Maryland-Bethesda-6903 Rockledge Drive Lease [Modification and Extension] - Democracy Associates LP and E-centives Inc.
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.
<PAGE> 20
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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<PAGE> 28
(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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<PAGE> 32
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 equal to that of Tenant at
the time of such assignment or subletting, (B) that such surviving or successor
entity or assignee or sublessee, as the case may be, agrees in writing to be
bound by the terms and conditions of this Lease and to assume all of the
obligations and liabilities of Tenant under this Lease, (C) that such surviving
or successor entity or assignee or sublessee, as the case may be, shall conduct
substantially the same business on the Premises as that conducted by Tenant or a
related business which is a permitted use pursuant to Article VI of this Lease,
(D) that Tenant provides Landlord with prior written notice of its intent to
assign or sublease all or a portion of the Premises not more than ninety (90)
nor less than thirty (30) days prior to the date such assignee or sublessee is
to occupy the Premises, (E) that the character of such person or entity and the
nature of its activities on the Premises and in the Office Building will not
materially adversely affect other tenants in the Office Building or impair the
reputation of the Office Building as a first-class office building, and (F) that
the sublease with such person or entity is not a so-called "sham" transaction
intended by Tenant to circumvent the provisions of this Article VII, and
provided further that if such Affiliate of Tenant or Parent of Tenant ceases to
be an Affiliate of Tenant or Parent of Tenant, as the case may be, such
cessation, at Landlord's sole option, for all purposes hereunder, shall be a
default under this Lease for which Landlord shall have all of the remedies
available to it pursuant to Article XIX hereof.
(b) In the event of any such assignment or subletting pursuant to
this Section 7.6, Tenant shall remain fully liable as a primary obligor and
principal for Tenant's obligations and
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responsibilities under this Lease, including without limitation, the payment of
all rent and other charges required hereunder and the performance of all
conditions and obligations to be performed under this Lease.
(c) For purposes of this Section 7.6, an "Affiliate of Tenant"
shall mean any corporation, association, trust or partnership (i) which Controls
(as herein defined) Tenant or (ii) which is under the Control of Tenant through
stock ownership or otherwise or (iii) which is under common Control with Tenant.
For the purposes hereof, a "Parent of Tenant" shall mean any corporation,
association, trust or partnership (i) which Controls Tenant or (ii) which owns
more than fifty percent (50%) of the issued and outstanding voting securities of
Tenant. The terms "Control" or "Controls" as used in this Section 7.6 shall mean
the power to directly or indirectly influence the direction, management or
policies of Tenant or such other entity.
7.6 Notwithstanding anything to the contrary in this Article VII, in
those cases in which the layout of the subleased premises or the nature of the
activities to be conducted therein will be changed by the proposed subtenant in
any manner, Landlord's consent to any proposed sublease shall be conditioned on
receipt of the certificate of a licensed mechanical engineer employed by the
proposed subtenant, as follows:
a. describing the changes which the proposed subtenant wishes to
make to the layout of the subleased premises or the activities conducted
therein;
b. stating whether or not such changes will affect the load
requirements or operating efficiency of any of the Building systems or utilities
serving the subleased premises (such as, for example, the HVAC or electrical
systems);
c. if the changes are substantial enough to affect the load
requirements or operating efficiency of any of the Building systems or utilities
serving the subleased premises, describing the modifications to the affected
Building system or utility necessary to satisfy the load capacity and operating
efficiency thereof and stating that such modifications fully comply with the
requirements of all applicable building codes and insurance rating bureaus as
well as the standards to which the base building systems were designed.
Further, the proposed subtenant, by its execution of the sublease agreement,
shall agree to be fully responsible, at its sole cost and expense, to assure
that the modifications, if any, described in its engineer's certificate are
installed in accordance with the requirements of all applicable building codes
and insurance rating bureaus and, further, at the expiration or earlier
termination of the sublease, to restore the subleased premises to the condition
and configuration in which it existed prior to the inception of the sublease.
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ARTICLE VIII
MAINTENANCE AND REPAIRS
8.1 Except as provided in Section 8.3 below, Tenant will keep and
maintain the Premises and all fixtures and equipment located therein in clean,
safe and sanitary condition, will take good care thereof and make all required
repairs thereto, and will suffer no waste or injury thereto. At the expiration
or other termination of the Lease Term, Tenant shall surrender the Premises,
broom clean, in the same order and condition in which they are in on the Lease
Commencement Date, ordinary wear and tear and unavoidable damage by the elements
excepted. Landlord, at its cost, shall provide replacement tubes for all
fluorescent light fixtures in the Premises on the Lease Commencement Date. All
other bulbs, tubes and lighting fixtures for the Premises shall be provided and
installed by Landlord at Tenant's cost and expense.
8.2 Except as otherwise provided in Article XVII hereof, all injury,
breakage and damage to the Premises and to any other part of the Office Complex
caused by any act or omission of Tenant, or of any agent, employee, subtenant,
contractor, customer or invitee of Tenant, shall be repaired by and at the sole
expense of Tenant, except that Landlord shall have the right, at its option, to
make such repairs and to charge Tenant for all costs and expenses reasonably
incurred by Landlord in light of the urgency, as determined by Landlord in its
sole judgment, of the repairs, solely in connection therewith as additional rent
hereunder. The liability of Tenant for such costs and expenses shall be reduced
by the amount of any insurance proceeds received by Landlord on account of such
injury, breakage or damage.
8.3 Landlord shall keep and maintain the exterior and demising walls,
foundations, roof and common areas that form a part of the Building (including
the windows, elevators, base sprinkler system), and the mechanical, electrical,
HVAC, plumbing and other operational systems of the Building, pipes and conduits
that are provided by Landlord in the operation of the Building or, on a
non-exclusive basis, the Premises in clean, safe, sanitary and operating
condition in accordance with standards customarily maintained by first-class
office buildings in the Bethesda, Maryland area, and will make all required
repairs thereto. All common or public areas of the Office Complex and the land
upon which it is situated (including without limitation the first floor lobby
area and the exterior landscaping) shall be maintained by Landlord in accordance
with standards customarily maintained by first-class office buildings in the
Bethesda, Maryland area. Tenant shall promptly provide Landlord with written
notice of any defect or need for repairs in or about the Office Complex or the
Building of which Tenant is aware; provided, however, Landlord's obligation to
repair hereunder shall not be limited to matters of which it has been given
notice by Tenant.
ARTICLE IX
TENANT ALTERATIONS
9.1 The Premises shall be delivered to and accepted by Tenant in their
present "as-is" condition. It is understood and agreed that Landlord will not
make, and is under no obligation to make, any structural or other alterations,
decorations, additions or improvements in or to the Premises, except as
otherwise provided in Section 9.2 below.
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9.2 (a) It is understood and agreed that prior to the Lease
Commencement Date, Tenant intends to make certain alterations, renovations and
improvements to the Premises described in this Section 9.2.
(b) All alterations, renovations, modifications and improvements
which are made to the Premises pursuant to this Section 9.2 (i) shall be done in
accordance with the space plan prepared by Greenwell Goetz Architects (the
"Architect") dated September 10, 1997 (the "Space Plan"), a copy of which is
attached hereto as Exhibit B and made a part hereof and construction drawings
prepared by the Architect based on the Space Plan and approved, in advance, by
Landlord, (ii) shall be subject to the provisions of this Lease, including
without limitation, Article IX, Article XIII and Article XV hereof 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 of Six Dollars ($6.00)
multiplied by the Net Rentable Area of the 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
Premises, including without limitation, any and all architectural, engineering
and consulting fees in connection therewith. In the event the entire Tenant
Improvement Allowance is not utilized by Tenant during the first (1st) Lease
Year in connection with designing, renovating, altering and upgrading the tenant
improvements in the Premises then such unused portion of the Tenant Improvement
Allowance shall be applied against the initial installment(s) of base rent due
with respect to the Premises pursuant to Article III hereof.
(c) (i) Landlord agrees to cause its contractor to perform such
work. Landlord, at Tenant's instruction, shall obtain bids for the performance
of the work from up to three (3) general contractors. Upon receipt and
comparison of the bids received from such contractors, Landlord shall engage the
contractor selected by Tenant (the "Selected Contractor"). Further, Landlord,
Tenant and the Selected Contractor shall establish a mutually agreeable
construction schedule, review submission procedures and such other controls as
are necessary for the timely and efficient completion of the improvements and
alterations to the Premises and the minimization of disruption to the conduct of
Tenant's business in the Premises. In addition, the Selected Contractor shall
obtain competitive bids from all major trades (e.g. electrical, plumbing,
drywall and millwork) performing work in the Premises, unless such competitive
bids were obtained or submitted in connection with the selection of the Selected
Contractor.
(ii) 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 for in Section 9.2(b) above.
Such costs and expenses shall include all amounts charged by the Selected
Contractor for performing such work and providing such materials (including the
contractor's general conditions, overhead and profit), plus an amount equal to
five percent (5%) of the contractor's charges as compensation for Landlord's
overhead and Landlord's direct and indirect costs of supervising construction
and installation of the tenant
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improvements in the Premises. In consideration for the five percent (5%)
mark-up, Landlord shall perform or cause the Contractor to perform
preconstruction services, cost estimating, scheduling and value engineering
services, shall administer the bid process, shall negotiate and enter into
contracts, shall negotiate, manage and administer change orders, shall provide
periodic progress reports on the work performed pursuant to this Section 9.2,
shall maintain construction records with respect to the work performed pursuant
to this Section 9.2, shall assemble operation manuals and shall cooperate with
the architect in preparing the "as-built" drawings for the Premises. Tenant will
be billed for one-half (1/2) of the costs and expenses in excess of the Tenant
Improvement Allowance provided in Section 9.2(b) above upon approval of the cost
estimate for such work and materials. Forty percent (40%) 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, and the remaining ten percent (10%) shall be due
and payable upon final completion of such work, as determined by Landlord's
architect and/or contractor.
(iii) Landlord or its contractor shall be responsible for
obtaining all governmental permits, licenses or approvals necessary to construct
and install the tenant improvements in the Premises. Landlord agrees to comply
with all terms and conditions of all such governmental permits, licenses and
approvals. Copies of all permits and final inspection certificates shall be
provided to Tenant as Landlord receives them from the issuing governmental
authority.
9.3 Tenant will not make or permit anyone to make any alterations,
decorations (visible to the exterior of the Building or the Office Complex or to
the common or public areas of the Building or the Office Complex), additions or
improvements (hereinafter referred to collectively as "improvements"),
structural or otherwise, in or to the Premises or the Office Complex, without
the prior written consent of Landlord. Improvements to the interior of the
Premises which (i) are not readily visible to the exterior of the Building or
the Office Complex or the common and public areas thereof, (ii) are not
structural, (iii) do not affect the electrical or mechanical systems within the
Building and (iv) are otherwise in conformance with all applicable building,
zoning and other codes or regulations affecting the Building and the Office
Complex, shall be subject to the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed. When granting its
consent, Landlord may impose any conditions it deems appropriate, including,
without limitation, the approval of plans and specifications, approval of the
contractor or other persons who will perform the work, and the obtaining of
required permits and specified insurance. All improvements permitted by Landlord
must conform to and comply with all rules and regulations established from time
to time by the Underwriters' Association of the State of Maryland and to all
laws, regulations and requirements of the Federal, State and local governments.
