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Sample Business ContractsHome: Sample Business Contracts:
LEASE MODIFICATION AND EXTENSION AGREEMENT
This Lease Modification and Extension Agreement (the "Agreement") is
made as of the 29th day of June, 2000, by and between DEMOCRACY ASSOCIATES
LIMITED PARTNERSHIP (hereinafter referred to as "Landlord") and e-centives,
Inc. (f/k/a Emaginet, Inc., "Tenant")
WITNESSETH:
WHEREAS, by Lease Agreement dated as of September 23, 1997 (together
with Amendment No. 1, as defined below, the "Lease"), Landlord leased to Tenant
for an initial term of three (3) years 7,596 square feet of Net Rentable Area
located on the twelfth (12th) floor (the "Original Premises") of the fifteen
(15) story office building known as Two Democracy Center having a street address
of 6903 Rockledge Drive, Bethesda, Maryland (the "Building") within an office
complex known as Democracy Center (the "Complex"), as such space is more
particularly described in the Lease; and
WHEREAS, by Amendment No. 1 to Lease Agreement dated as of December
23, 1998 ("Amendment No. 1") Landlord leased to Tenant for the remainder of the
Lease Term an additional 2,437 square feet of Net Rentable Area located on the
twelfth (12th) floor (the "Additional Premises") of the Building, as more
particularly described in Amendment No. 1; and
WHEREAS, Tenant has notified Landlord of its desire (i) to lease
approximately 23,544 square feet of Net Rentable Area on the sixth (6th) floor
of the nine story office building known as One Democracy Center having a street
address of 6901 Rockledge Drive, Bethesda, Maryland ("Building One") (the
"Building One Premises A") as depicted on Exhibit 1 attached hereto and made a
part hereof, on the terms and conditions set forth herein, (ii) to lease
approximately 23,544 square feet of Net Rentable Area on the seventh (7th) floor
of Building One (the "Building One Premises B") as depicted on Exhibit 2
attached hereto and made a part hereof, on the terms and conditions set forth
herein (the Building One Premises A and the Building One Premises B are
sometimes collectively referred to in this Agreement as the "Building One
Premises," (iii) to extend the Lease Term with respect to the Building One
Premises for a term of five (5) years on the terms and conditions set forth
herein, and (iv) to terminate its lease with respect to the Original Premises
and the Additional Premises on the terms and conditions set forth herein; and
WHEREAS, Landlord and Tenant wish to amend the Lease (i) to modify the
description of the premises which are the subject of the Lease, (ii) to extend
the term of the Lease with respect to the Building One Premises on the terms and
conditions set forth herein and (iii) to modify certain other terms and
provisions of the Lease as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant herein agree to
amend the Lease as follows:
1. Defined Terms. Except as otherwise provided herein, the capitalized
terms used herein shall have the same meanings as provided such terms in the
Lease.
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2. The Premises. (a) Commencing on the Extended Lease Term Commencement
Date, as defined in Paragraph 3(a) hereof, the definition of the "Premises" in
the Lease hereby is amended to comprise 47,088 square feet of Net Rentable Area,
consisting of (i) Building One Premises A consisting of approximately 23,544
square feet of Net Rentable Area on the sixth (6th) floor of Building One and
(ii) Building One Premises B 23,544 square feet of Net Rentable Area on the
seventh (7th) floor of Building One. Landlord and Tenant agree that Tenant is
not extending the term of the Lease with respect to the Original Premises or the
Additional Premises. The location and configuration of the Premises commencing
on the Extended Lease Term Commencement Date are outlined in red on Exhibit 1
attached hereto and made a part hereof. In addition, commencing on the Extended
Lease Term Commencement Date, Exhibit 1, those portions of Exhibit A showing the
Original Premises and the Additional Premises shall be deleted from the Lease
in its entirety. As a result, the number of square feet of Net Rentable Area
comprising the Premises on Extended Lease Term Commencement Date shall be 47,088
square feet of Net Rentable Area.
(b) Tenant shall quit, vacate and surrender the Original Premises and
the Additional Premises to Landlord on and as of the Extended Lease Term
Commencement Date. Accordingly, effective on the day after the Extended Lease
Term Commencement Date, the definition of the Premises in the Lease hereby is
amended to exclude the Original Premises and the Additional Premises. In
addition, effective on the Extended Lease Term Commencement Date, Exhibit 1
attached to the Lease, depicting the configuration of the Original Premises and
the Additional Premises, shall be deleted from Exhibit A to the Lease. The
Original Premises and the Additional Premises shall be surrendered on the
Extended Lease Term Commencement Date in broom clean condition, in the same
order and condition in which they existed on the Lease Commencement Date and the
Lease Commencement Date-II, respectively, ordinary wear and tear excepted.
Tenant, in accordance with the provisions of the Lease, shall remove all of its
personal property and moveable trade fixtures, furnishings and equipment from
the Original Premises and the Additional Premises on or before the Extended
Lease Term Commencement Date, provided that Tenant shall repair all damage
caused by such removal to the sole but reasonable satisfaction of Landlord.
Tenant's obligation to observe and perform the covenants provided in this
Paragraph 2(b) shall survive the Extended Lease Term Commencement Date.
3. Extended Lease Term Commencement Date; Term. (a) The term of the
Lease (the "Extended Lease Term") with respect to the Building One Premises
shall commence on the "Extended Lease Term Commencement Date," as defined in the
next sentence, and shall continue for a period of five (5) years thereafter. The
Extended Lease Term Commencement Date shall be the earlier to occur of (i) the
date on which the work to be performed in the Building One Premises in
accordance with the provisions of Paragraph 6 below is substantially complete as
determined in accordance with the following sentence and (ii) the date on which
Tenant commences beneficial use of the Building One Premises or (iii) September
1, 2000. For purposes of this Agreement, the Building One Premises shall be
deemed to be substantially complete when the work described in Paragraph 6 below
has been completed, as determined by Landlord's architect or contractor in its
professional judgment, except for long lead specialty items and items of work
and adjustment of equipment and fixtures that can be completed after the
Building One Premises are occupied by Tenant without causing substantial
interference with Tenant's use of Building One Premises, provided, however, if
substantial completion of the work described in Paragraph 6 below is delayed due
to causes within Landlord's reasonable control, including, without limitation,
delays caused by Landlord's architect, then the architect's determination of the
Extended Lease Term Commencement Date shall take such delays into account.
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(b) Tenant shall be deemed to have commenced beneficial use of the
Building One Premises when Tenant begins to move furniture and furnishings into
the Building One Premises; provided, however, that tenant and its contractors
shall be allowed access to the Building One Premises thirty (30) days prior to
Landlord's estimated date of substantial completion of the modification and
renovation of the tenant improvements in the Building One Premises for the
purpose of installing Tenant's computers, telephones or other special equipment
and fixtures, and to perform other related activity, and such installations and
related activity shall not be considered the commencement of beneficial use of
the Building One Premises by Tenant. Any and all installations and other related
activity by Tenant or its contractors prior to the Extended Lease Term
Commencement Date shall be coordinated with Landlord and its general contractor
to insure that Tenant's work in and to the Building One Premises does not
interfere with the work being performed by Landlord and its contractors. All
terms and conditions of the Lease, including, without limitation, the insurance,
release and waiver of liability provisions of Articles XIII and XV thereof shall
apply to and be effective during such period of occupancy by Tenant, except for
Tenant's obligation to pay rent. Notwithstanding the foregoing, if Landlord is
delayed in completing the renovation, modification and construction of the
tenant improvements in the Building One Premises as a result of (i)) the actions
or inactions of Tenant or any of its agents, employees, contractors,
subcontractors or consultants, (ii) Tenant's request for changes in or
modifications to the Space Plan showing changes to the Building One Premises
attached hereto as Exhibit 2 and made a part hereof or (iii) any other causes,
directly or indirectly, within Tenant's control or beyond Landlord's control,
then for purposes of determining the Extended Lease Term Commencement Date, the
Premises shall be deemed to have been substantially completed on the date
reasonably determined by Landlord's architect or contractor.
(c) Tenant shall not be entitled to move equipment or furnishings
into the Building One Premises without the prior written consent of Landlord. If
such consent is granted and Tenant begins to move equipment and/or furnishings
into the Building One Premises prior to the Extended Lease Term Commencement
Date, (i) Tenant shall do so at its own risk, (ii) Landlord shall not be liable
for any damage or injury to persons or property resulting therefrom, (iii)
Tenant shall indemnify and hold harmless Landlord from and against any and all
actions, demands, claims, injuries, damages, or liabilities arising out of or
resulting from any actions of Tenant, its agents, employees or contractors in or
around the Building and the Building One Premises during the time Tenant is
conducting such activity, and (iv) all other terms and conditions of the Lease,
including, without limitation, the insurance and waiver of liability provisions
set forth in Articles XII and XIV of the Lease, shall apply to and be effective
during such period of occupancy of the Building One Premises except for the
obligations to pay rent, which obligation shall commence on the Extended Lease
Term Commencement Date.
(d) Landlord presently anticipates that the Building One Premises
will be ready for occupancy by Tenant on or about September 1, 2000. In the
event that the delivery of possession of the Building One Premises to Tenant is
delayed, regardless of the reasons or causes of such delay, the Lease with
respect to the Building One Premises shall not be rendered void or voidable as a
result of such delay, and the term of the Lease with respect to the Building One
Premises shall commence on the Extended Lease Term Commencement Date, as
determined in accordance with Paragraphs 3(a) and (b) above. In no event shall
Landlord have any liability whatsoever to Tenant on account of any such delay.
Notwithstanding anything to the contrary in this Amendment, in the event
delivery of the Building One Premises to Tenant is delayed to causes within
Landlord's
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reasonable control, including, without limitation, delays caused by Landlord's
architect, Tenant, until such time as the Building One Premises are
substantially complete, shall continue to use and occupy the Original Premises
and the Additional Premises under the same terms and conditions as are set forth
in the Lease, except that Tenant shall not be obligated to pay to Landlord "hold
over rent" as set forth in the provisions of Article XXII of the Lease.
(e) Promptly after each of the Extended Lease Term Commencement
Date, Landlord and Tenant shall execute a written declaration setting forth the
Extended Lease Term Commencement Date, the date upon which the Lease Term will
expire and the other information set forth in the form of declaration attached
to the Lease as Exhibit E.
(f) As of the Extended Lease Term Commencement Date, the term
"Lease Year" shall mean the twelve (12) calendar month period commencing on the
Extended Lease Term Commencement Date and each 12 calendar month period
thereafter, except that if the Extended Lease Term Commencement Date shall occur
on a date other than the first day of a month, then the first Lease Year of the
Extended Lease Term shall also include the period from the Extended Lease Term
Commencement Date to the first day of the following month.
4. Base Rent. (a) Commencing on the Extended Lease Term Commencement
Date and continuing throughout the Extended Lease Term, Tenant shall pay to
Landlord as annual base rent for the Additional Space an amount equal to the
product of (i) Thirty-Three Dollars and Seventy-Five Cents ($33.75) multiplied
by (ii) the number of square feet of Net Rentable Area in the Building One
Premises, which amount shall be increased pursuant to the provisions of
subparagraph (b) below. The annual base rent for the Building One Premises shall
be payable as provided in Sections 3.1 and 3.3 of the Lease. Tenant shall not be
entitled to nor shall Tenant receive an abatement of rent with respect to the
Building One Premises.
(b) Commencing on the first (1st) day of the second (2nd) Lease
Year during the Extended Lease Term (which is anticipated to be September 1,
2001) and on the first day of each and every Lease Year thereafter during the
Extended Lease Term (i.e. each September 1), the annual base rent per square
foot of Net Rentable Area in the Building One Premises payable for such Lease
Year shall be increased by three percent (3%) of the annual base rent per square
foot of Net Rentable Area in the Building One Premises payable for the
immediately preceding Lease Year.
