<PAGE>
Exhibit 10.3
================================================================================
LEASE AGREEMENT BETWEEN
W9/TIB REAL ESTATE LIMITED PARTNERSHIP,
AS LANDLORD, AND
ERUNWAY, INC.,
AS TENANT
DATED AS OF JUNE __, 2000
WESTBOROUGH, MASSACHUSETTS
================================================================================
MASSACHUSETTS OFFICE LEASE FORM
VERSION 13 - LAST REVISED AUGUST 1999
<PAGE>
BASIC LEASE INFORMATION
<TABLE>
<S>
<C>
Lease Date:
as of June ___, 2000.
Landlord:
W9/TIB REAL ESTATE LIMITED PARTNERSHIP, a
Delaware limited partnership.
Tenant:
ERUNWAY, INC., a Delaware corporation.
Premises:
Suite No. 310, containing 10,499 rentable
square feet, in the building (the "BUILDING"),
whose street address is 2000 West Park Drive,
Westborough, Massachusetts. The Premises are
shown cross-hatched on the plan attached to the
Lease as Exhibit A. The term "Building"
includes the land (the "LAND") on which the
Building is located, and the driveways, parking
facilities, and similar improvements located
thereon.
Office Park:
The buildings whose street address are 1500
West Park Drive, Westborough, Massachusetts,
1700 West Park Drive, Westborough,
Massachusetts, 1800 West Park Drive,
Westborough, Massachusetts, 1900 West Park
Drive, Westborough, Massachusetts, and 2000
West Park Drive, Westborough, Massachusetts,
and the land on which such buildings are
located and all other buildings or improvements
now or hereafter located on such land. The
parcels of land which presently comprise the
Office Park (the "OFFICE PARK LAND") are
described on Exhibit B attached hereto.
Term:
Approximately 60 months, commencing on the
Commencement Date and ending at 5:00 p.m. local
time on the last day of the 60th full calendar
month following the Commencement Date, subject
to adjustment and earlier termination as
provided in the Lease.
Commencement Date:
The earlier of (a) the date on which Tenant
occupies any portion of the Premises and begins
conducting business therein, or (b) July 1,
2000 (provided, that if Landlord is unable to
deliver possession of the Premises to Tenant by
such date, then, as provided in Section 3 of
the Lease, Tenant shall accept possession of
the Premises on the date Landlord tenders
possession thereof to Tenant, which date will
then be the "Commencement Date").
Basic Rent:
Basic Rent shall be the following amounts for
the following periods of time:
Lease Month
Monthly Basic Rent
-----------
------------------
1 - 60
$21,872.92
As used herein, the term "LEASE MONTH" shall
mean each calendar month during the Term (and
if the Commencement Date does not occur on the
first day of a calendar month, the period from
the Commencement Date to the first day of the
next calendar month shall be included in the
first Lease Month for purposes of determining
the duration of the Term and the monthly Basic
Rent rate applicable
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
for such partial month).
Security Deposit:
$262,475.04.
Additional Security Deposit: $291,199.96
Rent:
Basic Rent, Tenant's Proportionate Share of
Taxes and Electrical Costs, Tenant's share of
Additional Rent, and all other sums that Tenant
may owe to Landlord or otherwise be required to
pay under the Lease.
Permitted Use:
General office use.
Tenant's Proportionate Share: 16.62%, which is the
percentage obtained by
dividing (a) the number of rentable square feet
in the Premises as stated above by (b) 63,180,
which is the number of rentable square feet in
the Building. Landlord and Tenant stipulate
that the number of rentable square feet in the
Premises and in the Building set forth above
shall be binding upon them.
Expense Stop:
Operating Costs per rentable square foot in the
Building for the calendar year 2000 (grossed up
as provided in Section 4.(b)(6) of the Lease).
Base Tax Year:
The fiscal year ending June 30, 2001.
Initial Liability Insurance
Amount:
$3,000,000.00.
</TABLE>
ii
<PAGE>
<TABLE>
<S>
<C>
<C>
Tenant's Prior to
Commencement Date:
Following Commencement Date:
Address: eRunway, Inc.
eRunvay, Inc.
176 East Main Street
2000 West Park Drive
Westborough, Massachusetts 01581
Westborough, Massachusetts 01581
Attention: Chief Financial Officer
Attention: Chief Financial Officer
Telephone: 508-366-9955
Telephone: 508-366-9955
Telecopy: 508-366-9901
Telecopy: 508-366-9901
Landlord's For
all Notices:
With a copy to:
Address: W9/TIB Real
Estate Limited Partnership W9/TIB Real Estate Limited
Partnership
c/o Archon Group, L.P.
c/o Archon Group, L.P.
1275 K Street, N. W., Suite 900
600 East Las Colinas Blvd., Suite 400
Washington, D.C. 20005
Irving, Texas
75039
Attention: Asset Manager
Attention: General Counsel - 2000
Telephone: 202-216-5800
West Park Drive, Westborough, Massachusetts
Telecopy: 202-216-5801
Telephone: 972-368-2200
Telecopy: 972-368-3199
</TABLE>
iii
<PAGE>
The foregoing Basic Lease Information is incorporated into and made
a part of
the Lease identified above. If any conflict exists between any
Basic Lease
Information and the Lease, then the Lease shall control.
LANDLORD:
W9/TIB REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: W9/TIB Gen-Par, Inc., a Delaware
corporation, its general partner
By: /s/ Stephen M. Abelman
------------------------------------
Name: Stephen M. Abelman
Title: Assistant Vice President
TENANT:
ERUNWAY, INC, a Delaware corporation
By: /s/ JACK STEINKRAUSS
------------------------------------
Name: JACK STEINKRAUSS
Title: SVP
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
1. Definitions and Basic Provisions
..................................... 1
2. Lease Grant; Common Areas
............................................ 1
3. Tender of Possession
................................................. 2
4. Rent
.................................................................
2
(a) Payment
..........................................................
2
(b) Operating
Costs; Taxes; Electrical Costs .........................
2
(c) Tenant
Inspection Right ..........................................
