the aggregate. In the event that
Landlord waives the requirement for the Letter of Credit pursuant to (a) above
and at any time during the Term of this Lease Tenant no longer meets the net
worth or market capitalization requirement, Tenant shall reinstate the Letter of
Credit in accordance with the terms hereof. In the event Landlord at any time
13
during the Term of this Lease waives the requirement for the Letter of Credit,
Tenant shall be required to post a Security Deposit in the amount of the last
two months Minimum Monthly Rental installment to be held as security for the
performance of Tenant's covenants and obligations under the Lease.
ARTICLE 5 - OCCUPANCY AND USE
SECTION 5.01. USE.
The Leased Premises shall be used by Tenant 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 comply with the Covenants (as they currently exist) and 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;
provided, however, that Tenant shall be required to make alterations or changes
to the Leased Premises to comply with applicable laws only if such alterations
or improvements are applicable to the Leased Premises because of the particular
or unique type of use being made by Tenant therein. Landlord shall be obligated
to comply with laws requiring alterations or improvements which are applicable
to occupied office space in general and not as a result of Tenant's unique and
particular type of use (subject to Landlord's right to include such costs in
Operating Expenses if and to the extent permitted by Section 3.02 above). Tenant
shall comply with and obey all reasonable directions of Landlord, including the
Building Rules and Regulations attached hereto as EXHIBIT C and as may be
modified from time to time by Landlord on reasonable notice to Tenant; provided,
however, Tenant shall not be obligated to comply with any modifications to the
Building Rules and Regulations that will materially, adversely affect Tenant's
use and enjoyment of the Leased Premises or Tenant's access to the Project,
Property, Building or Leased Premises. Tenant shall not do or permit anything to
be done in or about the Leased Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building or
injure or annoy them.
Landlord shall not be responsible to Tenant for the non-performance by any other
tenant or occupant of the Building of any of the Building Rules and Regulations,
but agrees to take reasonable measures to assure such other tenant's compliance.
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
for any increase in premium charged.
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:
14
Landlord, its employees and agents and any mortgagee of the Building shall have
the right to enter any part of the Leased Premises (other than Secure Areas, as
described below) at reasonable times upon at least twenty-four (24) hours notice
and with the accompaniment of an employee of Tenant, except in the event of an
emergency when no notice shall be required, for the purposes of examining or
inspecting the same, showing the same to prospective purchasers, mortgagees or,
during the last year of the Term only, tenants and making such repairs to the
Leased Premises or the Building as Landlord may be required to make under this
Lease. The term "Secure Areas" shall mean certain areas of the Leased Premises
designated by Tenant into which Landlord shall not have access except in the
event of an emergency. Landlord shall not be obligated to provide janitorial
services or repair services to the Secure Areas unless Tenant provides Landlord
access to the Secure Areas and Landlord shall not be liable for any loss, damage
or injury therein, except for the gross negligence or willful misconduct of
Landlord. 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 therefor, unless Tenant's business is
materially disrupted for three (3) or more consecutive business days as a result
of a cause within Landlord's control and which Landlord has the ability to cure,
in which case all Minimum Annual Rental and Annual Rental Adjustment
attributable to the portion of the Leased Premises in which Tenant's business is
disrupted shall be abated until such disruption ceases.
ARTICLE 6 - UTILITIES AND OTHER BUILDING SERVICES
SECTION 6.01. SERVICES TO BE PROVIDED.
Landlord shall furnish to Tenant, except as noted below, the following utilities
and other building services to the extent reasonably necessary for Tenant's
comfortable use and occupancy of the Leased Premises for the Permitted Use or as
may be required by law or directed by governmental authority and in types and
amounts customary for similar office buildings in the east I-85 Gwinnett County
area:
(a) Heating, ventilation and air-conditioning during the hours and on days
required by Tenant, in accordance with the specifications attached
hereto as EXHIBIT "E";
(b) Electrical current for lighting equal to at least two (2) watts per
rentable square foot plus electrical current for outlets and
convenience power equal to at least four (4) watts per rentable square
foot (on demand);
(c) Water in the Common Areas for lavatory and drinking purposes;
(d) Automatic elevator service twenty-four hours per day through at least
two (2) passenger elevators and at least one (1) freight elevator,
except in emergencies or for routine maintenance and in any case, both
passenger elevators won't be removed from service at one time for
routine maintenance;
(e) Cleaning and janitorial service in the Leased Premises and Common Areas
on Monday through Friday of each week except legal holidays in
accordance with the specifications attached hereto as EXHIBIT J;
(f) Washing of windows in accordance with the specifications attached
hereto as EXHIBIT "J";
15
(g) Replacement of all lamps, bulbs, starters and ballasts in Building
standard lighting as required from time to time as a result of normal
usage;
(h) Cleaning and maintenance of the Common Areas, including the removal of
rubbish, ice and snow;
(i) Repair and maintenance to the extent specified elsewhere in this Lease;
(j) Men's and women's restrooms on each floor of the Leased Premises with
at least the number of fixtures shown in the Building Plans;
(k) Security services limited to card key access; and
Charges for utilities and services provided by Landlord, if any, shall not
exceed the charges that would have been payable if such utilities and services
had been directly billed by the utilities or service providers to Tenant. Tenant
shall have the right to obtain telecommunication services and data services for
the Leased Premises from any provider that Tenant chooses and Landlord will
provide Tenant access to the Building risers and conduits as shown on the
Building Plans and Specifications attached hereto as EXHIBIT E, at no cost to
Tenant or the telecommunication or data provider, for Tenant to obtain such
services.