(c) Tenant's obligation to pay annual base rent, additional rent
and all other sums and charges due in accordance with the terms and provisions
of the Lease shall continue in full force and effect with respect to the
Original Premises and the Additional Premises. Except as provided in Paragraph
21 below, provided Tenant complies with the terms hereof, Tenant shall have no
further obligations with respect to the Additional Space following the day
immediately preceding the Extended Lease Term Commencement Date.
5. Additional Rent. (a) Tenant shall make estimated monthly payments in
respect of Additional Rent with respect to the Premises (i.e. the Original
Premises and the Additional Premises), as provided in Article IV of the Lease,
through and including the day prior to the Extended Lease Term Commencement
Date. Tenant's obligation with respect to payment of Additional Rent with
respect to the Original Premises and the Additional Premises accruing through
the day prior to the Extended Lease Term Commencement Date pursuant to Article
IV of the Lease, as well as Landlord's obligation to refund any overpayment made
with respect to the Original
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Premises and the Additional Premises by Tenant in respect of Additional Rent
accruing through the day prior to the Extended Lease Term Commencement Date,
shall survive the expiration of the initial Lease Term.
(b) The provisions of Article IV of the Lease, respecting the
payment by Tenant of its proportionate share of increases in certain operating
expenses incurred by Landlord in the operation of the Office Complex and
Building One, shall continue to be applicable to the Lease, provided, however,
that commencing on the Extended Lease Term Commencement Date (i) the Base Year
shall be the twelve (12) month period commencing January 1, 2001 and ending
December 31, 2001. Accordingly, commencing on the Extended Lease Term
Commencement Date, (ii) Tenant's proportionate share of increases in such
operating expenses shall be determined with reference to the Premises, as
amended hereby, (iii) the Base Year Operating Expenses shall be deemed to be the
actual Operating Expenses incurred by Landlord in connection with the management
and operation of the Office Complex and Building One during the Base Year, as
defined in the preceding sentence, (iv) Tenant shall commence paying its
proportionate share of Operating Expenses in January 2002, (v) as of the
Extended Lease Term Commencement Date, the numerator for determining Tenant's
proportionate share of Operating Expenses shall be as set forth in subparagraphs
2(a) above and (vi) the percentage set forth in Section 4.1(f) of the Lease with
respect to the cap on increases in Controllable Operating Expenses shall be
reduced from eight percent (8%) to six percent (6%).
6. Condition of the Premises. (a) The Building One Premises shall be
delivered to and accepted by Tenant in their present "as-is" condition, except
that Landlord during the first six (6) months of the Extended Lease Term shall
cause certain alterations, renovations and modifications to be made to the
tenant improvements in the Building One Premises in accordance with (i) a space
plan for the Building One Premises to be prepared by Greenwell Goetz Architects
(the "Space Plan"), which Space Plan shall be subject to Landlord's and Tenant's
prior written review and once approved shall be attached hereto as Exhibit 2 and
made a part hereof, and (ii) the construction drawings and specifications which
shall be based on the Space Plan and which shall be prepared by Greenwell Goetz
Architects and shall be subject to the prior written approval of Landlord and
Tenant (the Space Plan and the construction drawings and specifications are
referred to collectively herein as the "Space Plan and Construction Drawings").
(b) All alterations, renovations, modifications and improvements
which are to be made to the Building One Premises pursuant to this Paragraph 6
shall be done in accordance with the Space Plan and Construction Drawings, (ii)
shall be subject to the provisions of this Paragraph 6 and Article IX and
Article XIII of the Lease and (iii) shall be made at Tenant's sole cost, and
expense; provided, however, that Landlord agrees to provide Tenant with an
improvement allowance (the "Tenant Improvement Allowance") in an amount equal to
the product (x) of Eighteen Dollars ($18.00) multiplied by (y) the number of
square feet of Net Rentable Area in the Building One Premises. The Tenant
Improvement Allowance shall be applied, as hereinafter set forth, to all "hard"
and "soft" costs incurred in connection with the design, modification,
alteration, renovation, construction and installation of the tenant improvements
in the Building One Premises, including, without limitation, any and all
architectural, engineering and consulting fees and cabling and wiring fees in
connection therewith. In the event the entire Tenant Improvement Allowance is
not fully utilized during the first six (6) months of the Extended Lease Term in
connection with designing, renovating, altering and upgrading the tenant
improvements in the Building One Premises, such unused portion of the Tenant
Improvement Allowance shall be applied against the seventh and any
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subsequent installment(s) of base rent due with respect to the Building One
Premises pursuant to Paragraph 4 hereof.
(c) Landlord's contractor shall perform the alterations,
renovations and improvements which Tenant to the Building One Premises in
accordance with this Paragraph 6. Tenant agrees to pay Landlord, promptly upon
being billed therefor, all costs and expenses incurred by Landlord in connection
therewith in excess of the Tenant Improvement Allowance provided in subparagraph
(b) above. Such costs and expenses shall include all reasonable and customary
amounts charged by Landlord's contractor for performing such work and providing
such materials (including the contractor's and its subcontractors' general
conditions, overhead and profit)), plus an amount equal to three percent (3%) of
the contractor's and its subcontractors' charges as compensation for Landlord's
construction and installation of the tenant improvements in the Building One
Premises. Landlord shall not charge a fee in connection with its supervision of
construction and installation of the tenant improvements in the Building One
Premises. Tenant shall be billed for thirty percent (30%) of the costs and
expenses in excess of the Tenant Improvement Allowance provided in subparagraph
(b) above upon approval of the cost estimates by Tenant for such work and
materials. Thirty percent (30%) of all such costs and expenses in excess of the
Tenant Improvement Allowance shall be due and payable when such work is one-half
(1/2) completed, as determined by Landlord's architect and/or contractor in its
professional judgment, and thirty percent (30%) of all such costs and expenses
in excess of the Tenant Improvement Allowance shall be due and payable upon
substantial completion of the work in the Building One Premises, as determined
by Landlord's architect or contractor, in its professional judgment. The
remaining ten percent (10%) of such costs and expenses in excess of the Tenant
Improvement Allowance shall be due and payable upon completion of the work set
forth in the Punchlist, as defined in subsection (f) below.
(d) Landlord shall obtain bids for the performance of the work
described in this Paragraph 6 from at least three (3) reputable independent
general contractors. Tenant shall have the right to designate by indicating the
same in writing to Landlord not more than five (5) business days after the date
that Tenant executes and delivers this Agreement to Landlord, one (1) qualified,
licensed contractor to be included among the contractors from whom bids are
solicited, subject to Landlord's reasonable approval of the contractor thus
designated by Tenant. Upon receipt and comparison of the bids received from such
contractors, Landlord after consultation with Tenant, shall engage from the
three bidders, a contractor to perform the work (the "Contractor") described in
this Paragraph 6. Landlord, Tenant and the Contractor shall establish a mutually
agreeable construction schedule (the "Construction Schedule") and shall review
submission procedures and such other controls as are necessary for the timely
and efficient completion of the improvements and alterations to the Building One
Premises. Landlord shall cause the Contractor to obtain competitive bids from
all major trades (e.g. electrical, plumbing, drywall and millwork) performing
work in the Building One Premises, unless such competitive bids were obtained or
submitted in connection with the selection of the Contractor. In connection with
its performance of the work described in this Paragraph 6 Landlord shall cause
the Contractor to obtain any occupancy permit required for Tenant to lawfully
occupy the Building One Premises.
(e) Landlord agrees to repair and correct or cause to be repaired
and corrected any work or materials installed by Landlord or its contractor in
the Building One Premises pursuant to this Paragraph 6, that prove to be
defective as a result of faulty materials, equipment or workmanship and that
appear within one (1) year of the date of substantial completion of the work
described in this Paragraph 6, provided, however that Landlord shall cause
latent defects in work or materials
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installed by Landlord or its contractor in the Building One Premises to be
repaired and/or corrected, promptly after it receives notice of such latent
defect from Tenant. Landlord shall not be responsible to repair or correct any
defective work or material installed by Tenant or by any contractor other than
Landlord's contractor or any work or materials that prove defective as a result
of any act or omission of Tenant or any of its employees, guests, licenses,
subtenants or other occupants of the Building One Premises.
(f) After substantial completion, as determined by the Contractor
in its professional judgment, Landlord (or Landlord's representative), Tenant
(or Tenant's representative) and Landlord's architect shall conduct an
inspection of the Building One Premises to document (i) the condition of the
finishes within the Building One Premises and (ii) those items of equipment and
fixtures which are damaged and/or incomplete and can be repaired or completed
after the Building One Premises (or the applicable portion thereof) have been
occupied by Tenant without causing substantial interference with Tenant's use of
the Building One Premises (the "Punchlist"). Landlord or the Contractor shall
correct or undertake to correct each item on the Punchlist within thirty (30)
days of the date on which the Punchlist is agreed upon by Landlord, Tenant and
Landlord's architect, or such longer time as may be required to obtain necessary
materials or labor provided that Landlord shall use its reasonable efforts to
cause the correction of the Punchlist items to be performed diligently. Except
as otherwise provided in this Paragraph 6(f) and subject to the provisions of
subsection (e) above, Tenant's taking possession of the Building One Premises
shall constitute Tenant's acknowledgment that the Building One Premises are in
good condition and that all work and materials are satisfactory
(g) Prior to proceeding with any change to the work to be
performed in the Building One Premises pursuant to this Paragraph 6, Landlord
and Tenant shall mutually agree in writing on the number of days of delay, if
any, in substantial completion of the Premises shall be attributable to such
requested change. If Landlord and Tenant have mutually agreed, pursuant to the
preceding sentence, that one or more change requested by Tenant will cause an
agreed upon (in good faith) number of days of delay in substantial completion of
the Building One Premises, the Building One Premises shall be deemed to have
been substantially completed on a date that is such agreed upon number of days
prior to the actual date of substantial completion determined by the Contractor
in its professional judgment.
(h) Except as otherwise provided in Paragraph 6(a) above, Tenant
agrees to be responsible for the construction and installation of any and all
tenant improvements in the Building One Premises at Tenant's sole expense. All
tenant improvements constructed or installed in the Building One Premises by
Tenant shall be done in accordance with Tenant's plans therefor, which plans
shall be subject to the prior approval of Landlord, and shall otherwise be done
or provided in accordance with the provisions of Article IX and Article XIII of
the Lease including, without limitation, the insurance provisions thereof. All
improvements constructed or installed in the Premises shall remain upon and be
surrendered with the Building One Premises at the expiration of the Building One
Premises Term unless (i) Tenant requests, when it submits its plans and
specifications for such improvements to Landlord for Landlord's approval,
Landlord's consent to Tenant's removal of such improvements upon the expiration
or earlier termination of the Lease Term and Landlord so consents or (ii)
Landlord specifies in its approval of the plans and specifications for such
improvements that Tenant must remove the improvements upon the expiration or
earlier termination of the Building One Premises Term.
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(i) Except as is otherwise provided in this Paragraph 6, Landlord
shall not make and shall have no obligation to make any alterations (structural
or otherwise), decorations, additions, improvements or repairs in or to the
Building One Premises whatsoever.
