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Sample Business ContractsHome: Sample Business Contracts: DEED OF LEASE Williams Communications LLC, Landlord RACKSPACE IAD1DC, Ltd, Tenant TABLE OF CONTENTS
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v DEED OF LEASE THIS DEED OF LEASE (“Lease”), dated this 16th day of January, 2003 by and between Williams Communications LLC, a Delaware limited liability company (“Landlord”) and Rackspace IAD IDC, Ltd, a Texas limited partnership (“Tenant”) WITNESSETH: That Landlord, in consideration of the rents and mutual covenants hereinafter set forth, does hereby lease, demise and let on a net basis unto Tenant, and Tenant does hereby hire and take from Landlord the “Premises” which consists of 32,971 square feet of “net rentable area” comprising all of the data center building, including the equipment as detailed in Exhibit D, as attached and incorporated by reference (“Building B”), located at 524 Van Buren Street, Herndon, Virginia 22070 (“Property”) in Fairfax County, Virginia. A description of the Property is attached hereto and incorporated herein, as Exhibit A Building B, the Property, and Landlord’s property located at 520 Van Buren Street, Herndon Virginia 22070 in Fairfax County are sometimes hereafter referred to collectively as the “Project”. Landlord hereby leases the Premises and Tenant hereby accepts the Premises and the existing improvements and equipment therein in its current “AS IS” condition. In consideration for One Hundred Fifteen Thousand Three Hundred and Ninety Eight Thousand Dollars and 50/100 ($115,398.50), an amount equal to two (2) months free Base Rent, hereinafter set forth, Tenant agrees and acknowledges that Landlord shall have the right to continue to occupy and use a portion of the Premises consisting of the approximately 3,000 square feet of data center floor space (“Landlord’s Retained Space”) more particularly identified on the floor plan for the building attached hereto as Exhibit B until February 2, 2003 (“Continued Occupancy”), in accordance with the provisions of Section 17.2 hereof. Tenant hereby accepts this Lease and the Premises upon the covenants and conditions set forth herein and subject to any encumbrances, covenants, conditions, restrictions and other matters of record as of the date hereof and all applicable zoning, municipal, county, state and federal laws, ordinances and regulations governing and regulating the use of the Premises, including, but not limited to, the Protective Covenants and Restrictions for Herndon Square II attached hereto and incorporated herein, as Exhibit A-l. TO HAVE AND TO HOLD THE SAME, for a “term” commencing on January [Insert Date], 2003. The term shall continue for a period of ten (10) years after the Commencement Date, unless sooner terminated in the manner provided hereinafter. The date on which the term of the Lease begins is sometimes hereinafter referred to as the “Commencement Date”. Following the Commencement Date, Landlord shall deliver to tenant a Commencement Notice which shall contain the exact Commencement Date, and other reasonably pertinent data. Upon execution of the Commencement Notice by Landlord and Tenant, the Commencement Notice shall be conclusive and binding on Tenant as to all matters set forth therein.
-1- ARTICLE 1 BASE RENT Section 1.1 Base Rent. In consideration of the leasing aforesaid, Tenant agrees to pay to Landlord, One Technology Center, TC-11, 100 South Cincinnati, Tulsa, OK 74103, Attn: Susan Ellis, Corporate Real Estate or at such other place as Landlord from time to time may designate in wilting, annual rental based on the number of square feet of net rentable area contained in the Premises calculated as follows:
The aforesaid amount is sometimes hereinafter referred to as the “Base Rent,” and shall, be payable monthly, in advance, in equal installments commencing on the first day of the third month following the Commencement Date and continuing on the first day of each and every month thereafter for the next succeeding months during the balance of the term, it being the intention of the parties that there are to be two months free Base Rent. If the Commencement Date occurs on a date other than the first day of a calendar month, or if the term ends on a date other than the last day of a calendar month, monthly rent shall be prorated for that month on a daily basis. ARTICLE 2 ADDITIONAL RENT Section 2.1 Additional Rent. In addition to the Base Rent payable by Tenant under the provisions of Article 1 hereof, beginning on the Commencement Date Tenant shall pay to Landlord “Additional Rent” as hereinafter provided for in this Article 2. All sums under this Article and all other sums and charges required to be paid by Tenant under the Lease (except Base Rent), however denoted, shall be deemed to be “Additional Rent.” If any such amounts or charges are not paid at the time provided in the Lease, they shall nevertheless be collectible as Additional Rent with the next installment of Base Rent falling due.