Landlord's review and approval of any such plans and specifications and consent
to perform work described therein shall not be deemed an agreement by Landlord
that such plans, specifications and work conform with all applicable Legal
Requirements and requirements of the insurers of the Office Complex ("Insurance
Requirements") nor deemed a waiver of Tenant's obligations under this Lease with
respect to Legal Requirements and Insurance Requirements nor impose any
liability or obligation upon Landlord with respect to the completeness, design
sufficiency or compliance with Legal Requirements or Insurance Requirements of
such plans, specifications and work. As a condition precedent to such written
consent of Landlord, Tenant agrees to obtain and deliver to Landlord written,
unconditional waivers
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of mechanic's and materialmen's liens against the Office Complex and the land
upon which it is situated from all proposed contractors, subcontractors,
laborers and material suppliers for all work, labor and services to be performed
and materials to be furnished in connection with improvements to the Premises.
If, notwithstanding the foregoing, any mechanic's or materialmen's lien is filed
against the Premises, the Office Complex and/or the land upon which it is
situated, for work claimed to have been done for, or materials claimed to have
been furnished to, the Premises, such lien shall be discharged by Tenant within
twenty (20) days thereafter, at Tenant's sole cost and expense, by the payment
thereof or by the filing of a surety bond in form and substance acceptable to
Landlord. If Tenant shall fail to discharge any such mechanic's or materialmen's
lien, Landlord may, at its option, discharge such lien and treat the cost
thereof (including attorneys' fees incurred in connection therewith) as
additional rent payable with the next monthly installment of base rent falling
due; it being expressly agreed that such discharge by Landlord shall not be
deemed to waive or release the default of Tenant in not discharging such lien.
It is understood and agreed that any improvements to the Premises shall be
conducted on behalf of Tenant, and that Tenant shall be fully responsible
therefor. It is further understood and agreed that in the event Landlord shall
give its written consent to the making of any improvements to the Premises, such
written consent shall not be deemed to be an agreement or consent by Landlord to
subject its interest in the Premises, the Office Complex or the land upon which
it is situated to any mechanic's or materialmen's liens which may be filed in
connection therewith.
9.4 Tenant shall indemnify and hold Landlord harmless from and against
any and all expenses, liens, claims, liabilities and damages based on or
arising, directly or indirectly, by reason of the making of any improvements to
the Premises by Tenant, or its subtenants, contractors, agents or employees,
unless such expenses, liens, claims, liabilities or damages arise or are
occasioned by the gross negligence or willful misconduct of Landlord, its
agents, employees or contractors. If any improvements are made without the prior
written consent of Landlord, Landlord shall have the right to remove and correct
such improvements and restore the Premises to their condition immediately prior
thereto, and Tenant shall be liable for all expenses incurred by Landlord in
connection therewith. All improvements to the Premises or the Office Complex
made by either party shall remain upon and be surrendered with the Premises as a
part thereof at the end of the Lease Term unless (a) 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 (b) 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 Lease Term, all movable
furniture, furnishings and equipment installed in the Premises solely at the
expense of Tenant. All damage and injury to the Premises or the Office Complex
caused by such removal shall be repaired by Tenant at Tenant's sole expense. If
such property of Tenant is not removed by Tenant prior to the expiration or
termination of this Lease, the same shall become the property of Landlord and
shall be surrendered with the Premises as a part thereof.
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ARTICLE X
SIGNS AND FURNISHINGS
10.1 No sign, advertisement or notice referring to Tenant shall be
inscribed, painted, affixed or otherwise displayed on any part of the exterior
or the interior of the Office Complex, except on the directories and doors of
offices and such other areas as are designated by Landlord, and then only in
such place, number, size, color and style as are approved by Landlord and are in
accordance with any applicable Montgomery County building code or zoning
regulation. All of Tenant's signs that are approved by Landlord shall be
installed by Landlord at Tenant's cost and expense. If any sign, advertisement
or notice that has not been approved by Landlord is exhibited or installed by
Tenant, Landlord shall have the right to remove the same at Tenant's expense.
The preceding sentence notwithstanding, Landlord agrees to install at Landlord's
cost and expense, Tenant's name and suite number, using building standard
graphic design and building standard materials, on one (1) suite entry door to
the Premises. In addition, Landlord shall provide Tenant with three (3) lines on
the directory for the Building. Landlord's acceptance of any name for listing on
the Building directory will not be deemed, nor will it substitute for,
Landlord's consent, as required by this Lease, to any sublease, assignment or
other occupancy of the Premises. Landlord shall have the right to prohibit any
advertisement of or by Tenant which in its opinion tends to impair the
reputation of the Office Complex or its desirability as a first class office
building and, upon written notice from Landlord, Tenant shall immediately
refrain from and discontinue any such advertisement. Landlord reserves the right
to affix, install and display signs, advertisements and notices on any part of
the exterior or interior of the Office Complex.
10.2 Landlord shall have the right to prescribe the weight and position
of safes and other heavy equipment and fixtures, which, if considered necessary
by the Landlord, shall be installed in such manner as Landlord directs in order
to distribute their weight adequately. Any and all damage or injury to the
Premises or the Office Complex caused by moving the property of Tenant into or
out of the Premises, or due to the same being in or upon the Premises, shall be
repaired at the sole cost of Tenant. No furniture, equipment or other bulky
matter of any description will be received into the Office Complex or carried in
the elevators except as approved by Landlord, and all such furniture, equipment
and other bulky matter shall be delivered only through the designated delivery
entrance of the Office Complex and the designated freight elevator. All moving
of furniture, equipment and other materials shall be under the supervision of
Landlord, who shall not, however, be responsible for any damage to or charges
for moving the same. Tenant agrees to remove promptly from the sidewalks
adjacent to the Office Complex any of Tenant's furniture, equipment or other
material there delivered or deposited.
ARTICLE XI
TENANTS EQUIPMENT
11.1 After the Premises have been substantially completed in accordance
with plans, specifications and working drawings approved by Landlord, Tenant
will not install or operate in the Premises any electrically operated equipment
or machinery that operates on greater than 110 volt power without first
obtaining the prior written consent of Landlord, which consent shall not be
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unreasonably withheld, conditioned or delayed; provided, however, it shall not
be deemed unreasonable for Landlord to condition such consent upon (i) the
payment by Tenant of additional rent in compensation for the excess consumption
of electricity or other utilities and for the cost of any additional wiring or
apparatus that may be occasioned by the operation of such equipment or machinery
and/or (iii) the non-interruption or non-disturbance of the other tenants in the
Office Complex that may be occasioned by the operation of such equipment or
machinery. Tenant shall not install any equipment of any type or nature that
will or may necessitate any changes, replacements or additions to, or in the use
of, the water system, heating system, plumbing system, air conditioning system
or electrical system of the Premises or the Office Complex, without first
obtaining the prior written consent of Landlord. Business machines and
mechanical equipment belonging to Tenant which cause noise or vibration that may
be transmitted to the structure of the Office Complex or to any space therein to
such a degree as to be objectionable to Landlord or to any tenant in the Office
Complex shall be installed and maintained by Tenant, at Tenant's expense, on
vibration eliminators or other devices sufficient to reduce such noise and
vibration to a level satisfactory to Landlord.
ARTICLE XII
INSPECTION BY LANDLORD
12.1 Tenant will permit Landlord, or its agents or representatives, to
enter the Premises, without charge therefor to Landlord and without diminution
of the rent payable by Tenant, to examine, inspect and protect the Premises and
the Office Complex, to make such alterations or repairs as in the sole judgment
of Landlord may be deemed necessary, or to exhibit the same to prospective
tenants during the last one hundred eighty (180) days of the Lease Term. In
connection with any such entry, Landlord shall endeavor to provide twenty-four
(24) hours prior to notice to Tenant (except in the case of an emergency) and to
minimize the disruption to Tenant's use of the Premises. Tenant shall have the
right to escort Landlord, its agents and representatives, in connection with any
such entry into the Premises; provided, however, that Landlord shall have no
obligation to schedule any such entry into the Premises at a time convenience to
Tenant to escort Landlord, its agents or representatives.
ARTICLE XIII
INSURANCE
13.1 Tenant shall not conduct or permit to be conducted any activity,
or place any equipment in or about the Premises or the Building, which will in
any way increase the rate of fire insurance or other insurance on the Building.
If any increase in the rate of fire insurance or other insurance is stated by
any insurance company or by the applicable Insurance Rating Bureau to be due to
any activity or equipment of Tenant in or about the Premises or the Building,
such statement shall be conclusive evidence that the increase in such rate is
due to such activity or equipment and, as a result thereof, Tenant shall be
liable for the amount of such increase. Tenant shall reimburse Landlord for such
amount upon written demand from Landlord and such sum shall be considered
additional rent payable hereunder.
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13.2 Throughout the Lease Term, Landlord shall insure the Building of
which the Premises are a part against loss due to fire and other casualties
included in comprehensive all-risk property insurance policies, on a replacement
cost basis, in an amount equal to at least 90% of the replacement cost thereof,
exclusive of architectural and engineering fees, excavation, footings and
foundations. Such insurance shall also cover the initial tenant improvements
installed in the Premises by Landlord in accordance with Section 9.2 hereof, but
shall not cover Tenant's furniture, fixtures, equipment or other personal
property of Tenant on the Premises.
13.3 Throughout the Lease Term, Tenant shall insure the contents of the
Premises, including its furnishings, fixtures and equipment used or installed in
the Premises by Tenant, and any other personal property of Tenant in the
Premises, against loss due to fire and other casualties included in standard
extended coverage insurance policies, in minimum amounts reasonably approved by
Landlord from time to time. Throughout the Lease Term, Tenant shall obtain and
maintain comprehensive commercial general liability insurance coverage in a
company or companies licensed to do business in the State of Maryland and
reasonably approved by Landlord. Such insurance shall be for coverage equivalent
to a comprehensive single limited policy of not less than Two Million Dollars
($2,000,000.) and shall be issued for a minimum term of one (1) year. In
addition, said policies of insurance shall name Landlord, including the
constituent partners of Landlord, Boston Properties, Inc. as managing agent of
the Office Complex, and, if requested, the holder of any mortgage or deed of
trust secured by the Office Complex as additional insureds. If requested by
Landlord, receipts or certificates evidencing payment of the premiums for such
insurance shall be delivered by Tenant at least annually. Each such policy shall
contain an endorsement prohibiting cancellation or reduction of coverage without
first giving Landlord and the holder of any mortgage or deed of trust on the
Building at least thirty (30) days' prior written notice of such proposed
action.
13.4 Tenant hereby waives its right of recovery against Landlord and
releases Landlord from any claim arising out of losses, claims, casualties or
other damages for which Landlord may otherwise be liable to the extent Tenant is
either required to maintain insurance pursuant to this Article XIII or receives
insurance proceeds on account thereof. Landlord hereby waives its right of
recovery against Tenant and releases Tenant from any claim arising out of
losses, claims, casualties or other damages for which Tenant may otherwise be
liable to the extent Landlord is either required to maintain insurance pursuant
to this Article XIII or receives insurance proceeds on account thereof. Each
policy obtained by the either party pursuant to the provisions of this Article
XIII shall include a waiver of the insurer's right of subrogation against the
other party, and shall contain an endorsement to the effect that any loss
payable under such policy shall be payable notwithstanding any act or negligence
of such other party, or its agents, contractors or employees, which might,
absent such agreement, result in the forfeiture of payment for such loss.
