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Featured Severance Agreements
AGREEMENT
AGREEMENT made as of the 31st day of July, 1997, between
DELTA AIR LINES, INC., a Delaware corporation (hereinafter referred to as the
"Corporation"), with its general offices located at Hartsfield Atlanta
International Airport, Atlanta, Georgia 30320, and RONALD W. ALLEN, residing at
60 Finch Forest Trail, NW, Atlanta, Georgia 30327 (hereinafter referred to as
"Executive").
W I T N E S S E T H:
WHEREAS, Executive is employed by the Corporation pursuant to
an Employment Agreement dated July 29, 1987, as amended by Amendments to
Employment Agreements dated: September 1, 1988, September 1, 1989, February 1,
1992, August 15, 1992, October 28, 1993 and August 16, 1996 (hereinafter
referred to collectively as the "Employment Agreement"); and
WHEREAS, Executive will retire as Chairman of the Board,
President and Chief Executive Officer of the Corporation, and on May 9, 1997
resigned as a Director of the Corporation and from all other official positions
with the Corporation and its subsidiaries, effective July 31, 1997; and
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WHEREAS, the parties desire to supersede and replace the
Employment Agreement in connection with Executive's retirement from employment
by the Corporation, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter contained, the parties hereto hereby agree as follows:
1. Replacement of Employment Agreement.
Upon execution and delivery hereof by the parties, unless and
until revoked as permitted by Section 14 hereof, this Agreement shall supersede
and replace the Employment Agreement and the agreement in principle relating to
Executive's retirement, dated as of May 9, 1997, between Executive and the
Corporation (the "Agreement in Principle").
2. Retirement; Effective Date of Retirement.
Executive's retirement as Chairman of the Board, President and Chief Executive
Officer of the Corporation, and resignation as a Director of the Corporation
and from all other positions with the Corporation and its subsidiaries, will
become effective at the close of business on July 31, 1997. Since submitting
his resignation and until his retirement from employment with the Corporation
is effective in accordance herewith, Executive has been receiving, and
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shall continue to be entitled to receive, salary payments at the same salary
rate and on the same basis, and employment benefits and reimbursement of
business expenses incurred through July 31, 1997 on the same basis, as in
effect on May 9, 1997, including continued entitlement to the life insurance,
survivor, medical and dental benefit coverage or benefits to which he was
entitled on May 9, 1997 under the Corporation's employee benefit plans and
programs.
3. Payments and Benefits to Be Provided Executive.
Upon his retirement in accordance with Section 2 hereof
Executive shall be entitled to the following payments and benefits on the terms
and conditions herein provided:
(a) The Corporation shall on the Payment Date (as hereinafter
defined) make to Executive a lump-sum cash payment of $4,501,000 which amount
represents (i) $701,000 in lieu of an award for fiscal year 1997 under the
Corporation's Incentive Compensation Plan and (ii) a severance payment of
$3,800,000. It is understood and agreed that Executive shall not be entitled to
any other severance pay under any plan, policy or program of the Corporation or
any of its subsidiaries in respect of Executive's retirement from the
Corporation, or in respect of the Employment Agreement, or otherwise relating
to the termination of his employment with the Corporation, and
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shall not be entitled to any award under any executive incentive program of the
Corporation in respect of fiscal 1997 or fiscal 1998.
(b) Executive's existing stock options covering a total of
298,000 shares of common stock of the Corporation, and his restricted stock
award, each under the Corporation's 1989 Stock Incentive Plan (as amended
through January 26, 1995) (the "Stock Incentive Plan") and the award agreements
issued to Executive thereunder, as specified on Schedule 3B attached hereto,
shall continue in accordance with their terms as applicable to Executive's
retirement; provided, however, that for all purposes of the Stock Incentive
Plan and the award agreements thereunder Executive's retirement in accordance
with this Agreement shall be deemed retirement at Executive's normal retirement
date (as defined under the Stock Incentive Plan and the award agreements), with
the result that as of July 31, 1997 (i) the restrictions on Executive's
restricted stock award shall lapse and his ownership of such stock will become
nonforfeitable and (ii) Executive's rights in respect of his existing stock
options will become nonforfeitable and shall expire on August 1, 2000, and the
non-competition provisions applicable to option holders and holders of
restricted stock under the Stock Incentive Plan and Executive's award
agreements
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thereunder in the case of early retirement will be
inapplicable.
(c) On the terms and conditions herein provided, the
Corporation shall pay Executive monthly supplemental retirement payments
("supplemental payments"), effective with the monthly period commencing as of
August 1, 1997, in the amount of $25,754.04, which amount, when combined with
the retirement payments that he is otherwise entitled to receive under the
Corporation's existing qualified and non-qualified retirement plans (which
plans are identified further on Schedule 3C hereof), will produce for Executive
a total annual retirement payment at a rate of $765,600 per year, subject to
the payments to third parties, offsets or other adjustments described in the
next sentence and Section 8(b) hereof and subject to the forfeiture provisions
hereinafter in this paragraph 3(c) provided. Executive's total annual
retirement payment (after giving effect to the supplemental payments) of
$765,600 is subject to reduction on account of (i) payments required to be made
under any Qualified Domestic Relations Order, (ii) any social security benefits
to which Executive is entitled and (iii) any applicable pre-retirement survivor
election and similar adjustment that may be made in determining retirement
payments under the Corporation's existing qualified and
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non-qualified retirement plans. The supplemental payments from the Corporation
hereunder shall not be increased to counteract (or otherwise on account of)
such payments, offsets or adjustments, which are intended to be given effect in
determining Executive's total annual retirement payments, including the
supplemental payments. Executive's right to the supplemental payments shall be
in the nature of a single life annuity, payable for the remainder of
Executive's life. Alternatively, Executive may elect in writing no later than
the Payment Date to receive the supplemental payments in the form of a joint
and 50% survivor benefit under which a reduced monthly benefit will be paid to
the Executive for his lifetime and, upon his death, a monthly survivor benefit
will be paid to his spouse for such spouse's lifetime equal to 50% of the
monthly amount that would have been payable to the Executive, but for his
death. The identity of the Executive's spouse for purposes of this joint and
survivor annuity shall be fixed as of the date the supplemental payments begin
and thereafter shall not be changed for any reason whatsoever. The actuarial
factors used to determine the amount of Executive's joint and 50% survivor
annuity shall be the same factors as are provided in the Corporation's
qualified retirement plan for purposes of determining the amount of
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the joint and 50% survivor annuity provided to a terminated vested employee.
Except as otherwise provided by this paragraph 3(c), all of the terms of the
Corporation's qualified retirement plan relating to the time and manner of
payment of retirement benefits shall apply to the supplemental payments.
Notwithstanding the foregoing provisions of this paragraph 3(c), the
Corporation hereby waives any forfeiture of benefit provision that may be
applicable to Executive under the terms of the Corporation's non-qualified
retirement plans, but, in lieu thereof, the Corporation's payment of retirement
benefits under the Corporation's 1991 Excess Benefit Plan and Supplemental
Excess Benefit Plan and of the supplemental payments shall be subject to
Executive's compliance with the obligations on Executive's part contained in
Section 7 hereof until August 1, 1999, such that Executive shall not be
entitled to any such payment, commencing with the month subsequent to the month
in which Executive first breaches such restriction and continuing for so long
as Executive does not comply with such restriction (but not after August 1,
1999), and there shall be no obligation of Executive to return any such payment
received before he ceased to comply with such obligations. It is understood and
agreed that the monthly retirement payment subject to forfeiture under the
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immediately preceding sentence shall be $58,597.36, subject to adjustments to
account for any changes after the date hereof in required payments to third
parties, the offset for social security benefits and any similar adjustments.
(d) The Corporation shall, in a manner determined by it,
provide Executive and eligible members of his family, commencing as of August
1, 1997, with life insurance, survivor, medical and dental benefit coverage or
benefits on terms substantially equivalent to those to which he and the
eligible members of his family, respectively, would have been entitled under
the Corporation's existing benefits plans and programs had he been age 65 or
older upon retiring. These benefit plans and programs are identified on
Schedule 3D attached hereto. With respect to the provision of such medical and
dental benefit coverage, the Corporation shall make a lump-sum cash payment to
Executive on the Payment Date of $85,515, representing the present value of the
monthly premiums chargeable to Executive for such coverage with respect to the
period prior to Executive attaining age 65 and Executive shall be responsible
to pay all applicable premiums under the Corporation's Family-Care Medical Plan
(as the same may be amended or replaced) to keep such coverage in effect. If
Executive fails to pay such premiums, the Corporation shall have no further
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obligation with respect to providing such coverage. Notwithstanding the
foregoing provisions of this paragraph 3(d), for purposes of determining the
survivor benefits applicable to eligible survivors under the Corporation's
Family-Care Disability and Survivorship Plan, Executive's monthly final average
earnings as calculated for purposes of such plan shall be deemed to be
$106,333.33.
(e) As soon as practicable after the Payment Date, the
Corporation shall deliver to Executive ownership of the car owned by the
Corporation which Executive currently uses.
(f) Unless and until Executive provides any management or
executive services (whether as a consultant, advisor, officer or director) to
any company that is at the time he commences providing such services in direct
and substantial competition with the Corporation, Executive (i) upon his
retirement will be elected and continue on a life-time basis as an Advisory
Director of the Corporation (which will entitle him to a $25,000 a year fee and
such other benefits as are from time to time generally provided to Advisory
Directors, including, to the extent so generally provided, "positive space"
flight benefits), (ii) will be provided such additional "positive space" flight
benefits (if any and without duplication to those which he receives
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as an Advisory Director as provided above), for the benefit of Executive and
members of his family, as are generally provided by the Corporation from time
to time to its former chief executive officer and/or former executive vice
presidents and members of their families, respectively, upon the normal
retirement thereof, and (iii) until the tenth anniversary of this Agreement
will be provided, (A) at the Corporation's arrangement and expense, the office
space provided for by the lease attached hereto as Schedule 3F or, in the event
such lease is terminated prior to the end of such ten-year period (other than
by reason of actions of Executive), comparable office space reasonably
acceptable to Executive and the Corporation for the balance of such ten-year
period, and associated office equipment and furnishings, (B) full-time
secretarial support, through Delta Staffing Services, Inc. or another staffing
agency, reasonably acceptable to Executive, (C) payment by the Corporation of
the dues regularly payable by Executive as a member of the Commerce Club of
Atlanta, and (D) use of the East Lake Golf Club pursuant to the Corporation's
membership as long as the Corporation maintains that membership during such
ten-year period (provided, however, that Executive will not continue as one of
the Corporation's representative
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members after his retirement pursuant hereto and shall pay the fees and charges
resulting from his use).
(g) Except as provided by the foregoing paragraphs (a)
through (f) of this Section 3, it is agreed that upon his retirement in
accordance with Section 2 hereof Executive shall be entitled to no other
payment, benefits or perquisites from the Corporation or any of its
subsidiaries on account of his former employment by, or his retirement from,
the Corporation and its subsidiaries, other than those benefits described in
Schedule 3G hereof (but Executive shall be entitled to the consulting payments
provided by Section 6 hereof in accordance with the terms thereof) and except
that Executive shall be entitled to indemnification from the Corporation in
respect of his service as an officer and director of the Corporation or its
subsidiaries as provided in the Corporation's certificate of incorporation and
by-laws.