-2- Section 2.2 Definitions. The parties hereto agree upon the following Definitions: (a) “Lease Year” shall mean each twelve (12) month period commencing with and including the month during which the term of this Lease commences, and ending with the month during which the term of this Lease (including any extensions or renewals) terminates. (b) “Real Estate Taxes” shall mean and include all personal property taxes of Landlord relating to Landlord’s personal property used in connection with the operation and maintenance of the Project, real estate taxes accruing against the Project, water rates and charges, sewer rates and charges, charges and fees for public utilities, street lighting, excise levies, licenses, permits, inspection fees, installments of special assessments, including interest thereon, relating to the Project, and all other governmental charges, general and special, ordinary and extraordinary, foreseen as well as unforeseen, of any kind and nature whatsoever, or other tax, however described, which is levied or assessed in substitution for any of the foregoing by the United States of America or the state in which the Project is located or any political subdivision thereof, against Landlord or all or any part of the Project as a result of Landlord’s ownership thereof, and payable during the respective Lease Year. Real Estate Taxes shall not include state or federal income taxes, or franchise taxes. It shall not include any interest or penalties (other than those incurred as a result of Tenant’s non-payment of Base Rent or Additional Rent when due hereunder), net income tax, estate tax, or inheritance tax. Tenant shall be solely responsible for its Pro Rata Share (as hereinafter defined) of all Real Estate Taxes. (c) “Operating Expenses” shall mean all reasonable and necessary expenses actually incurred by Landlord with respect to the maintenance and operation of the Project as determined by Landlord’s accountant in the performance of the duties described below in this section as determined by Landlord’s accountant in accordance with generally accepted accounting principles as applied to real property, consistently followed, including, but not limited to, liability and casualty insurance premiums for any insurance required to be carried by Landlord under the terms hereof, maintenance and repair costs, steam, electricity, water, sewer, gas and other utility charges, fuel, lighting, window washing, parking lot maintenance, trash and rubbish removal, snow and ice removal, landscaping, maintenance of rights-of-way contiguous to the Property, wages payable to employees of Landlord whose duties are connected with the operation and maintenance of the Project, amounts paid to contractors or subcontractors for work or services performed in connection with the operation and maintenance of the Project, repairs, replacements or other expenses for maintaining and operating the Project, reasonable attorneys’ fees and costs in connection with taxes or levies against Building B, and such other expenses as many be ordinarily incurred in the operation and maintenance of common areas associated with similar buildings in the Dulles industrial corridor and not specifically set forth herein, including a reasonable administrative fee equal to ten percent (10%) of Operating Expenses, provided that in the event Operating Expenses exceed One Hundred Thousand dollars ($100,000), then the administrative fee shall equal the greater of Ten Thousand dollars ($10,000) or two and one-half percent of Operating Expenses. The term “Operating Expenses” shall also include capital improvements and replacements to the Project, provided that the cost thereof shall be amortized on a straight-line basis over the useful life of the improvement or replacement, as determined in
-3- accordance with generally accepted accounting principles; provided that only the amount equal to a given year’s amortization shall be included in that year’s Operating Expenses. Tenant shall be solely responsible for its Pro Rata Share of all Operating Expenses. Notwithstanding the foregoing, the term “Operating Expenses” shall not include any amounts reimbursed to Landlord from any source other than Operating Expenses; repairs, restoration or other work occasioned by fire, windstorm or other insured casualty, or occasioned by condemnation; interest or principal payments on any mortgage or other indebtedness of Landlord; payment under any ground lease; any depreciation allowance or expense; overtime or other expenses to Landlord due to Landlord’s defaults hereunder; costs directly resulting from the gross negligence or willful misconduct of Landlord, its employees, agents or contractors; costs or fees relating to the defense of Landlord’s title or interest in the Property; or costs or expenses incurred by Landlord in financing, refinancing, pledging, selling, granting or otherwise transferring or encumbering ownership rights in the Project. During the term of this Lease, Tenant will pay, when due, all charges of every nature, kind or description for all utilities furnished to the Premises or chargeable against the Premises, including all charges for water, sewage, heat, gas, light, garbage, electricity, telephone, steam, power, or other public or private utility services. Tenant shall within thirty (30) days following the Commencement Date reimburse Landlord for all utilities or services at the Premises used directly and exclusively by Tenant or its agents, employees or contractors prior to the Commencement Date. Tenant shall pay directly any utilities for which service is provided exclusively for Tenant’s account, and shall pay Tenant’s Pro Rata Share (defined below) of all other utilities furnished to the Premises. In the event that any charge or fee is required after the Commencement Date by the state in which the Premises are located, or by any agency, subdivision, or instrumentality thereof, or by any utility company furnishing services or utilities to the Premises, as a condition precedent to furnishing or continuing to furnish utilities or services to the Premises, such charge or fee shall be deemed to be a utility charge payable by Tenant. The provisions of this Section 2.2 shall include, but not be limited to, any charges or fees for present or future water or sewer capacity to serve the Premises, any charges for the underground installation of gas or other utilities or services, and other charges relating to the extension of or change in the facilities necessary to provide the Premises with adequate utility services. In the event that Landlord has paid any such charge or fee after the date hereof, Tenant shall reimburse Landlord for such utility charge. (d) The term “Tenant’s Pro Rata Share” shall mean a fraction, the numerator of which is the net rentable area of Building B and the denominator of which is the net rentable area of the Project. Tenant’s Pro Rata Share is 48.7% Section 2.3 Estimated Real Estate Taxes and Operating Expenses for Initial Lease Year. Landlord estimates that Real Estate Taxes and Operating Expenses for 2003 will be $2.95 per square foot of net rentable area, a summary of such estimate is attached hereto as Exhibit J.