4
5. Delinquent Payment; Handling Charges
................................. 5
6. Security Deposit
..................................................... 5
7. Landlord's Obligations
............................................... 6
(a) Services
.........................................................
6
(b) Excess
Utility Use ...............................................
7
(c) Restoration
of Services .......................................... 7
(d) Alternate
Service Provide ........................................
7
8. Improvements; Alterations; Repairs; Maintenance
...................... 8
(a)
Improvements; Alterations ........................................
8
(b) Repairs;
Maintenance .............................................
8
(c) Performance
of Work .............................................. 8
(d) Mechanic's
Liens .................................................
8
9. Use
..................................................................
9
10. Assignment and Subletting
........................................... 9
(a) Transfers
........................................................
9
(b) Consent
Standards ................................................
9
(c) Request for
Consent .............................................. 9
(d) Conditions
to Consent ............................................
10
(e) Cancellation
..................................................... 10
</TABLE>
v
<PAGE>
<TABLE>
<S>
<C>
(f) Additional
Compensation ..........................................
10
(g) Permitted
Transfers ..............................................
10
11.Insurance; Waivers; Subrogation; Indemnity
........................... 11
(a) Tenant's
Insurance ...............................................
11
(b) Landlord's
Insurance .............................................
12
(c) No
Subrogation ...................................................
12
(d) Indemnity
........................................................
12
12.Subordination; Attornment; Notice to Landlord's Mortgagee
............ 12
(a)
Subordination ....................................................
12
(b) Attornment
.......................................................
13
(c) Notice to
Landlord's Mortgagee ...................................
13
(d) Landlord's
Mortgagee's Protection Provisions .....................
13
13.Rules and Regulations
................................................ 13
14.Condemnation
.........................................................
13
(a) Total Taking
..................................................... 13
(b) Partial
Taking-Tenant's Rights ...................................
13
(c) Partial
Taking-Landlord's Rights .................................
14
(d) Award
............................................................
14
15.Fire or Other Casualty
............................................... 14
(a) Repair
Estimate ..................................................
14
(b) Tenant's
Rights ..................................................
14
(c) Landlord's
Rights ................................................
14
(d) Repair
Obligation ................................................
14
(e) Abatement of
Rent ................................................ 15
16.Personal Property Taxes
.............................................. 15
17.Events of Default
.................................................... 15
(a) Payment
Default ..................................................
15
(b) Abandonment
...................................................... 15
(c) Estoppel
.........................................................
15
(d) Other
Defaults ...................................................
15
(e) Insolvency
.......................................................
15
(e) Additional
Security Deposit ......................................
16
18.Remedies
.............................................................
16
(a) Termination
of Lease ............................................. 16
</TABLE>
vi
<PAGE>
<TABLE>
<S>
<C>
(b) Termination
of Possession ........................................ 16
(c) Alteration
of Locks ..............................................
16
19.Payment by Tenant; Non-Waiver; Cumulative Remedies
................... 16
(a) Payment by
Tenant ................................................
16
(b) No Waiver
........................................................
17
(c) Cumulative
Remedies ..............................................
17
20.Landlord's Lien
...................................................... 17
21.Surrender of Premises
................................................ 17
22.Holding Over
.........................................................
18
23.Certain Rights Reserved by Landlord
.................................. 18
(a) Building
Operations ..............................................
18
(b) Security
.........................................................
18
(c) Prospective
Purchasers and Lenders ............................... 18
(d) Prospective
Tenants .............................................. 18
24.[Intentionally Omitted]
.............................................. 19
25.Miscellaneous
........................................................
19
(a) Landlord
Transfer ................................................
19
(b) Landlord's
Liability .............................................
19
(c) Force
Majeure ....................................................
19
(d) Brokerage
........................................................
19
(e) Estoppel
Certificates ............................................
19
(f) Notices
..........................................................
19
(g) Separability
..................................................... 19
(h) Amendments;
and Binding Effect ................................... 20
(i) Quiet
Enjoyment ..................................................
20
(j) No Merger
........................................................
20
(k) No Offer
.........................................................
20
(1) Entire
Agreement .................................................
20
(m) Waiver of
Jury Trial .............................................
20
(n) Governing
Law ....................................................
20
(o) Recording
........................................................
20
(p) Joint and
Several Liability ......................................
20
(q) Financial
Reports ................................................
20
(r) Landlord's
Fees ..................................................
21
(s)
Telecommunications ...............................................
21
(t)
Confidentiality ..................................................
21
</TABLE>
vii
<PAGE>
<TABLE>
<S>
<C>
(u) Authority
........................................................
21
(v) Hazardous
Materials ..............................................
22
(w) List of
Exhibits .................................................
22
26.Other Provisions
..................................................... 22
</TABLE>
viii
<PAGE>
LEASE
THIS
LEASE AGREEMENT (this "LEASE") is entered into as of
June _________________, 2000, between W9/TIB REAL ESTATE LIMITED
PARTNERSHIP, a
Delaware limited partnership ("LANDLORD"), and ERUNWAY, INC., a
Delaware
corporation ("TENANT").
1.
DEFINITIONS AND BASIC PROVISIONS. The definitions and basic
provisions
set forth in the Basic Lease Information (the "BASIC LEASE
INFORMATION")
executed by Landlord and Tenant contemporaneously herewith are
incorporated
herein by reference for all purposes. Additionally, the following
terms shall
have the following meanings when used in this Lease: "AFFILIATE"
means any
person or entity which, directly or indirectly, through one or
more
intermediaries, controls, is controlled by, or is under common
control with the
party in question; "BUILDING'S STRUCTURE" means the Building's
exterior walls,
roof, elevator shafts, footings, foundations, structural portions
of
load-bearing walls, structural floors and subfloors, and structural
columns and
beams; "BUILDING'S SYSTEMS" means the Building's HVAC, life-safety,
plumbing,
electrical, and mechanical systems; "INCLUDING" means including,
without
limitation; "LAWS" means all federal, state, and local laws, rules
and
regulations, all court orders, governmental directives, and
governmental orders,
and all restrictive covenants affecting the Building, and "LAW"
shall mean any
of the foregoing; and "TENANT PARTY" means any of the following
persons: Tenant;
any assignees claiming by, through, or under Tenant; any subtenants
claiming by,
through, or under Tenant; and any of their respective agents,
contractors,
employees, and invitees.