SECTION 6.02. ADDITIONAL SERVICES.
If Tenant requests utilities or building services in addition to those
identified above or any of the above utilities or building services in
frequency, scope, quality or quantity substantially greater than those which
Landlord determines are normally required by other tenants in the Building for
the Permitted Use, then Landlord shall use reasonable efforts to attempt to
furnish Tenant with such additional utilities or building services. In the event
Landlord is able to and does furnish such additional utilities or building
services, the actual costs, without markup, overhead or fee, shall be borne by
Tenant, who shall reimburse Landlord monthly for the same as Additional Rent at
the same time Monthly Rental Installments and other Additional Rent is due.
If any lights, density of staff, machines or equipment used by Tenant in the
Leased Premises materially affect the temperature otherwise maintained by the
Building's air-conditioning system or generate substantially more heat in the
Leased Premises than that described in the design specifications for the HVAC
system which are set forth on EXHIBIT "E", then, at Tenant's option, either (i)
Landlord shall have the right to install any machinery or equipment which
Landlord considers reasonably necessary in order to meet the design
specifications, or (ii) Landlord's obligation to provide HVAC services per the
design specification shall be modified based on such excess heat generation. All
costs expended by Landlord to install any such machinery and equipment and any
additional costs of operation and maintenance in connection therewith shall be
borne by Tenant, who shall reimburse Landlord for the same as provided in this
SECTION 6.02. The Building and HVAC are accessible to Tenant 24 hours per day, 7
days per week via card-key or key pad security system.
SECTION 6.03. INTERRUPTION OF SERVICES.
16
Landlord shall not be liable in damages or otherwise for any failure or
interruption of any utility service and, no such failure or interruption shall
entitle Tenant to withhold sums due hereunder, except as expressly provided
below. Notwithstanding anything to the contrary contained in this lease, if
Tenant cannot reasonably use all or any portion of the Premises for Tenant's
intended business operations by reason of any interruption in services to be
provided by Landlord (and the interruption is caused either by a matter within
Landlord's control or by a matter that would be covered by Landlord's rent loss
coverage if Landlord maintains rent loss coverage as required in this Lease) and
Tenant does not in fact use such portion of the Leased Premises and such
condition exists for three (3) or more consecutive business days or five (5) or
more business days within any thirty (30) day period, then the Minimum Annual
Rent and Annual Rental Adjustment shall be abated for that portion of the Leased
Premises that Tenant is unable to use for Tenant's intended business operations
until such service is restored to the Leased Premises. At the time of the loss
of service, Tenant must give written notice promptly to Landlord of the loss of
service and its claim for abatement and Tenant only shall be entitled to
abatement of the Minimum Annual Rent and Annual Rental Adjustment in proportion
to the area rendered unusable. Landlord may prevent or stop abatement by
providing substantially the same service in similar quality and quantity by
temporary or alternative means until the cause of the loss of service can be
corrected. Tenant shall not be entitled to the rent abatement set forth above if
the service interruption is caused by the act or omission of Tenant, its agents
or employees.
ARTICLE 7 - REPAIRS, MAINTENANCE AND ALTERATIONS
SECTION 7.01. REPAIR AND MAINTENANCE OF BUILDING.
Subject to SECTION 7.02 and except for any repairs made necessary by the
negligence, misuse, or default of Tenant, its employees and agents, customers
and invitees, which is not covered by insurance of the type required to be
carried by Landlord under this Lease, Landlord shall keep and maintain in good
order, condition and repair the roofs, exterior walls, exterior doors, windows,
all structural portions, all Building electrical, Building mechanical, Building
plumbing and Building HVAC systems, corridors and other Common Areas.
SECTION 7.02. REPAIR AND MAINTENANCE OF LEASED PREMISES.
Landlord shall keep and maintain the Leased Premises in good order, condition
and repair. Except for ordinary wear and tear and damage, items which Landlord
is obligated to maintain and repair pursuant to Section 7.01, damage caused by
casualty or condemnation and damage caused by the negligence or willful
misconduct of Landlord, its agents or employees and which is not covered by
insurance of the type Tenant is required to carry under this Lease, the actual
cost of all repairs and maintenance to the Leased Premises shall be borne by
Tenant, who shall be separately billed and shall reimburse Landlord for the same
as Additional Rent, or as a part of Operating Expenses.
SECTION 7.03. ALTERATIONS.
Except for Permitted Alterations (as defined below), Tenant shall not permit
alterations in or to the Leased Premises unless and until the plans have been
approved by Landlord in writing, which approval shall not be unreasonably
17
withheld, conditioned or delayed. 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. Notwithstanding the foregoing, Tenant shall not be
obligated to remove any of Landlord's Work or any Permitted Alterations and
Landlord may not require Tenant to remove any other alterations that are of a
type customary for first-class office buildings. 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. No person shall be
entitled to any lien derived through or under Tenant for any labor or material
furnished to the Leased Premises, and nothing in this Lease shall be construed
to constitute a consent by Landlord to the creation of any lien. 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 after filing. Tenant shall
indemnify Landlord from all costs, losses, expenses and attorneys' fees in
connection with any construction or alteration and any related lien.
Notwithstanding anything to the contrary set forth hereinabove, Tenant may,
without Landlord's prior approval but with written notice to Landlord, along
with permits and drawings to the extent required, make any alterations,
improvements or additions to the Leased Premises ("Permitted Alterations"), so
long as they (i) do not affect the Building structure, (ii) do not adversely
affect the value of the Building, (iii) do not materially, adversely affect any
of the Building systems, (iv) are not visible from the exterior of the Building,
(v) are of a type customary for first-class office buildings, (vi) do not
materially increase the cost of demolition of the Premises Improvements, and
(vii) only if and to the extent the alteration is of a type not customary for
first-class office buildings, restore the affected portion of the Leased
Premises to its condition prior to such modification.