-4- Section 2.4 Estimated Real Estate Taxes and Operating Expenses for Subsequent Years. As to each Lease Year after the initial Lease Year, Landlord shall estimate on a reasonable basis for each such Lease Year the total amount of Tenant’s Pro Rata Share of Real Estate Taxes and Operating Expenses. Said estimate shall be in writing and shall be delivered or mailed to Tenant at the Premises in or around each October in advance of the start of the Lease Year. Section 2.5 Payment of Additional Rent. Tenant shall pay, as Additional Rent, Tenant’s Pro Rata Share of Real Estate Taxes and Operating Expenses for each Lease Year, so estimated, in equal monthly installments, in advance, on the first day of each month during each applicable Lease Year. If for any reason Landlord has not provided Tenant with Landlord’s estimate of Real Estate Taxes and Operating Expenses prior to the commencement of any Lease Year, then, Tenant shall continue paying the amount due for the immediately preceding year until it receives Landlord’s estimate of same. Tenant shall pay to Landlord each month an amount equal to one-twelfth (1/12th) of the Real Estate Taxes and Operating Expenses as noted on Landlord’s estimate. Section 2.6 Re-estimates of Real Estate Taxes and Operating Expenses. From time to time during any applicable Lease Year, but not more than one (1) time per Lease Year, Landlord may re-estimate the amount of Tenant’s Pro Rata Share of Real Estate Taxes and Operating Expenses, and in such event Landlord shall notify Tenant, in writing, of such re-estimate in the manner’ above set forth and fix monthly installments for the then remaining balance of such Lease Year in an amount sufficient to pay the re-estimated amount over the balance of such Lease Year after giving credit for payments made by Tenant on the previous estimate. Section 2.7 Adjustment of Actual Operating Expenses. Upon completion of each Lease Year, Landlord shall cause its accountants to determine the actual amount of Real Estate Taxes and Operating Expenses for such Lease Year and deliver a written certification of the amounts thereof to Tenant within ninety (90) days after the end of each Lease Year. If Tenant has paid less than its Pro Rata Share of the actual Real Estate Taxes and Operating Expenses for any Lease Year, Tenant shall pay such deficiency within thirty (30) days after receipt of such statement. If Tenant has paid more than its Pro Rata Share of the actual Real Estate Taxes and Operating Expenses for any Lease Year, Landlord shall credit such excess against the most current monthly installment or installments due Landlord for Additional Rent. A pro rata adjustment shall be made for a fractional Lease Year occurring during the term of this Lease or any renewal or extension thereof based upon the number of days of the term of this Lease during said Lease Year as compared to three hundred sixty-five (365) days and all additional sums payable by Tenant or credits due Tenant as a result of the provisions of this Article 2 shall be adjusted accordingly. Section 2.8 Tenant Audit Rights. Tenant shall have the right to examine and audit Landlord’s annual statement of Operating Expenses Tenant shall commence its examination and if applicable, its audit within forty-five (45) days after receipt of the annual statement, shall
-5- perform its examination and audit with diligence and continuity and shall complete its examination and audit within one hundred twenty (120) days after receipt of the annual statement. The cost of any such examination and audit shall be paid by Tenant, except that, if it is determined on the basis of such audit (or if, in accordance with the following provisions, it is otherwise ultimately determined) that the amount of Tenant’s obligations for Operating Expenses for any calendar year was overstated by more than five percent (5%), then the reasonable cost of the audit shall be paid by Landlord. Landlord shall refund to Tenant any overpayment for the calendar year in question within thirty (30) days after the amount of the overpayment has been established by the audit or as provided in this subsection. If Tenant fails to exercise its right of audit within the forty five (45) day period, the amount of Tenant’s obligations for Operating Expenses shall, in the absence of fraud, be conclusively established as the amount set forth in the annual statement delivered by Landlord to Tenant. If, however, Tenant timely exercises its right to audit and the results thereof differ from Landlord’s annual statement of Operating Expenses, and Landlord disputes Tenant’s audit and gives Tenant notice within thirty (30) days of Landlord’s receipt thereof that it disputes the results of such audit, Landlord or Tenant may elect to resolve the dispute in accordance with the alternative dispute resolution method set forth in Section 1633 of this Lease, in which event each “Official” shall be an independent certified public accountant with at least ten (10) years’ experience in the local Northern Virginia commercial real estate market. In the event Landlord fails to give Tenant notice that it disputes Tenant’s audit within said thirty (30) day period, the amount of Tenant’s obligations for Operating Expenses shall, in the absence of fraud, be conclusively established as the amount set forth in Tenant’s audit. Section 2.9 Taxes and Other Additional Rent. Beginning on the Commencement Date and continuing throughout the term of the Lease, Tenant shall be responsible for its Pro Rata Share of all Real Estate Taxes. Tenant shall pay, also as Additional Rent, all other sums and charges required to be paid by Tenant under this Lease, and any tax or excise on rents, gross receipts tax, or other tax, however described, which is levied or assessed by the United States of America or the state in which the Premises are located or any political subdivision thereof, against Landlord in respect to the Base Rent, Additional Rent or other charges reserved under this Lease or as a result of Landlord’s receipt of such rents or other charges accruing under this Lease, but only to the extent such levy, tax, assessment or charge on rent shall be expressly in lieu of or in substitution for any existing Real Estate Taxes; provided, however, that Tenant shall have no obligation to pay net income taxes of Landlord. ARTICLE 3 BASE AND ADDITIONAL RENT Section 3.1 Interest and Late Fee on Fast Due Obligations. Any installment of Base Rent, Additional Rent, or other charges to be paid by Tenant accruing under the provisions of this Lease which shall not be paid within ten (10) days after written notice from Landlord, shall bear interest at the rate (“Default Rate”) of interest per annum announced by Bank of America, N.A. as its prime lending late from time to time plus one percent (1%) from the date when the same is due until the same shall be paid, but if such rate exceeds the maximum interest