2.
LEASE GRANT; COMMON AREAS. Subject to the terms of this Lease,
Landlord
leases to Tenant, and Tenant leases from Landlord, the
Premises.
Tenant shall have the non-exclusive right during the Term to use
the Common
Areas (as defined below) for itself, its employees, agents,
customers, invitees
and licensees. The phrase "COMMON AREAS" as used herein shall mean
the portions
of the Building which are from time to time designated and improved
for common
use by or for the benefit of more than one tenant of the Building,
including,
but not limited to, any of the following: the land and facilities
used as
parking areas, access and perimeter roads, landscaping areas,
exterior walks,
stairways, ramps, interior corridors, stairs, but excluding any
portion thereof
when designated by Landlord for a non-common use. All Common Areas
shall be
subject to the exclusive control and management of Landlord.
Landlord shall have
the right to (i) to close, if necessary, all or any portion of the
Common Areas
to such extent as may be legally necessary to prevent a dedication
thereof or
the accrual of any rights of any person or of the public therein;
(ii) to close
temporarily all or any portion of the Common Areas to discourage
non-tenant use;
(iii) to use portions of the Common Areas while engaged in making
additional
improvements or repairs or alterations to the Building; and (iv) to
do and
perform such other acts in, to and with respect to the Common Areas
as Landlord
shall determine to be appropriate for the Building. Landlord shall
have the
right to increase the size of the Common Areas, including the
expansion thereof
to adjacent property, to reduce the Common Area, to reconfigure the
parking
spaces and improvements on the Common Areas, and to make such
changes therein
and thereto from time to time which in Landlord's opinion are
desirable and in
the best interests of all persons using the Common Areas. Any
portion of the
Building not originally included within the Common Areas shall be
so included if
and when so designated by Landlord for common use. Tenant shall use
and shall
use reasonable efforts to cause its agents, employees, invitees,
vendors,
suppliers and independent contractors to use such access roads and
operate
trucks and trailers delivering merchandise to and from the Premises
upon and
over such access roads as are designated by Landlord as a means of
ingress to
and egress from the Premises. Landlord may establish a system or
systems of
validation or other type of operation to control the parking areas
within
1
<PAGE>
the Common Areas. Nothing contained in this Lease shall prohibit or
otherwise
restrict Landlord from changing, from time to time, the location,
layout or type
of parking areas within the Common Areas.
3.
TENDER OF POSSESSION. Landlord and Tenant presently anticipate
that
possession of the Premises will be tendered to Tenant (with the
Work to be
performed by Landlord therein, if any, Substantially Completed) on
or about July
1, 2000 (the "ESTIMATED DELIVERY DATE"). If Landlord is unable to
tender
possession of the Premises in such condition to Tenant by the
Estimated Delivery
Date, then (a) Landlord shall not be in default hereunder or be
liable for
damages therefor, and (b) Tenant shall accept possession of the
Premises when
Landlord tenders possession thereof to Tenant. By occupying the
Premises, Tenant
shall be deemed to have accepted the Premises in their condition as
of the date
of such occupancy, subject to the performance of punch-list items
that remain to
be performed by Landlord, if any. Tenant shall execute and deliver
to Landlord,
within 10 days after Landlord has requested the same, a letter
substantially in
the form of Exhibit E hereto confirming (1) the Commencement Date
and the
expiration date of the initial Term, (2) that Tenant has accepted
the Premises,
and (3) that Landlord has performed all of its obligations with
respect to the
Premises (except for punch-list items specified in such letter).
Occupancy of
the Premises by Tenant prior to the Commencement Date shall be
subject to all of
the provisions of this Lease excepting only those requiring the
payment of Basic
Rent, Additional Rent, Taxes and Electrical Costs (each as defined
herein).
4.
RENT.
(a) PAYMENT. Tenant shall timely pay to Landlord Rent, without
notice,
demand, deduction or set off (except as otherwise expressly
provided herein), at
Landlord's address provided for in this Lease or as otherwise
specified by
Landlord and shall be accompanied by all applicable state and local
sales or use
taxes. Basic Rent, adjusted as herein provided, shall be payable
monthly in
advance. The first monthly installment of Basic Rent shall be
payable
contemporaneously with the execution of this Lease; thereafter,
Basic Rent shall
be payable on the first day of each month beginning on the first
day of the
second full calendar month of the Term. The monthly Basic Rent for
any partial
month at the beginning of the Term shall equal the product of 1/365
of the
annual Basic Rent in effect during the partial month and the number
of days in
the partial month from and after the Commencement Date, and shall
be due on the
Commencement Date.
(b) OPERATING COSTS; TAXES; ELECTRICAL COSTS.
(1) Tenant shall pay to Landlord the amount (per each rentable
square foot in the Premises) ("ADDITIONAL RENT") by which the
annual
Operating Costs (defined below) per rentable square foot in the
Building
exceed the Expense Stop (per rentable square foot in the
Building).
Landlord may make a good faith estimate of the Additional Rent to
be due by
Tenant for any calendar year or part thereof during the Term.
During each
calendar year or partial calendar year of the Term (after the base
year, if
the
Expense Stop is calculated on a base year basis), Tenant shall pay
to
Landlord, in advance concurrently with each monthly installment of
Basic
Rent, an amount equal to the estimated Additional Rent for such
calendar
year
or part thereof divided by the number of months therein. From time
to
time, Landlord may estimate and re-estimate the Additional Rent to
be due
by
Tenant and deliver a copy of the estimate or re-estimate to
Tenant.
Thereafter, the monthly installments of Additional Rent payable by
Tenant
shall be appropriately adjusted in accordance with the estimations
so that,
by
the end of the calendar year in question, Tenant shall have paid
all of
the
Additional Rent as estimated by Landlord. Any amounts paid based
on
such
an estimate shall be subject to adjustment as herein provided
when
actual Operating Costs are available for each calendar year.