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 Building Improvements. Rent shall proportionately
abate during the time that the Leased Premises or part thereof are unusable
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
hundred eighty (180) days from the casualty date, or if the Leased Premises are
materially damaged during the last year of the Term and Tenant has not already
or does not within thirty (30) days thereafter elect to extend the Term of this
Lease for the Extended Term; or (ii) destroyed by a casualty which is not
covered by insurance of the type required to be carried by Landlord 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. If neither party elects to terminate, or if neither party
has the right to terminate this Lease, Landlord shall promptly commence the
restoration and diligently pursue it to completion as soon as reasonably
possible.
SECTION 8.02. ALL RISK COVERAGE INSURANCE.
18
During the Lease Term, Landlord shall maintain all risk coverage insurance on
the Building including rent loss coverage, in types, amounts and duration and
covering such losses, as is customarily carried by present owners of similar
first-class office buildings in the I-85/Gwinnett market (in an amount equal to
the full replacement cost thereof, excluding all leasehold improvements), but
not leasehold improvements or Tenant's personal property on the Leased Premises.
Notwithstanding the provisions of SECTION 9.01 and SECTION 9.03, neither party
shall be liable for any damage to the other's property, regardless of cause,
including the negligence of either party and its employees, agents and invitees.
Each party hereby expressly waives any right of recovery against the other for
damage to any property located in or about the Leased Premises or the Building,
however caused, including the negligence of the other and its employees, agents
and invitees, each party hereby agreeing to look solely to its insurance
coverage (and/or to its own funds with respect to deductible amounts and
retained risk amounts) with respect to any property damage. All insurance
policies maintained by Landlord and 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. TENANT'S RESPONSIBILITY.
Tenant shall assume the risk of, be responsible for, have the obligation to
insure against, and indemnify Landlord and hold it harmless from any and all
liability for any loss of or damage or injury to any person (including death
resulting therefrom) or property occurring in the Leased Premises, regardless of
cause, except for any loss or damage covered by Landlord's all risk coverage
insurance as provided in SECTION 8.02 and except for that caused directly by the
negligence or willful misconduct of Landlord or its employees, agents, customers
or invitees; and Tenant hereby releases Landlord from any and all liability for
the same. Tenant's obligation to indemnify Landlord hereunder shall include the
duty to defend against any claims asserted by reason of such loss, damage or
injury and to pay any judgments, settlements, costs, fees and expenses,
including reasonable, actual attorneys' fees, incurred in connection therewith.
This provision shall survive the expiration or earlier termination of this
Lease.
SECTION 9.02. LIABILITY INSURANCE.
Tenant shall carry insurance, issued by one or more insurance companies having a
rating according to Best's Insurance Guide of A-/X or better, 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 written on an occurrence basis (not a claims made basis).
(c) All Risk Coverage, Vandalism and Malicious Mischief, and Sprinkler
Leakage insurance, if applicable, for the full cost of replacement of
Tenant's personal property.
19
(d) Tenant will either obtain insurance or self insure for business
interruption. Except as otherwise specifically provided herein,
(including within such exception any rent abatement rights expressly
provided for in this Lease), Tenant acknowledges that Landlord is
released from any liability arising during the term of the Lease which
would have been covered by business interruption insurance, if Tenant
had carried such insurance.
The insurance policies shall protect Tenant and Landlord as their interests may
appear, naming Landlord and Landlord's managing agent and mortgagee (but only if
Tenant has been provided with notice of the names and addresses of such parties)
as additional insureds, 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.
In addition to the insurance required by Section 8.02 above, Landlord shall
carry workers compensation insurance in amounts required by Georgia law as well
as commercial general liability insurance covering the Building and Common Areas
in the form required by Section 9.02(b) above and with combined single limits,
for both bodily injury and property damage, of not less than $3,000,000, such
commercial general liability insurance to be written on an occurrence basis (and
not a claims made basis).
SECTION 9.03. LANDLORD'S RESPONSIBILITY.
Landlord shall assume the risk of, be responsible for, have the obligation to
insure against (as described in Section 9.02 above), and indemnify Tenant and
hold it harmless from, any and all liability for any loss of or damage or injury
to person (including death resulting therefrom) or property (other than Tenant's
property as provided in SECTION 8.02) occurring in, on or about the Common
Areas, or on any other portion of the Building, Property or Project other than
the Leased Premises, regardless of cause, except for that caused by the
negligence or willful misconduct of Tenant or its employees, agents, customers
or invitees; and Landlord hereby releases Tenant from any and all liability for
the same. Landlord's obligation to indemnify Tenant hereunder shall include the
duty to defend against any claims asserted by reason of such loss, damage or
injury and to pay any judgments, settlements, costs, fees and expenses,
including reasonable, actual attorneys' fees, incurred in connection therewith.
This provision shall survive the expiration or earlier termination of this
Lease.
ARTICLE 10 - EMINENT DOMAIN
If all or any substantial part of the Building 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 possession thereof is so taken.