-6- rate permitted by law, such rate shall be reduced to the highest rate allowed by law under the circumstances. In addition, any installments of Base Rent or Additional Rent or any other charges payable by Tenant under the provisions hereof which shall not be paid when due and which remain unpaid ten (10) days after written notice from Landlord shall be subject to a late payment fee of two percent (2%) of the unpaid amount. Section 3.2 Rent Independent. Tenant’s covenants to pay the Base Rent and the Additional Rent are independent of any other covenant, condition, provision or agreement herein contained, and nothing herein contained shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable hereunder, or limit any other remedy of Landlord. Base Rent and Additional Rent are sometimes collectively referred to as “Rent” Rent shall be payable in lawful money of the United States without recoupment, deduction, offset, prior notice or demand, except as otherwise expressly provided herein. Section 3.3 Security Deposit. Concurrently with Tenant’s execution of this Lease, Tenant will deposit with Landlord the sum of Sixty-Six Thousand Two Hundred Seventeen Dollars ($66,217.00) (the “Security Deposit”). If Tenant defaults with respect to any of the terms, covenants, provisions or conditions of this Lease, Landlord may use, apply or retain the whole or any part of the Security Deposit for the payment of any Rent in default or any other sum which Landlord expends by reason of Tenant’s default. Tenant is not entitled to interest on the Security Deposit. It is expressly agreed that the Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in the case of Tenant’s default. Upon application of all or any part of the Security Deposit, Tenant must upon demand restore the Security Deposit to its original amount. No application of the Security Deposit by Landlord shall be deemed to have cured Tenant’s default. The Security Deposit will be released to Tenant within sixty (60) days of the surrender of the Premises to Landlord subject to any deductions made by Landlord pursuant to the terms of this Lease. ARTICLE 4 POSSESSION OF PREMISES; ENVIRONMENTAL LAWS Section 4.1 Permitted Use. The Premises shall be occupied and used by Tenant for a data center facility, computer co-location facility, general office use, and storage. Tenant shall not use or permit the Premises to be used for any other purpose without the prior written consent of Landlord. Section 4.2 Tenant’s Compliance With Environmental Laws. Tenant shall at all times and in all respects comply with all federal, state and local laws, ordinances and regulations (“Hazardous Materials Laws”) relating to the industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, presence, disposal or transportation of any oil, petroleum products, flammable explosives, asbestos, urea formaldehyde, polychlorinated
-7- biphenyls, radioactive materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances or wastes, including without limitation any “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under any such laws, ordinances or regulations (collectively, “Hazardous Materials”). The foregoing shall not be construed to prohibit Tenant from storing and using reasonable quantities of customary office and cleaning supplies in Building B. Notwithstanding the foregoing, all flammable or combustible materials and any Hazardous Materials permitted pursuant to the foregoing sentence shall be stored in specially designed containment rooms or containers. Tenant shall immediately notify Landlord in writing of (a) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any Hazardous Materials Laws; (b) any claim made or threatened by any person against Landlord, or the Premises, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; and (c) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in, on or about the Premises, or with respect to any Hazardous Materials removed from the Premises including, any complaints, notices, warnings, reports or asserted violations in connection therewith. Tenant shall also provide to Landlord, as promptly as possible, and in any event within five (5) business days after Tenant first receives or sends the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Hazardous Materials in or on the Premises Upon written request of Landlord (to enable Landlord to defend itself from any claim or charge related to any Hazardous Materials Law), Tenant shall promptly deliver to Landlord notices of hazardous waste manifests reflecting the legal and proper disposal of all such Hazardous Materials removed or to be removed from the Premises. All such manifests shall list the Tenant or its agent as a responsible party and in no way shall attribute responsibility for any such Hazardous Materials to Landlord. ARTICLE 5 SERVICES AND MAINTENANCE Section 5.1 Services Provided by Landlord at Tenant’s Expense. Subject to the provisions of Article 2 hereof, Landlord shall provide the following services on all days, and as otherwise stated in this Section 5.1: Maintenance in good order, condition and repair of all common areas and appropriate illumination of the parking facilities and all driveways leading thereto and keeping the same free from any unreasonable accumulation of snow and ice. Landlord shall keep and maintain the landscaped area and parking facilities in a neat, safe and orderly condition, and shall maintain and repair the sewer and storm system serving the Project, and provide trash and rubbish service. In addition, Landlord shall paint exterior of Building B as needed. All costs incurred in connection with this Section 5.1 shall be reimbursed by Tenant in accordance with Article 2 or Section 5.5, as applicable. Section 5.2 Janitorial Service. Both Landlord and Tenant acknowledge that Tenant shall provide janitorial services for the Premises at its sole cost and expense