2
<PAGE>
(2) The term "OPERATING COSTS" shall mean all expenses and
disbursements (subject to the limitations set forth below) that
Landlord
incurs in connection with the ownership, operation, and maintenance
of the
Building, determined in accordance with sound accounting
principles
consistently applied, including the following costs: (A) wages and
salaries
(including management fees) of all on-site employees at or below
the grade
of
senior building manager engaged in the operation, maintenance
or
security of the Building (together with Landlord's reasonable
allocation of
expenses of off-site employees at or below the grade of senior
building
manager who perform a portion of their services in connection with
the
operation, maintenance or security of the Building), including
taxes,
insurance and benefits relating thereto; (B) all supplies and
materials
used
in the operation, maintenance, repair, replacement, and security
of
the
Building; (C) costs for improvements made to the Building
which,
although capital in nature, are expected to reduce the normal
operating
costs (including all utility costs) of the Building, as amortized
using a
commercially reasonable interest rate over the time period
reasonably
estimated by Landlord to recover the costs thereof taking into
consideration the anticipated cost savings, as determined by
Landlord using
its
good faith, commercially reasonable judgment, as well as
capital
improvements made in order to comply with any Law hereafter
promulgated by
any
governmental authority or any interpretation hereafter rendered
with
respect to any existing Law, as amortized using a commercially
reasonable
interest rate over the useful economic life of such improvements
as
determined by Landlord in its reasonable discretion; (D) cost of
all
utilities, except Electrical Costs and the cost of other
utilities
reimbursable to Landlord by the Building's tenants other than
pursuant to a
provision similar to this Section 4.(b); (E) insurance expenses;
(F)
repairs, replacements, and general maintenance of the Building; and
(G)
service or maintenance contracts with independent contractors for
the
operation, maintenance, repair, replacement, or security of the
Building
(including alarm service, window cleaning, and elevator
maintenance).
Operating Costs shall also include the Building's pro rata share
of
the
costs of operating, managing, maintaining and cleaning
(including,
without limitation, snow and ice removal) the common areas and
facilities
of
the Office Park shared by the Building and other buildings in the
Office
Park, including, without limitation, the costs of landscaping,
insurance,
security, snow plowing/sanding; the cost of maintaining and
repairing the
entrance and side roads and sidewalks within the Office Park, the
drainage
system, the Office Park directory and signage, the irrigation
system and
the
street lights: and the cost of providing electricity to the
street
lights. The Building's pro rata share (as referred to in the
preceding
sentence) shall be equal to a fraction, the numerator of which is
the total
number of rentable square feet of floor area in the Building and
the
denominator of which is the total number of rentable square feet of
floor
area
in all the buildings in the Office Park, from time to time.
Operating Costs shall not include costs for (i) capital
improvements
made
to the Building, other than capital improvements described in
Section
4.(b)(2)(C) and except for items which are generally considered
maintenance
and
repair items, such as painting of common areas, replacement of
carpet
in
elevator lobbies, and the like; (ii) repair, replacements and
general
maintenance paid by proceeds of insurance or by Tenant or other
third
parties; (iii) interest, amortization or other payments on loans
to
Landlord; (iv) depreciation; (v) leasing commissions; (vi) legal
expenses
for
services, other than those that benefit the Building tenants
generally
(e.g., tax disputes); (vii) renovating or otherwise improving space
for
occupants of the Building or vacant space in the Building; (viii)
Taxes;
and
(ix) federal income taxes imposed on or measured by the income
of
Landlord from the operation of the Building. If the Expense Stop
is
calculated on a base year basis, Operating Costs for the base year
only
shall not include market-wide labor-rate increases due to
extraordinary
circumstances, including boycotts and strikes; utility rate
increases due
to
extraordinary circumstances, including conservation surcharges,
boycotts, embargos or other
3
<PAGE>
shortages; or amortized costs relating to capital improvements.
(3) Tenant shall also pay its Proportionate Share of any
increase
in
Taxes for each year and partial year falling within the Term over
the
Taxes for the Base Tax Year. Tenant shall pay its Proportionate
Share of
Taxes in the same manner as provided above for Additional Rent with
regard
to
Operating Costs. "TAXES" shall mean taxes, assessments, and
governmental
charges or fees whether federal, state, county or municipal, and
whether
they
be by taxing districts or authorities presently taxing or by
others,
subsequently created or otherwise, and any other taxes and
assessments
(including non-governmental assessments for common charges under
a
restrictive covenant or other private agreement that are not
treated as
part
of Operating Costs) now or hereafter attributable to the Building
(or
its
operation), excluding, however, penalties and interest thereon
and
federal and state taxes on income (if the present method of
taxation
changes so that in lieu of the whole or any part of any Taxes,
there is
levied on Landlord a capital tax directly on the rents received
therefrom
or a
franchise tax, assessment, or charge based, in whole or in part,
upon
such
rents for the Building, then all such taxes, assessments, or
charges,
or
the part thereof so based, shall be deemed to be included within
the
term
"Taxes" for purposes hereof). Taxes shall include the costs of
consultants retained in an effort to lower taxes and all costs
incurred in
disputing any taxes or in seeking to lower the tax valuation of
the
Building. For property tax purposes, Tenant waives all rights to
protest or
appeal the appraised value of the Premises, as well as the
Building, and
all
rights to receive notices of reappraisement.
(4) Tenant shall also pay to Landlord Tenant's Proportionate
Share of the cost of all electricity used by the Building
("ELECTRICAL
COSTS"). Such amount shall be payable in monthly installments on
the
Commencement Date and on the first day of each calendar month
thereafter.
Each
installment shall be based on Landlord's estimate of the amount
due
for
each month. From time to time during any calendar year, Landlord
may
estimate or re-estimate the Electrical Costs to be due by Tenant
for that
calendar year and deliver a copy of the estimate or re-estimate to
Tenant.
Thereafter, the monthly installments of Electrical Costs payable by
Tenant
shall be appropriately adjusted in accordance with the
estimations.