ARTICLE XIV
SERVICES AND UTILITIES
14.1 Landlord shall furnish to the Premises year-round ventilation and
air conditioning and heat during the seasons when they are required, as
determined in Landlord's reasonable judgment.
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Landlord shall also provide reasonably adequate electricity, water, exterior
window-cleaning service, and char and janitorial service after 6:00 p.m. on
Monday through Friday only (excluding legal holidays), as determined in
Landlord's reasonable judgment, and in accordance with standards customarily
provided in first class office buildings in the Bethesda, Maryland area.
Landlord will also provide elevator service; provided, however, that Landlord
shall have the right to remove elevators from service as may be required for
moving freight, or for servicing and maintaining the elevators or the Office
Complex. At least one elevator cab shall be available for use by Tenant at all
times. The normal hours of operation of the Office Complex will be 7:30 a.m. to
7:00 p.m. on Monday through Friday (except legal holidays), and 8:00 a.m. to
2:00 p.m. on Saturday (except legal holidays). There will be no normal hours of
operation of the Office Complex on Sundays or legal holidays and Landlord shall
not be obligated to maintain or operate the Office Complex at such times unless
special arrangements are made by Tenant. The services and utilities required to
be furnished by Landlord, other than electricity and water, will be provided
only during the normal hours of operation of the Office Complex, except as
otherwise specified herein. It is agreed that if Tenant requires air
conditioning or heat beyond the normal hours of operation set forth herein,
Landlord will furnish such air conditioning or heat, provided Tenant gives
Landlord's agent sufficient advance notice of such requirement and Tenant agrees
to pay for the cost of such extra service in accordance with Landlord's then
current schedule of costs and assessments for such extra service. Landlord
agrees to provide a security system in the Office Complex comparable to security
systems in first class office buildings in the Bethesda, Maryland area, which
shall permit Tenant to have access to the Premises on a 24-hour,
seven-days-a-week basis.
14.2 It is understood and agreed that Landlord shall not have any
liability to Tenant whatsoever as a result of Landlord's failure or inability to
furnish any of the utilities or services required to be furnished by Landlord
hereunder, whether resulting from breakdown, removal from service for
maintenance or repairs, strikes, scarcity of labor or materials, acts of God,
governmental requirements or from any other cause whatsoever. It is further
agreed that any such failure or inability to furnish the utilities or services
required hereunder shall not be considered an eviction, actual or constructive,
of Tenant from the Premises and, except as provided in Section 14.3 below, shall
not entitle Tenant to terminate this Lease or, except as expressly provided in
Section 14.3 below, to an abatement of any rent payable hereunder.
14.3 (a) Notwithstanding provisions of Section 14.2 to the contrary, if
(i) the services described in Section 14.1 hereof are interrupted for a period
of more than ten (10) consecutive business days, (ii) Landlord has not commenced
or is not diligently pursuing curing such interruption, (iii) such interruption
is not the result of strikes, unavailability of parts or other materials, or any
other cause beyond Landlord's control, and (iv) such interruption renders all or
a substantial portion of the Premises unusable by Tenant, then Tenant shall be
entitled to a pro rata abatement of rent beginning on the eleventh (11th)
consecutive business day that the Premises are unusable and continuing until the
use of the Premises is restored to Tenant.
(b) Landlord will use its reasonable efforts (including, in
Landlord's sole discretion, reasonable expenditures of money), but Landlord
shall not be obligated to litigate or otherwise bring suit or other court action
against the applicable utility, to cause the restoration of any
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interrupted utility services; further, should any equipment or machinery in the
Building break down so as to render the Premises unusable by Tenant, Landlord
shall promptly repair or replace it (subject to delays which result from
strikes, unavailability of parts or other materials, or other matters beyond
Landlord's control).
(c) In no event shall Landlord have any liability to Tenant for
any claims based on the interruption of or loss to Tenant's business or for any
consequential damages or indirect losses which may arise, directly or
indirectly, from any failure or inability to provide services or utilities.
14.4 The parties hereto agree to comply with all mandatory and
voluntary energy conservation controls and requirements applicable to office
buildings that are imposed or instituted by the Federal, State of Maryland or
Montgomery County governments, including without limitation, controls on the
permitted range of temperature settings in office buildings, and requirements
necessitating curtailment of the volume of energy consumption or the hours of
operation of the Office Complex. Any terms or conditions of this Lease that
conflict or interfere with compliance with such controls or requirements shall
be suspended for the duration of such controls or requirements. It is further
agreed that compliance with such controls or requirements shall not be
considered an eviction, actual or constructive, of Tenant from the Premises and
shall not entitle Tenant to terminate this Lease or to an abatement of any rent
payable hereunder.
14.5 Tenant shall reimburse Landlord for any excess water usage in the
Premises. "Excess water usage" shall mean the excess of Tenant's water usage
during any billing period for water services over the estimated average water
usage during the same period for other tenants of the Office Complex, as
computed by Landlord.
ARTICLE XV
LIABILITY OF LANDLORD
15.1 Except as provided in Section 14.3 above, Landlord shall not be
liable to Tenant, its employees, agents, business invitees, licensees,
customers, clients, family members or guests for any damage. injury, loss,
compensation or claim, including, but not limited to, claims for the
interruption of or loss to Tenant's business, based on, arising out of or
resulting from any cause whatsoever, including but not limited to the following:
repairs, or lack thereof, to any portion of the Premises or the Office Complex;
interruption in the use of the Premises; any accident or damage resulting from
the use or operation (by Landlord, Tenant or any other person or persons) of
elevators, or of the heating, cooling, electrical or plumbing equipment or
apparatus; the termination of this Lease by reason of the destruction of the
Premises, the Building or the Office Complex; any fire, robbery, theft,
mysterious disappearance or any other casualty; the actions of any other tenants
of the Office Complex or of any other person or persons; and any leakage in any
part or portion of the Premises or the Office Complex, or from water, rain or
snow that may leak into, or flow from, any part of the Premises or the Office
Complex, or from drains, pipes or plumbing fixtures in the Office Complex. Any
goods, property or personal effects stored or placed by Tenant or its employees
in or about the Premises or Office Complex shall be at the sole risk of Tenant,
and Landlord shall not in any manner be held responsible therefor. It is
understood that the employees of Landlord are prohibited from
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receiving any packages or other articles delivered to the Office Complex for
Tenant, and if any such employee receives any such package or articles, such
employee shall be acting as the agent of Tenant for such purposes and not as the
agent of Landlord. Notwithstanding the foregoing provisions of this Section
15.1, Landlord shall not be released from liability to Tenant for damage or
injury caused by the wilful misconduct or negligence of Landlord, its employees
or agents; provided, however, in no event shall Landlord have any liability to
Tenant for any claims based on the interruption of or loss to Tenant's business
or for any indirect losses or any consequential damages whatsoever.
15.2 Tenant hereby agrees to indemnify and hold Landlord harmless from
and against all costs, damages, claims, liabilities and expenses (including
attorneys' fees and any costs of litigation) suffered by or claimed against
Landlord, directly or indirectly, based on, arising out of or resulting from (i)
Tenant's use and occupancy of the Premises or the business conducted by Tenant
therein, (ii) any accident, injury or damage whatsoever caused to any person, or
the property of any person, occurring within the Premises during the Lease Term,
the gross negligence or wilful misconduct of Landlord, its employees and agents
excepted, (iii) any act or omission to act by Tenant or its employees,
contractors, agents. licensees, or invitees, (iv) any breach or default by
Tenant in the performance or observance of its covenants or obligations under
this Lease or (v) the towing of any car or other vehicle as provided in Section
24.4 hereof.
15.3 In the event that at any time Landlord shall sell or transfer
title to the Building or the Office Complex, provided the purchaser or
transferee assumes the obligations of Landlord hereunder, Landlord named herein
shall not be liable to Tenant for any obligations or liabilities based on or
arising out of events or conditions occurring on or after the date of such sale
or transfer. Furthermore, Tenant agrees to attorn to any such purchaser or
transferee upon all the terms and conditions of this Lease.
15.4 In the event that at any time during the Lease Term Tenant shall
have a claim against Landlord, Tenant shall not have the right to deduct the
amount allegedly owed to Tenant from any rent or other sums payable to Landlord
hereunder, it being understood that Tenant's sole remedy for recovering upon
such claim shall be to institute an independent action against Landlord.
15.5 Tenant agrees that in the event Tenant is awarded a money judgment
against Landlord, Tenant's sole recourse for satisfaction of such judgment shall
be limited to execution against the estate and interest of Landlord in the
Office Complex, including all rents, insurance proceeds and condemnation awards
payable to or received by Landlord. In no event shall any other assets of
Landlord, any partner of Landlord, or any other person or entity be available to
satisfy, or be subject to, such judgment nor shall any partner of Landlord or
any other person or entity be held to have any personal liability for
satisfaction of any claims or judgments that Tenant may have against Landlord or
any constituent partner of Landlord in such partner's capacity as a partner of
Landlord.
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ARTICLE XVI
RULES AND REGULATIONS
16.1 Tenant and its agents, employees, invitees, licensees, customers,
clients, family members, guests and permitted subtenants shall at all times
abide by and observe the rules and regulations attached hereto as Exhibit C. In
addition, Tenant and its agents, employees, invitees, licensees, customers,
clients, family members, guests and permitted subtenants shall abide by and
observe all other rules or regulations that Landlord may promulgate from time to
time for the operation and maintenance of the Office Complex, provided that
notice thereof is given to Tenant and such rules and regulations are not
inconsistent with the provisions of this Lease. Nothing contained in this Lease
shall be construed as imposing upon Landlord any duty or obligation to enforce
such rules and regulations, or the terms, conditions or covenants contained in
any other lease, as against any other tenant, and Landlord shall not be liable
to Tenant for the violation of such rules or regulations by any other tenant or
its employees, agents, business invitees, licensees, customers, clients, family
members or guests. If there is any inconsistency between this Lease and the
Rules and Regulations set forth in Exhibit C, this Lease shall govern.
ARTICLE XVII
DAMAGE OR DESTRUCTION
17.1 If, during the Lease Term, the Premises or the Building are
totally or partially damaged or destroyed from any cause, thereby rendering the
Premises totally or partially inaccessible or unusable, Landlord shall
diligently (taking into account the time necessary to effectuate a satisfactory
settlement with any insurance company involved) restore and repair the Premises
and the Building to substantially the same condition they were in prior to such
damage; provided, however, if in the sole and reasonable judgment of Landlord
the repairs and restoration cannot be completed within one hundred twenty (120)
days after the occurrence of such damage, including the time needed for removal
of debris, preparation of plans and issuance of all required governmental
permits, Landlord shall have the right, at its sole option, to terminate this
Lease by giving written notice of termination to Tenant within forty-five (45)
days after the occurrence of such damage. Landlord shall use reasonable efforts
not to discriminate against Tenant in determining whether to exercise its right
to terminate this Lease in accordance with the provisions of this Section 17.1.