(h) For purposes of this Agreement, "Payment Date" shall mean
the business day next following the seventh day after the date on which this
Agreement has been executed and delivered by both parties hereto, provided that
Executive has not revoked this Agreement within such seven day period as
permitted by Section 14 hereof.
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(i) For purposes of this Agreement, payment from a trust
(qualified or nonqualified) established by the Corporation shall be considered
as payment from the Corporation.
4. Publicity.
(a) Neither Executive nor the Corporation (including, without
limitation, any member of the Board) shall comment on the circumstances
surrounding Executive's resignation from the Corporation beyond the substance
of the comments contained in the public press release annexed hereto issued on
May 12, 1997, except as otherwise required by applicable law.
(b) The Corporation (including, without limitation, any
member of the Board) shall not knowingly make any statement, written or oral,
or take any other action relating to the circumstances surrounding Executive's
retirement or relating to his performance as a senior executive of the
Corporation that would tend to disparage either his personal or business
reputation. Executive shall not knowingly make any statement, written or oral,
or take any other action relating to the Corporation or its directors or
officers that would tend to disparage the Corporation's business or the
personal or business reputation of such individuals.
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(c) Paragraphs 4(a) and 4(b) hereof are essential elements of
the parties' agreement as expressed herein, and the agreement of the
Corporation (including, without limitation, any member of the Board), on the
one hand, or of Executive, on the other hand, under paragraphs 4(a) and 4(b)
hereof is a material inducement for the other party to enter into this
agreement and the breach thereof would be a material breach of this Agreement.
5. Cooperation. Executive agrees that notwithstanding his
retirement in accordance with Section 2 hereof he shall, from and after the
date hereof, without any additional cost to the Corporation except for
reimbursement of his direct out-of-pocket expenses reasonably incurred: (i)
cooperate and consult with the Corporation and its subsidiaries, and advise the
Corporation and its subsidiaries, with respect to any pending or threatened
litigation or investigation to which the Corporation or a subsidiary of the
Corporation may become party or subject arising out of activities in which he
was involved (or of which he has any knowledge) during his employment with the
Corporation, (ii) appear, if requested upon reasonable notice, in court
proceedings relating thereto to assist the Corporation and its subsidiaries,
and (iii) in his activities in connection with any such dispute or litiga-
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tion, use his good faith efforts to protect the Corporation's interest.
6. Consultancy.
(a) Commencing August 1, 1997, Executive shall, upon
reasonable request of the Corporation, at any time during the following seven
years (through July 31, 2004), provide his services to the Corporation as a
consultant, and receive payments at an annual rate of $500,000 for such
consulting services rendered and his availability to provide such services,
payable quarterly in advance commencing as of the Payment Date. Executive may
be asked to provide his consulting services to the Corporation with respect to
any matter within the general area of Executive's expertise as developed during
his employment with the Corporation that may from time to time arise during the
consulting period but Executive shall be required to act only in an advisory
capacity to the officers of the Corporation; it being understood that such
services shall include initially consultation on transitional matters. It is,
however, understood and agreed that Executive shall not be called upon to
devote a major portion of his business time to the performance of services as a
consultant to the Corporation and that Executive shall only be required to
perform his consulting services at such times, and at such places and
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for such periods, as will result in the least inconvenience to Executive in
relation to such other commitments as he may have from time to time (including,
without limitation, any full-time employment). It is further understood and
agreed that Executive may provide his consulting services in person at the
office to be provided to him by the Corporation as required by Section 3(f)
hereof or at other locations reasonably requested by the Corporation or by
correspondence or telecommunications from his residence or elsewhere as
Executive may determine. Regardless of how performed, all of Executive's
consulting services shall be provided to the best of his ability. Executive's
obligation to render consulting services to the Corporation pursuant hereto
shall be suspended (but not his right to receive the consulting payments
provided hereby) for such periods during which Executive may be physically or
mentally incapacitated. In the event of Executive's death before the end of the
period during which he is to provide consulting services to the Corporation
pursuant hereto (assuming none of the contingencies referred to in the
penultimate sentence of this paragraph 6(a) has occurred), the consulting
payments to which Executive is entitled pursuant to this Section 6 shall be
payable to such beneficiary or beneficiaries as may be designated by Executive
in a written designation received
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by the Corporation or, if no such designation is received by the Corporation or
any previous designation is revoked in writing and such revocation is received
by the Corporation prior to Executive's death, to Executive's estate, in either
such case on such periodic basis as may be convenient to the Corporation (but
not less often than monthly). Executive shall be reimbursed by the Corporation
for his reasonable out-of-pocket business expenses incurred in connection with
the performance of his consultancy services for the Corporation, upon receipt
by the Corporation of reasonable evidence thereof, provided that such expenses
were incurred with the prior, written authorization of the Corporation.
Notwithstanding the foregoing provisions of this paragraph 6(a), the
Corporation's obligation to make consulting payments to Executive is contingent
upon (i) Executive not having breached his duty to provide consulting services
as provided by this paragraph 6(a) or his confidentiality, non-competition and
non-solicitation obligations as provided by Section 7 hereof and (ii) Executive
not having provided management or executive services (whether as a consultant,
adviser, officer, or director) to any company (whether or not referred to in
paragraph 7(b)(ii) hereof) which is in direct and substantial competition with
the air transportation business of the Corporation
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and its subsidiaries as that business is conducted on July 31, 1997, without
the prior, express, written consent of the Corporation; provided, however, that
the provisions of clause (ii) of this sentence shall not prevent Executive from
owning any debt securities of, or less than 5% of any class of equity security
of, any company if such security is registered under Section 12 of the
Securities Exchange Act of 1934, as amended. In view of the worldwide air
transportation business of the Corporation and the detailed involvement of
Executive in all aspects of that worldwide business, it is understood and
agreed that the restrictions agreed to in clause (ii) of the immediately
preceding sentence are intended to extend to management or executive services
which are directly related to the provision of air transportation services
into, within or from the United States, as no smaller geographical restriction
will adequately protect the legitimate business interests of the Corporation.
(b) The period during which Executive shall provide
consulting services to the Corporation as provided by paragraph 6(a) hereof
shall be automatically extended, beginning August 1, 2004, for an additional
year (until July 31, 2005), even in the event of Executive's incapacity or
death prior thereto, and Executive (or his beneficiaries
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or estate, as the case may be) accordingly shall be entitled to receive on the
terms and subject to the conditions therein provided additional consulting
payments in respect of such year at an annual rate of $500,000, in quarterly
installments, payable in advance, unless Executive at any time during the
previous seven-year period has provided management or executive services (as an
employee, consultant, advisor, officer or director or in any other capacity)
for compensation either (i) to a non-governmental third party (whether or not a
competitor of the Corporation) or (ii) to a governmental entity (other than on
a part-time, consulting basis), unless Executive has provided such services
with the prior, express, written consent of the Corporation; provided, however,
that, notwithstanding the foregoing provisions of this sentence, Executive may
provide his services (i) as a non-officer director of any company that does not
directly or indirectly conduct business which is in direct and substantial
competition with the air transportation business of the Corporation as that
business is conducted on July 31, 1997 or (ii) to a business owned by Executive
and/or his family which is not in direct and substantial competition with the
air transportation business of the Corporation as that business is conducted on
July 31, 1997.
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7. Confidentiality; Non-Competition; Non-Solicitation.
(a) Acknowledgements. Executive acknowledges that the
Corporation has separately bargained for and paid additional consideration for
the restrictive covenants provided for herein, and that the Corporation will
provide certain benefits to Executive hereunder in reliance upon such
covenants, in view of the unique and essential nature of the services Executive
has performed on behalf of the Corporation, the unique and strategically
critical knowledge and information Executive has accumulated during his service
to the Corporation, and the irreparable injury that would befall the
Corporation should Executive breach such covenants. Executive's services have
been of a special, unique and extraordinary character, and his position with
the Corporation has placed him in a position of confidence and trust with
employees of the Corporation and its subsidiaries and with the Corporation's
other constituencies and has allowed him access to confidential and proprietary
information concerning the Corporation and its subsidiaries. Moreover, the
business of the Corporation under the leadership of Executive has expanded into
and now includes air transportation services to and from major markets
throughout the world. All such markets are either now
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actively served by the Corporation or are under active and ongoing study with
respect to possible expansion, an ongoing process of expansion in which
Executive was thoroughly and intimately involved. Accordingly, the types,
periods and geographic scope of the restrictions imposed by the covenants in
this Section 7 are fair and reasonable in light of Executive's positions as
recited above and the character of Executive's services, and such restrictions
will not prevent Executive from earning a livelihood, especially in view of the
substantial compensation to be paid hereunder for these covenants.
(b) Covenants. Having acknowledged the foregoing, Executive
covenants and agrees with the Corporation as follows:
(i) Commencing upon Executive's retirement
pursuant to Section 2 hereof and continuing until August 1, 2004 or, if the
term of Executive's consulting services to the Corporation pursuant to Section
6 hereof is extended as provided in paragraph 6(b) hereof, until August 1,
2005, Executive, without the express written consent of the Corporation, will
not divulge, furnish or make accessible to anyone any Confidential Information
(as hereinafter provided) with respect to any aspect of the business of the
Corporation or any of its subsidiary or
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affiliated companies (including, without limitation, information concerning
employees, suppliers or competitors of the Corporation obtained by Executive in
the course of providing his duties to the Corporation), or any other
information obtained by Executive in the course of his employment under a duty
of confidentiality (applicable either to Executive or the Corporation or both).
For purposes of this Agreement, the term "Confidential Information" means any
and all data and information relating to the air transportation business of the
Corporation that has been disclosed to Executive (or that will be disclosed
hereafter pursuant to the consulting provisions hereof) or of which Executive
became or becomes aware as a consequence of or through his relationship with
the Corporation, and that has economic value to the Corporation and is not
generally known by its competitors, including, without limitation, information
relating to the Corporation's financial affairs, products, services, customers,
employees or employees' compensation, research, purchasing, accounting,
marketing, fleet plan, strategic plans, operation or global and other
alliances. Confidential Information shall also include information that
constitutes a trade secret. Notwithstanding the foregoing, no information will
be deemed to be Confidential Information
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unless such information is treated by the Corporation as confidential and shall
not include any data or information that has been voluntarily disclosed to the
public by the Corporation (except where such public disclosure has been made
without authorization by the Corporation), or that has been independently
developed and disclosed by others, or that otherwise enters the public domain
through lawful means. The restrictions on disclosure imposed by this provision
shall not apply with respect to any statement or testimony required to be made
by Executive pursuant to subpoena or other legal requirement, but Executive
shall advise the Corporation of any legal process reasonably likely to require
the disclosure of any such information so as to permit the Corporation to seek
an appropriate protective order or other protection of the confidentiality
thereof and shall cooperate with the Corporation in respect to any such legal
proceedings as provided by Section 5 hereof.