(5) By April 1 of each calendar year, or as soon thereafter as
practicable, Landlord shall furnish to Tenant a statement of
Operating
Costs and Electrical Costs for the previous year, in each case
adjusted as
provided in Section
4.(b)(6), and of the Taxes for the previous year (the
"OPERATING COSTS AND TAX STATEMENT"). If the Operating Costs and
Tax
Statement reveals that Tenant paid more for Operating Costs or
Electrical
Costs than the actual amount for the year for which such statement
was
prepared, or more than its actual share of Taxes for such year,
then
Landlord shall promptly credit or reimburse Tenant for such
excess;
likewise, if Tenant paid less than Tenant's actual Proportionate
Share of
Additional Rent or share of Taxes due, then Tenant shall promptly
pay
Landlord such deficiency.
(6) With respect to any calendar year or partial calendar year
in
which the Building is not occupied to the extent of 95% of the
rentable
area
thereof, the Operating Costs and Electrical Costs for such
period
shall, for the purposes hereof, be increased to the amount which
would have
been
incurred had the Building been occupied to the extent of 95% of
the
rentable area thereof.
(c) TENANT INSPECTION RIGHT. Provided no Event of Default then
exists
after receiving an annual Operating Costs and Tax Statement and
giving Landlord
30 days' prior written notice thereof, Tenant may inspect or audit
Landlord's
records relating to Operating Costs for the period of time covered
by such
Operating Costs and Tax Statement in accordance with the following
provisions.
4
<PAGE>
If Tenant fails to object to the calculation of Operating Costs on
an annual
Operating Costs and Tax Statement within 30 days after the
statement has been
delivered to Tenant, or if Tenant fails to conclude its audit or
inspection
within 90 days after the statement has been delivered to Tenant,
then Tenant
shall have waived its right to object to the calculation of
Operating Costs for
the year in question and the calculation of Operating Costs set
forth on such
statement shall be final. Tenant's audit or inspection shall be
conducted where
Landlord maintains its books and records, shall not unreasonably
interfere with
the conduct of Landlord's business, and shall be conducted only
during business
hours reasonably designated by Landlord. Tenant shall pay the cost
of such audit
or inspection, including $150 per hour of Landlord's or the
building manager's
employee time devoted to such inspection or audit, to reimburse
Landlord for its
overhead costs allocable to the inspection or audit, unless the
total Operating
Costs for the period in question is determined to be in error by
more than 5% in
the aggregate, and, as a result thereof, Tenant paid to Landlord
$1.00 per
square foot in the Premises more than the actual Operating Costs
due for such
period, in which case Landlord shall pay the audit cost (not to
exceed the
amount Tenant was overcharged for the period in question). Tenant
may not
conduct an inspection or have an audit performed more than once
during any
calendar year. Tenant or the accounting firm conducting such audit
shall, at no
charge to Landlord, submit its audit report in draft form to
Landlord for
Landlord's review and comment before the final approved audit
report is
submitted to Landlord, and any reasonable comments by Landlord
shall be
incorporated into the final audit report. If such inspection or
audit reveals
that an error was made in the Operating Costs previously charged to
Tenant, then
Landlord shall refund to Tenant any overpayment of any such costs,
or Tenant
shall pay to Landlord any underpayment of any such costs, as the
case may be,
within 30 days after notification thereof. Provided Landlord's
accounting for
Operating Costs is consistent with the terms of this Lease,
Landlord's good
faith judgment regarding the proper interpretation of this Lease
and the proper
accounting for Operating Costs shall be binding on Tenant in
connection with any
such audit or inspection. Tenant shall maintain the results of each
such audit
or inspection confidential and shall not be permitted to use any
third party to
perform such audit or inspection, other than an independent firm of
certified
public accountants (1) reasonably acceptable to Landlord, (2) which
is not
compensated on a contingency fee basis or in any other manner which
is dependent
upon the results of such audit or inspection (and Tenant shall
deliver the fee
agreement or other similar evidence of such fee arrangement to
Landlord upon
request), and (3) which agrees with Landlord in writing to maintain
the results
of such audit or inspection confidential. Notwithstanding the
foregoing, Tenant
shall have no right to conduct an audit if Landlord furnishes to
Tenant an audit
report for the period of time in question prepared by an
independent certified
public accounting firm of recognized national standing (whether
originally
prepared for Landlord or another party). Nothing in this Section
4.(c) shall be
construed to limit, suspend or abate Tenant's obligation to pay
Rent, including
Additional Rent, when due.
5.
DELINQUENT PAYMENT; HANDLING CHARGES. All past due payments
required of
Tenant hereunder shall bear interest from the date due until paid
at the lesser
of 18% per annum or the maximum lawful rate of interest;
additionally, Landlord
may charge Tenant a fee equal to 5% of the delinquent payment to
reimburse
Landlord for its cost and inconvenience incurred as a consequence
of Tenant's
delinquency. In no event, however, shall the charges permitted
under this
Section 5 or elsewhere in this Lease, to the extent they are
considered to be
interest under applicable Law, exceed the maximum lawful rate of
interest.
Notwithstanding the foregoing, the late fee referenced above shall
not be
charged with respect to the first occurrence (but not any
subsequent occurrence)
during any 12-month period that Tenant fails to make payment when
due, until 5
days after Landlord delivers written notice of such delinquency to
Tenant.
6.
SECURITY DEPOSIT. Contemporaneously with the execution of this
Lease,
Tenant shall pay to Landlord the Security Deposit, which shall be
held by
Landlord to secure Tenant's performance of its obligations under
this Lease. The
Security Deposit is not an advance payment of Rent or a measure or
limit
5
<PAGE>
of Landlord's damages upon an Event of Default (as defined herein).
Landlord
may, from time to time following an Event of Default and without
prejudice to
any other remedy, use all or a part of the Security Deposit to
perform any
obligation Tenant fails to perform hereunder. Following any such
application of
the Security Deposit, Tenant shall pay to Landlord on demand the
amount so
applied in order to restore the Security Deposit to its original
amount.