7. Tenant's Equipment. Article XI, Tenant's Equipment, of the Lease
hereby is amended by adding the following Section 11.2 at the end thereof:
11.2 (a) Subject to the satisfaction, in Landlord's reasonable
judgment, of all of the conditions set forth in this Section, Tenant, at
Tenant's sole cost and expense, may install and once installed shall maintain
one (1) satellite or other telecommunications related dish (the "Satellite
Dish") on the roof of Building One for use in connection with Tenant's business
in the Premises. Notwithstanding anything in this Section 11.2 to the contrary,
Tenant shall not be permitted to install the Satellite Dish unless (I) Landlord,
at Tenant's reasonable expense, determines that there is room on the roof of
Building One for the Satellite Dish and that the Satellite Dish shall not
materially interfere with any other satellite dish or antenna of any other
tenant in Building One or the Complex, (II) the Satellite Dish conforms to the
specifications and requirements set forth in the drawings and specifications
prepared by a licensed professional reasonably approved by Landlord (the
"Satellite Dish Drawings"), which Satellite Dish Drawings shall be subject to
the prior written approval of Landlord, which approval shall not be unreasonably
withheld, (III) Landlord approves, which approval shall not be unreasonably
conditioned or delayed, the size, capacity, power, location and proposed
placement of the Satellite Dish and (IV) Tenant obtains and provides copies to
Landlord of all necessary governmental permits and approvals, including, without
limitation, special exception permits, if applicable, for the installation of
the Satellite Dish equipment upon Building One. Tenant, at Landlord's direction,
shall cause the Satellite Dish to be painted in a non-metallic paint. No
promotional or advertising matter or signage shall be attached to, painted or
displayed on the Satellite Dish. In addition, if the installation of the
Satellite Dish on the roof of Building One would damage or penetrate the roof of
Building One, then Tenant shall not be permitted to install the Satellite Dish
unless Tenant warrants and guaranties the roof to the extent that Landlord will
lose its existing roof warranty or guaranty and unless Landlord approves, in
writing, any such adverse effect to Building One's structure or service systems
or any such structural alteration, which approval may be granted or withheld by
Landlord in its sole discretion. The Satellite Dish shall be installed by a
contractor reasonably acceptable to both Landlord and Tenant and thereafter
shall be property maintained by Tenant, all at Tenant's sole expense. At the
expiration or earlier termination of the Lease Term, the Satellite Dish shall be
removed from the roof of Building One at Tenant's sole cost and expense and the
roof of Building One shall be returned to the condition it was in prior to the
installation of the Satellite Dish. Tenant shall pay all subscription fees,
usage charges and hook-up and disconnection fees associated with Tenant's use of
the Satellite Dish and Landlord shall have no liability therefor. All of the
provisions of this Lease, including, without limitation, the insurance
provisions set forth in Article XIII and the maintenance, repair, release and
indemnification provisions set forth in Sections 8.1, 8.2, 9.4, 9.5, 15.1 and
15.2 hereof, shall apply and be applicable to Tenant's installation, operation,
maintenance and removal of the Satellite Dish.
(b) (i) Tenant expressly acknowledges and agrees that its use of
the roof of Building One in nonexclusive and that Landlord and other tenants in
the Complex shall have access to the roof of Building One at all times. Landlord
retains the right to grant licenses and other use and occupancy rights to other
tenants in Building One and the Complex and to other third parties in Landlord's
sole discretion.
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(ii) Landlord agrees that it shall not grant tenants who
execute Leases for space in Building One after the date of this Lease the right
to install antennas, dishes or other equipment on the roof of Building One which
would, after consultation with Tenant, materially and adversely interfere with
the Satellite Dish. Landlord agrees that if, after the date of this Lease, any
other tenant in Building One or any other entity that has the right to use the
roof of Building One (each a "Rooftop Rights Tenant") notifies Landlord of its
desire to place an antenna, dish or other equipment on the roof of Building One
Landlord shall notify Tenant (a "Rooftop Notice") of such request and with such
notice shall provide Tenant with any information then available to Landlord
regarding the antenna, dish or equipment which such Rooftop Rights Tenant
desires to install on the roof of Building One. Tenant shall notify Landlord
("Tenant's Rooftop Notice") within five (5) days after its receipt of a Rooftop
Notice whether Tenant believes that the antenna, dish or equipment which such
Rooftop Rights Tenant desires to place on the roof of Building One would
materially and adversely impact the performance of Tenant's Satellite Dish.
Tenant's Rooftop Notice shall state in reasonable detail the reasons, if any,
why and how the antenna, dish or equipment which the Rooftop Rights Tenant
desires to place on the roof of Building One would interfere with the Satellite
Dish and offer reasonable alternative(s) to the placement of such Rooftop Rights
Tenant's antenna, dish or equipment. Landlord and Tenant shall work with any
Rooftop Rights Tenant in determining an acceptable location for such Rooftop
Rights Tenant's antenna, dish or other equipment. Except as otherwise provided
herein, nothing in this Section 11.2(b) shall restrict Landlord's rights to
allow other tenants in Building One or elsewhere in the Complex or other
entities with whom Landlord or its affiliates may contract, license or otherwise
agree to install, use, maintain, repair, operate, repair or remove any antenna,
dish or other equipment on or from the roof of Building One.
(c) Landlord agrees that during the normal hours of operation of
Building One as set forth in Section 11.2 hereof, Tenant, its agents and/or
representatives shall be permitted use of and access to the roof of Building One
and the Land for purposes of examination, maintenance and repair of the
Satellite Dish. Tenant shall be solely responsible for the adequacy and safety
of the installation and operation of the Satellite Dish on the roof of Building
One.
(d) In the event Landlord contemplates repairs to the roof of
Building One which (i) require the temporary removal or relocation of the
Satellite Dish or (ii) may result in an interruption in Tenant's
telecommunications services, Landlord shall notify Tenant promptly after it
schedules such work but in any event, not less than ten (10) business days prior
to commencing such work in order to allow Tenant to make other arrangements for
such services, except in the event of an emergency, in which case Landlord shall
give Tenant reasonable prior written or verbal notice of such work. In the event
such temporary removal or relocation of the Satellite Dish is necessary,
Landlord agrees to use its reasonable efforts to provide alternate space to
Tenant that is reasonable acceptable to Tenant for a temporary Satellite Dish.
Tenant shall perform such relocation and all reasonable and customary costs of
removal, relocation and re-installation actually paid by Tenant to independent
third parties shall be borne by Landlord. The preceding sentence
notwithstanding, Tenant shall bear the cost of any repairs to the roof of
Building One and any equipment, machinery or other antennas, dishes or other
items which are damaged by Tenant in connection with such removal, relocation
and re-installation of the Satellite Dish. Landlord shall not be liable to
Tenant for any cessation or interruption of Tenant's telecommunications
services.
(f) Except as shown on the Satellite Dish Drawings, Tenant shall
not make any modification to the design, structure or systems of Building One,
required in connection with the installation of the Satellite Dish without
Landlord's prior written approval of such modification and
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<PAGE> 10
the plans therefor, which approval may be granted, conditioned or withheld by
Landlord in its sole but reasonable discretion.
(g) Tenant, at its sole cost and expense, shall secure all
necessary permits and approvals from all applicable governmental agencies with
respect to the size, placement and installation of the Satellite Dish. In the
event Tenant is unable to obtain the necessary approvals and permits from any
applicable federal, state, county or other local governing authorities for the
Satellite Dish, Tenant shall have no remedy, claim, cause of action or recourse
against Landlord, nor shall such failure or inability to obtain any necessary
permits or approvals provide Tenant the opportunity to terminate this Lease.
Landlord agrees that it shall cooperate with Tenant in securing all necessary
permits and approvals for the Satellite Dish, provided, however, that Landlord
shall not be obligated to spend any monies in connection with obtaining such
permits and approvals.
(h) Landlord makes no representations or warranties concerning the
suitability of the roof of Building One for the installation operation,
maintenance and repair of the Satellite Dish, Tenant having satisfied itself
concerning such matters.
(i) During any period that the Satellite Dish is located on the
roof of Building One, Tenant shall pay as additional rent to Landlord, on the
first day of each month, a monthly fee (the "Satellite Dish Charge") of Two
Hundred Dollars ($200.00), which monthly fee shall be paid along with the base
rent in accordance with Section 3.1 of this Lease. Such monthly fee for any
period less than a month shall be apportioned based upon the number of days in
that month. On the first day of each Lease Year after placement of the Satellite
Dish on the roof, the Satellite Dish Charge shall be increased to equal the
product of the Satellite Dish Charge in effect during the immediately preceding
Lease Year multiplied by 103%.
(j) It is expressly understood that by granting Tenant the right
hereunder, Landlord makes no representation as to the legality of the satellite
dish or its installation. In the event that any federal, state, county,
regulatory or other authority requires the removal or relocation of the
satellite dish, Tenant shall remove or relocate the satellite dish at Tenant's
sole cost and expense, and Landlord shall under no circumstances be liable to
Tenant therefor.
(k) The satellite dishes may be used by Tenant only in the conduct
of Tenant's customary business in the Premises; provided, however, that Tenant's
subtenants permitted or approved in accordance with the provisions of Article
VII of the Lease may share in the use of Tenant's satellite dishes. No assignee
of Tenant (other than an assignee permitted or approved in accordance with the
provisions of Article VII of the Lease) shall have any rights pursuant to this
Section 11.2.
(1) Tenant shall maintain such insurance as is appropriate with
respect to the installation, operation and maintenance of the satellite dish.
Landlord shall have no liability on account of any damage to or interference
with the operation of the satellite dishes except for physical damage caused by
Landlord's gross negligence or willful misconduct and Landlord expressly makes
no representations or warranties with respect to the capacity for satellite
dishes placed on the roof of Building One to receive or transmit signals. The
operation of the satellite dishes shall be at Tenant's sole and absolute risk.
Tenant shall in no event interfere with the use of any other communications
equipment located on the roof of Building One prior to the installation of
Tenant's
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<PAGE> 11
satellite dishes, or any such equipment thereafter installed by Landlord in
connection with operation of Building One.
8. Signs and Furnishings. Section 10.1 of the Lease hereby is amended
by deleting the fifth (5th) sentence thereof in its entirety and substituting
the following sentence therefore:
"In addition Landlord shall provide Tenant with fifteen (15)
lines on the Building One directory."
9. Parking. Effective on the Extended Lease Term Commencement Date,
Section 24.1 of the Lease hereby is deleted in its entirety and the following
hereby is substituted therefore:
24.1 During the Extended Lease Term, upon the request of Tenant,
Landlord agrees to make available to Tenant and its employees and to
Tenant's permitted subtenants monthly parking permits in an amount not
to exceed three (3) parking permits for each 1,000 square feet of Net
Rentable Area in the Premises for the parking of standard-sized
passenger automobiles in the garage beneath the Office Complex (the
"Garage") or in the surface parking areas of the Office Complex not
designated for the exclusive use of particular tenants in the Office
Complex, such permits to be used for surface or Garage parking at
Landlord's sole discretion. During the first Lease Year of the Extended
Lease Term, the charge for such permits shall be Sixty Dollars ($60.00)
per permit per month. Thereafter, the charge for such permits shall be
the prevailing rate charged from time to time by Landlord or the
operator of the Garage; provided, however, that in no event shall the
monthly charge for such permits in any twelve (12) month period be
increased by more than Five Dollars ($5.00) per month per permit.
Notwithstanding the foregoing, Landlord does not guarantee the
availability of such monthly parking permits to Tenant following the
first (1st) Lease Year if and to the extent that Tenant does not
purchase such monthly parking permits during the first (1st) Lease
Year.