17.2 If Landlord determines, in its sole but reasonable judgment, that
the repairs and restoration cannot be substantially completed within one hundred
twenty (120) days after the date of such damage or destruction, Landlord shall
promptly notify Tenant of such determination. For a period of thirty (30) days
after receipt of such determination, Tenant shall have the right to terminate
this Lease by providing written notice to Landlord. If Tenant does not elect to
terminate this Lease within such thirty (30) day period, and provided that
Landlord has not elected to terminate this Lease, Landlord shall proceed to
repair and restore the Premises (including the means of access thereto) and the
Building. Notwithstanding the foregoing, Tenant shall not have the right to
terminate this Lease if the act or omission of Tenant, or any of its employees,
agents, licensees, subtenants, customers, clients, family members or guests,
shall have caused the damage or destruction.
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17.3 If this Lease is terminated pursuant to Section 17.1 or Section
17.2 above, all rent payable hereunder shall be apportioned and paid to the
effective date of the occurrence of such damage or destruction, and Tenant shall
have no further rights or remedies as against Landlord pursuant to this Lease,
or otherwise. If this Lease is not terminated as a result of such damage, and
provided that such damage was not caused by the act or omission to act of
Tenant, or any of its employees, agents, licensees, subtenants, invitees,
customers, clients, family members or guests, until the repair and restoration
of the Premises is completed Tenant shall be required to pay base rent and
additional rent only for that part of the Premises that Tenant is able to use
while repairs are being made, based on the ratio that the amount of usable Net
Rentable Area bears to the total Net Rentable Area in the Premises. Landlord
shall bear the costs and expenses of repairing and restoring the Premises,
except that if such damage or destruction was caused by the act or omission to
act of Tenant, or any of its employees, agents, licensees, subtenants, invitees,
customers, clients, family members or guests, upon written demand from Landlord,
Tenant shall pay to Landlord the amount by which such costs and expenses exceed
the insurance proceeds, if any, received by Landlord on account of such damage
or destruction; provided, however, that (a) Landlord shall make reasonable
efforts to collect all insurance proceeds Landlord is entitled to recover on
account of such damage or destruction and (b) in the event of a total casualty,
Tenant shall only be obligated to pay Landlord the amount by which such costs
and expenses exceed the amount of insurance proceeds Landlord would have
received if Landlord had insured the Building to its full replacement cost and
(c) Tenant's liability to Landlord shall not exceed the amount of insurance
proceeds Tenant is entitled to, or would be entitled to, receive in connection
with such damage or destruction. Provided, however, that Landlord shall not be
obligated to restore the Premises if the estimated cost of such restoration, as
prepared by Landlord's architect, exceeds the amount of insurance proceeds
available to Landlord for such restoration by more than 10% of such amount.
17.4 If Landlord repairs and restores the Premises as provided in
Section 17.1, Landlord shall not be required to repair or restore any
decorations, alterations or improvements to the Premises previously made by or
at the expense of Tenant or any trade fixtures, furnishings, equipment or
personal property belonging to Tenant. It shall be Tenant's sole responsibility
to repair and restore all such items.
17.5 Notwithstanding anything to the contrary contained herein, if the
Building is damaged or destroyed from any cause to such an extent that the costs
of repairing and restoring the Building would exceed fifty percent (50%) of the
replacement value of the Building, whether or not the Premises are damaged or
destroyed, Landlord shall have the right to terminate this Lease by written
notice to Tenant, provided the leases of all other tenants in the Building are
similarly terminated. This right of termination shall be in addition to any
other right of termination provided in this Lease.
ARTICLE XVIII
CONDEMNATION
18.1 If the whole or a substantial part (as hereinafter defined) of the
Premises, or the use
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or occupancy of the Premises, shall be taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose
including a sale thereof under threat of such a taking), then this Lease shall
terminate on the date title thereto vests in such governmental or
quasi-governmental authority, and all rent payable hereunder shall be
apportioned as of such date. If less than a substantial part of the Premises, or
the use or occupancy thereof, is taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose
(including a sale thereof under threat of such a taking), this Lease shall
continue in full force and effect, but the base rent and additional rent
thereafter payable hereunder shall be equitably adjusted (on the basis of the
ratio of the number of square feet of Net Rentable Area taken to the total Net
Rentable Area in the Premises prior to such taking) as of the date title vests
in the governmental or quasi-governmental authority. For purposes of this
Section 18.1, a substantial part of the Premises shall be considered to have
been taken if more than one-third (1/3) of the Premises is rendered unusable as
a result of such taking.
18.2 All awards, damages and other compensation paid by the condemning
authority on account of such taking or condemnation (or sale under threat of
such a taking) shall belong to Landlord, and Tenant hereby assigns to Landlord
all rights to such awards, damages and compensation. Tenant agrees not to make
any claim against Landlord or the condemning authority for any portion of such
award or compensation attributable to damages to the Premises, the value of the
unexpired term of this Lease, the loss of profits or goodwill, leasehold
improvements or severance damages. Nothing contained herein, however, shall
prevent Tenant from pursuing a separate claim against the condemning authority
for the value of furnishings, equipment and trade fixtures installed in the
Premises at Tenant's expense and for relocation expenses, provided that such
claim does not in any way diminish the award or compensation payable to or
recoverable by Landlord in connection with such taking or condemnation. Landlord
agrees that it shall not make a claim for the value of Tenant's furnishings,
equipment or trade fixtures installed in the Premises by Tenant unless
authorized to do so by Tenant.
ARTICLE XIX
DEFAULT BY TENANT
19.1 The occurrence of any of the following shall constitute a default
by Tenant under this Lease:
(a) If Tenant shall fail to pay any installment of base rent
or additional rent when due, or shall fail to pay when due any other payment
required by this Lease and such failure shall remain uncured for a period of
five (5) days after Landlord notifies Tenant of such failure; provided, however,
that Landlord shall not be required to give Tenant more than two (2) such
written notices in any twelve (12) month period.
(b) If Tenant shall violate or fall to perform any other term,
condition, covenant or agreement to be performed or observed by Tenant under
this Lease and such violation or failure shall continue uncured for a period of
thirty (30) days after Landlord notifies Tenant in writing of such violation or
failure. If such violation or failure is not capable of being cured within such
thirty
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(30) day period, Tenant shall not be deemed to be in default hereunder if Tenant
commences curative action within such thirty (30) day period and proceeds
diligently and in good faith thereafter to cure such violation or failure until
completion.
(c) If Tenant shall abandon the Premises.
(d) If an Event of Bankruptcy, as defined in Section 20.1 of
this Lease, shall occur.
(e) the occurrence of the event described in the last clause
of Section 7.5(a) hereof
19.2 If Tenant shall be in default under this Lease, Landlord shall
have the right, at its sole option, to terminate this Lease. With or without
terminating this Lease, Landlord may re-enter and take possession of the
Premises and the provisions of this Article XIX shall operate as a notice to
quit, any other notice to quit or of Landlord's intention to re-enter the
Premises being hereby expressly waived. If necessary, Landlord may proceed to
recover possession of the Premises under and by virtue of the laws of the State
of Maryland. If Landlord elects to terminate this Lease, everything contained in
this Lease on the part of Landlord to be done and performed shall cease without
prejudice, however, to the right of Landlord to recover from Tenant all rent and
other sums due under this Lease. Whether or not this Lease is terminated by
reason of Tenant's default, Landlord shall use reasonable efforts to relet the
Premises for such rent and upon such terms as are not unreasonable under the
circumstances, and if the full rental provided herein plus the costs, expenses
and damages hereafter described shall not be realized by Landlord, Tenant shall
be liable for all damages sustained by Landlord, including, without limitation,
deficiency in base rent and additional rent, reasonable attorneys' fees,
brokerage fees, and the expenses of placing the Premises in first class rentable
condition. Provided Landlord shall have used reasonable efforts to relet the
Premises, Landlord shall in no way be responsible or liable for any failure to
relet the Premises or any part thereof, or any failure to collect any rent due
or accrued upon such reletting (provided, however, that Landlord shall endeavor
to act diligently in collecting any rent due or accrued upon such reletting), to
the end and intent that Landlord may elect to hold Tenant liable for difference
between any base rent, additional rent, and any and all other items of cost and
expense which Tenant shall have been obligated to pay throughout the remainder
of the Lease Term and the amount actually collected by Landlord as a result of
reletting the Premises. Notwithstanding anything to the contrary in this Section
19.2, Tenant expressly acknowledges that Landlord's agreement to use reasonable
efforts to relet the Premises shall in no event limit, restrict or prejudice
Landlord's right to lease all other vacant space in the Office Complex prior to
reletting the Premises. Any damages or loss of rent sustained by Landlord may be
recovered by Landlord, at Landlord's option, at the time of the reletting, or in
separate actions, from time to time, as said damage shall have been made more
easily ascertainable by successive reletting, or, at Landlord's option, may be
deferred until the expiration of the Lease Term, in which event Tenant hereby
agrees that the cause of action shall not be deemed to have accrued until the
date of expiration of the Lease Term. The provisions contained in this Section
19.2 shall be in addition to, and shall not prevent the enforcement of, any
claim Landlord may have against Tenant for anticipatory breach of this Lease.
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19.3 All rights and remedies of Landlord set forth herein are in
addition to all other rights and remedies available to Landlord at law or in
equity. All rights and remedies available to Landlord hereunder or at law or in
equity are expressly declared to be cumulative. The exercise by Landlord of any
such right or remedy shall not prevent the concurrent or subsequent exercise of
any other right or remedy. No delay in the enforcement or exercise of any such
right or remedy shall constitute a waiver of any default by Tenant hereunder or
of any of Landlord's rights or remedies in connection therewith. Landlord shall
not be deemed to have waived any default by Tenant hereunder unless such waiver
is set forth in a written instrument signed by Landlord. If Landlord waives in
writing any default by Tenant, such waiver shall not be construed as a waiver of
any covenant, condition or agreement set forth in this Lease except as to
specific circumstances described in such written waiver.
19.4 If Landlord shall institute proceedings against Tenant and a
compromise or settlement thereof shall be made, neither shall the same
constitute a waiver of default or of any other covenant, condition or agreement
set forth herein, nor of any of Landlord's rights hereunder. Neither the payment
by Tenant of a lesser amount than the installments of base rent, additional rent
or of any sums due hereunder nor any endorsement or statement on any check or
letter accompanying a check for payment of rent or other sums payable hereunder
shall be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance of such
rent or other sums or to pursue any other remedy available to Landlord. No
re-entry by Landlord, and no acceptance by Landlord of keys from Tenant, shall
be considered an acceptance of a surrender of this Lease.
19.5 If Tenant defaults in the making of any payment or in the doing of
any act herein required to be made or done by Tenant, then Landlord may, but
shall not be required to, make such payment or do such act. If Landlord elects
to make such payment or do such act, all costs and expenses incurred by
Landlord, plus interest thereon at the rate per annum which is two percent (2%)
higher than the "prime rate" then being charged by Riggs National Bank of
Washington, D.C., from the date paid by Landlord to the date of payment thereof
by Tenant, shall be immediately paid by Tenant to Landlord; provided however,
that nothing contained herein shall be construed as permitting Landlord to
charge or receive interest in excess of the maximum legal rate then allowed by
law. The taking of such action by Landlord shall not be considered as a cure of
such default by Tenant or prevent Landlord from pursuing any remedy it is
otherwise entitled to in connection with such default.