If all or any part of the Leased Premises (or all or any part of the Building,
Common Areas or portions of the Property or Project that provide access to the
Building or Leased Premises), shall be acquired by the exercise of eminent
domain so that the Leased Premises are no longer suitable for Tenant's use,
Tenant may terminate this Lease by giving written notice to Landlord as of the
date possession thereof is so taken. All damages awarded shall belong to
20
Landlord; provided, however, that Tenant, as part of the overall award, shall be
entitled to the value of any leasehold improvements installed at Tenant's
expense, business interruption costs, moving expenses (other than the value of
Tenant's leasehold estate), to which Tenant is entitled under Georgia law,
provided such amounts are proportionately awarded to Landlord and Tenant.
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, conditioned or denied. In the event of any
permitted assignment or subletting, Tenant shall remain primarily liable
hereunder. In the event of any permitted subletting, no subtenant shall be
entitled to exercise any extension, expansion, rights of first offer, rights of
first refusal or other options granted to Tenant under this Lease, but such
right shall be exercisable by any permitted assignee of all of Tenant's rights
under this Lease. 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 materially, adversely affected; (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 of its sublease or assignment. Tenant agrees to reimburse
Landlord in an amount equal to $500.00 in conjunction with the processing and
documentation of any requested assignment, subletting or any other hypothecation
of this Lease or Tenant's interest in and to the Leased Premises.
Notwithstanding the foregoing, Tenant may freely transfer and assign this Lease
or sublet all or any portion of the Leased Premises, without Landlord's consent
(i) in connection with any merger, consolidation or sale of assets of Tenant,
provided such company has a net worth equal to or greater than Tenant's as of
the date of such proposed assignment or subletting; or (ii) to any parent,
affiliate or subsidiary of Tenant, ; provided, however, that any such assignment
or subletting shall not result in Tenant being released or discharged from any
liability under this Lease, including but not limited to, its obligations
regarding the Letter of Credit. Tenant shall provide Landlord with written
notice of such assignment or subletting prior to or promptly following the
effective date of such assignment or subletting.
Notwithstanding anything contained in this Lease to the contrary, Tenant shall
have the right, without Landlord's consent, to collaterally assign this Lease to
any lender providing financing to Tenant or to any parent, affiliate or
subsidiary of Tenant including but not limited to rights of such lenders to
foreclose or assign Tenant's rights hereunder ; provided however, that Tenant's
obligations regarding the Letter of Credit remain in place, and are applicable
to any successor tenant (including the lender), that any such lender shall
assume and remain liable for Tenant's lease obligations herein, and in the event
of any proposed assignment of Tenant's rights hereunder, Landlord shall continue
to have all of its rights relating to subletting and assignment hereunder
including the right to approve any such successor tenant. Without limiting the
foregoing, Landlord shall, within five (5) days after demand therefor, execute
and deliver such instruments as may reasonably be requested by such lender to
21
confirm Landlord's consent to such collateral assignment without any further
consideration. In addition, Landlord agrees upon request of any lender providing
financing to Tenant to subordinate in writing, on form attached hereto as
EXHIBIT M, any lien rights which Landlord may have against Tenant's trade
fixtures, equipment and other items of personal property pursuant to this Lease
or any applicable law.
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, provided the
purchaser expressly assumes all of Landlord's duties or obligations such sale
shall operate to release Landlord for liability for any matters assumed by the
successor landlord.
SECTION 12.02. SUBORDINATION.
This Lease and Tenant's interest hereunder shall at all times be subject and
subordinate to the lien and security title of any deeds to secure debt, deeds of
trust, mortgages, or other interests heretofore or hereafter granted by Landlord
or which otherwise encumber or affect the Leased Premises and to any and all
advances to be made thereunder and to all renewals, modifications,
consolidations, replacements, substitutions, and extensions thereof (all of
which are herein called the "Mortgage"); provided, however, that such
subordination is conditioned upon delivery to Tenant of a subordination,
non-disturbance attornment agreement, in form substantially similar to that
attached as EXHIBIT K. The failure of Tenant to execute such a form, shall be a
breach of covenant which will entitle Landlord to pursue the remedies provided
in this Lease.
SECTION 12.03. ESTOPPEL CERTIFICATE.
Within ten (10) business days following receipt of a written request from
Landlord, Tenant shall execute and deliver to Landlord, without cost, an
estoppel certificate 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
factual matters respecting the status of this Lease. Such estoppel may be relied
upon by Landlord and by any purchaser or mortgagee of the Building who is named
therein.
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 when due, or Tenant fails to pay any other amounts due Landlord from Tenant
within ten (10) days after invoice and, in either event, such failure shall
continue for five (5) business days after notice from Landlord to Tenant.
22
(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 notice thereof from Landlord; provided, however, that if the nature
of Tenant's default is such that more than thirty (30) days are reasonably
required to cure, then such default shall be deemed to have been cured if Tenant
commences such performance within said thirty (30) 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 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.
(e) Tenant fails to deliver or renew its Letter of Credit as required
under Article 4 and other provisions of this Lease.
SECTION 13.02. REMEDIES.
Upon the occurrence 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) andlord 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 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. Upon the
termination of this Lease, Landlord may declare an amount, if any, equal to 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, minus the then current
fair market value of the Leased Premises, which shall include without limitation
expenses of preparing the Leased Premises for re-letting, demolition, repairs,
tenant finish improvements, brokers' commissions and attorneys' fees, for the
23
balance of the Lease Term, to be immediately due and payable, whereupon Tenant
shall be obligated to pay the same to Landlord, it being expressly understood
and agreed that the liabilities and remedies specified in this subsection (b)
shall survive the termination of this Lease.
(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, whereupon 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.
SECTION 13.03. LANDLORD'S DEFAULT AND TENANT'S REMEDIES.