10. Storage Space. If available, as determined by Landlord in its sole
judgment, Landlord, at Tenant's option, agrees to lease to Tenant, storage space
on the P-[2] level of the Garage. For a period of three (3) business days after
receipt of notice (the "Storage Space Availability Notice") from Landlord that
storage space is available, Tenant shall have the right to lease such storage
space from Landlord upon the terms and conditions set forth herein. The exact
size and location of the storage space shall be determined by Landlord in its
sole discretion and shall be identified in the Storage Space Availability
Notice. Tenant shall pay annual rent for such storage space in an amount equal
to Eight Dollars and Fifty Cents ($8.50) multiplied by the total number of
square feet of storage space (the "Storage Rent"). The Storage Rent shall be
increased annually as provided in Paragraph 4(b) of this Agreement. The Storage
Rent shall be payable in equal monthly installments, without setoff, deduction
or demand, in advance, on the first day of each month during the Lease Term. All
of the terms, covenants, conditions and provisions of the Lease, as modified
hereby where applicable, except Article V thereof, shall apply to the storage
space leased to Tenant. Tenant shall lease the storage space in its "as is"
condition and Landlord shall not be obligated to provide any alterations or
improvements to the storage space.
11. Renewal. Rider No.1 to the Lease hereby is deleted in its entirety
and the following substituted therefore:
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<PAGE> 12
Landlord hereby grants to Tenant the conditional right, exercisable at
Tenants option, to renew the term of the Lease for two (2) additional terms of
five (5) years each. If exercised and if the conditions applicable thereto have
been satisfied, the first such renewal term (the "First Renewal Term") shall
commence immediately following the end of the Extended Lease Term provided in
Paragraph 1(a) above and the second such renewal term (the "Second Renewal
Term") shall commence immediately following the end of the First Renewal Term.
The right of renewal herein granted to Tenant shall be subject to, and shall be
exercised in accordance with, the following terms and conditions:
(a) Tenant shall exercise its right of renewal with respect to
each Renewal Term by giving Landlord written notice of the exercise thereof (the
"renewal option notice") not less than nine (9) months and not more than twelve
(12) prior to the expiration of the preceding term of the Lease. The preceding
sentence notwithstanding, Tenant, at its election, may exercise its right with
respect to the Second Renewal Term concurrently with its exercise of its right
of renewal with respect to the First Renewal Term. In the event that a renewal
option notice is not given in a timely manner, Tenant's right of renewal with
respect to such Renewal Term, and any subsequent Renewal Term, shall lapse and
be of no further force or effect. If Tenant is in monetary default under the
Lease, beyond any applicable notice and cure period, on the date either renewal
option notice is given or any time thereafter, beyond any applicable notice and
cure period, on or before the Commencement Date of such Renewal Term, then, at
Landlord's option, the renewal option notice shall be totally ineffective and
Tenant's right of renewal as to such Renewal Term shall lapse and be of no
further force of effect.
(b) Promptly following Landlord's timely receipt of the renewal
option notice for each Renewal Term, Landlord and Tenant shall commence
negotiations concerning the amount of annual base rent which shall be payable
during each year of such Renewal Term, it being intended that such annual base
rent shall be equal to the then prevailing fair market rent for the Premises.
The parties shall have thirty (30) days after Landlord's receipt of each renewal
option notice in which to agree on the base rent which shall be payable during
each year of the applicable Renewal Term. The parties shall be obligated to
conduct such negotiations in good faith. Among the factors to be considered by
the parties during such negotiations shall be (i) the general office rental
market for first class office buildings in the North Bethesda, Montgomery
County, Maryland area, (ii) rental rates then being obtained (or quoted if
comparables are not readily available) by other building owners for office
buildings of comparable size, location and quality to the Building and the
Office Complex in the North Bethesda. Montgomery County, Maryland area, (iii)
the rental rates then being obtained by Landlord for comparable office space, in
"as is" condition, in the Building and the Office Complex, (iv) escalations and
pass through provided in the Lease, (v) concession packages then being obtained
(or offered if comparables are not readily available) by other building owners
for office buildings in the North Bethesda, Maryland area, of comparable size,
location and quality to the Building and the Office Complex and (vi) concession
packages then being obtained by Landlord for comparable office space in "as-is"
condition in the Building and the Office Complex. In no event, however, shall
the base rent payable during any year of any Renewal Term be less than the base
rent in effect under the Lease during the Lease Year immediately preceding the
commencement of such Renewal Term. If during such thirty (30) day period, the
parties agree on the base rent payable during each year of a Renewal Term, they
shall promptly execute an amendment to the Lease stating the rent so agreed
upon.
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<PAGE> 13
(c) If, during such thirty (30) day period referred to in
subparagraph (b) above, the parties are unable to agree on the base rent payable
during the applicable Renewal Term, then Tenant shall have the option either (A)
to rescind its renewal option notice or (B) to agree that the fair market rent
shall be determined in accordance with the appraisal procedure set forth in this
subparagraph (c). Tenant shall exercise its option by giving Landlord written
notice of its election within five (5) days of the termination of the thirty
(30) day period provided for in subparagraph (b) above. If Tenant elects to
rescind its renewal option notice, Tenant's right to renew the term of the
Lease, and any subsequent renewal right, shall lapse and be of no further force
or effect. If Tenant shall fail to notify Landlord of its election to rescind
its renewal option notice, Tenant shall be deemed to have agreed that the fair
market rent for the Premises shall be determined in accordance with the
procedure set forth in this subparagraph (c). If Tenant shall elect to proceed
with the appraisal procedure provided in this subparagraph (c) then, within ten
(10) days after Landlord's receipt of Tenant's election to proceed with the
appraisal procedure, or, if Tenant fails to notify Landlord of its election,
within ten (10) days after Tenant was obligated to provide Landlord with notice
of its election, the parties shall appoint an independent third-party real
estate broker who shall be mutually agreeable to both Landlord and Tenant, shall
be a commercial real estate broker licensed to do business in Montgomery County,
Maryland for a period of not less than ten (10) consecutive years, and shall be
knowledgeable in office rentals in the North Bethesda, Maryland area. If the
parties are unable to agree on such a broker within such ten (10) day period,
then each party, within five (5) days after the expiration of the aforesaid ten
(10) day period, shall appoint a broker (with the same qualifications) and the
two (2) shall together appoint a third broker with the same qualifications. The
broker or brokers so appointed then shall determine, within sixty (60) days
after the appointment of such broker or brokers, the then fair market base rent
for the Premises. Among the factors to be considered by the broker(s) in
determining the fair market base rent for the Premises shall be those factors
set out in subparagraph (b) above. In addition, the broker(s) shall follow the
Real Estate Valuation Rules of the American Arbitration Association. The figure
arrived at by the broker (or the average of the figures arrived at by the three
brokers, if applicable) shall be used as the fair market base rent for such
renewal term. If the three broker method is chosen, then if any broker's
estimate of fair market base rent is either (I) less than ninety percent (90%)
of the average figure or (II) more than one hundred ten percent (110%) of such
average, then the fair market rent will be either (1) the average of the
remaining two (2) figures falling within such a range of percentages, (2) the
remaining figure which is within such range of percentages or (3) if none of the
figures are within such range, the average of the three (3) figures. Landlord
and Tenant shall each bear the cost of its broker and shall share equally the
cost of the third broker.
(d) During each Renewal Term, all the terms, conditions, covenants
and agreements set forth in the Lease shall continue to apply and be binding
upon Landlord and Tenant, except that (i) the base rent payable during each year
of each Renewal Term shall be the amount agreed upon by Landlord and Tenant in
the manner provided in subparagraphs (b) and (c) above, (ii) in no event shall
Tenant have the right to renew the term of the Lease, or any renewal term
thereof, beyond the expiration of the Second Renewal Term.
(e) In the event that Tenant's right of renewal with respect to
the First Renewal Term shall lapse for any reason, Tenant's right of renewal
with respect to the Second Renewal Term shall similarly lapse and be of no
further force or effect.
(f) Tenant's rights of renewal under this Paragraph 11 are
personal to and may be exercised only by e-centives, Inc. and shall not be
exercisable by any assignee or subtenant of e-centives, Inc., other than a
permitted assignee under this Lease.
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<PAGE> 14
(g) Tenant shall not he entitled to exercise its rights under this
Paragraph 11 to renew the Renewal Term if at the time Tenant would otherwise be
entitled to exercise its right of renewal Tenant is occupying less than fifty
percent (50%) of the Premises.
12. Broker. Landlord recognizes Jones Partners, LLC and Insignia/ESG as
the brokers procuring this Agreement and shall pay said brokers a commission
pursuant to a separate agreement between said brokers and Landlord. Landlord and
Tenant each represents and warrants to the other that, except as provided in the
preceding sentence, neither of them has employed or dealt with any broker, agent
or finder in carrying on the negotiations relating to this Agreement. Tenant
shall indemnify and hold Landlord harmless from and against any claim or claims
for brokerage or other commissions asserted by any broker, agent or finder
engaged by Tenant or with whom Tenant has dealt in connection with this
Agreement, other than the brokers named in the first sentence of this Paragraph
12.
13. Incorporation of Lease Terms. All of the terms, conditions,
covenants and agreements set forth in the Lease, as hereby amended, (a) are
incorporated herein by reference, (b) shall remain in full force and effect and
(c) shall be applicable to and binding upon the lease of Additional Premises
except to the extent expressly modified herein.
14. Vacation of Original Premises and Additional Premises. (a) On or
before the Extended Lease Term Commencement Date Tenant shall vacate the
Original Premises and the Additional Premises and surrender them to Landlord in
broom clean condition, in the same order and condition in which they existed on
the Lease Commencement Date and the Lease Commencement Date-II, respectively,
ordinary wear and tear excepted, and otherwise in accordance with the terms of
the Lease pertaining to surrender and condition of the Premises. Tenant, in
accordance with the provisions of the Lease, shall remove from the Original
Premises and the Additional Premises, on or before the Extended Lease Term
Commencement Date all of its personal property, moveable furnishings, furniture
and equipment. Tenant shall repair, at its expense and to the reasonable
satisfaction of Landlord, any and all damage caused by such removal. Tenant's
obligation to observe and perform the covenants provided in this Paragraph 14
shall survive the termination of Tenant's obligations with respect to the
Original Premises and the Additional Premises.
(b) Notwithstanding anything to the contrary in this Paragraph 14
or elsewhere in this Amendment, Tenant shall not be required to vacate the
Original Premises or the Additional Premises until the Building One Premises are
substantially complete, as defined in Paragraph 6 hereof. Tenant acknowledges
that, subject to the provisions of Paragraphs 3 and 6 hereof and the
Construction Schedule, Tenant may be paying base rent with respect to both the
Premises and the Building Two Premises for a period of time.
15. Corporate Authority. Tenant hereby represents and warrants to
Landlord that all necessary corporate action has been taken to enter this Lease
and that the person signing this Lease on behalf of Tenant has been duly
authorized to do so.
16. Exhibits. This Amendment includes and incorporates Exhibits 1, 2
and 3 attached hereto.
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<PAGE> 15
17. Early Entry. Notwithstanding anything in this Agreement or the
Lease to the contrary, commencing on the day after the date on which this
Agreement is executed by Tenant, Landlord, its employees, contractors,
architects, engineers and consultants and representatives of prospective
tenants, shall be allowed access to the Original Premises and the Additional
Premises, without charge therefor, during normal hours of operation of Building
Two, to examine and inspect the Original Premises and the Additional Premises
and to prepare plans and drawings for the renovation and modification of the
Original Premises and the Additional Premises.