Provided that Tenant has performed all of its obligations
hereunder, Landlord
shall, within 30 days after the Term ends, return to Tenant the
portion of the
Security Deposit which was not applied to satisfy Tenant's
obligations. The
Security Deposit may be commingled with other funds, and no
interest shall be
paid thereon. If Landlord transfers its interest in the Premises
and the
transferee assumes Landlord's obligations under this Lease, then
Landlord may
assign the Security Deposit to the transferee and Landlord
thereafter shall have
no further liability for the return of the Security Deposit.
In
lieu of a Security Deposit in immediately available funds, Tenant
may
deliver to Landlord a standby, unconditional, irrevocable letter of
credit in
the face amount of the Security Deposit, naming Landlord as
beneficiary, issued
by any of the 5 largest national banking associations with banking
offices in
Dallas, Texas, permitting partial draws thereon, and otherwise in
the form of
Exhibit J attached hereto or another form reasonably acceptable to
Landlord.
Tenant shall from time to time cause its letter of credit to be
renewed no later
than 30 days prior to any expiration date thereof so that its
letter of credit
remains in effect for 30 days after the scheduled expiration date
of the Term or
any renewal Term; if Tenant fails timely to renew its letter of
credit, then
Landlord shall have the right to draw thereon, and retain the
amounts so drawn
as the Security Deposit. Landlord may draw upon the letter of
credit and apply
the proceeds thereof to perform any of Tenant's unperformed
obligations under
this Lease. After any such draw, Tenant shall pay to Landlord on
demand the
amount so drawn to be held as part of the Security Deposit. Tenant
hereby
irrevocably appoints Landlord its true and lawful attorney-in-fact,
such power
of attorney being coupled with an interest, with full power of
substitution, to
do any one or more of the following in its sole discretion upon the
occurrence
of an Event of Default under the Lease: (a) demand, collect,
receive, sue for,
compound and give acquittance for any and all amounts which may be
or become due
or payable with respect to the letter of credit and all funds
evidenced thereby,
(b) execute any and all withdrawal receipts or others orders for
the payment of
monies drawn from the letter of credit, (c) endorse the name of
Tenant on all
commercial paper given in payment or in partial payment of the
letter of credit,
(d) file any claim or institute any proceeding with respect to the
letter of
credit, (e) transfer the letter of credit into the name of Landlord
or its
nominee, and (f) take any other action which Landlord may deem
necessary or
appropriate to protect and preserve the right, title, and interest
of Landlord
under the Lease. To further secure Tenant's obligations under the
Lease, Tenant
hereby pledges to Landlord and grants to Landlord a security
interest in, the
letter of credit, and all renewals and replacements thereof, and
proceeds
therefrom.
7.
LANDLORD'S OBLIGATIONS.
(a) SERVICES. Landlord shall use all reasonable efforts to furnish
to
Tenant (1) water at those points of supply provided for general use
of tenants
of the Building; (2) heated and refrigerated air conditioning
("HVAC") as
appropriate, at such temperatures and in such amounts as are
standard for
comparable buildings in the vicinity of the Building; (3)
janitorial service to
the Premises on weekdays, other than holidays, for
Building-standard
installations and such window washing as may from time to time be
reasonably
required; (4) elevators for ingress and egress to the floor on
which the
Premises are located, in common with other tenants, provided that
Landlord may
reasonably limit the number of operating elevators during
non-business hours and
holidays; and (5) electrical current during normal business hours
for equipment
that does not require more than 110 volts and whose electrical
energy
consumption does not exceed normal office usage. Landlord shall
maintain the
common areas of the Building in reasonably good order and
condition, except for
damage caused by a Tenant Party. If Tenant desires any of the
services specified
in Section 7(a)(2): (A) at any time other than between 8:00 a.m.
and 5:30 p.m.
on weekdays
6
<PAGE>
(other than holidays), or (B) on Saturdays, Sundays or holidays,
then such
services (i.e, after-hour HVAC services) shall be supplied to
Tenant upon the
written request of Tenant delivered to Landlord before 3:00 p.m. on
the business
day preceding such extra usage, and Tenant shall pay to Landlord
the cost of
such services within 30 days after Landlord has delivered to Tenant
an invoice
therefor. The costs incurred by Landlord in providing after-hour
HVAC service to
Tenant shall include costs for electricity, water, sewage, water
treatment,
labor, metering, filtering, and maintenance reasonably allocated by
Landlord to
providing such service.
(b) EXCESS UTILITY USE. Landlord shall not be required to
furnish
electrical current for equipment that requires more than 110 volts
or other
equipment whose electrical energy consumption exceeds normal office
usage. If
Tenant's requirements for or consumption of electricity exceed the
electricity
to be provided by Landlord as described in Section 7.(a), Landlord
shall, at
Tenant's expense, make reasonable efforts to supply such service
through the
then-existing feeders and risers serving the Building and the
Premises, and
Tenant shall pay to Landlord the cost of such service within 30
days after
Landlord has delivered to Tenant an invoice therefor. Landlord may
determine the
amount of such additional consumption and potential consumption by
any
verifiable method, including installation of a separate meter in
the Premises
installed, maintained, and read by Landlord, at Tenant's expense.
Tenant shall
not install any electrical equipment requiring special wiring or
requiring
voltage in excess of 110 volts or otherwise exceeding Building
capacity unless
approved in advance by Landlord. The use of electricity in the
Premises shall
not exceed the capacity of existing feeders and risers to or wiring
in the
Premises. Any risers or wiring required to meet Tenant's excess
electrical
requirements shall, upon Tenant's written request, be installed by
Landlord, at
Tenant's cost, if, in Landlord's judgment, the same are necessary
and shall not
cause permanent damage to the Building or the Premises, cause or
create a
dangerous or hazardous condition, entail excessive or unreasonable
alterations,
repairs, or expenses, or interfere with or disturb other tenants of
the
Building. If Tenant uses machines or equipment in the Premises
which affect the
temperature otherwise maintained by the air conditioning system or
otherwise
overload any utility, Landlord may install supplemental air
conditioning units
or other supplemental equipment in the Premises, and the cost
thereof, including
the cost of installation, operation, use, and maintenance, shall be
paid by
Tenant to Landlord within 30 days after Landlord has delivered to
Tenant an
invoice therefor.