(ii) Commencing upon Executive's retirement pursuant to
Section 2 hereof and continuing until August 1, 2000, Executive shall not,
directly or indirectly, provide management or executive services (whether as a
consultant, adviser, officer or director) to any of the following companies or
their majority-owned subsidiaries or affiliates
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(or any successor to the air transportation business thereof): AMR Corporation,
Continental Airlines, Inc., Northwest Airlines Corporation, Southwest Airlines
Co., Trans World Airlines, Inc., UAL Corporation and US Airways Group, Inc.; it
being understood that each of the foregoing companies or their majority-owned
subsidiaries or affiliates participates in the air transportation business in
direct and substantial competition with the Corporation; provided, however,
that the provisions of this paragraph 7(b)(ii) shall not prevent Executive from
owning any debt securities of, or less than 5% of any class of equity security
of, any such company if such security is registered under Section 12 of the
Securities Exchange Act of 1934, as amended.
(iii) Commencing with Executive's retirement pursuant to
Section 2 hereof and continuing until August 1, 2004 or, if the term of
Executive's consulting services to the Corporation pursuant to Section 6 hereof
is extended as provided in paragraph 6(b) hereof, until August 1, 2005,
Executive shall not solicit or advise any person who is at the time an employee
of the Corporation or any of its subsidiaries at the management or executive
level to accept employment with or to provide his services to any other company
or enterprise (including, without limitation, any non-profit or governmental
enterprise or body).
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(c) In addition to any other remedies that may be available
to the Corporation under applicable law, in the event of a breach by Executive
of any of his obligations under paragraphs 7(b)(i), 7(b)(ii) or 7(b)(iii)
hereof, the Corporation shall be entitled to injunctive and other equitable
relief to restrain any future breach of such obligations and to remedy the
consequences of a breach. The right of the Corporation, as stated in the last
sentence of paragraph 3(c) and the penultimate sentence of paragraph 6(a)
hereof, to cease making payments to Executive under such paragraphs in the
event of a breach of Executive's obligations under paragraphs 7(b)(i), 7(b)(ii)
or 7(b)(iii) hereof shall not be exclusive of any other right or remedy to
which the Corporation shall be entitled under applicable law in respect of any
breach by Executive of any of his obligations under this Agreement.
8. Withholding Taxes; Third-Party Payees.
(a) Notwithstanding any other provision of this Agreement,
the Corporation may withhold from any and all payments required to be made to
Executive pursuant to this Agreement, all federal, state, local and/or other
taxes which the Corporation determines in good faith are required to be
withheld in accordance with the applicable statutes and/or regulations from
time to time in effect. Upon his
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retirement, Executive's relationship with the Corporation shall be as an
independent contractor and Executive shall be responsible for any taxes
applicable to payments and benefits provided to him hereunder, except for
withholding required by law.
(b) Notwithstanding any other provision of this Agreement,
the payments to be made by the Corporation pursuant hereto may be made to such
other person as shall be entitled to receive such payments pursuant to any
applicable law or court order (including, without limitation, any Qualified
Domestic Relations Order) and such third party payment shall for purposes
hereof be deemed a payment to Executive.
9. Transitional Matters; Relationship After Retirement.
Prior to July 31, 1997, Executive will carry out his duties
in good faith and cooperate with the Corporation and its Board in all
transitional matters. After July 31, 1997, Executive shall no longer occupy any
official position with the Corporation or any of its subsidiaries (other than
as an Advisory Director of the Corporation as provided in Section 3 hereof) and
he shall represent the Corporation only as specifically provided in this
Agreement or as specifically requested in writing by the Board. Except as
specifically provided herein, the
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Corporation shall have no responsibility for expenses, fees or obligations
incurred by the Executive for any activities occurring after July 31, 1997.
10. Mutual Releases.
The parties hereto hereby release and forever discharge each
other (and in the case of the Corporation the subsidiaries thereof and the past
and present directors, officers, employees and agents of the Corporation and
its subsidiaries) from any and all claims, liabilities, obligations or causes
of action, existing as of the date hereof, known or unknown and whether or not
accrued or matured, arising out of or relating to Executive's retirement from
the Corporation, or his employment by the Corporation or his services as a
director or officer of the Corporation or its subsidiaries, or otherwise
relating to the termination of such employment or services as provided herein,
including but not limited to any claim against the Corporation based on,
relating to or arising under wrongful discharge, breach of contract, tort,
fraud, Title VII of the Civil Rights Act of 1964, as amended, any other civil
or human rights law, the Age Discrimination in Employment Act, Americans with
Disabilities Act, Employee Retirement Income Security Act of 1974, as amended,
or any other federal, state or local law relating to employment or
discrimination
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in employment, or otherwise, but such general release will not limit either (i)
the rights or obligations under this Agreement of the Corporation (including,
without limitation, the members of the Board) or Executive or (ii) Executive's
rights to indemnification from the Corporation in respect of his services as an
officer or director of the Corporation or any of its subsidiaries as provided
by law or the certificates of incorporation or bylaws (or like constitutive
documents) of the Corporation or any subsidiary thereof.
11. Entire Agreement.
This Agreement sets forth the entire understanding or
agreement of the parties hereto and no statement, representation, warranty or
covenant has been made by either party except as expressly set forth herein.
This Agreement shall not be changed or terminated orally. The obligation of
Executive hereunder to provide his services to the Corporation is personal to
Executive and may not be assigned. All of the provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective heirs and personal representatives of Executive and the successors
and assigns of the Corporation.
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12. Notices.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given to a
party hereto if personally delivered to or (except in the case of the notice
referred to in Section 14 hereof) five days after having been mailed, postage
prepaid, by certified or registered mail, return receipt requested, to the
party at its or his address as set forth at the beginning hereof (in the case
of the Corporation, marked to the attention of the Secretary) or to such other
address as the party may designate by notice given in conformity with the
foregoing.
13. Governing Law.
This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without giving
effect to the principles, policies or provisions thereof concerning conflict or
choice of laws.
14. Executive's Acknowledgments; Review and Revocation Rights.
Executive acknowledges that before entering into this
Agreement he has had the opportunity to consult with any attorney or other
advisor of his choice, and has done so, and has not relied in connection
herewith on legal counsel for the Corporation. Executive acknowledges that he
has entered into this Agreement of his own free will, that
28
<PAGE> 29
no promises or representations have been made to him by any person to induce
him to enter into this Agreement other than the terms expressly set forth
herein, that he has been provided up to 21 days to consider, sign and return
this Agreement and that, after signing and returning it, he may nevertheless
revoke this Agreement by delivering a signed revocation notice to the
Corporation (addressed as provided in Section 12 hereof) within seven days
after he executes and delivers to the Corporation this Agreement. Upon timely
delivery of such a revocation notice by Executive, this Agreement shall cease
to be of any force and effect as to either party as of the time of the
execution and delivery thereof.
15. Attorney's Fees.
As soon as practicable after the Payment Date, the
Corporation shall pay Executive's legal counsel, Dow, Lohnes & Albertson PLC,
its reasonable fees and expenses for its services in connection with the
preparation of the Agreement in Principle and this Agreement.
16. Authorization By The Corporation.
The Corporation represents and warrants to Executive that (i)
it has the corporate power and authority to enter into this Agreement and to
carry out its respective obligations hereunder; (ii) the execution, delivery
and
29
<PAGE> 30
performance of this Agreement by the Corporation and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Corporation; and (iii) this Agreement is a valid and
binding obligation of the Corporation, enforceable against it in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws now or
hereafter in effect relating to the enforcement of creditors' rights generally.
17. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which, together shall constitute
one and the same instrument. Any counterpart of this Agreement that has
attached to it separate signature pages which together contain the signature of
all parties hereto shall for all purposes be deemed a fully executed original.
Facsimile signatures shall constitute original signatures.
IN WITNESS WHEREOF, the Corporation has caused
this Agreement to be executed in its corporate name by a
30
<PAGE> 31
director thereof thereunto duly authorized, and Executive has hereunto set his
hand, as of the day and year first above written.
DELTA AIR LINES, INC.
By: /s/ Gerald Grinstein
---------------------------------
Gerald Grinstein,
CHAIRMAN, PERSONNEL,
COMPENSATION &
NOMINATING COMMITTEE OF
THE BOARD OF DIRECTORS
/s/ Ronald W. Allen
------------------------------------
RONALD W. ALLEN
Date Signed: August 14, 1997
----------------------
31
<PAGE> 32
-----------
SCHEDULE 3B
-----------
1. OUTSTANDING NONQUALIFIED STOCK OPTIONS AS OF JULY 22, 1997
----------------------------------------------------------
------------------------------------------------------------------------------------------------
NO. OF SHARES OF LAST DAY TO
COMMON STOCK OPTION PRICE EXERCISE STOCK
DATE OF GRANT SUBJECT TO STOCK OPTION OPTION
------------------------------------------------------------------------------------------------
January 27, 1994 89,000 $54.375 July 31, 2000
------------------------------------------------------------------------------------------------
January 26, 1995 89,000 $52.000 July 31, 2000
------------------------------------------------------------------------------------------------
January 25, 1996 66,000 $71.000 July 31, 2000
------------------------------------------------------------------------------------------------
January 23, 1997 54,000 $82.375 July 31, 2000
------------------------------------------------------------------------------------------------
298,000
------------------------------------------------------------------------------------------------
2. RESTRICTED STOCK AWARD
----------------------
------------------------------------------------------------------------------
Date of Grant No. of Shares Granted
------------------------------------------------------------------------------
January 26, 1995 7,500*
------------------------------------------------------------------------------
* plus 50.47 shares from reinvested dividends as of June 30, 1997
<PAGE> 33
SCHEDULE 3C
DELTA'S EXISTING QUALIFIED AND NONQUALIFIED RETIREMENT PLANS
(All AS AMENDED THROUGH JULY 31, 1997)
------------------------------------------------------------
1. Delta Family-Care Retirement Plan.
2. 1991 Delta Excess Benefit Plan.
3. Delta Supplemental Excess Benefit Plan.
4. Excess Benefit Agreement executed in conjunction with the 1991 Delta
Excess Benefit Plan and the Delta Supplemental Excess Benefit Plan.
<PAGE> 34
SCHEDULE 3D
LIFE INSURANCE, SURVIVOR, MEDICAL AND DENTAL BENEFITS
-----------------------------------------------------
1. Delta Family-Care Disability and Survivorship Plan.
2. Delta Family-Care Medical Plan.
3. Officers Life Insurance Program.
4. $40,000 Supplemental Lump Sum Death Benefit.
5. Delta Supplemental Excess Benefit Plan.
6. Excess Benefit Agreement executed in conjunction with the 1991 Delta
Excess Benefit Plan and the Delta Supplemental Excess Benefit Plan.
7. 1991 Delta Excess Benefit Plan.
<PAGE> 35
SCHEDULE 3F
-----------
THE MONARCH TOWER OFFICE BUILDING
3424 Peachtree Road, N.E.
Atlanta, Georgia 30326
LEASE AGREEMENT
by and between
KNICKERBOCKER MONARCH ASSOCIATES, L.P.
("Landlord")
and
DELTA AIR LINES, INC.