18. Subordination. Landlord shall use reasonable efforts to obtain from
Teachers Insurance and Annuity Association ("TIAA"), the holder of the
beneficiary's interest under the deed of trust currently secured by Building One
and the Complex, with respect to Tenant's use and occupancy of the Building One
Premises, a Subordination, Non-Disturbance and Attornment Agreement ("SNDA") on
TIAA's standard form, to the end and intent that as long as Tenant pays all rent
when due and punctually observes all other covenants and obligations on its part
to be observed under the Lease, including this Amendment, the terms and
conditions of this Lease shall continue in full force and effect and Tenant's
possession, use and occupancy of the Building One Premises shall not be
disturbed during the term of the Lease by the holder of such mortgage or deed of
trust or by any purchaser upon foreclosure of such mortgage or deed of trust.
19. Mutual Negotiation. Landlord and Tenant each hereby covenant and
agree that each and every provision of this Agreement has been jointly and
mutually negotiated and authorized by both Landlord and Tenant and in the event
of any dispute arising out of any provision of this Lease, Landlord and Tenant
do hereby waive any claim of authorship against the other party.
20. Release. Provided the conditions set forth in paragraphs 2, 4 and 5
hereof shall have been fully satisfied and except as provided in paragraphs 2, 4
and 5 hereof, commencing on the day after the Extended Lease Term Commencement
Date, Tenant shall be relieved of all further liability under the Lease with
respect to the Original Premises and the Additional Premises only.
21. Landlord's address. All notices to Landlord or other communications
required in connection with the Lease shall be addressed to Landlord in care of
Boston Properties, Inc., 401 9th Street, N.W., Suite 700, Washington, D.C.
20004.
22. Expansion Space. Article XXV, Expansion Space, of the Lease hereby
is deleted in its entirety.
23. Security Deposit. (a) Simultaneously with the execution of this
Agreement, Tenant shall deliver to Landlord an unconditional, irrevocable letter
of credit (the "Letter of Credit") in the amount of Five Hundred Forty Two
Thousand Nine Hundred Eighty Three Dollars and Fifty Cents ($542,983.50) as an
increased security deposit (the "Increased Security Deposit") subject to the
following terms and conditions. The Letter of Credit shall be (a) in form and
substance satisfactory to Landlord in its sole discretion; (b) at all times in
the amount of the Increased Security Deposit, and shall permit multiple draws;
(c) issued by Chevy Chase FSB; (d) made payable to, and expressly transferable
and assignable at no charge by, the owner from time to time of Building One or,
at Landlord's option, the holder of any mortgage (which transfer/assignment
shall be conditioned only upon the execution of a written document in connection
therewith); (e) payable at sight upon presentment to the Office of General
Counsel located at 8401 Connecticut Avenue, Chevy Chase, Maryland 20815 a simple
sight draft and certificate stating that Landlord is entitled to collect the
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face value of the letter of credit or an identified portion thereof; (f) of a
term not less than one year; and (g) at least thirty (30) days prior to the
then-current expiration date of such letter of credit, either (1) renewed (or
automatically and unconditionally extended) from time to time through the
ninetieth (90th) day after the expiration of the Lease Term or (2) replaced with
cash in the amount of the Security Deposit. Notwithstanding anything in this
Lease to the contrary, any cure or grace periods set forth in this Lease shall
not apply to any of the foregoing, and, specifically, if Tenant fails to timely
comply with the requirements of subsection (g) above, then Landlord shall have
the right to immediately draw upon the letter of credit without notice to Tenant
and apply the proceeds to the security deposit. Each Letter of Credit shall be
issued by a commercial bank that has a credit rating with respect to
certificates of deposit, short term deposits or commercial paper of at least
P-2 (or equivalent) by Moody's Investor Service, Inc., or at least A-2 (or
equivalent) by Standard & Poor's Corporation, and shall be otherwise acceptable
to Landlord in its sole and absolute discretion. If the issuer's credit rating
is reduced below P-2 (or equivalent) by Moody's Investors Service, Inc. or below
A-2 (or equivalent) by Standard & Poor's Corporation, or if the financial
condition of such issuer changes in any other materially adverse way, then
Landlord shall have the right to require that Tenant obtain from a different
issuer a substitute letter of credit that complies in all respects with the
requirements of this Section, and Tenant's failure to obtain such substitute
letter of credit within ten (10) days following Landlord's written demand
therefor (with no other notice or cure or grace period being applicable thereto,
notwithstanding anything in this Lease to the contrary) shall entitle Landlord
to immediately draw upon the then existing Letter of Credit in whole or in part,
without notice to Tenant. In the event the issuer of any Letter of Credit held
by Landlord is placed into receivership or conservatorship by the Federal
Deposit Insurance Corporation or any successor or similar entity, then,
effective as of the date such receivership or conservatorship occurs, said
Letter of Credit shall be deemed to not meet the requirements of this Section,
and, within ten (10) days thereof, Tenant shall replace such Letter of Credit
with other collateral acceptable to Landlord in its sole and absolute discretion
(and Tenant's failure to do so shall, notwithstanding anything in this Lease to
the contrary, constitute an Event of Default for which there shall be no notice
or grace or cure periods being applicable thereto other than the aforesaid ten
(10) day period). Any failure or refusal of the issuer to honor the Letter of
Credit shall be at Tenant's sole risk and shall not relieve Tenant of its
obligations hereunder with respect to the Increased Security Deposit or the
security deposit. Except as expressly provided herein, the Increased Security
Deposit shall be subject to all of the terms and conditions of the Lease
applicable to the security deposit.
(b) Provided that as of the applicable Reduction Date (as defined
below) no default on the part of Tenant under this Lease shall then be in
existence and no Event of Default (as defined in Section 19.1) has occurred
hereunder, Tenant shall have the right with respect to each Reduction Date to
reduce the portion of the security deposit posted as a Letter of Credit by the
amount set forth below with respect to each Reduction Date:
SECURITY DEPOSIT
REDUCTION DATE REDUCTION AMOUNT
FIRST DAY OF SECOND LEASE YEAR 20% OF THE
OUTSTANDING LETTER
OF CREDIT AMOUNT
FIRST DAY OF THIRD LEASE YEAR 20% OF THE
OUTSTANDING LETTER
OF CREDIT AMOUNT
FIRST DAY OF FOURTH LEASE YEAR 20% OF THE
OUTSTANDING LETTER
OF CREDIT AMOUNT
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If all of the aforesaid conditions are met, the Increased Security Deposit shall
be so reduced in accordance with this Paragraph 24(b). Notwithstanding anything
herein to the contrary, if an Event of Default has occurred, then there shall
occur no further reduction in the Increased Security Deposit. Such reduction
shall occur by means of delivery by Tenant to Landlord of a substitute Letter of
Credit in such amount and in strict conformity with the terms of this Paragraph
24, in which event, the original Letter of Credit will be promptly returned to
Tenant.
25. Maintenance and Repairs. Section 8.3 of the Lease hereby is amended
by adding the following clause at the end thereof:
"Landlord shall cause the common and public areas and primary function
areas of Building One which are under Landlord's sole and exclusive
control to comply in all material respects with all applicable Legal
Requirements, including, without limitation, the Americans with
Disabilities Act of 1990 and all regulations promulgated thereunder
(collectively, the "ADA"). [Landlord represents that, as of the date of
this Lease, to the best of its actual knowledge, the common bathrooms
in the Building One Premises comply with the ADA, except that the
vanity counter tops are two inches (2") higher than required by the
provisions of the ADA. Landlord agrees that at such time as it is
legally obligated to replace and/or to lower the vanity counter tops in
the common bathrooms in the Building One Premises in order to comply
with the requirements of ADA, it shall do so and Tenant shall have no
responsibility, monetary or otherwise, for the replacement of the
vanity counter tops in the common bathrooms in the Building One
Premises.]"
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease
Modification and Extension Agreement as of the date and year first above
written.
LANDLORD:
DEMOCRACY ASSOCIATED LIMITED
PARTNERSHIP, a Maryland limited partnership
By: Boston Properties LLC, a Delaware
limited liability company, its
General Partner
By: Boston Properties Limited
Partnership, a Delaware limited
partnership, its Managing Member
By: Boston Properties, Inc., a Delaware
corporation, its General Partner
WITNESS:
/s/ [ILLEGIBLE] By: /s/ RAYMOND A. RITCHEY
---------------------------- ------------------------------
Raymond A. Ritchey, Executive
Vice President
ATTEST: TENANT:
e-centives, Inc., a Delaware corporation
By: /s/ [ILLEGIBLE] By: /s/ JASON KARP
-------------------------- ------------------------------
Its: VP & General Counsel
------------------------------
[CORPORATE SEAL]
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<PAGE> 19
LEASE AGREEMENT
DEMOCRACY CENTER
BETHESDA, MARYLAND
THIS LEASE AGREEMENT (the "Lease") is made as of the 23rd day of
September, 1997, by and between DEMOCRACY ASSOCIATES LIMITED PARTNERSHIP, a
Maryland limited partnership (hereinafter referred to as "Landlord"), and
EMAGINET, INC., a Delaware corporation (hereinafter referred to as "Tenant").
RECITALS:
A. Landlord is the developer and owner of an office complex known as
Democracy Center, located at 6901-6905 Rockledge Drive, West Bethesda, Maryland,
situated on certain real property owned by Landlord (all such real property is
referred to herein as the "Land"). Said office complex consists of one 15-story
office building, two 9-story office buildings, three surface parking areas, a
recreation area, a plaza area and a 2-level below grade parking structure
serving all of the office buildings. Said office complex is referred to herein
as the "Office Complex."
B. Tenant desires to lease space in the Office Complex and Landlord is
willing to rent space in the Office Complex to Tenant, upon the terms,
conditions, covenants and agreements set forth herein.
NOW, THEREFORE, the parties hereto, intending legally to be bound,
hereby covenant and agree as set forth below.
ARTICLE I
THE PREMISES
1.1 Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, for the term and upon the terms, conditions, covenants and agreements
herein provided, approximately 7,596 square feet of Net Rentable Area, known as
Suite 1200, on the twelfth (12th) floor of the fifteen (15) story office
building included as part of the Office Complex which office building is known
and referred to herein interchangeably either as "Two Democracy Center" or as
the "Building." The space which is the subject of this Lease Agreement is
hereinafter referred to as the "Premises." The location and configuration of the
Premises is outlined in red on Exhibit A attached hereto and made a part hereof.
1.2 The lease of the Premises includes the right, together with other
tenants of the Office Complex and members of the public, to use the common and
public areas of the Office Complex subject to the rules and regulations
promulgated by Landlord hereunder, but includes no other rights not specifically
set forth herein. The lease of the Premises also is subject to any covenants,
conditions and restrictions of record.
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1.3 Promptly after the Lease Commencement Date is ascertained, Landlord
and Tenant shall enter into an amendment in substantially the form attached as
Exhibit D to this Lease, setting forth the exact number of square feet of Net
Rentable Area (as defined in Exhibit D hereto) included in the Premises. The
number of square feet of rentable area included in the Premises shall be
determined by Landlord's architect in accordance with the provisions of Exhibit
D.
ARTICLE II
TERM
2.1 The term of this Lease (hereinafter referred to as the "Lease
Term") shall be for three (3) years, commencing on the Lease Commencement Date,
as determined pursuant to Section 2.2 hereof, and continuing for a period of
three (3) years thereafter, unless such Lease Term shall be terminated earlier
in accordance with the provisions hereof. (Provided, however, that if the Lease
Commencement Date shall occur on a day other than the first day of a month, the
Lease Term shall commence on such date and continue for the balance of such
month and for a period of three (3) years thereafter) The term "Lease Term"
shall include any and all renewals and extensions of the term of the Lease.