If Landlord fails to pay any amounts due to Tenant under this Lease and shall
not cure such failure within ten (10) business days following Tenant's notice to
Landlord (and to the holder of any Mortgage) or if Landlord fails to keep or
perform any of its obligations under this Lease and shall not cure such failure
within thirty (30) days following Tenant's notice to Landlord (and to the holder
of any Mortgage), Landlord shall be in default under this Lease; provided,
however, if the failure is of a nature that it cannot be cured within thirty
(30) days, Landlord shall not be in default so long as Landlord commences the
cure within such thirty (30) day period and diligently and continuously pursues
the cure to completion as soon as reasonably possible. Upon the occurrence of
any default by Landlord in the payment of money due to Tenant under this Lease
which default remains uncured for the period described in the preceding
sentence, Tenant may offset the amount due, plus interest at the rate specified
in Section 2.4, against the next Monthly Rental Installment and monthly
installment of Annual Rental Adjustment due under this Lease, but in no event
shall Tenant be entitled to offset against more than 50% of any Minimum Annual
Rent or monthly installment of Annual Rental Adjustment installment until such
time as Tenant must offset against 100% of the remaining Minimum Annual Rent to
recoup its costs prior to the expiration of this Lease. In the event of any
default by Landlord in any of its non-monetary obligations under this Lease,
Tenant may pursue any of the following remedies: (i) take any and all action
reasonably necessary to cure Landlord's default and offset the costs reasonably
incurred by Tenant to effect such cure, subject to the provisions set forth
below; (ii) if and only if Tenant's use of a substantial portion of the Leased
Premises for normal business operations has been materially and adversely
effected and the cost to Tenant to cure is so excessive as to be unreasonable
for Tenant to expend such sums, Tenant may terminate this Lease, subject to the
provisions set forth below; provided, however, Tenant may not exercise this
tennination right until after the thirty (30) day cure period provided to
Landlord above has expired and Tenant has provided the holder of any Mortgage
written notice of the Landlord's default and afforded such holder an additional
twenty (20) days opportunity to cure Landlord's failure (or if such failure
cannot reasonably be cured within such twenty (20) day period, Tenant may not
terminate if the holder of such Mortgage commences the cure within such twenty
(20) day period and diligently pursues the cure to completion within sixty (60)
24
days of the second notice to the holder); or (iii) pursue any other remedies
available to Tenant at law or in equity. Notwithstanding anything to the
contrary set forth hereinabove, Tenant may not exercise the remedies provided in
item (i), (ii) or (iii) above without first providing Landlord written notice
which notice must describe, in detail, the cure which Tenant intends to
undertake or that Tenant intends to terminate. Landlord shall have ten (10)
business days following its receipt of Tenant's notice to notify Tenant that it
does not believe that Landlord is in default or that Landlord does not believe
that the cure which Tenant has described in its notice is necessary or that
Landlord does not believe the conditions described above for termination have
been met. If Landlord provides such notice, the parties shall negotiate, in good
faith, for ten (10) business days to resolve their dispute concerning what
action needs to be taken with respect to the alleged default by Landlord or
whether Tenant is entitled to terminate. If the parties are unable to resolve
that dispute, then, prior to undertaking such self-help remedy, the dispute must
be submitted to the Atlanta, Georgia Chapter of the American Arbitration
Association for resolution. The determination of that arbitration panel shall be
final and binding upon both Landlord and Tenant. If the arbitration panel
decides in Tenant's favor, Tenant may undertake the cure as described in
Tenant's notice (or as approved by the arbitration panel) or terminate, as the
case may be. Tenant may offset the costs reasonably incurred by Tenant to effect
such cure against the next Monthly Rental Installment and monthly installment of
Annual Rental Adjustment; provided, however, Tenant may not offset against more
than fifty percent (50%) of any Monthly Rental Installment and monthly
installment of Annual Rental Adjustment installment until such time as Tenant
must offset against 100% of the remaining Minimum Annual Rent and monthly
installment of Annual Rental Adjustment to recoup its costs prior to the
expiration of the Lease.
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 (i) Landlord's right, title and interest in and to
the Building and the Property, (ii) the proceeds of any casualty insurance or
any condemnation award not applied in accordance with this Lease, (iii) the net
income from the Building following the occurrence of any Landlord default, and
(iv) the net proceeds of any sale of the Building and the Property, 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.
25
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 the reasonable
attorneys' fees incurred in connection therewith.
ARTICLE 14 - LANDLORD'S RIGHT TO RELOCATE TENANT
This Section intentionally deleted.
ARTICLE 15 - TENANT'S RESPONSIBILITY REGARDING ENVIRONMENTAL
LAWS AND HAZARDOUS SUBSTANCES.
SECTION 15.01. ENVIRONMENTAL DEFINITIONS.
A. "Environmental Laws" - All present or future federal, state and
municipal laws, ordinances, rules and regulations applicable to the
environmental and ecological condition of the Leased Premises, the rules and
regulations of the Federal Environmental Protection Agency or any other federal,
state or municipal agency or governmental board or entity having jurisdiction
over the Leased Premises.
B. "Hazardous Substances" - Those substances included within the
definitions of "hazardous substances," "hazardous materials," "toxic substances"
"solid waste" or "infectious waste" under 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, occupancy, maintenance or alteration
of the Leased Premises whether such notice shall be served upon Landlord or
Tenant.
SECTION 15.03. RESTRICTIONS ON TENANT.