19.6 If Tenant fails to make any payment of base rent or of additional
rent on or before the date such payment is due and payable, Tenant shall pay to
Landlord a late charge of five percent (5%) of the amount of such payment. In
addition, such payment shall bear interest at the rate per annum which is two
percent (2%) higher than the "prime rate" then being charged by Riggs National
Bank of Washington, D.C. from the date such payment became due to the date of
payment thereof by Tenant; provided, however, that nothing contained herein
shall be construed as permitting Landlord to charge or receive interest in
excess of the maximum legal rate then allowed by law. Such late charge and
interest shall constitute additional rent due and payable hereunder with the
next installment of base rent due hereunder. Notwithstanding the foregoing
provisions to the contrary,
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Landlord will not exercise its right to impose the sums described in this
Section 19.6 if such late payments are no later than five (5) days past due and
such late payments occur no more than two (2) times in any twelve (12) month
period.
ARTICLE XX
BANKRUPTCY
20.1 The following shall be Events of Bankruptcy under this Lease:
(a) Tenant's becoming insolvent, as that term is defined in
Title 11 of the United States Code (the "Bankruptcy Code"), or under the
insolvency laws of any state, district, commonwealth or territory of the United
States (the "Insolvency Laws");
(b) The appointment of a receiver or custodian for any or all
of Tenant's property or assets, or the institution of a foreclosure action upon
any of Tenant's real or personal property;
(c) The filing of a voluntary petition under the provisions of
the Bankruptcy Code or Insolvency Laws;
(d) The filing of an involuntary petition against Tenant as
the subject debtor under the Bankruptcy Code or Insolvency Laws, which either
(i) is not dismissed within thirty (30) days of filing, or (ii) results in the
issuance of an order for relief against the debtor; or
(e) Tenant's making or consenting to an assignment for the
benefit of creditors or a common law composition of creditors.
20.2 (a) Upon occurrence of an Event of Bankruptcy, Landlord shall have
all rights and remedies available to Landlord pursuant to Article XIX, provided
that while a case in which Tenant is the subject debtor under the Bankruptcy
Code is pending and only for so long as Tenant or its Trustee in Bankruptcy
(hereafter referred to as "Trustee") is in compliance with the provisions of
Sections 20.2(b), (c) and (d) below, Landlord shall not exercise its rights and
remedies pursuant to Article XIX.
(b) In the event Tenant becomes the subject debtor in a case
pending under the Bankruptcy Code, Landlord's right to terminate this Lease
pursuant to Section 20.2(a) shall be subject to the rights of the Trustee to
assume or assign this Lease. Trustee shall not have the right to assume or
assign this Lease unless Trustee promptly (i) cures all defaults under this
Lease, (ii) compensates Landlord for monetary damages incurred as a result of
such defaults, and (iii) provides adequate assurance of future performance on
the part of Tenant as debtor in possession or on the part of the assignee
tenant.
(c) Landlord and Tenant hereby agree in advance that adequate
assurance of future performance, as used in Section 20.2(b) above, shall mean
that all of the following minimum criteria must be met: (i) Tenant must pay its
estimated pro rata share of the cost of all services
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provided by Landlord (whether directly or through agents or contractors and
whether or not previously included as part of the annual base rent), in advance
of the performance or provision of such services; (ii) Trustee must agree that
Tenant's business shall be conducted in a first class manner, and that no
liquidating sales, auctions, or other non-first class business operations shall
be conducted on the Premises; (iii) Trustee must agree that the use of the
Premises as stated in this Lease will remain unchanged and that no prohibited
use shall be permitted; (iv) Trustee must agree that the assumption or
assignment of this Lease will not violate or affect the rights of other tenants
in the Office Complex; (v) Trustee must pay to Landlord at the time the next
monthly installment of annual base rent is due under this Lease, in addition to
such installment of annual base rent, an amount equal to the monthly
installments of annual base rent and additional rent due under this Lease for
the next six (6) months under this Lease, said amount to be held by Landlord in
escrow until either Trustee or Tenant defaults in its payment of rent or other
obligations under this Lease (whereupon Landlord shall have the right to draw on
such escrowed funds) or until the expiration of this Lease (whereupon the funds
shall be returned to Trustee or Tenant); and (vi) Tenant or Trustee must agree
to pay to Landlord at any time Landlord is authorized to and does draw on the
escrow account the amount necessary to restore such escrow account to the
original level required by Section 20.2(c).
(d) In the event Tenant is unable to (i) cure its defaults,
(ii) reimburse the Landlord for its monetary damages, (iii) pay the rent due
under this Lease and all other payments required of Tenant under this Lease on
time (or within five (5) days of the due date) or (iv) meet the criteria and
obligations imposed by Section 20.2(c) above, Tenant agrees in advance that it
has not met its burden to provide adequate assurance of future performance, and
this Lease may be terminated by Landlord in accordance with Section 20.2(a)
above.
ARTICLE XXI
SUBORDINATION
21.1 This Lease is subject and subordinate to the lien of any and all
mortgages (which term "mortgages" shall include both construction and permanent
financing and shall include deeds of trust and similar security instruments)
which may now encumber the Building or the Office Complex, and to any and all
renewals, extensions, modifications, recastings or refinancings thereof. This
Lease shall also be subject and subordinate to the lien of (i) any new first
mortgage that hereafter may encumber the Building or the Office Complex, and
(ii) any second or junior mortgages that may hereafter encumber the Building or
the Office Complex, provided the holder of the first mortgage consents to such
subordination. At any time after the execution of this Lease, the holder of any
mortgage to which this Lease is subordinate shall have the right to declare this
Lease to be superior to the lien of such mortgage and Tenant agrees to execute
all reasonable documents required by such holder in confirmation thereof.
21.2 In confirmation of the foregoing subordination, Tenant shall, at
Landlord's request, promptly execute any requisite or appropriate certificate or
other document. In the event Tenant does not execute and deliver any requisite
or appropriate certificate or other document within ten (10) business days of
Landlord's request therefor, Tenant hereby constitutes and appoints Landlord
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as Tenant's attorney-in-fact to execute any such certificate or other document
for or on behalf of Tenant. Tenant agrees that in the event any proceedings are
brought for the foreclosure of any mortgage encumbering the Building or the
Office Complex, Tenant shall attorn to the purchaser at such foreclosure sale,
if requested to do so by such purchaser, and shall recognize such purchaser as
the landlord under this Lease, and Tenant waives the provisions of any statute
or rule of law, now or hereafter in effect, which may give or purport to give
Tenant any right to terminate or otherwise adversely affect this Lease and the
obligations of Tenant hereunder in the event any such foreclosure proceeding is
prosecuted or completed. Tenant agrees that upon the attornment referred to in
the preceding sentence, such purchaser shall not (a) be bound by any payment of
annual base rent or additional rent for more than one (1) month in advance,
except prepayments in the nature of security for the performance by Tenant of
its obligations under this Lease but only to the extent such prepayments have
been delivered to such purchaser, (5) be bound by any amendment of this Lease
made without the consent of any lender providing construction or permanent
financing for the Office Complex, if such consent is required, (c) be liable for
damages for any act or omission of any prior landlord or (d) be subject to any
offsets or defenses which Tenant might have against any prior landlord, unless
lender shall have recovered from Landlord any sums attributable to the act(s) or
omission(s) of Landlord giving rise to such offset or defense; provided,
however, that after succeeding to Landlord's interest under this Lease, such
purchaser shall perform in accordance with the terms of this Lease all
obligations of Landlord arising after the date such purchaser acquires title to
the Office Complex. Landlord agrees to use reasonable efforts to obtain the
required consent of any Lender providing financing for the Office Complex to any
amendment to this Lease, where such consent is required. Landlord agrees to use
reasonable efforts to obtain the consent, if required, of any lender providing
financing to the Building and/or the Office Complex to any amendment to this
Lease. Upon request by such purchaser, Tenant shall execute and deliver any
reasonably instrument or instruments confirming its attainment.
21.3 (a) After receiving notice from any person, firm or other entity
that it holds a mortgage, deed of trust or a ground lease on the Building, or
the land on which the Building is situated or the Office Complex, no notice from
Tenant to Landlord alleging any default by Landlord shall be effective unless
and until a copy of the same is given to such holder, trustee, or ground lessor;
provided, however, that Tenant shall have been furnished with the name and
address of such holder, trustee or ground lessor. The curing of any of
Landlord's defaults by such holder, trustee or ground lessor shall be treated as
performance by Landlord, but nothing herein contained in this Article XXI shall
obligate or be deemed to obligate such holder, trustee or groundlessor to cure
any of Landlord's defaults.
(b) In addition to the time afforded Landlord for the curing
of any default, any such holder, trustee, or ground lessor shall have an
additional thirty (30) days after the expiration of the period allowed to
Landlord for the cure of any such default within which to commence a cure.
(c) In the event that any future lender providing construction
or permanent financing or any refinancing for the Building or the Office Complex
requires, as a condition of such financing, that modifications to this Lease be
obtained, and provided that such modifications (i) are reasonable, (ii) do not
adversely affect in a material manner Tenant's use and occupancy of the
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Premises as herein permitted, (iii) do not increase the rent and other sums to
be paid by Tenant hereunder, (iv) do not reduce the services provided to Tenant
under this Lease, (v) do not materially decrease Landlord's obligations under
this Lease and (vi) do not materially affect the rights and obligations of
Tenant under this Lease, Landlord may submit to Tenant a written amendment to
this Lease incorporating such required changes, and Tenant hereby covenants and
agrees to execute, acknowledge and deliver such amendment to Landlord within ten
(10) business days of Tenant's receipt thereof.
(d) Landlord represents that as of the date of this Lease the
Office Complex is not encumbered by a mortgage or deed of trust. Landlord shall
use its commercially reasonable efforts to obtain from any future holder of any
mortgage or deed of trust on the Office Complex a non-disturbance agreement, on
such future holder's standard form, in favor of Tenant 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, the terms
and conditions of this Lease shall continue in full force and effect and
Tenant's possession, use and occupancy of the Premises shall not be disturbed
during the term of this Lease by the holder of such mortgage or deed of trust or
by any purchaser upon foreclosure of such mortgage or deed of trust.
ARTICLE XXII
HOLDING OVER
22.1 In the event that Tenant shall not immediately surrender the
Premises on the date of the expiration of the Lease Term, Tenant shall become a
tenant by the month at a base rent and additional rent equal to one hundred
fifty percent (150%) of the base rent and all additional rent in effect during
the last month of the Lease Term. Said monthly tenancy shall commence on the
first day following the expiration of the Lease Term. As a monthly tenant,
Tenant shall be subject to all the terms, conditions, covenants and agreements
of this Lease. Tenant shall give to Landlord at least thirty (30) days' written
notice of any intention to quit the Premises, and Tenant shall be entitled to
thirty (30) days' written notice to quit the Premises, unless Tenant is in
default hereunder, in which event Tenant shall not be entitled to any notice to
quit, the usual thirty (30) days' notice to quit being hereby expressly waived.