2.2 The Lease Commencement Date shall be the earlier to occur of (i)
the date on which the construction, installation, modification and renovation of
the tenant improvements in the Premises, as described in Section 9.2 hereof, is
substantially completed or (ii) the date on which Tenant commences beneficial
use of the Premises; provided, however, if Tenant elects to construct or cause
to be constructed the renovations and modifications to the Premises described in
Section 9.2 hereof, the Lease Commencement Date shall be the earlier to occur of
October 1, 1997 or (i) and (ii) of the first clause of this sentence. For
purposes of this Lease, the Premises shall be deemed to be substantially
complete when (x) the work described in Section 9.2 has been completed, as
certified by Landlord's architect in its professional judgment, except for
long-lead specialty items and items of work and adjustment of equipment and
fixtures that can be completed after the Premises are occupied by Tenant without
causing substantial interference with Tenant's use of the Premises and (y)
Tenant may lawfully occupy the Premises. Tenant shall be deemed to have
commenced beneficial use of the Premises when Tenant begins to move furniture
and furnishings into the Premises; provided, however that in the event that
Tenant elects that Landlord perform the work described in Section 9.2 below,
Tenant and its contractors shall be allowed access to the Premises fifteen (15)
days prior to the anticipated date of substantial completion of the modification
and renovation of the tenant improvements in the Premises for the purpose of
installing Tenant's computers, telephones or other special equipment and
fixtures, and to perform other related activity, and such installation and
related activity shall not be considered the commencement of beneficial use of
the Premises by Tenant. Any and all installations and other related activity by
Tenant or its contractors in the Premises prior to the Lease Commencement Date
shall be coordinated with Landlord and its general contractor. Landlord and
Tenant shall each endeavor to assure that, to the greatest extent possible, any
work which it or its contractors is performing in and to the Premises does not
interfere with or delay the work being performed by the other and its
contractors. All terms and conditions of this Lease, including, without
limitation, the insurance, release and waiver of liability provisions of
Articles XIII and XV hereof, shall apply to and be effective during such period
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of occupancy by Tenant, except for Tenant's obligation to pay rent.
Notwithstanding the foregoing, if Landlord is delayed in substantially
completing the construction and installation of the alterations and
modifications to the Premises due to delays caused, directly or indirectly, by
the actions or inactions of Tenant, its employees, agents, consultants,
contractors or subcontractors, then, for the purposes of determining the Lease
Commencement Date the Premises shall be deemed to have been substantially
completed and all necessary permits and approvals issued or granted, as
applicable, on the date that the Premises would have been substantially
completed if such delay or delays had not occurred.
2.3 Promptly after the Lease Commencement Date is ascertained, Landlord
and Tenant shall execute, in recordable form, a written declaration setting
forth the Lease Commencement Date, the date upon which the Lease Term will
expire and the other information set forth therein. The form of such declaration
is attached hereto as Exhibit E, and is made a part hereof.
2.4 (a) Landlord presently anticipates that the Premises will be ready
for occupancy by Tenant on or about October 1, 1997, provided that (i) Tenant
adheres to the time frames set forth in the construction schedule described in
Section 9.2(c)(i) hereof and (b) Landlord timely receives all required permits
and approvals in connection with the performance of the work to be performed in
the Premises pursuant to Section 9.2 below. In the event that construction of
the Premises or the delivery of possession of the Premises to Tenant is delayed,
regardless of the reasons or causes of such delay, this Lease shall not be
rendered void or voidable as a result of such delay, and the term of this Lease
shall commence on the Lease Commencement Date as determined pursuant to Section
2.2 hereof. Furthermore, Landlord shall not have any liability whatsoever to
Tenant on account of any such delay.
(b) Notwithstanding anything to the contrary set forth in Section
2.4(a) above, in the event that Snyder Communications, L.P., the current
occupant of the Premises, does not vacate the Premises on or before November 1,
1997, then, except as otherwise provided below, Tenant, at its sole option,
shall have the right to terminate this Lease by delivering written notice of the
exercise of such right of termination to Landlord. Tenant's right to terminate
this Lease in accordance with the provisions of this Section 2.4(b) may be
exercised by Tenant only during the five (5) day period commencing on November
2, 1997 and terminating on November 6, 1997 and if such right is not exercised
by 5:00 p.m. on November 6, 1997, such right of termination shall lapse and
expire and be of no further force and effect. In the event this Lease is
terminated pursuant to this Section 2.4(b), this Lease shall be null and void
and the parties shall be released and discharged from further liabilities,
obligations or responsibilities hereunder and Landlord will return to Tenant all
sums paid to Landlord in accordance with Section 3.1 and Section 5.1 below.
2.5 For purposes of this Lease, the term "Lease Year" shall mean a
period of twelve (12) consecutive calendar months, commencing on the first day
of the month in which the Lease Commencement Date occurs and each successive
twelve (12) month period, except that if the Lease Commencement Date shall occur
on a date other than the first day of a month, then the first Lease Year shall
also include the period from the Lease Commencement Date to the first day of the
following month.
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ARTICLE III
BASE RENT
3.1 During the Lease Term, Tenant shall pay to Landlord as annual base
rent for the Premises, without set off, deduction or demand, an amount equal to
the sum of Twenty-Four Dollars ($24.00) multiplied by the total number of square
feet of Net Rentable Area in the Premises, which amount shall be subject to
adjustment as provided in Section 3.2 hereof. The annual base rent payable
hereunder during each Lease Year shall be divided into equal monthly
installments and such monthly installments shall be due and payable in advance
on the first day of each month during such Lease Year. Concurrently with the
signing of this Lease, Tenant shall pay to Landlord the sum of Fifteen Thousand
One Hundred Ninety-Two Dollars ($15,192.00), which sum shall be credited by
Landlord toward the monthly installment of base rent due for the first full
calendar month falling within the Lease Term. If the Lease Term begins on a date
other than on the first day of a month, rent from such date until the first day
of the following month shall be prorated on a per diem basis at the base rate
payable during the first Lease Year, and such prorated rent shall be payable in
advance on the Lease Commencement Date.
3.2 Commencing on the first (1st) day of the second (2nd) Lease Year
and on the first day of each and every Lease Year thereafter during the Lease
Term, the annual base rent shall be increased by two and seventy-five
one-hundredths percent (2.75%) of the amount of annual base rent payable for the
immediately preceding Lease Year.
3.3 All rent shall be paid to Landlord in legal tender of the United
States at the address to which notices to Landlord are to be given or to such
other party or to such other address as Landlord may designate from time to time
by written notice to Tenant. If Landlord shall at any time accept rent after it
shall become due and payable, such acceptance shall not excuse a delay upon
subsequent occasions, or constitute or be construed as a waiver of any of
Landlord's rights hereunder.
ARTICLE IV
ADDITIONAL RENT
4.1 Operating Expenses.
(a) Commencing in the calendar year 1999 and continuing with
each calendar year thereafter during the Lease Term, Tenant shall pay Landlord,
as additional rent for the Premises, Tenant's proportionate share of the amount
by which actual Operating Expenses (as hereinafter defined) incurred by Landlord
in connection with the management and operation of the Office Complex during any
calendar year falling entirely or partly within the Lease Term exceed the actual
Operating Expenses incurred by Landlord in connection with the management and
operation of the Office Complex during the twelve month period (the "Base Year")
commencing January 1, 1998, and ending December 31, 1998. For the purposes of
this Lease, the actual Operating Expenses
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incurred by Landlord during the Base Year are referred to as the "Base Year
Operating Expenses." For purposes of this Article IV Tenant's proportionate
share of such increases in Operating Expenses shall be that percentage which is
equal to a fraction, the numerator of which is the number of square feet of
rentable area in the Premises and the denominator of which is the total number
of square feet of rentable area in the Office Complex, excluding the number of
square feet devoted to storage space and parking. As of the date of this Lease,
Landlord represents that the denominator of the fraction referred to in the
preceding sentence is (i) 680,000 square feet of rentable area when calculating
all Operating Expenses other than those Operating Expenses referred to in
Sections 4.1 (b)(l)(x) and (xi) below, (ii) 669,538 square feet of rentable area
when calculating the Operating Expense referred to in Section 4.1(b)(l)(x) below
and (iii) 675,336 square feet of rentable area when calculating the Operating
Expense referred to in Section 4.1(b)(1)(xi) below; however, it is understood
that the numbers comprising such denominators are subject to change because of
changes in the use or configuration of space in the Office Complex or the
addition of space to the Office Complex or the deletion of space from the Office
Complex or in the amount of space leased by tenants who pay by separate meter
for their electrical and/or janitorial and cleaning services. The preceding
sentence notwithstanding, Tenant's proportionate share shall increase in the
event Tenant expands the Premises. By execution of this Lease, Tenant accepts
the basic obligation to pay its proportionate share of increases in Operating
Expenses incurred by Landlord above those amounts actually incurred by Landlord
in the Base Year. The specific obligations of Tenant with respect to such
increases shall be governed by the remaining sections of this Article IV.
(b) The Operating Expenses shall include the costs and
expenses described in subsection (1) below, but shall not include the costs and
expenses described in subsection (2) below:
(1) Included costs and expenses:
(i) Gas, water, sewer, electricity and other utility
charges (including surcharges) of every type and
nature.
(ii) Insurance premiums paid by Landlord.
(iii) Personnel costs of the Office Complex,
including, but not limited to, salaries, wages,
bonuses, pension, retirement and welfare payments or
contributions, payroll taxes, worker's compensation,
uniforms and dry cleaning costs, fidelity bonds,
payments toward mass transit subsidies, fringe
benefits, all medical insurance and other
contributions benefits, programs and employee benefit
plans and other direct and indirect costs of
engineers, superintendents, watchmen, porters and any
other personnel related to the management,
maintenance,
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repair and operation of the Office Complex but
excluding the costs of any compensation paid to
partners of Landlord or officers or directors of the
managing agent.
(iv) Costs of service and maintenance contracts,
including, but not limited to, chillers, boilers,
controls, elevators, mail chute, window, security
service, snow and ice removal and management fees;
provided such costs and expenses under generally
accepted accounting principles as applied in the real
estate industry ("GAAP") would not be capitalized.
Management fees shall not exceed five percent (5%) of
the gross revenues derived from the Office Complex
per year. Costs of service shall be consistent with
costs of such contracts for other first-class office
buildings in the North Bethesda, Maryland area.
(v) Except to the extent excluded by subsection (2)
below, all other maintenance, supply and repair
expenses incurred in connection with the Office
Complex which are deductible by Landlord in computing
its Federal income tax liability under the tax laws
and regulations in effect from time to time when such
expenses are incurred.
(vi) Depreciation (on a straight-line basis) for
capital expenditures made by Landlord (A) to reduce
operating expenses if the annual reduction in
operating expenses which results from such capital
expenditure shall exceed the actual charge for
depreciation therefor or (B) to comply with
applicable laws, rules, regulations, requirements,
statutes, ordinances, by-laws and court decisions of
all public authorities which are now or hereafter in
force ("Legal Requirements"), unless compliance with
any such Legal Requirement may be postponed or
delayed due to a "grandfather" provision in such
Legal Requirement which is applicable to the Office
Complex or the Building and Landlord determines not
to rely on such grandfather provision but to comply
with such Legal Requirement prior to the time such
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compliance is mandated; provided, however, that such
capital expenditures shall be depreciated over the
longer of (I) the useful life of the item,
improvement or product resulting from such capital
expenditure or (II) the life time permitted by the
Internal Revenue Code of 1986, as amended, for such
item, improvement or product.
(vii) Any other reasonable costs and expenses
incurred by Landlord in maintaining or operating the
Office Complex in accordance with management
practices generally prevailing for first class office
buildings in North Bethesda, Montgomery County,
Maryland.