-8- Section 5.3 Other Provisions Relating to Services. No interruption in, or temporary stoppage of, any of the aforesaid services caused by repairs, renewals, improvements, alterations, strikes, lockouts, labor controversy, accidents, inability to obtain fuel or supplies, or other Unavoidable Delays shall be deemed an eviction or disturbance of Tenant’s use and possession, or render Landlord liable for damages, by abatement of rent or otherwise, or relieve Tenant from any obligation herein set forth. In no event shall Landlord be required to provide any service in excess of that permitted by involuntary guidelines or laws, ordinances or regulations of governmental authority. Section 5.4 Effects on Utilities. Tenant shall not connect with electric current or water pipes, except through existing electrical or water outlets already in the Premises. Landlord shall allow Tenant to install equipment which utilizes up to a maximum electrical capacity of 7000 Amps/3 phase/480V. Section 5.5 Maintenance Provided by Landlord at Landlord’s Expense. Landlord shall, at its expense, keep and maintain in good order, condition and repair the exterior structure and structural integrity of Building B, the structural elements of the walls, load bearing elements, foundations and roof of Building B. Notwithstanding anything to the contrary contained in this Lease, in the event any repair, replacement or other maintenance is required as a result of the negligence or willful misconduct of Tenant, Tenant shall be solely responsible for all costs and expenses arising in connection therewith, subject to the provisions of Section 6.1 below. Section 5.6 Right to Obtain Telecommunications and Fiber Optic Suppliers. Tenant shall have the right to contract with third-party telecommunications and fiber optic suppliers to provide service for its use. Tenant shall have the right to use the Fiber Easements located generally as set out in Exhibit C attached hereto and made a part hereof, for locating such other fiber optic connections as more particularly detailed in Section 16 below. The parties agree that they will diligently pursue negotiations of a Telecommunications Services Agreement for fiber connectivity. ARTICLE 6 INSURANCE Section 6.1 Landlord’s Casualty Insurance Obligations. Landlord shall keep Building B insured in an amount equivalent to the full replacement value thereof (excluding foundation, grading and excavation costs) against: (a) loss or damage by fire; and (b) such other risk or risks of a similar or dissimilar nature as are now or may be customarily covered with respect to buildings and improvements similar in construction, general
-9- location, use, occupancy and design to Building B, including, but without limiting the generality of the foregoing, windstorms, hail, explosion, vandalism, malicious mischief, civil commotion, and such other coverage as may be deemed necessary by Landlord, provided such additional coverage is obtainable and provided such additional coverage is such as is customarily carried with respect to buildings and improvements similar in construction, general location, use, occupancy and design to Building B. Except as expressly set forth in this Article 6, these insurance provisions shall in no way limit or modify any of the obligations of Tenant under any provision of this Lease. Tenant shall be obligated to pay the rental called for hereunder in the event of damage to or destruction of the Premises if such damage or destruction is occasioned by the negligence or fault of Tenant, its agents or employees, as established by arbitration or a judicial proceeding. Insurance premiums paid for insurance coverage required under this Article 6 by Landlord shall be a portion of the “Operating Expenses” described in Article 2 hereof. Section 6.2 Tenant’s Casualty Insurance Obligations. Tenant shall keep all of its machinery, equipment, furniture, fixtures and personal property which may be located in, upon, or about the Premises insured for the benefit of Tenant in an amount equivalent to the full insurable value thereof against: (a) loss or damage by fire; and (b) such other risk or risks of a similar or dissimilar nature as are now, or may in the future be, customarily covered with respect to a tenant’s machinery, equipment, furniture, fixtures, personal property and business located in a building similar in construction, general location, use, occupancy and design to Building B, including, but without limiting the generality of the foregoing, windstorms, hail, explosions, vandalism, theft, malicious mischief, civil commotion, and such other coverage as Tenant may deem appropriate or necessary. Section 6.3 Landlord’s Liability and Other Insurance Obligations. Landlord shall maintain, for its benefit, commercial general liability insurance against claims for personal injury, death or property damage occurring upon, in or about the Project, such insurance to afford protection to Landlord of a combined single limit of Two Million and No/100 Dollars ($2,000,000.00) in respect to the injury, death or property damage arising out of any accident or occurrence. In addition, Landlord shall carry employer’s liability insurance and worker’s compensation insurance in statutory limits. Landlord agrees to provide such coverage from one or more insurance companies with a rating of not less than AA- and a financial size of not less than Class VIII in the most current available “Best’s Insurance Reports”. Landlord agrees to include in its commercial general liability insurance policy the contractual liability coverage insuring Landlord’s indemnification obligations provided for herein. Any such coverage shall be deemed secondary to any liability coverage secured by Tenant. Such insurance shall also afford coverage for all claims based upon acts, omissions, injury or damage, which claims occurred or arose (or the onset of which occurred or arose) in whole or in part during the policy period.