Notwithstanding the foregoing provisions of this Section 22.1, in the event that
Tenant shall hold over after the expiration of the Lease Term, and if Landlord
shall desire to regain possession of the Premises promptly at the expiration of
the Lease Term, then at any time prior to Landlord's acceptance of rent from
Tenant as a monthly tenant hereunder, Landlord, at its option, may forthwith
re-enter and take possession of the Premises by any legal process in force in
the State of Maryland.
ARTICLE XXIII
COVENANTS OF LANDLORD
23.1 Landlord covenants that it has the right to make this Lease for
the term aforesaid, and that if Tenant shall pay all rent when due and
punctually perform all the covenants, terms, conditions and agreements of this
Lease to be performed by Tenant, Tenant shall, during the term hereby created,
freely, peaceably and quietly occupy and enjoy the full possession of the
Premises without
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molestation or hindrance by Landlord or any party claiming through or under
Landlord, subject to the provisions of Section 23.2 hereof. Tenant acknowledges
and agrees that its leasehold estate in and to the Premises vests on the date
this Lease is executed, notwithstanding that the term of this Lease will not
commence until a future date.
23.2 (a) Landlord hereby reserves to itself and its successors and
assigns the following rights (all of which are hereby consented to by Tenant):
(i) to change the street address and/or name of the Building or the Office
Complex and/or the arrangement and/or location of entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets, or other public parts of the
Office Complex, provided such changes to not materially and adversely interfere
with Tenant's use or occupancy of the Premises; (ii) to erect, use and maintain
pipes and conduits in and through the Premises, provided that Landlord shall use
its reasonable efforts to minimize the disruption to Tenant's use and occupancy
of the Premises and provided such changes do not materially or adversely
interfere with Tenant's use or occupancy of the Premises; and (iii) to grant to
anyone the exclusive right to conduct any particular business or undertaking in
the Office Complex; provided, however, that Landlord shall not grant to anyone
an exclusive right which would preclude Tenant from occupying the Premises.
Landlord may exercise any or all of the foregoing rights without being deemed to
be guilty of an eviction, actual or constructive, or a disturbance or
interruption of the business of Tenant or of Tenant's use or occupancy of the
Premises. If, as a result of Landlord's change of street address or name of the
Building, Tenant must replace its professional stationery, Landlord agrees to
reimburse Tenant, up to Three Thousand Dollars ($3,000.00) based on invoices
presented to Landlord, for the reasonable cost of replacing stock on hand at the
time of such change with stationery of equal amount and quality.
(b) If (i) the occurrence of any of the events set forth in
Section 23.2 (a)(i).(iii) above causes a material and adverse impact on
Tenant's use and occupancy of the Premises as a direct result of which Tenant is
unable to conduct its normal business operations in all or a portion of the
Premises for five (5) full business days or longer and (ii) Tenant has provided
Landlord with written notice of Tenant's inability to use all or a portion of
the Premises for the conduct of normal business operations as a result of the
occurrence of any of such events and (iii) Landlord does not commence or is not
diligently pursuing curing such disruption of Tenant's ability to use all or a
portion of the Premises for the conduct of normal business operations, then,
base rent for that portion of the Premises which Tenant is unable to use as a
result of such disruption in its business operations shall be abated on a pro
rata basis commencing on the date that Tenant provides Landlord written notice
of Tenant's inability to use all or a portion of the Premises for the normal
conduct of its business until use of that portion of the Premises which Tenant
is unable to use is returned to Tenant.
ARTICLE XXIV
PARKING
24.1 During the 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
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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 (1st) Lease Year, the charge for such permits
shall be Fifty-Five Dollars ($55.00) per month per permit. Thereafter, the
charge for such permits shall be the prevailing rate charged from time to time
by Landlord or the operator of the Garage, as applicable. If Tenant desires
additional parking permits, the charge for such permits shall be the prevailing
rate charged from time to time by Landlord or the operator of the Garage, as
applicable. 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.
24.2 It is understood and agreed that the Garage and the surface
parking areas of the Office Complex will be operated on a self-parking basis and
no specific parking spaces will be allocated for use by Tenant. Each user of the
Garage and the surface parking areas not designated for the exclusive use of
particular tenants of the Office Complex will have the right to park in any
available stall in accordance with regulations of uniform applicability
promulgated for all users of the Garage and the surface parking areas by
Landlord or the Garage operator.
24.3 Tenant agrees that it and its employees shall observe reasonable
safety precautions in the use of the Garage and the surface parking areas and
shall at all times abide by all rules and regulations promulgated by Landlord or
the Garage operator governing the use of the Garage and the surface parking
areas, including the requirement that an identification or parking sticker shall
be displayed at all times in all cars parked in the Garage or the surface
parking areas. Any car not displaying such a sticker may be towed away at the
car owner's expense.
24.4 The Garage and the surface parking areas will remain open on
Monday through Friday (excluding legal holidays) during the normal hours of
operation of the Office Complex on such days. Landlord reserves the right to
close the Garage or the surface parking areas during periods of unusually
inclement weather. At all times when the Garage or the surface parking areas are
closed, monthly permit holders shall be afforded access to the Garage or the
surface parking areas by means of a magnetic card or other procedure provided by
Landlord or the Garage operator.
24.5 It is understood and agreed that the Landlord does not assume any
responsibility for, and shall not be held liable for, any damage or loss to any
automobiles parked in the Garage or the surface parking areas or to any personal
property located therein, or for any injury sustained by any person in or about
the Garage or the surface parking areas. Notwithstanding the preceding sentence,
Landlord shall not be released from liability to Tenant for any damage or injury
to any automobiles parked during normal hours of operation of the Building in
the garage or the surface parking areas or to any personal property located
thereon caused directly by the willful misconduct or negligence of Landlord or
its employees; provided, however in no event shall Landlord have any liability
to Tenant for any claims based on the interruption of or loss to Tenant's
business.
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ARTICLE XXV
EXPANSION SPACE
25.1 (a) In the event Tenant exercises its right to renew the Lease
Term in accordance with the provisions of Rider No. 1 to this Lease, Landlord
agrees that provided Tenant is not in default hereunder, beyond any applicable
notice and cure period, Tenant shall be afforded the right, exercisable at
Tenant's option to lease an additional 2,437 square feet of space on the twelfth
(12th) floor of the Office Building which is contiguous to the Premises (the
"Expansion Space") at some time during the first two (2) Lease Years of the
Renewal Term. The date upon which the Expansion Space is made available to
Tenant during the first two (2) Lease Years of the Renewal Term shall be
determined by Landlord in its sole discretion.
(b) Landlord shall notify Tenant of the availability of the
Expansion Space.
(c) The annual base rent with respect to the Expansion Space
shall be equal to one hundred percent (100%) of the then prevailing fair market
rent for such space reflecting the concessions then being quoted by Landlord and
other building owners for office buildings of comparable size, location and
quality to the Office Building in the North Bethesda, Montgomery County,
Maryland area.
(d) For a period often (10) days after receipt of any such
notice from Landlord pursuant to Section 25.1(a) above, Tenant shall have the
right to lease the Expansion Space from Landlord upon the terms and conditions
set forth in the notice from Landlord. In the event Tenant agrees to lease the
Expansion Space within such ten (10) day period, the parties shall have thirty
(30) days after Landlord receipt of Tenant's acceptance in which to agree on the
base rent which shall be payable during each year of the remainder of the Lease
Term with respect to the Expansion Space. 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 in the North Bethesda, Montgomery County Maryland area, (ii) the rental
rates and concessions then being quoted by other building owners for the office
buildings of comparable size, location and quality to the Office Complex in the
North Bethesda, Montgomery County, Maryland area, (iii) the rental rates and
concessions then being quoted by Landlord to prospective tenants for comparable
office space, in "as is" condition, in the Office Complex. If the parties agree
on the base rent payable with respect to the Expansion Space, they shall
promptly execute an amendment to the Lease indicating the location and
configuration of the Expansion Space and stating the rent so agreed upon. If
during such thirty (30) day period, the parties are unable to agree on the
annual base rent payable with respect to the Expansion Space then Tenants option
to expand the Premises shall cease and expire and be of no further force and
effect.
(e) In the event Tenant does not agree to lease the Expansion
Space within such ten (10) day period or if Tenant fails to timely notify
Landlord of its election to lease the Expansion Space, Landlord shall have the
right to lease such space to any other person or entity upon any terms and
conditions which Landlord desires, in its discretion.
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(f) The term of the lease for the Expansion Space shall
commence on the date (the "Expansion Space Availability Date") on which the
Expansion Space is made available to Tenant for its use and shall be coincident
with the remaining Lease Term under this Lease. Any and all installations and
other related activity by Tenant or its contractors in the Expansion Space prior
to the Lease Commencement Date with respect to the Expansion Space shall be
coordinated with Landlord and its general contractor, if any, to insure that
Tenant's work in and to the Expansion Space does not interfere with the work
being performed by Landlord and its contractors, if any. 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 of installation and activity in the
Expansion Space by Tenant.
(g) Tenant shall accept the Expansion Space in "as is"
condition, except as provided in subsection (c) above. Landlord shall have no
obligation to construct, alter, renovate, repaint, recarpet or to provide any
construction allowance for tenant improvements in the Expansion Space.
(h) Any work done and materials furnished and performed in
connection with the construction and installation of improvements in the
Additional Expansion Space shall be governed and construed in accordance with
and subject to all of the provisions, conditions and requirements of Article IX
of the Lease.
(i) The term of the Lease for the Additional Expansion Space
shall be for not less than one (1) year and shall be coincident with the
remaining Lease Term (subject to Tenant's right to renew such term) under this
Lease.
(j) In no event shall Tenant have the right to lease less than
all of the Expansion Space available.
(h) Tenant shall be obligated to pay additional rent with
respect to the Expansion Space in accordance with the provisions of Article IV
of the Lease.
26.2 If Tenant is in default under the Lease on the date Landlord's
notice is given to Tenant by Landlord or at any time thereafter but prior to the
commencement of the term for such Expansion Space and if such default is not
cured within the applicable notice and cure period, if any, provided in this
Lease, then, at Landlord's option, Tenant's right to lease the Additional Space
shall lapse and be of no further force or effect.
26.3 Tenant's rights under this Article XXV are subject to (a)
Landlord's right or obligation to extend or renew the lease of the then current
tenant of the Expansion Space beyond the expiration date of such tenant's lease
upon any terms and conditions to which Landlord and such tenant may agree and
(5) to any expansion rights of any other tenant occupying space in the Office
Complex prior to the Lease Commencement Date with respect to such tenant's right
to lease the Expansion Space.
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26.4 Tenant's rights under this Article XXV are personal to Emaginet,
Inc. and not by any assignee or subtenant of Emaginet, Inc., except for an
assignee permitted under Section 7.6 of this Lease, and, further, Tenant shall
not have any of the expansion rights set forth in this Article XXV if Emaginet,
Inc. together with any assignee or subtenant permitted under Section 7.6 of this
Lease is occupying less than fifty percent (50%) of the original Premises at
such time.
ARTICLE XXVI
GENERAL PROVISIONS
26.1 Tenant acknowledges that neither Landlord nor any broker, agent or
employee of Landlord has made any representations or promises with respect to
the Premises or the Office Complex except as herein expressly set forth, and no
rights, privileges, easements or licenses are being acquired by Tenant except as
herein expressly set forth.