(viii) The reasonable costs of any additional
services not provided to the Office Complex at the
Lease Commencement Date but thereafter provided by
Landlord in the prudent management of the Office
Complex and in accordance with management practices
generally prevailing for first class office buildings
in North Bethesda, Montgomery County, Maryland.
(ix) Real Estate Taxes (as hereinafter defined).
(x) Common Area Electricity Charges (as hereinafter
defined).
(xi) Common Area Janitorial Charges (as hereinafter
defined).
(2) Excluded costs and expenses:
(i) Principal or interest payments on and any other
charges paid by Landlord in connection with any
mortgages, deeds of trust or other financing
encumbrances.
(ii) Rental payments (including percentage rent and
any increases in base rent) made under any ground
lease, except to the extent such rental payments
represent payment of Real Estate Taxes (as
hereinafter defined).
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(iii) Leasing commissions payable by Landlord and
advertising and promotional expenditures associated
with marketing vacant space in the Office Complex.
(iv) Deductions for depreciation for the Office
Complex, except to the extent included in subsection
(l)(vi) above.
(v) Capital improvements that are not deducted by
Landlord in computing its federal income tax
liability, except to the extent included in
subsection (l)(vi) above.
(vi) The costs of insurance premiums, special
services, tenant improvements and concessions,
repairs, maintenance items or utilities separately
chargeable to, or specifically provided for,
individual tenants of the Office Complex, including,
without limitation, the cost of preparing any space
in the Office Complex for occupancy by any tenant
and/or for altering, renovating, repainting,
decorating, planning and designing spaces for any
tenant in the Office Complex in connection with the
renewal of its lease and/or costs of preparing or
renovating any vacant space for lease in the Office
Complex.
(vii) Costs and expenses associated with the
operation and maintenance of the health club.
(viii) Salaries and all other compensation (including
fringe benefits and other direct and indirect
personnel costs) of partners, officers and executives
above the grade of superintendent or building manager
of Landlord or the managing agent.
(ix) Costs and expenses incurred by Landlord in
connection with damage, casualty or condemnation of
all or a portion of the Office Complex; provided,
however, that with respect to the cost to repair
damage, Landlord may include in Operating Expenses
(i) the amount of a commercially reasonable
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deductible applied to each such occurrence and (2) if
Landlord determines, in its reasonable judgment, that
the effect of making a claim under Landlord's
insurance policy or policies would be to increase, in
the aggregate, the future cost of insurance premiums
and repair and maintenance expenses relating to the
Office Complex, Landlord may include in Operating
Expenses the cost to repair such damage to the extent
such cost does not exceed two hundred percent (200%)
of the deductible amount applicable under Landlord's
insurance policy or policies to such occurrence;
provided, however, that Landlord may only include
such cost in Operating Expenses, if Landlord actually
makes such repair and does not submit an insurance
claim in connection therewith.
(xi) Costs and expenses incurred by Landlord in
curing, repairing or replacing any structural portion
of the Office Complex made necessary as a result of
defects in design, workmanship or materials.
(xii) Any costs and expenses incurred by Landlord in
connection with causing the common and public areas
of the Office Complex which are within Landlord's
sole and exclusive control to comply with applicable
Legal Requirements, including, without limitation,
the Americans with Disabilities Act of 1990, except
to the extent included in (l)(vi) above.
(xiii) Costs and expenses incurred by Landlord to
abate, to encapsulate, to investigate, to remove and
to respond to any hazardous materials contamination,
exposure or release or to comply with any hazardous
materials or environmental laws, ordinances or
regulations.
(xiv) Sums paid by Landlord for any indemnity,
damages, fines, late charges, penalties or interest
for any late payment of Real Estate Taxes or any
Operating Expenses or to correct violations of Legal
Requirements applicable to the Office Complex, except
for expenditures for repairs, maintenance and
replacement or other items that would otherwise
reasonably constitute Operating Expenses.
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(xv) Costs and expenses directly resulting from the
gross negligence or willful misconduct of Landlord or
its employees.
(xvi) Fees, costs and expenses incurred by Landlord
in connection with or relating to claims against or
disputes with tenants of the Office Complex or the
negotiation of leases with tenants or prospective
tenants or the enforcement of rules and regulations,
including, without limitation, legal fees and
disbursements.
(xvii) Costs and expenses of administration and
management of partnership activities of Landlord.
In the calculation of any Operating Expenses hereunder, it is
understood that no expense shall be charged more than once.
(c) As used above, the term "Real Estate Taxes" shall mean (i)
all real estate taxes, including general and special assessments, if any, which
are imposed upon Landlord or assessed against the Office Complex or the Land
upon which the Office Complex is situated; (ii) any other present for future
taxes or governmental charges that are imposed upon Landlord or assessed against
the Office Complex and/or the land upon which the Office Complex is situated,
including, but not limited to, any tax levied on or measured by the rents
payable by tenants of the Office Complex, which are in the nature of, or in
substitution for, real estate taxes; and (iii) all taxes which are imposed upon
Landlord, and which are assessed against the value of any improvements to the
Premises made by Tenant or any machinery, equipment, fixtures or other personal
property of Tenant used therein. Real Estate Taxes shall not include franchise
taxes, inheritance taxes or federal or local income taxes imposed upon Landlord
except to the extent such taxes are in the nature of, or in substitution for,
real estate taxes.
(d) As used above, the term "Common Area Electricity Charges"
shall consist of the charges for electrical power consumed in the operation of
the public and common areas of the Office Complex, as determined by Landlord in
its reasonable discretion.
(e) As used above, the term "Common Area Janitorial Charges"
shall mean the charges for janitorial and cleaning services and supplies
furnished for all public and common areas in the Office Complex.
(f) Notwithstanding anything to the contrary in this Article
IV, Tenant shall not be obligated to pay to Landlord its proportionate share of
increases of Operating Expenses for any
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calendar year after the first Lease Year attributable to Controllable Operating
Expenses (as defined in the next sentence) which exceed eight percent (8%), in
the aggregate, of the amount of Controllable Operating Expenses for the
immediately preceding calendar year. For the purposes of this Section 4.1(f),
Controllable Operating Expenses are all Operating Expenses other than Operating
Expenses incurred by Landlord which are attributable to (i) Real Estate Taxes,
(ii) Utilities, (iii) snow removal and (iv) Insurance.
4.2 In the event the average occupancy rate for the entire Office
Complex shall be less than ninety-five percent (95%) for any calendar year,
including the Base Year, for purposes of calculating the additional rent payable
by Tenant pursuant to this Article IV for each calendar year, the Operating
Expenses for the Base Year and such calendar year shall each be increased by the
amount of additional costs and expenses that Landlord reasonably estimates would
have been incurred if the average occupancy rate for the entire Office Complex
had been ninety-five percent (95%) for the Base Year and such calendar year.
When making the foregoing calculation, Landlord shall be governed by the
following:
(1) It is the intent of this provision to permit Landlord
to recover for increases in Operating Expenses
attributable to occupied space in the Office Complex
even though the aggregate of such expenses shall have
been reduced below the actual Operating Expenses
incurred by Landlord for the preceding calendar year
or for the Base Year as a result of vacancies in the
Office Complex.
(2) It is not the intent of this provision to permit
Landlord to recover from Tenant additional rent
pursuant to Article IV for any calendar year which,
when added to the total amount of additional rent
payable by all tenants of the Office Complex on
account of Operating Expenses for such year, will
exceed (i) the actual amount of Operating Expenses
incurred by Landlord for such year, less (ii) the
Base Year Operating Expenses.
(3) The increases contemplated by this provision are
intended to apply only to those costs and expenses
related to tenants occupancy of the Office Complex
or, as applicable, the Building, including, without
limitation, janitorial, utility and personnel costs
and
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expenses, but would not relate to Real Estate Taxes
or other expenses not related to tenant occupancy of
the Office Complex and/or the Building, as
applicable.
4.3 At the beginning of calendar year 1999 and each calendar year
thereafter during the Lease Term, Landlord shall submit to Tenant a statement
setting forth Landlord's reasonable estimate of the amount by which the
Operating Expenses that are expected to be incurred during such calendar year
will exceed the Base Year Operating Expenses, and the computation of Tenant's
proportionate share of such anticipated increase. Except as otherwise provided
herein, Tenant shall pay to Landlord on the first day of each month following
receipt of such statement during such calendar year an amount equal to Tenant's
proportionate share of the anticipated increase in such expenses multiplied by a
fraction, the numerator of which is 1, and the denominator of which is twelve
(12). Within ninety (90) days after the expiration of each calendar year falling
entirely or partly within the Lease Term, Landlord shall submit to Tenant a
statement showing (i) the actual amount of Base Year Operating Expenses, (ii)
the actual Operating Expenses paid or incurred by Landlord during the
immediately preceding calendar year, (iii) a computation of Tenant's
proportionate share of the amount by which the Operating Expenses actually
incurred during the preceding calendar year exceeded the Base Year Operating
Expenses, and (iv) the aggregate amount of the estimated payments made by Tenant
on account thereof. If the aggregate amount of such estimated payments exceeds
Tenant's actual liability for such increases, Tenant shall deduct the net
overpayment from its next estimated payment or payments on account of increases
in Operating Expenses for the then current year. If Tenant's actual liability
for such increases exceeds the estimated payments made by Tenant on account
thereof, then Tenant shall promptly pay to Landlord the total amount of such
deficiency as additional rent due hereunder.
4.4 In the event the Lease Term commences or expires on a day other
than the first day or the last day of a calendar year, the increases in the
Operating Expenses to be paid by Tenant for such calendar year shall be
apportioned by multiplying the amount of Tenant's proportionate share thereof
for the full calendar year by a fraction, the numerator of which is the number
of days during such calendar year falling within the Lease Term, and the
denominator of which is 365.
4.5 All payments required to be made by Tenant pursuant to this Article
IV shall be paid to Landlord, without setoff or deduction, in the same manner as
base rent is payable pursuant to Article III hereof.
4.6 The obligation imposed upon Tenant by Section 4.3 hereof to pay for
its proportionate share of the increases in Operating Expenses described in
Section 4.1 hereof for the last calendar year falling entirely or partly within
the Lease Term shall survive the expiration of the Lease Term. Similarly,
Landlord's obligation to refund to Tenant the excess, if any, of the amount of
Tenant's estimated payments on account of such increases for such last calendar
year over Tenant's actual liability therefor shall survive the expiration of the
Lease Term and such amount shall be refunded to Tenant within thirty (30) days
of the date of Landlord's calculation of the actual increases for such last
calendar year falling entirely or partly within the Lease Term.
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ARTICLE V
SECURITY DEPOSIT
5.1 Simultaneously with the execution of this Lease, Tenant shall
deliver to Landlord the sum of Fifteen Thousand One Hundred Ninety-Two Dollars
($15,19200), as a security deposit (hereinafter referred to as the "security
deposit"), which sum shall be in addition to the amount paid by Tenant to
Landlord pursuant to Section 3.1 hereof. Landlord shall maintain the security
deposit in a separate account. In the event that the Premises are determined to
be more or less than 7,596 square feet of Net Rentable Area, than the amount of
the Security Deposit shall be increased or decreased, as the case may be, so
that the amount of the Security Deposit shall be equal to one monthly
installment of base rent, as determined pursuant to Section 3.1 hereof. However,
all cash which Tenant delivers to Landlord as a security deposit will be
deposited in a interest bearing account maintained by Landlord (which account
may also contain the security deposits of other tenants or other sums).