Tenant shall operate its business and maintain the Leased Premises in compliance
with all Environmental Laws. Tenant shall not cause or permit 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,
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
26
Environmental Laws on, under or about the Leased Premises of which Tenant
becomes aware, or (ii) the presence or suspected presence of any Hazardous
Substances on, under or about the Leased Premises of which Tenant becomes aware
and shall promptly deliver to Landlord any notice received by Tenant relating to
(i) and (ii) above from any source.
SECTION 15.05. LANDLORD'S RIGHTS.
Landlord and its agents shall have the right, but not the duty, upon advance
notice and with the accompaniment of an employee of Tenant (except in the case
of emergency when no notice shall be required) to inspect the Leased Premises
(except Secure Areas) 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.
SECTION 15.07. EXISTING CONDITIONS.
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 prior to the Commencement Date of this Lease except to the extent
Tenant causes or exacerbates the same.
SECTION 15.08. ADA, TOXIC WASTE:
Landlord warrants that, to the best of its knowledge and belief, the Building
shall be constructed in compliance with all Environmental Laws. Landlord shall
agree to remove, at Landlord's sole cost and expense, any hazardous waste or
toxic substances, which may have been used in the construction of the Building
and will indemnify Tenant for any damages caused as a result of the presence of
any such hazardous substances in the Building, if Landlord is responsible for
such hazardous substances, as described above. Landlord's cost for
aforementioned removal shall be excluded from the Operating Expenses passed
through to the Tenant. Landlord further warrants that, to the best of its
knowledge and belief, no other portions of the Property currently contain any
Hazardous Substances and that no other portion of the Building, Property or
Project is in violation of any Environmental Laws. Landlord shall also be
obligated to construct the Building (including all Common Areas) in compliance
with the Americans With Disabilities Act ("ADA") as it exists and is reasonably
interpreted based on current regulations and judicial decisions existing as of
the date of this Lease, provided, however, that Tenant shall be responsible for
27
the compliance of the Premises Plans with ADA. Landlord shall, at Landlord's
sole cost and expense, make any alterations to the Building and the Common Areas
required after the Commencement Date to correct violations of ADA for which
Landlord is responsible (as described in the preceding sentence) and the costs
of such corrections shall be excluded from Operating Expenses.
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. Intentionally Deleted
SECTION 16.04. FORCE MAJEURE.
Landlord and Tenant (except with respect to the payment of any monetary
obligation and except as expressly limited by Section 2.02B of this Lease) 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 (hereinafter called "Force
Majeure").
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.
The parties hereby represent and warrant that the only real estate brokers
involved in the negotiation and execution of this Lease are the Brokers. Each
party shall indemnify the other from any and all liability for the breach of
this representation and warranty on its part and shall pay any compensation to
any other broker or person who may be entitled thereto.
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 ITEM L of the BASIC LEASE
PROVISIONS. The time period for responding to any notice shall begin to run on
28
the date of actual receipt of such notice (but refusal to accept delivery or
inability to accomplish delivery because the party to whom such notice is sent
can no longer be found at the correct notice address, shall be deemed actual
receipt). 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. 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 (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 16.10. PARKING:
Tenant shall have the right to five (5) parking spaces per 1,000 rentable square
feet of area in the Building. Parking is free and unassigned throughout the
initial Term and the Extended Lease Term, and available for use by Tenant 24
hours per day and 7 days per week.
SECTION 16.11. SIGNAGE:
Subject to the provisions hereof, Tenant (or any assignee of all of Tenant's
rights under this Lease) shall be entitled, throughout the initial Term and the
Extended Lease Term to illuminated Building signage fronting I-85 and one ground
monument sign fronting North Brown Road subject to reasonable approval by
Landlord, the requirements of the Protective Covenants, and governing laws. The
exact size, location, design, number and materials for the Building and Monument
signs are shown on EXHIBIT L attached hereto. The signage will be exclusive as
long as Tenant is the sole occupant in the Building. In the event Tenant or an
approved assignee or sublessee does not occupy at least fifty percent (50%) of
the Building, Tenant shall no longer be entitled to any signage on the Building.
Tenant shall pay all costs associated with the design, installation and removal
of any such signage.
SECTION 16.12. OPTION TO EXTEND:
If Tenant is not in Default hereunder on the last day of the initial Lease Term
hereof, Tenant shall have the option (hereinafter called the "Option") to extend
the initial Lease Term hereof for a period of ten (10) years after the last day
of the initial Lease Term (herein called the "Extended Lease Term"), upon the
same terms and conditions provided in this Lease, except for the Minimum Annual
Rent, rent escalations and tenant improvement allowances, collectively, which
29
shall be at fair market rental rate as determined below. The Option shall be
exercised by written notice from Tenant to Landlord given on or before the date
that is six (6) months prior to the expiration of the initial Lease Term.