("Tenant")
dated
July __, 1997
for
Suite Number 1745
containing
2,090 square feet of Rentable Floor Area
Term: 120 months
<PAGE> 36
TABLE OF CONTENTS
PAGE
1. Certain Definitions....................................... 1
2. Lease of Premises......................................... 1
3. Term...................................................... 2
4. Possession................................................ 2
5. Rental Payments........................................... 2
6. Base Rental............................................... 2
7. Rental Adjustment......................................... 2
8. Additional Rental......................................... 3
9. Operating Expenses........................................ 3
10. Tenant Taxes.............................................. 5
11. Payments.................................................. 5
12. Late Charges.............................................. 5
13. Use Rules................................................. 5
14. Alterations............................................... 5
15. Repairs................................................... 6
16. Landlord's Right of Entry................................. 6
17. Insurance................................................. 6
18. Waiver of Subrogation..................................... 6
19. Default................................................... 6
20. Waiver of Breach.......................................... 7
21. Assignment and Subletting................................. 7
22. Destruction............................................... 8
23. Landlord's Lien........................................... 8
24. Services by Landlord...................................... 9
25. Attorneys' Fees and Homestead............................. 9
26. Time...................................................... 9
27. Subordination and Attornment.............................. 9
28. Estoppel Certificates..................................... 9
29. No Estate................................................. 9
30. Cumulative Rights......................................... 10
31. Holding Over.............................................. 10
32. Surrender of Premises..................................... 10
33. Notices................................................... 10
34. Damage or Theft of Personal Property...................... 10
35. Eminent Domain............................................ 10
36. Parties................................................... 11
37. Liability of Tenant....................................... 11
38. Relocation of the Premises................................ 11
39. Force Majeure............................................. 11
40. Landlord's Liability...................................... 11
41. Landlord's Covenant of Quiet Enjoyment.................... 11
42. Security Deposits......................................... 12
43. Hazardous Substances...................................... 12
44. Submission of Lease....................................... 12
45. Severability.............................................. 12
46. Entire Agreement.......................................... 12
47. Headings.................................................. 12
48. Broker.................................................... 12
49. Governing Law............................................. 13
50. Authority................................................. 13
51. Joint and Several Liability............................... 13
52. Special Stipulations...................................... 13
Rules and Regulations
Exhibit "A" - Legal Description
Exhibit "B" - Floor Plan
Exhibit "C" - Supplemental Notice
Exhibit "D" - Landlord's Construction
Exhibit "E" - Building Standard Services
Exhibit "F" - Guaranty
Exhibit "G" - Special Stipulations
<PAGE> 37
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT ("Lease") is made and entered into this ___ day
of July, 1997, by and between Landlord and Tenant.
W I T N E S S E T H:
-------------------
1. CERTAIN DEFINITIONS. For purposes of this Lease, the following terms
shall have the meanings hereinafter ascribed thereto:
(a) LANDLORD: KNICKERBOCKER MONARCH ASSOCIATES, L.P.
(b) LANDLORD'S ADDRESS:
ERE Yarmouth
3424 Peachtree Road
Suite 800
Atlanta, Georgia 30326
(c) TENANT: DELTA AIR LINES, INC.
(d) TENANT'S ADDRESS:
-----------------------------------
------------------------------------
------------------------------------
------------------------------------
(e) BUILDING ADDRESS:
3424 Peachtree Road, N.E.
Atlanta, Georgia 30326
(f) SUITE NUMBER: 1745
(g) RENTABLE FLOOR AREA OF DEMISED PREMISES:
2,090 square feet. Landlord and Tenant agree that when the
tenant improvements to the Demised Premises are completed, Landlord or Tenant
may have the same remeasured by a firm reasonably acceptable to Landlord. If
the measurement proves the Demised Premises contain more or less than 2,090
rentable square feet, Landlord and Tenant agree to modify this Lease to reflect
the accurate amount of rentable square feet and correct the associated
calculations hereunder which are based on rentable square feet provided that
such remeasurement shall not affect or impact the conversion factor used to
calculate usable square feet within the Demised Premises or the Building.
(h) RENTABLE FLOOR AREA OF BUILDING:
Approximately 521,408 rentable square feet, subject to final
determination by Landlord.
(i) LEASE TERM: 120 months.
(j) BASE RENTAL RATE: $32.50 per square foot of Rentable Floor
Area of Demised Premises per year for years 1-5. $37.50 per square foot of
Rentable Floor Area of Demised Premises per year for years 6-10.
(k) RENTAL COMMENCEMENT DATE: The earlier of (x) September 1,
1997, or (y) the date upon which Tenant takes possession and occupies the
Demised Premises; provided that if the Demised Premises are not ready for
occupancy on the date set forth in (x) above due to delays not caused by Tenant
or its employees, agents or contractors, then the date set forth in (x) above
shall be postponed to the date on which the Demised Premises are ready for
occupancy.
(l) TENANT IMPROVEMENT ALLOWANCE: $62,700.00.
(m) SECURITY DEPOSITS:
(i) $5,660.42 [Article 42(a)].
(ii) $0 [Article 42(b)].
(n) BROKER(S): NONE [NONE, if no name is inserted.]
2. LEASE OF PREMISES. Landlord, in consideration of the covenants and
agreements to be performed by Tenant, and upon the terms and conditions
hereinafter stated, does hereby rent and lease unto Tenant, and Tenant does
hereby rent and lease from Landlord, certain premises (the "Demised Premises")
in the building (the "Building") located on that certain tract of land (the
"Land") more particularly described on Exhibit "A" attached hereto and by this
reference made a part hereof, which Demised Premises are outlined in red or
cross- hatched on the floor plan attached hereto as Exhibit "B" and by this
reference made a part hereof, with no easement for light, view or air included
in the Demised Premises or being granted hereunder. The
<PAGE> 38
"Project" is comprised of the Building, the Land, the Building's parking
facilities, any walkways, covered walkways, tunnels or other means of access to
the Building and the Building's parking facilities, all common areas, including
any lobbies or plazas, and any other improvements or landscaping on the Land.
3. TERM. The term of this Lease (the "Lease Term") shall commence on the
date first hereinabove set forth (the "Term Commencement Date"), and, unless
sooner terminated as provided in this Lease, shall end on the expiration of the
period designated in Article 1(i) above, which period shall commence on the
Rental Commencement Date, unless the Rental Commencement Date shall be other
than the first day of a calendar month, in which event such period shall
commence on the first day of the calendar month following the month in which
the Rental Commencement Date occurs. Promptly after the Rental Commencement
Date, Landlord or Landlord's agent shall send to Tenant a Supplemental Notice
in the form of Exhibit "C" attached hereto and by this reference made a part
hereof, specifying the Rental Commencement Date, the date of expiration of the
Lease Term in accordance with Article 1(i) above and certain other matters as
therein set forth.
4. POSSESSION. The obligations of Landlord and Tenant with respect to the
initial leasehold improvements to the Demised Premises are set forth in Exhibit
"D" attached hereto and by this reference made a part hereof. Taking of
possession by Tenant shall be deemed conclusively to establish that Landlord's
construction obligations with respect to the Demised Premises have been
completed in accordance with the plans and specifications approved by Landlord
and Tenant and that the Demised Premises, to the extent of Landlord's
construction obligations with respect thereto, are in good and satisfactory
condition.
5. RENTAL PAYMENTS.
(a) Commencing on the Rental Commencement Date, and continuing
thereafter throughout the Lease Term, Tenant hereby agrees to pay all Rent due
and payable under this Lease. As used in this Lease, the Term "Rent" shall mean
the Base Rental, Rental Adjustment, Tenant's Forecast Additional Rental,
Tenant's Additional Rental, and any other amounts that Tenant assumes or agrees
to pay under the provisions of this Lease that are owed to Landlord, including,
without limitation, any and all other sums that may become due by reason of any
default of Tenant or failure on Tenant's part to comply with the agreements,
terms, covenants and conditions of this Lease to be performed by Tenant. Base
Rental, together with Tenant's Forecast Additional Rental, shall be due and
payable in twelve (12) equal installments on the first day of each calendar
month, commencing on the Rental Commencement Date and continuing thereafter
throughout the Lease Term and any extensions or renewals thereof. Tenant hereby
agrees to pay such Rent to Landlord at Landlord's address as provided herein
(or such other address as may be designated by Landlord from time to time)
monthly in advance. Tenant shall pay all Rent and other sums of money as shall
become due from and payable by Tenant to Landlord under this Lease at the times
and in the manner provided in this Lease, without demand, set-off or
counterclaim.
(b) If the Rental Commencement Date is other than the first day of a
calendar month or if this Lease terminates on a day other than the last day of
a calendar month, then the installments of Base Rental and Tenant's Forecast
Additional Rental for such month or months shall be prorated on a daily basis
and the installment or installments so prorated shall be paid in advance. Also,
if the Rental Commencement Date occurs on a day other than the first day of a
calendar year, or if this Lease expires or is terminated on a day other than
the last day of a calendar year, Tenant's Additional Rental shall be prorated
for such commencement or termination year, as the case may be, by multiplying
such Tenant's Additional Rental by a fraction, the numerator of which shall be
the number of days of the Lease Term (from and after the Rental Commencement
Date) during the commencement or expiration or termination year, as the case
may be, and the denominator of which shall be 365, and the calculation
described in Article 8 hereof shall be made as soon as possible after the
expiration or termination of this Lease, Landlord and Tenant hereby agreeing
that the provisions relating to said calculation shall survive the expiration
or termination of this Lease.
6. BASE RENTAL. From and after the Rental Commencement Date, Tenant shall
pay to Landlord a base annual rental (herein called "Base Rental") equal to the
Base Rental Rate set forth in Article 1(j) above multiplied by the Rentable
Floor Area of the Demised Premises as set forth in Article 1(g) above.
7. RENTAL ADJUSTMENT.
(a) Tenant shall pay to Landlord as additional rental a rental
adjustment (the "Rental Adjustment") which shall be determined as of the first
anniversary of the Rental Commencement Date and as of each January 1 thereafter
during the Lease Term in the manner hereinafter provided (each such date being
hereinafter in this Article 7 called an "Adjustment Date", and each period of
time from any given Adjustment Date through the day before the next succeeding
Adjustment Date being herein called an "Adjustment Period"). Each such Rental
Adjustment shall be payable in monthly installments in advance on the first day
of every such calendar month during the Adjustment Period for which such Rental
Adjustment was determined. A prorated monthly installment, based on the number
of days in the partial month, shall be paid for any fraction of a month if the
Rental Commencement Date falls on any day other than the first day of a
calendar month, or if the Lease Term is terminated or expires on any other day
than the last day of a calendar month. Landlord shall use reasonable efforts to
notify Tenant in writing of the monthly amount of the Rental Adjustment for
each Adjustment Period at least ten (10) days prior to the date on which the
first installment of such Rental Adjustment is due and payable, or as soon
thereafter as is practicable. Failure by Landlord to notify Tenant of the
monthly amount of such Rental Adjustment shall not prejudice Landlord's right
to collect the full amount of such Rental Adjustment, nor shall Landlord be
deemed to have forfeited or surrendered its rights to collect such Rental
Adjustment which may have become due pursuant to this Article 7, and Tenant
agrees to pay upon demand all accrued but unpaid Rental Adjustment.
(b) For each Adjustment Period, each monthly installment of the
Rental Adjustment shall be an amount equal to one-twelfth (1/12th) of the
product of: (i) the annual Base Rental set forth in Article 6 hereof,
multiplied by (ii) the "percentage increase" (as hereinafter defined), if any,
in the "Index" (as hereinafter defined), as such percentage increase is
determined with respect to the Adjustment Date beginning such Adjustment
Period.