-10- Section 6.4 Tenant’s Liability Insurance Obligations. Tenant shall, at Tenant’s sole cost and expense but for the mutual benefit of Landlord, its managing agent and Tenant, maintain commercial general liability insurance against claims for personal injury, death or property damage occurring upon, in or about the Premises, such insurance to afford protection to Landlord and Tenant of a combined single limit of Two Million and No/100 Dollars ($2,000,000 00) in respect to the injury, death or property damage arising out of any accident or occurrence in the Premises, including property of Landlord damaged by the negligent acts or omissions of Tenant, its agents and employees. In addition, Tenant shall carry employer’s liability insurance with a minimum limit of $1,000,000 per injury; worker’s compensation insurance in statutory limits; and excess liability insurance over the commercial general and employer’s liability insurance required above with a combined minimum coverage of $5,000,000 per occurrence. Such policies of insurance shall be written in companies reasonably satisfactory to Landlord. Landlord agrees that an insurance company with a rating of not less than AA- and a financial size of not less than Class VIII in the most current available “Best’s Insurance Reports” is acceptable to Landlord. All such policies shall also name Landlord as an additional insured thereunder (on a primary basis), and such policies, or a memorandum or certificate of such insurance, shall be delivered to Landlord with evidence reasonably satisfactory to Landlord that the premium thereon has been paid. At such time as insurance limits required of tenants in light industrial buildings in the area in which the Premises are located are generally increased to greater amounts, Landlord shall have the right to require such greater limits as may then be customary. Tenant agrees to include in such policy the contractual liability coverage insuring Tenant’s indemnification obligations provided for herein. Any such coverage shall be deemed primary and not contributory with or excess of any liability coverage secured by Landlord for its own benefit Such insurance shall also afford coverage for all claims based upon acts, omissions, injury or damage, which claims occurred or arose (or the onset of which occurred or arose) in whole or in part during the policy period. Any insurance required by the terms of this Lease to be carried by Tenant may be under a blanket policy (or policies) covering the other properties of the Tenant so long as the insurance requirements set forth herein are satisfied. Section 6.5 Indemnifications. Tenant agrees to indemnify, protect, defend and hold Landlord and Landlord’s shareholders, employees, and lender harmless from and against any and all claims, costs, liabilities, actions, and damages arising from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease or arising from any act or negligence on the part of Tenant or its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage to the extent caused by Tenant, its agents, and employees to any person, firm or corporation occurring during the term of this Lease or any renewal thereof, in or about the Project, and from and against all reasonable costs, reasonable counsel fees, expenses and liabilities incurred in or about any such claim or action or proceeding brought thereon; and in case any action or proceeding be brought against Landlord or its managing agent by reason of
-11- any such claim, Tenant, upon notice from Landlord, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to Landlord. Tenant’s indemnification shall not apply to losses, claims, costs and the like arising as a result of and to the extent of the negligence or willful misconduct of Landlord or its agents as determined in a settlement agreement or by the trier of fact in any lawsuit. Landlord hereby waives all claims against Tenant for damage to any property or injury to, or death of, any person in, upon, or about the Project, arising at any time and from any cause other than by reason of the negligence or willful misconduct of Tenant, its employees, agents, contractors or representatives. Landlord agrees to indemnify, protect, defend and hold Tenant harmless from and against claims, costs, liabilities, actions, and damages to any property or injury to, or death of, any person arising from any breach or default on the part of Landlord in the performance of any covenant or agreement on the part of Landlord to be performed pursuant to the terms of the Lease, unless the damage is caused by the negligence or willful misconduct of the Tenant, its employees, agents, contractors or representatives, and from and against all reasonable costs, reasonable counsel fees, expenses and liabilities incurred in or about any such claim or action or proceeding brought thereon; and in case any action or proceeding be brought against Tenant or its managing agent by reason of any such claim, Landlord, upon notice from Tenant, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to Tenant. Landlord’s indemnification shall not apply to losses, claims, costs and the like arising as a result and to the extent of the negligence or willful misconduct of Tenant or its agents or employees, as determined in a settlement agreement or by the trier of fact in any lawsuit Section 6.6 Tenant’s Waiver. Except to the extent covered by Landlord’s indemnity in Section 6.5 above, Tenant agrees, to the extent not expressly prohibited by law, that Landlord, its agents, employees and servants shall not be liable, and Tenant waives all claims for damage to property and business sustained during the term of this Lease by Tenant occurring in or about the Project, resulting directly or indirectly from any existing or future condition or defect in the Project, or any part thereof, or from equipment or appurtenances becoming out of repair or from accident, or from any occurrence or act or omission of Landlord, its agents, employees or servants, or any other person. This paragraph shall apply especially, but not exclusively, to damage caused by any of the causes aforesaid or by the flooding of basements or other subsurface areas, or by refrigerators, sprinkling devices, air conditioning apparatus, water, snow, frost, steam, excessive heat or cold, falling plaster, broken glass, sewage, gas, odors or noise, or the bursting or leaking of pipes or plumbing fixtures Section 6.7 Intentionally Omitted Section 6.8 Tenant’s Property. All property on the Premises belonging to or under the care, custody or control of Tenant, its agents, employees, invitees or otherwise located at the Premises shall be at the risk of Tenant only, and Landlord, except to the extent covered by Landlord’s indemnity in Section 6.5, shall not be liable for damage thereto or theft, misappropriation or loss thereof and Tenant agrees to defend and hold Landlord, its agents, employees and servants harmless and indemnify them against claims and liability for injuries to such property.