26.2 Nothing contained in this Lease shall be construed as creating a
partnership or joint venture of or between Landlord and Tenant, or to create any
other relationship between the parties hereto other than that of landlord and
tenant.
26.3 Landlord recognizes Polinger/Shamton & Luchs as the broker
procuring this Lease and shall pay said broker a commission pursuant to a
separate agreement between said broker and Landlord. Landlord and Tenant each
represents and warrants to the other that, except as provided above, neither of
them has employed or dealt with any broker, agent or finder in carrying on the
negotiations relating to this Lease. 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 Lease, other than the broker named in the
first sentence of this Section 26.3.
26.4 Tenant agrees, at any time and from time to time, upon not less
than ten (10) business days' prior written notice by Landlord, to execute,
acknowledge and deliver to Landlord a statement in writing (i) certifying that
this Lease is unmodified and in full force and effect (or if there have been any
modifications, that the Lease is in full force and effect as modified and
stating the modifications or amendments which Tenant has executed), (ii) stating
the dates to which the rent and any other charges hereunder have been paid by
Tenant, (iii) stating whether or not, to the best knowledge of Tenant, Landlord
is in default in the performance of any covenant, agreement or condition
contained in this Lease, and if so, specifying the nature of such default, (iv)
stating the address to which notices to Tenant are to be sent, and (v) stating
to the best knowledge of Tenant such other information as may be reasonably
requested by Landlord. Any such statement delivered by Tenant may be relied upon
by any owner of the Building or the Office Complex or the land upon which they
are situated, any prospective purchaser of the Building or the Office Complex or
such land, any mortgagee or prospective mortgagee of the Building or the Office
Complex or such land or of Landlord's interest therein, or any prospective
assignee of any such mortgagee.
26.5 Landlord and Tenant each hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other in
connection with any matter arising out
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of or in any way connected with this Lease, the relationship of Landlord and
Tenant hereunder, Tenant's use or occupancy of the Premises, and/or any claim of
injury or damage.
26.6 All notices or other communications required hereunder shall be in
writing and shall be deemed duly given if delivered in person (with receipt
therefor), or if sent by a nationally recognized overnight delivery service
(with return receipt therefor) or if sent by certified or registered mail,
return receipt requested, postage prepaid, to the following addresses: (i) if to
Landlord at do Boston Properties, Inc., 500 E Street, S.W., Washington, D.C.
20024, with a copy to Boston Properties, Inc., 8 Arlington Street, Boston,
Massachusetts 02116; (ii) if to Tenant, at the Premises, except that prior to
the Lease Commencement Date, notices to Tenant shall be sent to such address as
Tenant shall designate and inform Landlord. Either party may change its address
for the giving of notices by notice given in accordance with this Section.
26.7 If any provision of this Lease or the application thereof to any
person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Lease, OR the application of such provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each provision of this Lease shall be valid and
enforced to the fullest extent permitted by law.
26.8 Feminine or neuter pronouns shall be substituted for those of the
masculine form, and the plural shall be substituted for the singular number, in
any place or places herein in which the context may require such substitution.
26.9 The provisions of this Lease shall be binding upon, and shall
inure to the benefit of, the parties hereto and each of their respective
representatives, successors and assigns, subject to the provisions hereof
restricting assignment or subletting by Tenant.
26.10 This Lease contains and embodies the entire agreements of the
parties hereto and supersedes all prior agreements, negotiations and discussions
between the parties hereto. Any representation, inducement or agreement that is
not contained in this Lease shall not be of any force or effect. This Lease may
not be modified or changed in whole or in part in any manner other than by an
instrument in writing duly signed by both parties hereto.
26.11 This Lease shall be governed by and construed in accordance with
the laws of the State of Maryland.
26.12 Article and section headings are used herein for the convenience
of reference and shall not be considered when construing or interpreting this
Lease.
26.13 The submission of an unsigned copy of this document to Tenant for
Tenant's consideration does not constitute an offer to lease the Premises or an
option to or for the premises. This document shall become effective and binding
only upon the execution and delivery of this Lease by both Landlord and Tenant.
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<PAGE> 62
26.14 Time is of the essence of each provision of this Lease.
26.15 This Lease shall not be recorded, except that upon the request of
either party, the parties agree to execute, in recordable form, a short-form
memorandum of this Lease, provided that such memorandum shall not contain any of
the specific rental terms set forth herein. Such memorandum may be recorded in
the land records of Montgomery County, Maryland and the party desiring such
recordation shall pay all recordation costs.
26.16 The Net Rentable Area in the Office Complex and in the Premises
shall be determined in accordance with Exhibit D hereto.
26.17 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.
26.18 Except as otherwise provided in Section 4.3 of this Lease any
additional rent owed by Tenant to Landlord, and any cost, expense, damage, or
liability shall be paid by Tenant to Landlord no later than the later of(i)
twenty (20) days after the date Landlord notifies Tenant of the amount of such
additional rent or such cost, expense, damage or liability, or (ii) the day the
next monthly installment of base rent is due. If any payment hereunder is due
after the end of the Lease Term, such additional rent or such cost, expense,
damage or liability shall be paid by Tenant to Landlord not later than twenty
(20) days after Landlord notifies Tenant of the amount of such additional rent
or such cost, expense, damage or liability.
26.19 All of Tenant's duties and obligations hereunder, including but
not limited to Tenant's duties and obligations to pay base rent, additional rent
and the costs, expenses, damages and liabilities incurred by Landlord for which
Tenant is liable, shall survive the termination of this Lease for any reason
whatsoever.
26.20 Except as provided in Section 2.2 hereof, in the event Landlord
or Tenant is in any way delayed, interrupted or prevented from performing any of
its obligations under this Lease, except for Tenant's compliance with its
monetary obligations to pay rent, Additional rent or to make any other payments
required under the terms of this Lease (including, without limitation, payment
of insurance premiums required to maintain Tenant's required insurance coverage
in effect at all times) and such delay, interruption or prevention is due to
fire, act of God, governmental act, action or inaction (including, without
limitation, government delays in issuing any required building, construction,
occupancy or other permit or approval or performing any inspection or review in
connection therewith) strike, labor dispute, inability to procure materials, or
any other cause beyond Landlord's reasonable control (whether similar or
dissimilar), then Landlord shall be excused from performing the affected
obligations for the period of such delay, interruption or prevention.
26.21 Landlord and Tenant each hereby covenant and agree that each and
every provision of this Lease 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
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<PAGE> 63
hereby waive any claim of authorship against the other party.
26.22 This Lease includes and incorporates Rider No. 1 and Exhibits A,
A-1, C, D, E and F attached hereto.
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<PAGE> 64
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal on or as of the day and year first above written.
LANDLORD:
DEMOCRACY ASSOCIATES LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Boston Properties LEC, a Delaware
limited liability company, its General
Partner
By: Boston Properties Limited Partnership, a
Delaware limited partnership, Managing
Member
By: Boston Properties, Inc., a Delaware
corporation, its General Partner
WITNESS:
[ILLEGIBLE]
------------------------------ By: /s/ RAYMOND A. RITCHEY
----------------------------------------
Raymond A. Ritchey, Senior Vice President
TENANT:
EMAGINET, INC., a Delaware corporation
ATTEST:
By: [ILLEGIBLE] By: /s/ Mehrdad Axhavan
--------------------------- ----------------------------------------
Title: President Title: Executive Vice President
------------------------ -------------------------------------
[CORPORATE SEAL]
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<PAGE> 65
RIDER NO. 1
THIS RIDER NO. 1 is attached to and made a part of that certain Lease
Agreement dated September 23, 1997 (the "Lease"), by and between DEMOCRACY
ASSOCIATES LIMITED PARTNERSHIP ("Landlord") and EMAGINET, INC., a Delaware
corporation ("Tenant"). The terms used in this Rider which are defined in the
Lease have the same meanings as provided in the Lease.
WITNESSETH, that for and in consideration of Tenant's entering into the
Lease Agreement described above, and other good and valuable consideration, and
intending to be legally bound hereby, Landlord hereby grants to Tenant the right
to renew the initial term of the Lease upon the following terms and conditions:
(1) Landlord hereby grants to Tenant the conditional right, exercisable
at Tenant's option, to renew the term of the Lease for one (1) additional term
of three (3) years. If exercised and if the conditions applicable thereto have
been satisfied, such renewal term (the "Renewal Term") shall commence
immediately following the end of the initial term provided in Section 3.1 of the
Lease. 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
the Renewal Term by giving Landlord written notice of the exercise thereof (the
"renewal option notice") not less than six (6) months and not more than nine (9)
months prior to the expiration of the initial term of the Lease. In the event
that the renewal option notice is not given in a timely manner, Tenant's right
of renewal with respect to the Renewal Term shall lapse and be of no further
force or effect. If Tenant is in default under the Lease, beyond any applicable
notice and cure period, on the date the renewal option notice is given or any
time thereafter on or before the commencement date of the Renewal Term, then, at
Landlord's option, the renewal option notice shall be totally ineffective and
Tenant's right of renewal as to the 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 the Renewal Term, Landlord and Tenant shall commence
negotiations concerning the amount of annual base rent which shall be payable
during each year of the Renewal Term, it being intended that the annual base
rent payable during the first Lease Year of the Renewal Term 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 the renewal option notice in which
to agree on the base rent which shall be payable during each year of the 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 in the 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 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 throughs provided
in the Lease, (v) concession packages then being obtained (or offered if
comparables are not readily available) by
<PAGE> 66
other building owners for office buildings in the Bethesda, Maryland area of
comparable size, location and quality to 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 annual base rent payable during the Renewal Term be less than the annual
base rent in effect under the Lease during the Lease Year immediately preceding
the commencement of the Renewal Term. If the parties agree on the base rent
payable during each year of the Renewal Term, they shall promptly execute an
amendment to the Lease stating the rent so agreed upon. If during such thirty
(30) day period the parties are unable to agree on the base rent payable during
the Renewal Term, then Tenant's option to renew the term of the Lease shall
cease and expire and be of no further force or effect and Landlord shall have
the right to lease the Premises to any other person or entity upon such terms
and conditions as Landlord, in its discretion may determine.
(c) During the 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 the Renewal Term shall be the amount agreed upon by Landlord and
Tenant in the manner provided in Paragraph 1(b) above, and (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 Renewal Term.
(2) The base rent payable during the Renewal Term shall be increased,
as of the first day of the second Lease Year of the Renewal Term and on the
first day of each and every Lease Year thereafter during the Renewal Term in
accordance with the provisions of Section 3.2 of the Lease.
(3) Tenant's rights under this Rider No. 1 are personal to and may be
exercised only by Emaginet, Inc. and shall not be exercisable by any assignee or
subtenant Emaginet, Inc., other than an assignee permitted or approved, as
applicable, pursuant to the provisions of Article VII of the Lease.
Initials of:
[ILLEGIBLE]
------------------
Landlord
/s/ MA
------------------
Tenant
<PAGE> 67
EXHIBIT A
[FLOOR PLAN]
Two Democracy
12th Floor
<PAGE> 68
EXHIBIT A-1
[FLOOR PLAN]
Two Democracy Center
12th Floor
2,437 SF
<PAGE> 69
EXHIBIT B
[FLOOR PLAN]
Emaginet; Democ.2 revised plan 9/10/97
Floor 12 not to scale.