(c) For purposes of Articles 7(a) and (b) above, the "percentage
increase," if any, in the Index for each Adjustment Date shall mean and equal
the quotient (expressed as a decimal) determined by dividing (i) the difference
obtained by subtracting the Index for the calendar month in which the Rental
Commencement Date falls from the Index for the calendar month of October
immediately preceding the Adjustment Date in question [if the difference so
obtained is negative, then this factor (i) shall be deemed to be zero], by (ii)
the Index for the calendar month in which the Rental Commencement Date falls.
2
<PAGE> 39
(d) The term "Index" as used in Articles 7(b) and (c) above shall mean
the Consumer Price Index for All Urban Consumers, U.S. City Average, All Items
(1982-84=100), published by the Bureau of Labor Statistics of the United States
Department of Labor. If the Bureau of Labor Statistics should discontinue the
publication of the Index, or publish the same less frequently, or alter the
same in some manner, then Landlord shall adopt a substitute Index or substitute
procedure which reasonably reflects and monitors consumer prices.
(e) Nothing contained in this Article 7 shall be construed at any time
so to reduce the monthly installments of Base Rental payable hereunder below
the amount set forth in Article 6 of this Lease. Notwithstanding anything
contained in this Lease to the contrary, it is agreed that (i) the Rental
Adjustment for any given Adjustment Period shall not be less than the Rental
Adjustment for the immediately preceding Adjustment Period, and (ii) Tenant's
payments pursuant to this Article 7 shall not be deemed payments of rent as
that term is construed relative to governmental wage and price controls or
analogous governmental actions affecting the amount of rent which Landlord may
charge Tenant.
8. ADDITIONAL RENTAL.
(a) For purposes of this Lease, "Tenant's Forecast Additional Rental"
shall mean Landlord's reasonable estimate of Tenant's Additional Rental for
each calendar year or portion thereof during the Lease Term. If at any time it
appears to Landlord that Tenant's Additional Rental for the current calendar
year then at hand will vary from Landlord's estimate, Landlord shall have the
right to revise, by notice to Tenant, its estimate for such year, and
subsequent payments by Tenant for such year shall be based upon such revised
estimate of Tenant's Additional Rental. Failure to make a revision contemplated
by the immediately preceding sentence shall not prejudice Landlord's right to
collect the full amount of Tenant's Additional Rental. Prior to the first day
of January immediately following the expiration of the Base Year, and
thereafter prior to the beginning of each calendar year during the Lease Term,
including any extensions or renewals thereof, Landlord shall present to Tenant
a statement of Tenant's Forecast Additional Rental for such calendar year;
provided, however, that if such statement is not given prior to the beginning
of any calendar year as aforesaid, Tenant shall continue to pay during the next
ensuing calendar year on the basis of the amount of Tenant's Forecast
Additional Rental payable during the calendar year just ended until the month
after such statement is delivered to Tenant.
(b) For purposes of this Lease, "Tenant's Additional Rental" shall
mean for each calendar year (or portion thereof) during the Lease Term the
excess of (x) the Operating Expense Amount (defined below) multiplied by the
number of square feet of Rentable Floor Area of the Demised Premises, over (y)
the Base Operating Expenses (defined below) multiplied by the number of square
feet of Rentable Floor Area of the Demised Premises. As used herein, "Operating
Expense Amount" shall mean the amount of Operating Expenses (as defined below)
for such calendar year divided by the greater of (i) ninety-five percent (95%)
of the number of square feet of Rentable Floor Area of the Building, or (ii)
the total number of square feet of Rentable Floor Area occupied in the Building
for such calendar year on an average annualized basis; provided, however, if
the amount is calculated under (i) above, the Operating Expenses actually
incurred with respect to such calendar year shall be adjusted to reflect the
amount of Operating Expenses which would have been incurred if the Building
were ninety-five percent (95%) occupied throughout such calendar year. As used
herein, the term "Base Operating Expenses" shall mean the Operating Expenses
paid or incurred by Landlord in the Base Year (as hereinafter defined) as if
the Building was ninety-five percent (95%) occupied throughout the Base Year,
divided by ninety-five (95%) of the number of square feet of Rentable Floor
Area of the Building. If the Building was not ninety-five percent (95%)
occupied throughout the Base Year, then the Base Operating Expenses shall be an
amount which fairly reflects what the Operating Expenses would have been in the
Base Year had the Building been ninety-five percent (95%) occupied throughout
the Base Year, as determined by Landlord in its reasonable opinion. As used
herein, "Base Year" shall mean calendar year 1997.
(c) Within one hundred fifty (150) days after the end of the calendar
year in which the Rental Commencement Date occurs and of each calendar year
thereafter during the Lease Term, or as soon thereafter as practicable,
Landlord shall provide Tenant a statement showing the Operating Expenses for
said calendar year, as prepared by an authorized representative of Landlord,
and a statement prepared by Landlord comparing Tenant's Forecast Additional
Rental with Tenant's Additional Rental. In the event Tenant's Forecast
Additional Rental exceeds Tenant's Additional Rental for said calendar year,
Landlord shall credit such amount against the Forecast Additional Rental next
due hereunder or, if the Lease Term has expired or is about to expire, refund
such excess to Tenant if Tenant is not in default under this Lease (in the
instance of a default, such excess shall be held as additional security for
Tenant's performance, may be applied by Landlord to cure any such default, and
shall not be refunded until any such default is cured). In the event that the
Tenant's Additional Rental exceeds Tenant's Forecast Additional Rental for said
calendar year, Tenant shall pay Landlord, within thirty (30) days of receipt of
the statement, an amount equal to such difference. The provisions of this Lease
concerning the payment of Tenant's Additional Rental shall survive the
expiration or earlier termination of this Lease.
(d) Landlord's books and records pertaining to the calculation of
Operating Expenses for any calendar year within the Lease Term may be audited
by Tenant or its representatives at Landlord's office where Operating Expense
records are kept, at Tenant's expense, at any time within ninety (90) days
after the Landlord's annual statement is delivered to Tenant for such calendar
year; provided that Tenant shall give Landlord not less than thirty (30) days
prior written notice of any such audit. If Landlord's calculations of Tenant's
Additional Rental for the audited calendar year was incorrect, then Tenant
shall be entitled to a prompt refund of any overpayment or Tenant shall
promptly pay to Landlord the amount of any underpayment, as the case may be.
9. OPERATING EXPENSES.
(a) For the purposes of this Lease, "Operating Expenses" shall mean
all expenses, costs and disbursements (but not specific costs billed to
specific tenants of the Building) of every kind and nature, computed on an
accrual basis, relating to or incurred or paid in connection with the
ownership, management, operation, repair and maintenance of the Project,
including, but not limited to, the following:
(1) wages, salaries and other costs of all on-site and off-site
employees engaged either in full or part time in the operation, management,
maintenance or access control of the Project, including taxes, insurance
and benefits relating to such employees, allocated based upon the time such
employees are engaged directly in providing services;
(2) the cost of all supplies, tools, equipment and materials
used in the operation, management, maintenance and access control of the
Project;
3
<PAGE> 40
(3) the cost of all utilities for the Project, including but not
limited to the cost of electricity, gas, water, sewer services and power
for heating, lighting, air conditioning and ventilating;
(4) the cost of all maintenance and service agreements for the
Project and the equipment therein, including, but not limited to,
security service, garage operators, window cleaning, elevator maintenance,
HVAC maintenance, janitorial service, landscaping maintenance and
customary landscaping replacement;
(5) the cost of inspections, repairs and general maintenance of
the Project;
(6) amortization (together with reasonable financing charges,
whether or not actually incurred) of the costs of acquisition and/or
installation of capital investment items (including security equipment),
amortized over their respective useful lives, which are installed for the
purpose of reducing operating expenses, promoting safety, complying with
governmental requirements, or maintaining the first-class nature of the
Project;
(7) the cost of casualty, rental loss, liability and other
insurance applicable to the Project and Landlord's personal property
used in connection therewith;
(8) the cost of trash and garbage removal, vermin extermination,
and snow, ice and debris removal;
(9) the cost of legal and accounting services incurred by Landlord
in connection with the management, maintenance, operation and repair of
the Project, excluding the owner's or Landlord's general accounting, such
as partnership statements and tax returns, and excluding services
described in Article 9(b)(14) below;
(10) all taxes, assessments and governmental charges, whether or
not directly paid by Landlord, whether federal, state, county or municipal
and whether they be by taxing districts or authorities presently taxing
the Project or by others subsequently created or otherwise, and any other
taxes and assessments attributable to the Project or its operation (and
the costs of monitoring and contesting any of the same), including
business license taxes and fees (all of the foregoing are herein sometimes
collectively referred to as "Taxes"), excluding, however, taxes and
assessments imposed on the personal property of the tenants of the
Project, federal and state taxes on income, death taxes, franchise taxes,
and any taxes (other than business license taxes and fees) imposed or
measured on or by the income of Landlord from the operation of the
Project; provided, however, that if any time during the Lease Term, the
present method of taxation or assessment shall be so changed that the
whole or any part of the taxes, assessments, levies, impositions or
charges now levied, assessed or imposed on real estate and the
improvements thereon shall be discontinued and as a substitute therefor,
or in lieu of or in addition thereto, taxes, assessments, levies,
impositions or charges shall be levied, assessed and/or imposed wholly or
partially as a capital levy or otherwise on the rents received from the
Project or the rents reserved herein or any part thereof, then such
substitute or additional taxes, assessments, levies, impositions or
charges, to the extent so levied, assessed or imposed, shall be deemed to
be included within the Operating Expenses to the extent that such
substitute or additional tax would be payable if the Project were the only
property of the Landlord subject to such tax; and it is agreed that Tenant
will be responsible for ad valorem taxes on its personal property and on
the value of the leasehold improvements in the Demised Premises to the
extent that the same exceed building standard allowances, if said taxes
are based upon an assessment which includes the cost of such leasehold
improvements in excess of building standard allowances (and if the taxing
authorities do not separately assess Tenant's leasehold improvements,
Landlord may make an appropriate allocation of the ad valorem taxes
allocated to the Project to give effect to this sentence);
(11) the cost of operating the management office for the Project,
including cost of office supplies, telephone expenses and non-capital
investment equipment and amortization (together with reasonable financing
charges) of the cost of capital investment equipment; and
(12) management fees.
Tenant acknowledges that the Project is part of a development, which
will or may include other improvements and that certain of the costs of
management, operation and maintenance of the development shall, from time
to time, be allocated among and shared by two or more of the improvements
in the development (including the Project). The determination of such
costs and their allocation shall be made by Landlord in its sole but
reasonable discretion. In addition, Landlord reserves the right to
recompute and adjust the base year of any component of Operating Expenses
at any time during the Lease Term as a result of any reallocation within
the Project. Accordingly, the term "Operating Expenses" as used in this
Lease shall, from time to time, include some costs, expenses and taxes
enumerated above which were incurred with respect to other improvements in
the development but which were allocated to and share by the Project in
accordance with the foregoing. Notwithstanding the foregoing, Tenant
understands and agrees that its right to use other portions of the
development of which the Project is a part are those available to the
general public and that this Lease does not grant to Tenant additional
rights of use.