A. The Annual Base Rental rate under this Lease for the Extended Lease
Term shall be determined as follows:
(i) Within fifteen (15) days following Tenant's written
request, made at least nine (9) months, but not more than
twelve (12) months prior to the expiration of the initial
Lease Term, stating that Tenant is considering exercising its
Option, Landlord shall deliver written notice to Tenant of
Landlord's estimation of the fair market rental rate and shall
thereafter negotiate in good faith with Tenant in an attempt
to agree upon such fair market rental rate. The Minimum Annual
Rent under this Lease for the Extended Lease Term shall be an
amount equal to the then "fair market rental rate", as
hereinafter defined, as agreed upon by Landlord and Tenant not
later than forty-five (45) days after Tenant's delivery to
Landlord of its preliminary notice. In the event Landlord and
Tenant are unable to agree upon the definition of the fair
market rental rate within such forty-five (45) day period,
then the Minimum Annual Rent for the Extended Lease Term shall
be the then "fair market rental rate" determined by
arbitration as provided below. The term "fair market rental
rate shall mean the annual rental rate (projected to the date
of the commencement of the Extended Lease Term) which Tenant
would expect to pay and Landlord would expect to receive under
renewal leases for space of comparable size and quality to the
Leased Premises for comparable office buildings in the same
submarket area and as provided for in, and upon terms and
conditions comparable to, this Lease covering renewal lease
premises similar to the Leased Premises and taking into
account the direct operating expenses payable by Tenant during
the Extended Lease Term, concessions offered by landlords, if
any, for such comparable renewal lease space to the Leased
Premises, commissions paid, lack of any leasing "downtime",
increases in base rent and operating expenses and all other
relevant factors. If Landlord and Tenant have not reached
agreement on a fair market rental rate within forty-five (45)
days after Tenant's delivery to Landlord of Tenant's
preliminary notice, then, within ten (10) days after that
date, each party shall appoint and employ, a qualified real
estate professional with at least five (5) years' experience
immediately prior to the date in question, to appraise and
establish the "fair market rental rate" for renewal leases.
The two real estate professionals, thus appointed, shall meet
promptly and attempt to agree upon and establish said rate or,
upon failing to do so, shall then jointly designate a third
real estate professional within ten (10) days of the
appointment of the last two real estate professionals. If they
are unable to agree upon the third real estate professional,
either of the parties, after giving five (5) days' notice to
the other, may apply to judge of the Superior Court of
Gwinnett County, Georgia (to whose jurisdiction for this
limited purpose both Landlord and Tenant hereby consent) for
the selection of a third real estate professional. Each of the
parties shall pay the cost of its own real estate professional
and each bear one-half (1/2) of the cost of the third real
estate professional. Within thirty (30) days after the
selection of the third real estate professional, the third
30
real estate professional shall select as "fair market rental
rate" either the rate suggested by Landlord's real estate
professional or the rate suggested by Tenant's real estate
professional, but no other amount. In any of said events, the
determination so chosen shall be final, conclusive and binding
upon both Landlord and Tenant.
(ii) There shall be no further extensions or renewals of the
Lease Term, except as expressly agreed to by the parties
hereto in writing.
(iii) During the Extended Lease Term, Landlord shall have no
obligations to make any alterations or improvements to the
Leased Premises.
(iv) Landlord shall have no obligation in the Extended Lease
Term to pay any allowances, or similar items to Tenant, except
to the extent agreed by the parties or determined by the
appraisers, as part of the fair market rental rate.
SECTION 16.13. COMPLIANCE WITH PROTECTIVE COVENANTS.
In addition to and without in any way limiting any of the other provisions of
this Lease, Tenant and Landlord shall comply with the Protective Covenants and
with any changes to the Protective Covenants duly adopted so long as such
changes do not materially and adversely interfere with Tenant's use of the
Leased Premises, Tenant's parking rights or Tenant's access to the Property, the
Building or the Leased Premises. It is expressly acknowledged that all uses of
the Building and Leased Premises are subject to the covenants, conditions and
restrictions of the Protective Covenants, but Landlord hereby represents and
warrants that the Permitted Use and the terms of this Lease are in compliance
with the Protective Covenants.
SECTION 16.14. ACCESS AND SECURITY SYSTEM.
Landlord shall furnish Tenant with up to four (4) computerized access cards per
1,000 rentable square feet of space in the Leased Premises for the Building
standard corridor doors entering the Building. Additional keys (or cards) will
be furnished by Landlord upon an order signed by Tenant and at Tenant's expense.
All such keys (or cards) shall remain the property of Landlord. No additional
locks shall be allowed on any door of the Leased Premises without Landlord's
permission, and Tenant shall not make or permit to be made any duplicate keys
(or cards), except those furnished by Landlord. Landlord shall permit Tenant to
install, maintain and remove, at Tenant's sole cost and expense, a separate card
access system within the Leased Premises, provided that Tenant shall provide
Landlord with means of access. Upon expiration or other termination of this
Lease (other than Tenant default), Tenant shall have the right to remove the
security/access system in the Leased Premises provided Tenant repairs any damage
to the Leased Premises caused by such removal, or Tenant may choose to leave the
system, provided that Tenant shall surrender to Landlord all keys (or cards) to
any locks on doors entering or within the Leased Premises, and give to Landlord
the explanation of the combination of all locks for safes, safe cabinets and
vault doors, if any, in the Leased Premises.
SECTION 16.15. GENERATOR.
31
Tenant shall have the right, at its sole cost and expense and subject to the
terms of this Lease, to install, operate and maintain an emergency generator
adjacent to the Building as depicted on EXHIBIT A. Tenant shall install, operate
and maintain the emergency generator in accordance with all federal, state and
local laws and regulations. Tenant shall be solely responsible for obtaining any
necessary permits and licenses required to install, operate and maintain the
emergency generator, but Landlord will assist and cooperate in that effort.
Prior to installation of the emergency generator, Tenant shall, on behalf of the
installer, provide Landlord with a certificate of insurance reasonably
satisfactory to Landlord. Prior to installation of the emergency generator,
Landlord shall require Tenant, at Tenant's sole cost and expense, to install
screening surrounding the generator. The size, location, design and manner of
the installation of the screening surrounding the emergency generator shall be
subject to the written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed. Tenant shall at all times keep
the generator and the surrounding area in a clean and orderly condition.