(c) RESTORATION OF SERVICES. Landlord shall use reasonable efforts
to
restore any service required of it that becomes unavailable;
however, such
unavailability shall not render Landlord liable for any damages
caused thereby,
be a constructive eviction of Tenant, constitute a breach of any
implied
warranty, or entitle Tenant to any abatement of Tenant's
obligations hereunder.
(d) ALTERNATE SERVICE PROVIDER. Landlord has advised Tenant
that
presently Massachusetts Electric Company (the "ELECTRIC SERVICE
PROVIDER") is
the electric utility company selected by Landlord to provide
electricity service
for the Building. Notwithstanding the foregoing, Landlord reserves
the right at
any time and from time to time before or during the Term to either
contract for
electric service from a different company or companies providing
electricity
service (each such company shall hereinafter be referred to as an
"ALTERNATIVE
SERVICE PROVIDER") or continue to contact for electricity service
from the
Electric Service Provider. Tenant shall cooperate with Landlord,
the Electric
Service Provider and any Alternative Service Provider at all times
and, as
reasonably necessary, shall allow Landlord, the Electric Service
Provider and
any Alternative Service Provider reasonable access to the
Building's electric
lines, feeders, risers, wiring and other machinery within the
Premises.
7
<PAGE>
8.
IMPROVEMENTS; ALTERATIONS; REPAIRS; MAINTENANCE.
(a) IMPROVEMENTS; ALTERATIONS. Improvements to the Premises shall
be
installed at Tenant's expense only in accordance with plans and
specifications
which have been previously submitted to and approved in writing by
Landlord,
which approval shall be governed by standards in the following
sentence. No
alterations or physical additions in or to the Premises may be made
without
Landlord's prior written consent, which shall not be unreasonably
withheld or
delayed; however, Landlord may withhold its consent to any
alteration or
addition that would adversely affect (in the reasonable discretion
of Landlord)
(1) the Building's Structure or the Building's Systems (including
the Building's
restrooms or mechanical rooms), (2) the exterior appearance of the
Building, or
(3) the appearance of the Building's common areas or elevator lobby
areas.
Tenant shall not paint or install lighting or decorations, signs,
window or door
lettering, or advertising media of any type on or about the
Premises without
the prior written consent of Landlord, which shall not be
unreasonably withheld
or delayed; however, Landlord may withhold its consent to any such
painting or
installation which, would affect the appearance of the exterior of
the Building
or of any common areas of the Building. All alterations, additions,
and
improvements shall be constructed, maintained, and used by Tenant
at its risk
and expense, in accordance with all Laws; Landlord's consent to or
approval of
any alterations, additions or improvements (or the plans therefor)
shall not
constitute a representation or warranty by Landlord, nor Landlord's
acceptance,
that the same comply with sound architectural and/or engineering
practices or
with all applicable Laws, and Tenant shall be solely responsible
for ensuring
all such compliance.
(b) REPAIRS; MAINTENANCE. Tenant shall maintain the Premises in
a
clean, safe, and operable condition, and shall not permit or allow
to remain any
waste or damage to any portion of the Premises. Tenant shall repair
or replace,
subject to Landlord's direction and supervision, any damage to the
Building
caused by a Tenant Party. If Tenant fails to make such repairs or
replacements
within 15 days after the occurrence of such damage, then Landlord
may make the
same at Tenant's cost. If any such damage occurs outside of the
Premises, then
Landlord may elect to repair such damage at Tenant's expense,
rather than having
Tenant repair such damage. The cost of all repair or replacement
work performed
by Landlord under this Section 8 shall be paid by Tenant to
Landlord within 30
days after Landlord has invoiced Tenant therefor.
(c) PERFORMANCE OF
WORK. All work described in this Section 8 shall be
performed only by Landlord or by contractors and subcontractors
approved in
writing by Landlord. Tenant shall cause all contractors and
subcontractors to
procure and maintain insurance coverage naming Landlord as an
additional insured
against such risks, in such amounts, and with such companies as
Landlord may
reasonably require. All such work shall be performed in accordance
with all Laws
and in a good and workmanlike manner so as not to damage the
Building (including
the Premises, the Building's Structure and the Building's Systems).
All such
work which may affect the Building's Structure or the Building's
Systems must be
approved by the Building's engineer of record, at Tenant's expense
and, at
Landlord's election, must be performed by Landlord's usual
contractor for such
work. Tenant shall provide sworn statements, including the names,
addresses and
copies of contracts for all contractors, and upon completion of any
work shall
promptly furnish Landlord with sworn owner's and contractor's
statements and
full and final waivers of lien covering all labor and materials
included in the
work in question.
(d) MECHANIC'S LIENS. Tenant shall not permit any mechanic's liens
to
be filed against the Premises or the Building for any work
performed, materials
furnished, or obligation incurred by or at the request of Tenant.
If such a lien
is filed, then Tenant shall, within 10 days after Landlord has
delivered notice
of the filing thereof to Tenant (or such earlier time period as may
be necessary
to prevent the forfeiture of the Building or any interest of
Landlord therein or
the imposition of a civil or criminal fine
8
<PAGE>
with respect thereto), either (1) pay the amount of the lien and
cause the lien
to be released of record, or (2) diligently contest such lien and
deliver to
Landlord a bond or other security reasonably satisfactory to
Landlord. If Tenant
fails to timely take either such action, then Landlord may pay the
lien claim,
and any amounts so paid, including expenses and interest, shall be
paid by
Tenant to Landlord within ten days after Landlord has invoiced
Tenant therefor.
All materialmen, contractors, artisans, mechanics, laborers and any
other
persons now or hereafter contracting with Tenant or any contractor
or
subcontractor of Tenant for the furnishing of any labor, services,
materials,
supplies or equipment with respect to any portion of the Premises,
at any time
from the date hereof until the end of the Term, are hereby charged
with notice
that they look exclusively to Tenant to obtain payment for same.
Nothing herein
shall be deemed a consent by Landlord to any liens being placed
upon the
Building or Landlord's interest therein due to any work performed
by or for
Tenant.