-12- Section 6.9 Increase in Insurance. Tenant shall not do or permit anything to be done in or about the Premises not bring or keep anything therein which will in any way increase the existing rate of or affect in any other way any fire or other insurance upon the Project or any of its contents, or cause a cancellation of any insurance policy covering the Project or any of its contents. Notwithstanding anything to the contrary contained herein, Tenant shall promptly, upon demand, reimburse Landlord for the full amount of any additional premium charged for such policy by reason of Tenant’s failure to comply with the provisions of the paragraph, it being understood that such demand for reimbursement shall not be Landlord’s exclusive remedy. Section 6.10 Failure to Insure. In the event Tenant fails to provide Landlord with evidence of insurance required under this Article 6 within thirty (30) days of Landlord’s written request therefor, but in any event at least ten (10) days prior to the expiration of the existing policy, Landlord may effect, but shall not be obligated to effect, without further demand upon Tenant, and without waiving or releasing Tenant from any obligation contained in this Lease, such insurance and Tenant agrees to repay, upon demand, all such sums incurred by Landlord in effecting such insurance. All such sums shall become a part of the Additional Rent payable hereunder, but no such payment by Landlord shall relieve Tenant from any default under this Lease ARTICLE 7 CERTAIN RIGHTS RESERVED BY LANDLORD Section 7.1 Rights Reserved by Landlord. Landlord reserves the following rights, which shall be exercisable by Landlord in its sole discretion and for Landlord’s sole benefit without notice and without liability to Tenant and without effecting an eviction, constructive or actual, or disturbance of Tenant’s use or possession, or giving rise to any claim for set off or abatement of rent except as otherwise expressly set forth herein: (a) Retain Keys. Only to the extent required by law, Landlord shall have the right to retain keys to all doors within and into the Premises. (b) Make Repairs. Landlord shall provide ten (10) days advance written notice to Tenant prior to entering to make repairs, alterations, additions, or improvements, whether structural or otherwise, in and about the Project, or any part thereof, and for such purposes to enter upon the Premises, and during the continuation of any of said work, to temporarily close doors, entryways, public spaces, and corridors in the Project and to interrupt or temporarily suspend services and facilities, all only so long as Landlord at all times uses its best commercially reasonable efforts and endeavors in good faith to limit any interference with the conduct of Tenant’s business or its occupancy and use of the Premises. Landlord and its
-13- contractors shall comply with Tenant’s security policies and execute a non-disclosure agreement (the “NDA”) generally in the form set put as Exhibit E attached hereto and made a part hereof, which form may be updated by Tenant from time to time. Section 7.2 Emergency Entry. Landlord and its agents may enter the Premises at any time in case of emergency without notice and shall have the right to use any and all means which Landlord may reasonably deem proper to open such doors during an emergency in order to obtain entry to the Premises, provided Landlord promptly repairs all damages caused thereto. Landlord shall use reasonable care to preserve the proprietary intellectual property of Tenant in connection with such entry. Any entry to the Premises obtained by Landlord in the event of an emergency shall not, under any circumstances, be construed or deemed to be a forcible or unlawful entry into, or detainer of, the Premises, or to be an eviction of Tenant from the Premises or any portion thereof. Landlord shall notify Tenant promptly after any such emergency entry. Section 7.3 Exhibition of Premises. Tenant shall permit Landlord and its agents, upon not less than twenty four (24) hours’ written notice, to enter and pass through the Premises or any part thereof at reasonable times dining normal business hours to: (a) post notices of non-responsibility; (b) exhibit the Premises to holders of encumbrances on the interest of Landlord under’ the Lease and to prospective purchasers or mortgagees of Building B or the Project; (c) during the period of six (6) months prior to the expiration of the Lease term; (d) or any time without notice if Tenant is in default under this Lease, exhibit the Premises to prospective tenants thereof and post commercially reasonable signage indicating that the Premises will be available for occupancy. Any parties to whom the Project is exhibited shall execute the NDA (except during times when Tenant is in default under this Lease). Section 7.4 Right of Landlord to Perform. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of Rent. If Tenant shall fail to pay any sum of money (other than Rent due Landlord) required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, including, but not limited to, the failure to commence and complete repairs promptly and adequately and the failure to remove any liens or otherwise to perform any act or fulfill any obligation required of Tenant under this Lease, Landlord may, but shall not be obligated to, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such act on Tenant’s part to be made or performed as in this Lease provided. Notwithstanding the foregoing, Landlord shall not be required to give Tenant written notice prior to performing any obligation on Tenant’s behalf in the event of an emergency. All sums so paid by Landlord and all necessary incidental costs actually incurred by Landlord shall be payable to Landlord by Tenant as Rent on demand remedy of Landlord) the same rights and remedies in the event of Tenant’s nonpayment of such sums, as in the case of default by Tenant in the payment of Rent to Landlord. Notwithstanding the foregoing, except in the case of an emergency, Landlord agrees not to perform any obligation for Tenant’s account until the expiration of all applicable notice and cure periods referenced in this Lease.