(b) For purposes of this Lease, and notwithstanding anything in any
other provision of this Lease to the contrary, "Operating Expenses" shall not
include the following:
(1) the cost of any special work or service performed for any
tenant (including Tenant) at such tenant's cost;
(2) the cost of installing, operating and maintaining any
specialty service, such as an observatory, broadcasting facility, luncheon
club, restaurant, cafeteria, retail store, sundry shop, newsstand, or
concession, but only to the extent such costs exceed those which would
normally be expected to be incurred had such space been general office
space.
(3) the cost of correcting defects in construction;
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(4) compensation paid to officers and executives of Landlord (but
it is understood that the on-site general manager and other on-site
employees below the grade of general manager may carry a title such as
vice president and the salaries and related benefits of these
officers/employees of Landlord would be allowable Operating Expenses under
Article 9[a][1] above);
(5) the cost of any items for which Landlord is reimbursed by
insurance, condemnation or otherwise, except for costs reimbursed
pursuant to the provisions similar to Articles 8 and 9 hereof;
(6) the cost of any additions, changes, replacements and other
items which are made in order to prepare for a new tenant's occupancy;
(7) the cost of repairs incurred by reason of fire or other
casualty;
(8) insurance premiums to the extent Landlord may be directly
reimbursed therefor, except for premiums reimbursed pursuant to
provisions similar to Articles 8 and 9 hereof;
(9) interest on debt or amortization payments on any mortgage or
deed to secure debt (except to the extent specifically permitted by
Article 9[a]) and rental under any ground lease or other underlying lease;
(10) any real estate brokerage commissions or other costs
incurred in procuring tenants or any fee in lieu of such commission;
(11) any advertising expenses incurred in connection with the
marketing of any rentable space;
(12) rental payments for base building equipment such as HVAC
equipment and elevators;
(13) any expenses for repairs or maintenance which are covered by
warranties and service contracts, to the extent that such maintenance
and repairs are made at no cost to the Landlord; and
(14) legal expenses arising out of the construction of the
improvements on the Land or the enforcement of the provisions of any
lease affecting the Land or Building, including without limitation this
Lease.
10. TENANT TAXES. Tenant shall pay promptly when due all taxes
directly or indirectly imposed or assessed upon Tenant's gross sales, business
operations, machinery, equipment, trade fixtures and other personal property or
assets, whether such taxes are assessed against Tenant, Landlord or the
Building. In the event that such taxes are imposed or assessed against Landlord
or the Building, Landlord shall furnish Tenant with all applicable tax bills,
public charges and other assessments or impositions and Tenant shall forthwith
pay the same either directly to the taxing authority or, at Landlord's option,
to Landlord.
11. PAYMENTS. All payments of Rent and other payments to be made to
Landlord shall be made on a timely basis and shall be payable to Landlord or as
Landlord may otherwise designate. All such payment shall be mailed or delivered
to Landlord's Address designated in Article 1(b) above or at such other place
as Landlord may designate from time to time in writing. If mailed, all payments
shall be mailed in sufficient time and with adequate postage thereon to be
received in Landlord's account by no later than the due date for such payment.
Tenant agrees to pay to Landlord Fifty Dollars ($50.00) for each check
presented to Landlord in payment of any obligation of Tenant which is not paid
by the bank on which it is drawn, together with interest from and after the due
date for such payment at the rate of eighteen percent (18%) per annum on amount
due.
12. LATE CHARGES. Any rent or other amounts payable to Landlord under
this Lease, if not paid by the fifth day of the month for which such Rent is
due, or by the due date specified on any invoices from Landlord for any other
amounts payable hereunder, shall incur a late charge of Fifty Dollars ($50.00)
for Landlord's administrative expense in processing such delinquent payment and
in addition thereto shall bear interest at the rate of eighteen percent (18%)
per annum from and after the due date for such payment. Notwithstanding
anything to the contrary contained in this Lease, in no event shall the rate of
interest payable on any amount due under this Lease exceed the legal limits for
such interest enforceable under applicable law.
13. USE RULES. The Demised Premises shall be used for executive,
general administrative and office space purposes and no other purposes and in
accordance with all applicable laws, ordinances, rules and regulations of
governmental authorities and the Rules and Regulations attached hereto and made
a part hereof. Tenant covenants and agrees that it will, at its expense, comply
with all laws, ordinances, orders, directions, requirements, rules and
regulations of all governmental authorities (including Federal, State, county
and municipal authorities), now in force or which may hereafter be in force,
which shall impose any duty upon Landlord or Tenant with respect to the use,
occupancy or alteration of the Demised Premises, and of all insurance bodies
applicable to the Demised Premises or to the Tenant's use or occupancy thereof.
Tenant covenants and agrees to abide by the Rules and Regulations in all
respects as now set forth and attached hereto or as hereafter promulgated by
Landlord. Landlord shall have the right at all times during the Lease Term to
publish and promulgate and thereafter enforce such rules and regulations or
changes in the existing Rules and Regulations as it my reasonably deem
necessary in its sole discretion to protect the tenantability, safety,
operation, and welfare of the Demised Premises and the Project.
14. ALTERATIONS. Except for any initial improvement of the Demised
pursuant to Exhibit "D", which shall be governed by the provisions of said
Exhibit "D", Tenant shall not make, suffer or permit to be made any
alterations, additions or improvements to or of the Demised Premises or any
party thereof, or any fixtures or equipment thereto, without first obtaining
Landlord's written consent. With respect to any alteration, addition or
improvement which does not affect the structure of the Building, does not
affect any of the Building's systems (e.g., mechanical, electrical or
plumbing), does not diminish the capacity of such Building systems available to
other portions of the Building, is not visible from the common areas or
exterior of the Building, and is in full compliance with all laws, orders,
ordinances, directions, requirements, rules and regulations of all governmental
authorities. Landlord's consent shall not be unreasonably withheld. Any such
alterations, additions or improvements to the Demised Premises consented to by
Landlord shall be made by Landlord or under Landlord's supervision for Tenant's
account and Tenant shall reimburse Landlord for all costs thereof (including a
reasonable charge for Landlord's overhead), as Rent, within ten (10) days after
receipt of a statement. All such alterations, additions, and improvements shall
become Landlord's property at the expiration or earlier termination of the
Lease Term and shall remain on the Demised Premises without compensation to
Tenant unless Landlord elects by notice to Tenant to have Tenant remove such
alterations, additions and improvements, in which event,
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notwithstanding any contrary provisions respecting such alterations, additions
and improvements contained in Article 32 hereof, Tenant shall promptly restore,
at its sole cost and expense, the Demised Premises to its condition prior to
the installation of such alterations, additions and improvements, normal wear
and tear excepted.
15. REPAIRS.
(a) Landlord shall maintain in good order and repair, subject to
normal wear and tear and subject to casualty and condemnation, the Building
(excluding the Demised Premises and other portions of the Building leased to
other tenants), the Building parking facilities, the public areas and the
landscaped areas. Notwithstanding the foregoing obligation, the cost of any
repairs or maintenance to the foregoing necessitated by the intentional acts or
negligence of Tenant or its agents, contractors, employees, invitees,
licensees, tenants or assigns, shall be borne solely by Tenant and shall be
deemed Rent hereunder and shall be reimbursed by Tenant to Landlord upon
demand. Landlord shall not be required to make any repairs or improvements to
the Demised Premises except structural repairs necessary for safety and
tenantability.
(b) Tenant covenants and agrees that it will take good care of the
Demised Premises and all alterations, additions and improvements thereto and
will keep and maintain the same in good condition and repair, except for normal
wear and tear. Tenant shall at once report, in writing, to Landlord any
defective or dangerous condition known to Tenant. To the fullest extent
permitted by law, Tenant hereby waives all rights to make repairs at the
expense of Landlord or in lieu thereof to vacate the Demised Premises as may be
provided by any law, statute or ordinance now or hereafter in effect. Landlord
has no obligation and has made no promise to alter, remodel, repair, decorate
or paint the Demised Premises or any part thereof, except as specifically and
expressly herein set forth.
16. LANDLORD'S RIGHT OF ENTRY. Landlord shall retain duplicate keys to
all doors of the Demised Premises and Landlord and its agents, employees and
independent contractors shall have the right to enter the Demised Premises at
reasonable hours to inspect and examine same, to make repairs, additions,
alterations and improvements, to exhibit the Demised Premises to mortgagees,
prospective mortgagees, purchasers or tenants, and to inspect the Demised
Premises to ascertain that Tenant is complying with all of its covenants and
obligations hereunder, all without being liable to Tenant in any manner
whatsoever for any damages arising therefrom; provided, however, that Landlord
shall, except in case of emergency, afford Tenant such prior notification of an
entry into the Demised Premises as shall be reasonably practicable under the
circumstances. Landlord shall be allowed to take into and through the Demised
Premises any and all materials that may be required to make such repairs,
additions, alterations or improvements. During such time as such work is being
carried on, in or about the Demised Premises, the Rent provided herein shall
not abate, and Tenant waives any claim or cause of action against Landlord for
damages by reason of interruption of Tenant's business or loss of profits
therefrom because of the prosecution of any such work or any part thereof.
17. INSURANCE. Tenant shall procure at its expense and maintain
throughout the Lease Term a policy or policies of commercial property
insurance, issued on an "all risks" basis insuring the full replacement cost of
its furniture, equipment, supplies and other property owned, leased, held or
possessed by it and contained in the Demised Premises, together with the excess
value of the improvements to the Demised Premises over the Tenant Improvement
Allowance (with a replacement cost endorsement sufficient to prevent Tenant
from becoming a co-insurer), and workmen's compensation insurance as required
by applicable law. Tenant shall also procure at its expense and maintain
throughout the Lease Term a policy or policies of commercial general liability
insurance, written on an occurrence basis and insuring Tenant, Landlord and any
other person designated by Landlord, against any and all liability for injury
to or death of a person or persons and for damage to property occasioned by or
arising out of any construction work being done on the Demised Premises, or
arising out of the condition, use or occupancy of the Demised Premises, or in
any way occasioned by or arising out of the activities of Tenant, its agents,
contractors, employees, guests or licensees in the Demised Premises, or other
portions of the Building or the Project, the limits of such policy or policies
to be in combined single limits for both damage to property and personal injury
and in amounts not less than Three Million Dollars ($3,000,000.00) for each
occurrence. Such insurance shall, in addition, extend to any liability of
Tenant arising out of the indemnities provided for in this Lease. Tenant shall
also carry such other types of insurance in form and amount which Landlord
shall reasonably deem to be prudent for Tenant to carry, should the
circumstances or conditions so merit Tenant carrying such type of insurance.
All insurance policies procured and maintained by Tenant pursuant to this
Article 17 shall name Landlord and any additional parties designated by
Landlord as additional insured, shall be carried with companies licensed to do
business in the State of Georgia reasonably satisfactory to Landlord and shall
be non-cancelable and not subject to material change except after twenty (20)
days' written notice to Landlord. Such policies or duly executed certificates
of insurance with respect thereto, accompanied by proof of payment of the
premium therefor, shall be delivered to Landlord prior to the Rental
Commencement Date, and renewals of such policies shall be delivered to Landlord
at least thirty (30) days prior to the expiration of each respective policy
term.