9.
USE. Tenant shall continuously occupy and use the Premises only for
the
Permitted Use and shall comply with all Laws relating to the use,
condition,
access to, and occupancy of the Premises. The population density
within the
Premises as a whole shall at no time exceed one person for each 300
rentable
square feet in the Premises. Tenant shall not conduct second or
third shift
operations within the Premises; however, Tenant may use the
Premises after
normal business hours, so long as Tenant is not generally
conducting business
from the Premises after normal business hours. The Premises shall
not be used
for any use which is disreputable, creates extraordinary fire
hazards, or
results in an increased rate of insurance on the Building or its
contents, or
for the storage of any Hazardous Materials (other than typical
office supplies
[e.g., photocopier toner] and then only in compliance with all
Laws). Tenant
shall not use any substantial portion of the Premises for a "call
center," any
other telemarketing use, or any credit processing use. If, because
of a Tenant
Party's acts, the rate of insurance on the Building or its contents
increases,
then such acts shall be an Event of Default, Tenant shall pay to
Landlord the
amount of such increase on demand, and acceptance of such payment
shall not
waive any of Landlord's other rights. Tenant shall conduct its
business and
control each other Tenant Party so as not to create any nuisance or
unreasonably
interfere with other tenants or Landlord in its management of the
Building.
10.
ASSIGNMENT AND SUBLETTING.
(a) TRANSFERS. Except as provided in Section 10.(g), Tenant shall
not,
without the prior written consent of Landlord, (1) assign,
transfer, or encumber
this Lease or any estate or interest herein, whether directly or by
operation of
law, (2) permit any other entity to become Tenant hereunder by
merger,
consolidation, or other reorganization, (3) if Tenant is an entity
other than a
corporation whose stock is publicly traded, permit the transfer of
an ownership
interest in Tenant so as to result in a change in the current
control of Tenant,
(4) sublet any portion of the Premises, (5) grant any license,
concession, or
other right of occupancy of any portion of the Premises, or (6)
permit the use
of the Premises by any parties other than Tenant (any of the events
listed in
Section 10.(a)(l)through 10.(a)(6) being a "TRANSFER").
(b) CONSENT STANDARDS. Landlord shall not unreasonably withhold
its
consent to any assignment or subletting of the Premises, provided
that the
proposed transferee (A) is creditworthy, (B) has a good reputation
in the
business community, (C) will use the Premises for the Permitted Use
(thus,
excluding, without limitation, uses for credit processing and
telemarketing) and
will not use the Premises in any manner that would conflict with
any exclusive
use agreement or other similar agreement entered into by Landlord
with any other
tenant of the Building, (D) is not a governmental entity, or
subdivision or
agency thereof, and (E) is not another occupant of the Building or
person or
entity with whom Landlord is negotiating to lease space in the
Building;
otherwise, Landlord may withhold its consent in its sole
discretion.
(c) REQUEST FOR
CONSENT. If Tenant requests Landlord's consent to a
Transfer, then, at
9
<PAGE>
least 15 business days prior to the effective date of the proposed
Transfer,
Tenant shall provide Landlord with a written description of all
terms and
conditions of the proposed Transfer, copies of the proposed
documentation, and
the following information about the proposed transferee: name and
address;
reasonably satisfactory information about its business and business
history; its
proposed use of the Premises; banking, financial, and other credit
information;
and general references sufficient to enable Landlord to determine
the proposed
transferee's creditworthiness and character. Concurrently with
Tenant's notice
of any request for consent to a Transfer, Tenant shall pay to
Landlord a fee of
$1,000 to defray Landlord's expenses in reviewing such request, and
Tenant shall
also reimburse Landlord immediately upon request for its reasonable
attorneys'
fees incurred in connection with considering any request for
consent to a
Transfer.
(d) CONDITIONS TO CONSENT. If Landlord consents to a proposed
Transfer, then the proposed transferee shall deliver to Landlord a
written
agreement whereby it expressly assumes Tenant's obligations
hereunder; however,
any transferee of less than all of the space in the Premises shall
be liable
only for obligations under this Lease that are properly allocable
to the space
subject to the Transfer for the period of the Transfer. No Transfer
shall
release Tenant from its obligations under this Lease, but rather
Tenant and its
transferee shall be jointly and severally liable therefor.
Landlord's consent to
any Transfer shall not waive Landlord's rights as to any subsequent
Transfers.
If an Event of Default occurs while the Premises or any part
thereof are subject
to a Transfer, then Landlord, in addition to its other remedies,
may collect
directly from such transferee all rents becoming due to Tenant and
apply such
rents against Rent. Tenant authorizes its transferees to make
payments of rent
directly to Landlord upon receipt of notice from Landlord to do so
following the
occurrence of an Event of Default hereunder. Tenant shall pay for
the cost of
any demising walls or other improvements necessitated by a proposed
subletting
or assignment.
(e) CANCELLATION. Landlord may, within 30 days after submission
of
Tenant's written request for Landlord's consent to an assignment or
subletting,
cancel this Lease as to the portion of the Premises proposed to be
sublet or
assigned as of the date the proposed Transfer is to be effective.
If Landlord
cancels this Lease as to any portion of the Premises, then this
Lease shall
cease for such portion of the Premises and Tenant shall pay to
Landlord all
Rent accrued through the cancellation date relating to the portion
of the
Premises covered by the proposed Transfer. Thereafter, Landlord may
lease such
portion of the Premises to the prospective transferee (or to any
other person)
without liability to Tenant.
(f) ADDITIONAL COMPENSATION. Tenant shall pay to Landlord,
immediately
upon receipt thereof, the excess of (1) all compensation received
by Tenant for
a Transfer less the costs reasonably incurred by Tenant with
unaffiliated third
parties in connection with such Transfer (i.e., brokerage
commissions, tenant
finish work, and the like) over (2) the Rent allocable to the
portion of the
Premises covered thereby.
(g) PERMITTED TRANSFERS. Notwithstanding Section 10.(a), Tenant
may
Transfer all or part of its interes