<PAGE> 70
EXHIBIT C
RULES AND REGULATIONS
This Exhibit C is attached to and made a part of that Lease Agreement
dated September 23, 1997 (the "Lease"), between DEMOCRACY ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited partnership ("Landlord"), and EMAGINET, INC.,
("Tenant"). Unless the context otherwise requires, the terms used in this
Exhibit that are defined in the Lease shall have the same meanings as provided
in the Lease.
The following rules and regulations have been formulated for the safety
and well-being of all tenants of the Office Complex and to insure compliance
with municipal and other requirements. Strict adherence to these rules and
regulations is necessary to guarantee that each and every tenant will enjoy a
safe and undisturbed occupancy of its premises in the Office Complex. Any
continuing violation of these rules and regulations by Tenant shall constitute a
default by Tenant under the Lease.
Landlord may, upon request of any tenant, waive the compliance by such
tenant of any of the following rules and regulations, provided that (i) no
waiver shall be effective unless signed by Landlord or Landlord's authorized
agent, (ii) any such waiver shall not relieve such tenant from the obligation to
comply with such rule or regulation in the future unless otherwise agreed to by
Landlord, (iii) no waiver granted to any tenant shall relieve any other tenant
from the obligation of complying with these rules and regulations, unless such
other tenant has received a similar written waiver from the Landlord and (iv)
any such waiver by Landlord shall not relieve such Tenant from any liability to
Landlord for any loss or damage occasioned as a result of such tenant's failure
to comply with any rule or regulation.
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors, halls and other parts of the Office Complex not
exclusively occupied by any tenant shall not be obstructed or encumbered by any
tenant or used for any purpose other than ingress and egress to and from each
tenant's premises. If a tenant's premises are situated on the ground floor of
the Office Complex, the tenant thereof shall, at such tenant's own expense, keep
the sidewalks and curb directly in front of its premises clean and free from ice
and snow. Landlord shall have the right to control and operate the public
portions of the Office Complex, and the facilities furnished for common use of
the tenants, in such manner as Landlord deems best for the benefit of the
tenants generally. No tenant shall permit the visit to its premises of persons
in such numbers or under such conditions as to interfere with the use and
enjoyment of the entrances, corridors, elevators and other public portions or
facilities of the Office Complex by other tenants.
2. No awnings or other projections shall be attached to the outside
walls of the Office Complex without the prior written consent of Landlord. No
drapes, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of any tenant's premises, without the prior
written consent of Landlord. All awnings, projections, curtains, blinds, shades,
screens and other fixtures must be of a quality, type and design or color, and
attached in the manner, approved by Landlord.
<PAGE> 71
3. No showcases or other articles shall be in front of or affixed to
any part of the exterior of the Office Complex, nor placed in the halls,
corridors or vestibules without the prior written consent of Landlord.
4. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
debris, rubbish, rags or other substances shall be thrown therein. All damage
resulting from any misuse of the fixtures shall be borne by the tenant who, or
whose servants, employees, agents, visitors or licensees, shall have caused the
same.
5. There shall be no marking, painting, drilling into or defacement of
the Office Complex or any part of the premises that is visible from public areas
of the Office Complex. Tenants shall not construct, maintain, use or operate
within their respective premises any electrical device, wiring or apparatus in
connection with a loud speaker system or other sound system, except as
reasonably required as part of a communication system approved prior to the
installation thereof by Landlord. No such loud speaker or sound system shall be
constructed, maintained, used or operated outside of the premises.
6. No bicycles or vehicles and no animals, birds or pets of any kind
shall be brought into or kept in or about the Office Complex or any tenant's
premises, except that this rule shall not prohibit the parking of bicycles or
vehicles in the garage in the Office Complex. No cooking or heating of food
shall be done or permitted by any tenant on its premises. No tenant shall cause
or permit the unusual or objectionable odors to be produced upon or permeate
from any tenant's premises.
7. No space in the Office Complex shall be used for the manufacture of
goods for sale in the ordinary course of business, or for the sale at auction of
merchandise, goods or property of any kind. Furthermore, the use of its premises
by any tenant shall not be changed without the prior approval of Landlord.
8. No tenant shall make any unseemly or disturbing noises or disturb or
interfere with occupants of the Office Complex or neighboring buildings or
premises or those having business with them, whether by the use of any musical
instrument, radio, talking machine, whistling, singing, or in any other way. No
tenant shall throw anything out of the doors or windows or down the corridors or
stairs of the Office Complex.
9. No flammable, combustible or explosive fluid, chemical or substance
shall be brought into or kept upon any tenant's premises.
10. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in any
existing locks or the locking mechanism therein, without Landlord's approval.
The doors leading to the corridors or main halls shall be kept closed during
business hours except as they may be used for ingress or egress. Each tenant
shall, upon the termination of its tenancy, restore to the Landlord all keys of
stores, offices,
C-2
<PAGE> 72
storage and toilet rooms either furnished to, or otherwise procured by, such
tenant, and in the event of the loss of any keys so furnished, such tenant shall
pay to Landlord the replacement cost thereof. Tenant's key system shall be
separate from that for the rest of the Office Complex.
11. Landlord reserves the right to inspect all freight to be brought
into the Office Complex and to exclude from the Office Complex all freight which
violates any of these rules and regulations or the Lease.
12. No tenant shall pay any employees on the premises, except those
actually working for such tenant at the tenant's premises.
13. Landlord reserves the right to exclude from the Office Complex at
all times any person who is not known or does not properly identify himself to
the Office Complex management or watchman on duty. Landlord may, at its option,
require all persons admitted to or leaving the Office Complex between the hours
of 7:00 p.m. and 7:30 a.m., Monday through Friday, and at any hour on Saturdays,
Sundays and legal holidays, to register. Each tenant shall be responsible for
all persons for whom it authorizes entry into the Office Complex, and shall be
liable to Landlord for acts or omissions of such persons.
14. No tenant's premises shall be used, at any time, for lodging or
sleeping or for any immoral or illegal purpose.
15. Each tenant, before closing and leaving its premises at any time,
shall see that any windows are closed and all lights turned off.
16. Landlord's employees shall not perform any work or do anything
outside of their regular duties, unless under special instruction from the
management of the Office Complex. The requirements of tenants will be attended
to only upon application to Landlord, and any such special requirements shall be
billed to Tenant (and paid when the next installment of rent is due) in
accordance with the schedule of charges maintained by Landlord from time to time
or at such charge as is agreed upon in advance by Landlord and Tenant.
17. Canvassing, soliciting and peddling in the Office Complex is
prohibited and each tenant shall cooperate to prevent the same.
18. There shall not be used in any space, or in the public halls of the
Office Complex, either by any tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and side guards. Tenant shall be responsible to Landlord for any loss or damage
resulting from any deliveries made by or for Tenant to the Office Complex.
19. Mats, trash or other objects shall not be placed in the public
corridors of the Office Complex.
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<PAGE> 73
20. Landlord does not maintain suite finishes which are non-standard,
such as kitchens, bathrooms, wallpaper, special lights, etc. However, should the
need arise for repairs of items not maintained by Landlord, Landlord will
arrange for the work to be done at Tenant's expense.
21. Drapes installed by Landlord for the use of Tenant or drapes
installed by Tenant, which are visible from the exterior of the Office Complex,
must be cleaned by Tenant at least once a year, without notice, at Tenant's own
expense.
Initials of:
/s/ [ILLEGIBLE]
---------------
Landlord
/s/ MA
---------------
Tenant
C-4
<PAGE> 74
EXHIBIT D
METHOD OF MEASURING NET RENTABLE AREA
The Net Rentable Area of the Premises shall be determined in accordance with the
following:
(1) Net Rentable Area shall equal the sum of (i) net usable area, (ii)
floor core factor and (iii) common core factor.
(2) For the purposes hereof, the terms identified in Paragraph (1)
hereof shall have the following definitions:
a. Net usable area shall be computed by measuring from the finished
surface for the corridor side of the common corridor and/or wall of the building
core to the inside finished surface of the glassline of the permanent outer
building walls, and to the center of any demising walls which separate the
Premises from any adjoining space.
b. Floor core factor shall be a pro rata allocation of all building
service areas on the floor or floors on which the Premises are located which are
not measured in the net usable area calculation, including but not limited to
restrooms, public corridors, telephone and electrical closets, and mechanical
rooms, but excluding vertical penetrations through the floor slab which serve
more than one floor in the building, including but not limited to stairs,
elevator shafts, flues, pipe shafts, vertical ducts and their enclosing walls.
The pro rata allocation will be based on the ratio of net usable area of the
Premises on the floor relative to the total net usable area on the floor.
c. Common core factor shall be a pro rata allocation of the
building service areas on the first floor that are for the benefit of the
general population of the building, and shall include the first floor lobby
area, public corridors, janitorial storage area, building engineer's office,
shop, and locker room, building receiving/service area, mail room, fire control
rooms, and energy management rooms, but shall exclude first floor net usable
area, building service areas exclusively for the use of first floor tenants, and
vertical penetrations previously defined. The pro rata allocation will be based
on the net usable area of the Premises on the floor or floors on which such
Premises are located relative to the total net usable area in the Building.
d. All single tenant floors shall have a core factor equal to ten
percent (10%) All multi-tenant floors shall have a core factor equal to fourteen
percent (14%).
Initials of:
/s/ [ILLEGIBLE]
---------------
Landlord
/s/ MA
---------------
Tenant
<PAGE> 75
EXHIBIT E
FORM OF ESTOPPEL CERTIFICATE
This Exhibit E is attached to and made a part of that certain Lease
Agreement dated September 23, 1997 (the "Lease"), between Democracy Associates
Limited Partnership ("Landlord") and Emaginet, Inc. ("Tenant"). The terms used
in this Exhibit that are defined in the Lease shall have the same meaning as
provided in the Lease. The Estoppel Certificate to be executed by Landlord and
Tenant pursuant to Section 2.3 of the Lease shall provide as follows:
"This Estoppel Certificate made as of the __ day of__________, 19__. is
being provided pursuant to the terms and provisions of that certain Lease
Agreement dated _____________, 1997 (the "Lease"), between Democracy Associates
Limited Partnership ("Landlord") and Emaginet, Inc. ("Tenant"). The parties to
the Lease desire to confirm that the following terms which are defined in the
Lease shall have the meanings set forth below for all purposes in the Lease:
1. The Lease Commencement Date is ____,19__.
2. The initial term of the Lease shall expire on _______, 19__.
3. The number of square feet of rentable area in the Premises is
_____.
4. The annual base rent with respect to the Premises for the
first Lease Year is an amount equal to the product of_______
Dollars ($ ) multiplied by the total number of square feet
of rentable area in the Premises.
5. As of the date hereof the Lease has not been modified and is
in full force and effect and there are no defaults thereunder.
Attached to this Estoppel Certificate is evidence of payment of all
insurance required pursuant to Article XIII of the Lease."
Initials of:
/s/ [ILLEGIBLE]
---------------
Landlord
/s/ [ILLEGIBLE]
---------------
Tenant