18. WAIVER OF SUBROGATION. Landlord and Tenant shall each have
included in all policies of commercial property insurance, commercial general
liability insurance, and business interruption and other insurance respectively
obtained by them covering the Demised Premises, the Building and contents
therein, a waiver by the insurer of all right of subrogation against the other
in connection with any loss or damage thereby insured against. Any additional
premium for such waiver shall be paid by the primary insured. To the full
extent permitted by law, Landlord and Tenant each waives all right of recovery
against the other for, and agrees to release the other from liability for, loss
or damage to the extent such loss or damage is covered by valid and collectible
insurance in effect at the time of such loss or damage or, in the event of
self-insurance or a failure to insure, would be covered by the insurance
required to be maintained under this Lease by the party seeking recovery.
19. DEFAULT.
(a) The following events shall be deemed to be events of default
by Tenant under this Lease: (i) Tenant shall fail to pay any installment of
Rent or any other charge or assessment against Tenant pursuant to the terms
hereof and such failure shall continue for five (5) days after written notice
of such failure or payment; provided, however, such notice and such grace
period shall be required to be provided by Landlord and shall be accorded
Tenant, if necessary, only two (2) times during any calendar year of the Lease
Term, and an event of default shall be deemed to have immediately occurred upon
the third (3rd) failure by Tenant to make a timely payment as aforesaid within
any calendar of the Lease Term; (ii) Tenant shall fail to comply with any term,
provision, covenant or warranty made under this Lease by Tenant, other than the
payment of the Rent or any other charge or assessment payable by Tenant, and
shall not cure such failure within thirty (30) days after notice thereof to
Tenant; (iii) Tenant or any guarantor of this Lease shall make a general
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts as they become due, or shall file a petition in
bankruptcy, or shall be adjudicated as bankrupt or insolvent, or shall file a
petition in any proceeding seeking any reorganization, arrangement,
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composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or shall file an answer admitting
or fail timely to contest the material allegations of a petition filed against
it in any such proceeding; (iv) a proceeding is commenced against Tenant or any
guarantor of this Lease seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, and such proceeding shall not have been
dismissed within forty-five (45) days after the commencement thereof; (v) a
receiver or trustee shall be appointed for the Demised Premises or for all or
substantially all of the assets of Tenant or of any guarantor of this Lease;
(vi) Tenant shall abandon or vacate all or any portion of the Demised Premises
or fail to take possession thereof as provided in this Lease; (vii) Tenant
shall do or permit to be done anything which creates a lien upon the Demised
Premises or the Project and such lien is not removed or discharged within
fifteen (15) days after the filing thereof; (viii) Tenant shall fail to return
a properly executed instrument to Landlord in accordance with the provisions of
Article 27 hereof within the time period provided for such return following
Landlord's request for same as provided in Article 27; or (ix) Tenant shall
fail to return a properly executed estoppel certificate to Landlord in
accordance with the provisions of Article 28 hereof within the time period
provided for such return following Landlord's request for same as provided in
Article 28, provided, however, if any non-monetary default is not subject to
cure within the allotted time period and Tenant is diligently pursuing the cure
of such default, then Tenant shall have such time (not to exceed forty-five
(45) days) as is reasonably necessary to cure such default.
(b) Upon the occurrence of any of the aforesaid events of default,
Landlord shall have the option to pursue any one or more of the following
remedies without any notice or demand whatsoever: (i) terminate this Lease, in
which event Tenant shall immediately surrender the Demised Premises to Landlord
and if Tenant fails to do so, Landlord may without prejudice to any other
remedy which it may have for possession or arrearages in Rent, enter upon and
take possession of the Demised Premises and expel or remove Tenant and any
other person who may be occupying said Demised Premises or any part thereof, by
force, if necessary, without being liable for prosecution or any claim of
damages therefor; Tenant hereby agreeing to pay to Landlord on demand the
amount of all loss and damage which Landlord may suffer by reason of such
termination, whether through inability to relet the Demised Premises on
satisfactory terms or otherwise; (ii) terminate Tenant's right of possession
(but not this Lease) and enter upon and take possession of the Demised Premises
and expel or remove Tenant and any other person who may be occupying said
Demised Premises or any part thereof, by entry (including the use of force, if
necessary), dispossessory suit or otherwise, without thereby releasing Tenant
from any liability hereunder, without terminating this Lease, and without being
liable for prosecution or any claim of damages therefor and, if Landlord so
elects, make such alterations, redecorations and repairs as, in Landlord's
judgment, may be necessary to relet the Demised Premises, and Landlord may, but
shall be under no obligation to do so, relet the Demised Premises or any
portion thereof in Landlord's or Tenant's name, but for the account of Tenant,
for such term or terms (which may be for a term extending beyond the Lease
Term) and at such rental or rentals and upon such other terms as Landlord may
deem advisable, with or without advertisement, and by private negotiations, and
receive the rent therefor, Tenant hereby agreeing to pay to Landlord the
deficiency, if any, between all Rent reserved hereunder and the total rental
applicable to the Lease Term hereof obtained by Landlord re-letting, and Tenant
shall be liable for Landlord's expenses in redecorating and restoring the
Demised Premises and all costs incident to such re-letting, including broker's
commissions and lease assumptions, and in no event shall Tenant be entitled to
any rentals received by Landlord in excess of the amounts due by Tenant
hereunder; or (iii) enter upon the Demised Premises by force, if necessary,
without being liable for prosecution or any claim of damages therefor, and do
whatever Tenant is obligated to do under the terms of this Lease; and Tenant
agrees to reimburse Landlord on demand for any expenses including, without
limitation, reasonable attorneys' fees which Landlord may incur in thus
effecting compliance with Tenant's obligations under this Lease and Tenant
further agrees that Landlord shall not be liable for any damages resulting to
Tenant from such action, whether caused by negligence of Landlord or otherwise.
If this Lease is terminated by Landlord as a result of the occurrence of an
event of default, Landlord may declare due and payable immediately an amount
determined as follows: (x) the entire amount of Rent and other charges and
assessments which would have become due and payable during the remainder of the
Lease Term (including, without limitation, increases in Rent pursuant to
Article 7 hereof), discounted to present value by using a discount factor of
eight percent (8%) per annum, plus (y) all of Landlord's costs and expenses
(including, without limitation, Landlord's expenses in redecorating and
restoring the Demised Premises and all costs relating to such reletting,
including broker's commissions and lease assumptions) reasonably incurred in
connection with or related to the reletting of the Demised Premises, minus (z)
the market rental value of the Demised Premises for the remainder of the Lease
Term, based on Landlord's reasonable determination of both future rental value
and the probability of reletting the Demised Premises for all or part of the
remaining Term, discounted to present value by using a discount factor of eight
percent (8%) per annum. Such payment shall not constitute a penalty or
forfeiture but shall constitute liquidated damages for Tenant's failure to
comply with the terms and provisions of this Lease (Landlord and Tenant
agreeing that Landlord's exact damages in such event are impossible to
ascertain and that the amount set forth above is a reasonable estimate
thereof). For purposes of determining what could be collected by Landlord by
re-letting under this subsection, Landlord is not required to relet when other
comparable space in the Building is available. The term "remaining Lease Term"
as used in this subsection shall mean the period which otherwise would have
(but for the termination of this Lease) constituted the balance of the Lease
Term from the date of the termination of this Lease.
(c) Pursuit of any of the foregoing remedies shall not preclude
pursuit of any other remedy herein provided or any other remedy provided by law
or at equity, nor shall pursuit of any remedy herein provided constitute an
election of remedies thereby excluding the later election of an alternate
remedy, or a forfeiture or waiver of any Rent or other charges and assessments
payable by Tenant and due to Landlord hereunder or of any damages accruing to
Landlord by reason of violation of any of the terms, covenants, warranties and
provisions herein contained. No reentry or taking possession of the Demised
Premises by Landlord or any other action taken by or on behalf of Landlord
shall be construed to be an acceptance of a surrender of this Lease or an
election by Landlord to terminate this Lease unless written notice of such
intention is given to Tenant. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default. In determining the amount of
loss or damage which Landlord may suffer by reason of termination of this Lease
or the deficiency arising by reason or any reletting of the Demised Premises by
Landlord as above provided, allowance shall be made for the expense of
repossession. Tenant agrees to pay to Landlord all costs and expenses incurred
by Landlord in the enforcement of this Lease, including, without limitation,
the fees of Landlord's attorneys as provided in Article 25 hereof.
20. WAIVER OF BREACH. No waiver of any breach of the covenants,
warranties, agreements, provisions, or conditions contained in this Lease shall
be construed as a waiver of said covenant, warranty, provision, agreement or
condition or of any subsequent breach thereof, and if any breach shall occur
and afterwards be compromised, settled or adjusted, this Lease shall continue
in full force and effect as if no breach had occurred.
21. ASSIGNMENT AND SUBLETTING. Tenant shall not, without the prior
written consent of Landlord, assign this Lease or any interest herein or in the
Demised Premises, or mortgage, pledge, encumber, hypothecate or otherwise
transfer or sublet the Demised Premises or any part thereof or permit the use
of the Demised Premises by any party other than Tenant. Consent to one or more
such transfers or subleases shall not destroy or waive this provision, and all
subsequent transfers and subleases shall likewise be made only upon obtaining
the prior written consent of Landlord. Without limiting
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the foregoing prohibition, in no event shall Tenant assign this Lease or any
interest herein whether directly, indirectly or by operation of law, or sublet
the Demised Premises or any part thereof or permit the use of the Demised
Premises or any part thereof by any party if such proposed assignment,
subletting or use would contravene any restrictive covenant (including any
exclusive use) granted to any other tenant of the Building or would contravene
the provisions of Article 13 of this Lease. Sublessees or transferees of the
Demised Premises for the balance of the Lease Term shall become directly liable
to Landlord for all obligations of Tenant hereunder, without relieving Tenant
(or any guarantor of Tenant's obligations hereunder) of any liability therefor,
and Tenant shall remain obligated for all liability to Landlord arising under
this Lease during the entire remaining Lease Term including any extensions
thereof, whether or not authorized herein. If Tenant is a partnership, a
withdrawal or change, whether voluntary, involuntary or by operation of law, of
partners owning a controlling interest in the Tenant shall be deemed a
voluntary assignment of this Lease and subject to the foregoing provisions. If
Tenant is a corporation, any dissolution, merger, consolidation or other
reorganization of Tenant, or the sale or transfer of a controlling interest in
the capital stock of Tenant, whether in a single transaction or in a series of
transactions, shall be deemed a voluntary assignment of this Lease and subject
to the foregoing provisions. Landlord may, as a prior condition to considering
any request for consent to an assignment or sublease, require Tenant to obtain
and submit current financial statements of any proposed subtenant or assignee
and such other financial documentation relative to the proposed subtenant or
assignee as Landlord may reasonably require. In the event Landlord consents to
an assignment or sublease, Tenant shall pay to Landlord a fee to cover
Landlord's accounting costs plus any legal fees incurred by Landlord as a
result of the assignment or sublease. The consent of Landlord to any proposed
assignment or sublease may be withheld by Landlord in its sole and absolute
discretion. Landlord may require an additional security deposit from the
assignee or subtenant as a condition of its consent. Any consideration, in
excess of the Rent and other charges and sums due and payable by Tenant under
this Lease, paid to Tenant by any assignee of this Lease for its assignment, or
by any sublessee under or in connection with its sublease, or otherwise paid to
Tenant by another party for use and occupancy of the Demised Premises or any
portion thereof, shall be promptly remitted by Tenant to Landlord as additional
rent hereunder and Tenant shall have no right or claim thereto as against
Landlord. No assignment of this Lease consented to by Landlord shall be
effective unless and until Landlord shall receive an original assignment and
assumption agreement, in form and substance satisfactory to Landlord, signed by
Tenant and Tenant's proposed assignee, whereby the assignee assumes due
performance of this Lease to be done and performed for the balance of the then
remaining Lease Term of this Lease. No subletting of the Demised Premises, or
any part thereof, shall be effective unless and until there shall have been
delivered to Landlord an agreement, in form and substance satisfactory to
Landlord, signed by Tenant and the proposed sublessee, whereby the sublessee
acknowledges the right of Landlord to continue or terminate any sublease, in
Landlord's sole discretion, upon termination of this Lease, and such sublessee
agrees to recognize and attorn to Landlord in the event that Landlord elects
under such circumstances to continue such sublease. Upon Landlord's receipt of
a request by Tenant to assign this Lease or any interest herein or in the
Demised Premises or to transfer or sublet the Demised Premises or any part
thereof or permit the use of the Demised Premises by any party other than
Tenant, Landlord shall have the right, at Landlord's option, to exercise in
writing any of the following options: (a) To terminate this Lease as to the
portion of the Demised Premises proposed to be assigned or sublet; (b) to
consent to the proposed assignment or sublease, subject to the other terms and
conditions set forth in this Article 21; or (c) to refuse to consent to the
proposed assignment or sublease, which refusal shall be deemed to have been
exercised unless Landlord gives Tenant written notice providing otherwise.