-14- ARTICLE 8 ALTERATIONS AND IMPROVEMENTS Section 8.1 Tenant’s Changes and Alterations Subject to the provisions of Section 17.2, Tenant shall have the right at any time, and from time to time during the term of this Lease, to make such changes and alterations, structural or otherwise, to the Premises, improvements and fixtures hereafter erected on the Premises as Tenant shall deem necessary or desirable in connection with the requirements of its business, but only with Landlord’s prior written approval. The changes and alterations (other than changes or alterations of Tenant’s movable trade fixtures and equipment) shall be made in all cases subject to the following conditions, which Tenant covenants to observe and perform: (a) Permits. No change or alteration shall be undertaken until Tenant shall have procured and paid for, so far as the same may be required by the applicable governmental authorities from time to time, all municipal, state and federal permits and authorizations of the various governmental bodies and departments having jurisdiction thereof, and Landlord agrees to join in the application for such permits or authorizations whenever such action is necessary, all at Tenant’s sole cost and expense. (b) Compliance with Plans and Specifications. Before commencement of any change, alteration, restoration or construction (hereinafter sometimes referred to as “Work”) involving in the aggregate an estimated cost of more than $50,000 per year or which would alter the plumbing, mechanical, structural, fire systems, electrical systems of Building B, or involve roof penetrations or construction on any easements, Tenant shall (i) furnish Landlord with detailed plans and specifications of the proposed change or alteration; (ii) obtain Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, (iii) if required by the building code applicable to Herndon, Virginia, provide Landlord with the name of the licensed architect or licensed professional engineer selected and paid for by Tenant, who shall supervise any such work (hereinafter referred to as “Alterations Architect or Engineer”); and (iv) if required by the building code applicable to Herndon, Virginia, obtain Landlord’s prior written approval of detailed plans and specifications prepared and approved in writing by said Alterations Architect or Engineer, and of each amendment and change thereto, which shall not be unreasonably withheld, conditioned or delayed. Failure by Landlord to approve or disapprove Tenant’s plans within ten (10) business days after submission by Tenant shall be deemed to be approval, provided however that such ten (10) business day period shall be automatically extended if Landlord and Tenant are discussing concerns or requiring additional information with respect to proposed alterations or for reasons outside of Landlord’s control. (c) Value Maintained. Any change or alteration shall, when completed, be of such character as not to reduce the value of the Premises or Building B to which such change or alteration is made below its value immediately before such change or alteration, nor shall such change or alteration reduce the area or cubic content of Building B, nor change Building B as to use without Landlord’s express written consent.
-15- (d) Compliance with Laws. All Work done in connection with any change or alteration shall be done promptly and in a good and workmanlike manner and in compliance with all building and zoning laws of the place in which the Premises are situated, and with all laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments and appropriate departments, commissions, boards and officers thereof, and in accordance with the orders, rules and regulations of the Board of Fire Underwriters where the Premises are located, or any other body exercising similar functions. The cost of any such change or alteration shall be paid so that the Premises and all portions thereof shall at all times be free of liens for labor and materials supplied to the Premises, or any portion thereof. The Work of any change or alteration shall be prosecuted with reasonable dispatch, delays due to strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions or similar causes beyond the control of Tenant excepted. Tenant shall obtain and maintain, or cause to be obtained and maintained, at no expense to Landlord, during the performance of the Work, workers’ compensation insurance in normal and customary amounts, covering all persons employed in connection with the Work and with respect to which death or injury claims could be asserted against Landlord or Tenant or against the Premises or any interest therein. Tenant shall also cause any contractor performing work on Tenant’s behalf to carry and maintain, at no expense to Landlord, a comprehensive general liability insurance policy with a deductible of no greater than $10,000, which shall include contractor’s liability coverage, contractual liability coverage, completed operations coverage, a broad form property damage endorsement and contractor’s protective liability coverage to afford protection with limits, for each occurrence, of not less than Three Million Dollars ($3,000,000) combined single limit, written on an occurrence basis. In addition, the fire insurance with “extended coverage” endorsement required by Section 6.1 hereof shall be supplemented with “builder’s risk” insurance on a completed value form or other comparable coverage on the Work. All such insurance shall be in a company or companies authorized to do business in the state in which the Premises are located and reasonably satisfactory to Landlord, and all such policies of insurance or, at Tenant’s option, certificates of insuran | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||