Tenant shall be responsible for all costs of removal of the emergency generator
and the screening surrounding the emergency generator. Tenant shall also be
responsible for all costs associated with restoring any damage caused to the
Building and/or Common Areas as a result of such removal. Tenant agrees, within
ten (10) days after written notice from Landlord, to remove the emergency
generator and screening surrounding same in the event any governmental entity or
applicable law or regulation requires removal thereof or Tenant fails to
materially comply with the terms stated herein. Such removal shall be in
accordance with all of the terms and conditions set forth herein. If Tenant
elects not to remove the emergency generator and screening surrounding same from
the Building or Common Areas, upon expiration or earlier termination of the
Lease, or after expiration of the ten (10) day notice period provided herein,
the emergency generator and screening surrounding same shall be deemed abandoned
by Tenant and shall become the property of Landlord or Landlord may remove the
same at Tenant's expense. Any language in the Lease notwithstanding, Tenant
shall indemnify and hold harmless Landlord from any and all liability for any
loss of or damage or injury to any person (including death resulting therefrom)
or property connected with or arising from the emergency generator and screening
surrounding same or the rights granted Tenant herein.
SECTION 16.16. YEAR 2000
Landlord hereby represents to Tenant that, to the best of Landlord's actual
knowledge and belief, all utilities and services provided by Landlord by means
of Building systems containing time and date related codes and internal
programs, whether computerized or not, are "Year 2000 Compliant" and shall
continue without interruption throughout the Term of this Lease including and
beyond December 31, 1999. Tenant recognizes that Landlord cannot provide Tenant
with a warranty or a guarantee that there will be no interruption, because
Landlord depends on the efforts and affirmations of third parties that are
beyond Landlord's control.
SECTION 16.17. TELECOMMUNICATIONS EQUIPMENT
a. Provided no Default then exists under the Lease, and provided
further that Tenant complies with all zoning and other municipal and county
rules and regulations, throughout the Term and any renewal thereof, Tenant shall
have the right, without any rent being charged, at its own cost and expense and
subject to the terms hereof, to install, operate and maintain on the roof of the
32
Building, microwave satellite dishes and/or antennae (collectively "Dishes").
Such Dishes must be used exclusively for Tenant's personal use and may not be
sold to, transferred, or utilized by a third party. Tenant shall be solely
responsible for obtaining any necessary permits and licenses required to install
and operate the Dishes throughout. Copies of such permits and licenses shall be
provided to Landlord.
b. The size, location, design and manner of installation of the Dish
and all related wiring shall be approved by Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed. After obtaining written
approval of Landlord, Tenant shall have reasonable access to the roof for
installation and maintenance of the Dish and shall have the right to install all
reasonable wiring related thereto. However, unless otherwise approved by
Landlord in writing, which approval shall not be unreasonably withheld,
conditioned or delayed, in no event shall Tenant be permitted to penetrate the
roof membrane in connection with the installation or maintenance of the Dish.
c. Tenant represents and warrants that the installation and maintenance
of the Dish will not cause any damage to the structural portions of the
Building. Tenant shall be responsible for repairing any such damages to the
structure.
d. Tenant shall install, operate and maintain the Dish in accordance
with all federal, state and local laws and regulations. Prior to installation of
the Dish, Tenant shall, on behalf of the installer, provide Landlord with a
certificate of insurance reasonably satisfactory to Landlord.
e. Tenant reserves the right to discontinue its use of the Dish at any
time prior to the termination of the Lease or any renewal or extension thereof
for any reason whatsoever, provided that Tenant gives thirty (30) days prior
written notice thereof to Landlord. Tenant shall be responsible for all costs of
removal and for restoring the Building to its original condition after such
removal. Notwithstanding the foregoing, Tenant agrees within five (5) days after
written notice from Landlord to remove the Dish in the event any governmental
entity or applicable law or regulation requires removal thereof or Tenant fails
to comply with the terms stated herein. Such removal or relocation shall be in
accordance with all of the terms and conditions set forth herein. If Tenant
elects not to remove the Dish from the Building, upon expiration or earlier
termination of this Lease, or after expiration of the five (5) day notice period
provided herein, the Dish shall be deemed abandoned by Tenant and shall become
the property of Landlord.
f. Any language in the Lease notwithstanding, Landlord shall not be
liable and Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all liability, damages (including but not limited to personal
injury, death, or property damages), costs, expenses, and attorneys' fees
incurred by Landlord arising from any Dish related cause whatsoever, including
those arising from the installation, use, maintenance and removal thereof.
33
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first above written.
LANDLORD:
1755 NORTH BROWN ROAD, LLC, a Georgia
limited liability company
By: /S/ ROBERT M. CHAPMAN
Printed: ROBERT M. CHAPMAN
Title: REGIONAL EXECUTIVE VICE PRESIDENT
Atlanta/Texas
TENANT:
KMC TELECOM HOLDINGS, INC., a
Delaware corporation
By: /S/ JAMES D. GRENFELL
Printed: JAMES D. GRENFELL
Title: EXEC. VICE PRESIDENT, CFO
KMC TELECOM, INC., a
Delaware corporation
By: /S/ JAMES D. GRENFELL
Printed: JAMES D. GRENFELL
Title: EXEC. VICE PRESIDENT, CFO
KMC TELECOM II, INC., a
Delaware corporation
By: /S/ JAMES D. GRENFELL
Printed: JAMES D. GRENFELL
Title: EXEC. VICE PRESIDENT, CFO
34
KMC TELECOM III, INC., a
Delaware corporation
By: /S/ JAMES D. GRENFELL
Printed: JAMES D. GRENFELL
Title: EXEC. VICE PRESIDENT, CFO
35