22. DESTRUCTION.
(a) If the Demises Premises are damaged by fire or other casualty,
the same shall be repaired or rebuilt as speedily as practical under the
circumstances at the expense of Landlord, unless this Lease is terminated as
provided in this Article 22, and during the period required for restoration a
just and proportionate part of Base Rental shall be abated until the Demised
Premises are repaired or rebuilt.
(b) If the Demised Premises are (i) damaged to such an extent that
repairs cannot, in Landlord's judgment, be completed within one hundred eighty
(180) days after the date of the commencement of repair of the casualty, or
(ii) damaged or destroyed as a result of a risk which is not insured under the
insurance policies required hereunder, or (iii) damaged or destroyed during the
last eighteen (18) months of the Lease Term, or (iv) if the Building is damaged
in whole or in part (whether or not the Demised Premises are damaged) to such
an extent that the Building cannot, in Landlord's judgment, be operated
economically as an integral unit, then and in any such event Landlord may at
its option terminate this Lease by notice in writing to Tenant within sixty
(60) days after the day of such occurrence. If the Demised Premises are damaged
to such an extent that repairs cannot, in Landlord's judgment, be completed
within one hundred eighty (180) days after the date of the commencement of
repair of the casualty or if the Demised Premises are substantially damaged
during the last eighteen (18) months of the Lease Term, then in either such
event Tenant may elect to terminate this Lease by notice in writing to Landlord
within fifteen (15) days after the date of such occurrence. Unless Landlord or
Tenant elects to terminate this Lease as hereinabove provided, this Lease will
remain in full force and effect and Landlord shall repair such damage at its
expense to the extent required under subparagraph (c) below as expeditiously as
possible under the circumstances.
(c) If Landlord should elect or be obligated pursuant to
subparagraph (a) above to repair or rebuild because of any damage or
destruction, Landlord's obligation shall be limited to the original Building
and any other work or improvements which were originally performed or installed
at Landlord's expense as described in Exhibit "D" hereto or with the proceed of
the Tenant Improvement Allowance. If the cost of performing such repairs
exceeds the accrual proceeds of insurance paid or payable to Landlord on
account of such casualty, or it Landlord's mortgagee or the lessor under a
ground or underlying lease shall require that any insurance proceeds from a
casualty loss be paid to it, Landlord may terminate this Lease unless Tenant,
within fifteen (15) days after demand therefor, deposits with Landlord a sum of
money sufficient to pay the difference between the cost of repair and the
proceeds of the insurance available to Landlord for such purpose.
(d) In no event shall Landlord be liable for any loss or damage
sustained by Tenant by reason of casualties mentioned hereinabove or any other
accidental casualty.
23. LANDLORD'S LIEN. Landlord shall at all times have a valid first
lien upon all of the personal property of Tenant situated in the Demised
Premises to secure payment of Rent and other sums and charges due hereunder
from Tenant to Landlord and to secure the performance by Tenant of each and all
of the covenants, warranties, agreements and conditions hereof. Said personal
property shall not be removed from the Demised Premises without the consent of
Landlord until all arrearage in Rent and other charges as well as any and all
other sums of money due hereunder shall first have been paid and discharged and
until this Lease and all of the covenants, conditions, agreements and
provisions hereof have been fully performed by Tenant. Tenant shall from time
to time execute any financing statements and other instruments necessary to
perfect the security interest granted herein. The lien herein granted may be
foreclosed in the manner and form provided by law for the foreclosure of
security instruments or chattel mortgages, or in any other manner
8
<PAGE> 45
provided by law. This Lease is intended as and constitutes a security agreement
within the meaning of the Uniform Commercial Code of the State of Georgia.
24. SERVICES BY LANDLORD. Landlord shall provide the Building Standard
Services described on Exhibit "E" attached hereto and by this reference made a
part hereof.
25. ATTORNEYS' FEES AND HOMESTEAD. If any Rent or other debt owing by
Tenant to Landlord hereunder is collected by or through an attorney-at-law,
Tenant agrees to pay an additional amount equal to fifteen percent (15%) of
such sum as attorneys' fees. If Landlord uses the services of any attorney in
order to secure compliance with any other provisions of this Lease to recover
damages for any breach or default of any other provisions of this Lease, or to
terminate this Lease or evict Tenant, Tenant shall reimburse Landlord upon
demand for any and all attorneys' fees and expenses so incurred by Landlord.
Tenant waives all homestead rights and exemptions which it may have under any
law as against any obligation owing under this Lease, and assigns to Landlord
its homestead and exemptions to the extent necessary to secure payment and
performance of its covenants and agreements hereunder.
26. TIME. Time is of the essence of this Lease and whenever a certain
day is stated for payment or performance of any obligation of Tenant or
Landlord, the same enters into and becomes a part of the consideration hereof.
27. SUBORDINATION AND ATTORNMENT.
(a) Tenant agrees that this Lease and all rights of Tenant
hereunder are and shall be subject and subordinate to any ground or underlying
lease which may now or hereafter be in effect regarding the Project or any
component thereof, to any mortgage now or hereafter encumbering the Demised
Premises or the Project or any component thereof, to all advances made or
hereafter to be made upon the security of such mortgage, to all amendments,
modifications, renewals, consolidations, extensions and restatements of such
mortgage, and to any replacements and substitutions for such mortgage. The
terms of this provision shall be self-operative and no further instrument of
subordination shall be required. Tenant, however, upon request of any party in
interest, shall execute promptly such instrument or certificates as may be
reasonably required to carry out the intent hereof, whether said requirement is
that of Landlord or any other party in interest, including, without limitation,
any mortgagee. Landlord is hereby irrevocably vested with full power and
authority as attorney-in-fact for Tenant and in Tenant's name, place and stead,
to subordinate Tenant's interest under this Lease to the lien or security title
of any mortgage and to any future instrument amending, modifying, renewing,
consolidating, extending, restating, replacing or substituting any such
mortgage.
(b) If any mortgagee or lessee under a ground or underlying lease
elects to have this Lease superior to its mortgage or lease and signifies its
election in the instrument creating its lien or lease or by separate recorded
instrument, then this Lease shall be superior to such mortgage or lease, as the
case may be. The term "mortgage", as used in this Lease, includes any deed to
secure debt, deed of trust or security deed and any other instrument creating a
lien in connection with any other method of financing or refinancing. The term
"mortgagee", as used in this Lease, refers to the holder(s) of the indebtedness
secured by a mortgage.
(c) In the event any proceedings are brought for the foreclosure
of, or in the event of exercise of the power of sale under, any mortgage
covering the Demised Premises or the Project, or in the event the interests of
Landlord under this Lease shall be transferred by reason of deed in lieu of
foreclosure or other legal proceedings, or in the event of termination or any
lease under which Landlord may hold title, Tenant shall, at the option of the
transferee or purchaser at foreclosure or under power of sale, or the lessor of
the Landlord upon such lease termination, as the case may be (sometimes
hereinafter called "such person"), attorn to such person and shall recognize
and be bound and obligated hereunder to such person as the Landlord under this
Lease; provided, however, that no such person shall be (i) bound by any payment
of Rent for more than one (1) month in advance, except prepayment in the nature
of security for the performance by Tenant of its obligations under this Lease
(and then only if such prepayments have been deposited with and are under the
control of such person); (ii) bound by any amendment or modification of this
Lease made without the express written consent of the mortgagee or lessor of
the Landlord, as the case may be; (iii) obligated to cure any defaults under
this Lease of any prior landlord (including Landlord); (iv) liable for any act
or omission of any prior landlord (including Landlord); (v) subject to any
offsets or defenses which Tenant might have against any prior landlord
(including Landlord); or (vi) bound by any warranty or representation of any
prior landlord (including Landlord) relating to work performed by any prior
landlord (including Landlord) under this Lease. Tenant agrees to execute any
attornment agreement not in conflict herewith requested by Landlord, the
mortgagee or such person. Tenant's obligation to attorn to such person shall
survive the exercise of any such power of sale, foreclosure or other
proceeding. Tenant agrees that the institution of any suit, action or other
proceeding by any mortgagee to realize on Landlord's interest in the Demised
Premises or the Building pursuant to the powers granted to a mortgagee under
its mortgage, shall not, by operation of law or otherwise, result in the
cancellation or termination of the obligations of Tenant hereunder. Landlord
and Tenant agree that notwithstanding that this Lease is expressly subject and
subordinate to any mortgages, any mortgagee, its successors and assigns, or
other holder of a mortgage or of a note secured thereby, may sell the Demised
Premises or the Building, in the manner provided in the mortgage and may, at
the option of such mortgagee, its successors and assigns, or other holder of
the mortgage or note secured thereby, make such sale of this Demised Premises
or Building subject to this Lease.
28. ESTOPPEL CERTIFICATES. Within ten (10) days after request thereto
by Landlord, Tenant agrees to execute and deliver to Landlord in recordable
form an estoppel certificate addressed to Landlord, any mortgagee or assignee
of Landlord's interest in, or purchaser of, the Demised Premises or the
Building or any part thereof, certifying (if such be the case) that this Lease
is unmodified and is in full force and effect (and if there base been
modifications, that the same is in full force and effect as modified and
stating said modifications); that there are no defenses or offsets against the
enforcement thereof or stating those claimed by Tenant, and stating the date to
which Rent and other ch |