(b) The security deposit shall be security for the performance
by Tenant of all of Tenant's obligations, covenants, conditions and agreements
under this Lease. Within thirty (30) days after the expiration of the Lease
Term, and provided Tenant has vacated the Premises and is not in default
hereunder, Landlord shall return the security deposit and any interest accrued
thereon to Tenant, less such portion thereof as Landlord shall properly have
appropriated to satisfy any default by Tenant hereunder. In the event of any
default by Tenant hereunder, Landlord shall have the right, but shall not be
obligated, to use, apply or retain all or any portion of the security deposit
for (i) the payment of any base or additional rent or any other sum as to which
Tenant is in default, (ii) the payment of any amount which Landlord may spend or
become obligated to spend to repair physical damage to the Premises or the
Office Complex pursuant to Section 8.2 hereof, or (iii) the payment of any
amount Landlord may spend or become obligated to spend, or for the compensation
of Landlord for any losses incurred, by reason of Tenant's default, including,
but not limited to, any damage or deficiency arising in connection with the
reletting of the Premises; provided, however, Landlord, except in cases of
emergency, shall not use, apply or retain any portion of the security deposit
without first notifying Tenant of its intent to do so, which notice, in case of
emergency, may be verbal. If any portion of the security deposit is so used or
applied, within three (3) business days after written notice to Tenant of such
use or application, Tenant shall deposit with Landlord cash in an amount
sufficient to restore the security deposit to its original amount and Tenant's
failure to do so shall constitute a default under this Lease.
5.2 In the event of the sale or transfer of Landlord's interest in the
Office Complex, Landlord shall have the right to transfer the security deposit
to the purchaser or assignee. If Landlord does not exercise its right to
transfer the security deposit to the purchaser or assignee, Landlord shall
return the security deposit to Tenant. If Landlord exercises its right to
transfer the security deposit to the purchaser or assignee, Tenant shall look
only to the new landlord for the return of the security deposit, and Landlord
shall thereupon be released from all liability to Tenant for the return of the
security deposit.
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5.3 Tenant hereby acknowledges that Tenant will not look to the holder
of any mortgage (as defined in Section 20.1) encumbering the Office Complex for
return of the security deposit if such holder, or its successors or assigns,
shall succeed to the ownership of the Office Complex, whether by foreclosure or
deed in lieu thereof, except if and to the extent the security deposit is
actually transferred to such holder.
ARTICLE VI
USE OF PREMISES
6.1 Tenant shall use and occupy the Premises solely for general office
purposes and for no other use or purpose without the prior written consent of
Landlord. Tenant shall not use or occupy the Premises for any unlawful purpose
or in any manner that will constitute waste, nuisance or unreasonable annoyance
to Landlord or other tenants of the Office Complex. Tenant shall comply with all
present and future laws, ordinances (including zoning ordinances and land use
requirements), regulations, and orders of the United States of America, the
State of Maryland, the County of Montgomery and any other public or quasi-public
authority having jurisdiction over the Premises, concerning the use, occupancy
and condition of the Premises and all machinery, equipment and furnishings
therein. Landlord has agreed to obtain at its expense the initial occupancy
permit required for Tenant to lawfully occupy the Premises. It is expressly
understood that if any change in the use of the Premises by Tenant, or any
alterations to the Premises by Tenant, or any future law, ordinance, regulation
or order requires a new or additional permit from, or approval by, any
governmental agency having jurisdiction over the Office Complex, such permit or
approval shall be obtained by Tenant on its behalf and at its sole expense.
Further, Tenant shall comply with all Legal Requirements which shall impose a
duty on Landlord or Tenant relating to or as a result of the use or occupancy of
the Premises. Tenant shall pay all fines, penalties and damages that may arise
out of or be imposed because of Tenant's failure to comply with the provisions
of this Lease.
6.2 Tenant shall pay any business rent or other taxes that are now or
hereafter levied upon Tenant's use or occupancy of the Premises, the conduct of
Tenant's business at the Premises, or Tenant's equipment, fixtures or personal
property. In the event that any such taxes are enacted, changed or altered so
that any of such taxes are levied against Landlord, or the mode of collection of
such taxes is changed so that Landlord is responsible for collection or payment
of such taxes, Tenant shall pay any and all such taxes to Landlord upon written
demand from Landlord.
6.3 Tenant shall not generate, dispose of or maintain any toxic or
hazardous substances in the Premises other than cleaning agents and other
substances normally and customarily used by office tenants and which are not
prohibited by applicable law and which Tenant shall store and shall use in
accordance with applicable law.
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ARTICLE VII
ASSIGNMENT AND SUBLETTING
7.1 Tenant shall not have the right to assign, transfer mortgage or
otherwise encumber this Lease or its interest herein without first obtaining the
prior written consent of Landlord, which consent may be granted or withheld by
Landlord in its sole discretion. No assignment or transfer of this Lease or the
right of occupancy hereunder may be effectuated by operation of law or otherwise
without the prior written consent of Landlord, which consent may be granted or
withheld by Landlord in its sole discretion. If Tenant is a partnership, a
withdrawal or change, whether voluntary, involuntary or by operation of law, of
partners owning, individually or collectively, a controlling interest in Tenant
shall be deemed a voluntary assignment of this Lease shall be 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 of the capital stock of Tenant, shall be deemed a voluntary
assignment of this Lease and subject to the foregoing provisions. However, the
preceding sentence shall not apply to corporations the stock of which is traded
through a national or regional stock exchange. Any attempted assignment or
transfer by Tenant of this Lease or its interest herein without consent shall,
at the option of Landlord, terminate this Lease. However, in the event of such
termination, Tenant shall remain liable for all rent and other sums due under
this Lease and all damages suffered by Landlord on account of such breach by
Tenant.
7.2 Tenant shall not have the right to sublease (which term, as used
herein, shall include any type of subrental arrangement and any type of license
to occupy) all or any part of the Premises without first obtaining the prior
written consent of Landlord, which consent shall not be unreasonably withheld;
provided, however, that it shall not be unreasonable for Landlord to withhold
its consent if Tenant is in default hereunder, or if Landlord determines, in its
sole, but not arbitrary or capricious, discretion, that the character of the
proposed subtenant or the nature of the activities to be conducted by such
proposed subtenant would materially adversely affect the other tenants of the
Office Complex or would impair the reputation of the Office Complex as a
first-class office building, or that the financial history or credit rating of
the proposed subtenant is unacceptable to Landlord or that the character of the
business to be conducted or the proposed use of the Premises by the proposed
subtenant or assignee (i) is likely to materially increase Operating Expenses
for the Building or the Office Complex beyond that which Landlord now incurs for
use of by Tenant; (ii) is likely to materially increase the burden on elevators
or other Building systems or equipment over the burden prior to such proposed
subletting or assignment; or (iii) violates or is likely to violate any
provisions or restrictions contained herein relating to the use or occupancy of
the Premises. Furthermore, Tenant shall not have the right to sublease all or
any portion of the Premises without first complying with the provisions of
subsections (a) through (e) below:
(a) Tenant shall give Landlord written notice of its desire to
sublease all or a portion of the Premises. Such notice shall specify the
portion of the Premises proposed to be sublet and the date such portion is to be
made available for subleasing. Within ten (10) business days after receipt of
such notice, Landlord shall notify Tenant in writing whether or not Landlord
will retake
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possession of the portion of the Premises proposed to be sublet and thereby
delete such portion of the Premises from the Premises being leased to Tenant
hereunder. If Landlord elects to retake such portion of the Premises, (i)
Landlord shall retake possession of such portion on the date specified in
Tenant's notice, (ii) Tenant's obligation to pay rent for such portion shall
cease on such date and (iii) Landlord and Tenant shall promptly execute an
amendment to the Lease setting forth the new square footage of the reduced
premises to be occupied by Tenant Thereafter, Tenant shall not have any further
rights of any kind, including any rights of renewal, in or to the portion of the
Premises so retaken. If Landlord does not elect to retake such portion of the
Premises within the aforesaid ten (10) business day period, Tenant shall comply
with the provisions of subsection (b) below with respect to any proposed
sublease of such portion of the Premises.
(b) Tenant shall have the right to sublease any portion of the
Premises that Landlord has not elected to retake pursuant to subsection (a)
above, provided that Tenant obtains the prior written consent of Landlord to
such proposed sublease. Landlord agrees not to unreasonably withhold its consent
to any such proposed sublease; provided, however, that it shall not be
unreasonable for Landlord to withhold its consent for any of the reasons set
forth in the introduction to this Section 7.2. Notwithstanding the foregoing,
Tenant shall in no event have the right to sublease the Premises, or any portion
thereof, to more than four (4) subtenant(s) at any one time.
(c) Tenant agrees to give Landlord at least thirty (30) days
advance written notice of Tenant's intention to sublease a portion of the
Premises, along with sufficient information about the proposed subtenant to
enable Landlord to make the determination called for by subsection (b) above.
Within ten (10) business days after Landlord's receipt of Tenant's notice,
Landlord shall notify Tenant, in writing, whether Landlord consents to such
sublease or whether Landlord requires additional information to make its
determination.
(d) Tenant's right to sublease any portion of the Premises that
Landlord has not elected to retake pursuant to subsection (a) above shall expire
one hundred twenty (120) days after the giving of the notice required by
subsection (a). Thereafter, Tenant shall have no right to sublease the portion
of the Premises described in the notice furnished pursuant to subsection (a),
unless Tenant shall have again complied with the procedures set forth in this
Section 72.
(e) Provided Tenant is not in default under any terms and
provisions of this Lease, beyond any applicable notice and cure period, Tenant
shall be entitled to retain any profit derived from subletting the Premises or
any part thereof.
7.3 Notwithstanding the provisions of Section 7.1 or 7.2 hereof to the
contrary, if consent to any assignment or subletting is required by the holder
of any mortgage on the Building or the Office Complex, no assignment of this
Lease or sublease of all or any portions of the Premises shall be permitted
without the prior written consent of such holder. Landlord agrees to use its
reasonable efforts to obtain promptly such required consent to any proposed
subletting from the the holder of a mortgage on the Office Complex.
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7.4 The consent by Landlord to any assignment or subletting shall not
be construed as a waiver or release of Tenant from any and all liability for the
performance of all covenants and obligations to be performed by Tenant under
this Lease, nor shall the collection or acceptance of rent from any assignee,
transferee or subtenant constitute a waiver or release of Tenant from any of its
liabilities or obligations under this Lease. Landlord's consent to any
assignment or subletting shall not be construed as relieving Tenant from the
obligation of complying with the provisions of Sections 7.1 or 7.2 hereof, as
applicable, with respect to any subsequent assignment or subletting. For any
period during which Tenant is in default hereunder, Tenant hereby assigns to
Landlord the rent due from any subtenant of Tenant and hereby authorizes each
subtenant to pay said rent directly to Landlord. If Landlord consents to an
assignment or subleasing in any instance, Tenant further agrees to submit any
and all instruments of assignment and sublease to Landlord for Landlord's prior
written approval as to form and substance, which approval shall not be
unreasonably withheld, but which instruments shall provide, as an express
condition precedent to Landlord's prior approval, that any sublessee or assignee
agree to remain jointly and severally liable to Landlord for all obligations
imposed by any such agreement of assignment or sublease.
7.5 (a) Notwithstanding the above restrictions on subletting and
assignments, Landlord's prior consent shall not be required with respect to (i)
any assignment or transfer of this Lease incident to the merger, consolidation,
restructure or reorganization of Tenant or (ii) any assignment or subletting to
an "Affiliate of Tenant" (as hereinafter defined) or a "Parent of Tenant" (as
hereinafter defined), provided (A) that such surviving or successor entity or
assignee or sublessee, as the case may be, has a creditworthiness (e.g. assets
and capitalization) and net worth (which shall be determined on a pro forma
basis using generally accepted accounting principles consistently applied and
using the most recent financial statements) at least eq |
