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AGREEMENT OF LEASE

Lease Agreement

AGREEMENT OF LEASE | Document Parties: 6721 GATEWAY, LLC | INTEGRAL SYSTEMS, INC You are currently viewing:
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6721 GATEWAY, LLC | INTEGRAL SYSTEMS, INC

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Title: AGREEMENT OF LEASE
Governing Law: Maryland     Date: 6/12/2008
Industry: Computer Services     Law Firm: Gibson Dunn     Sector: Technology

AGREEMENT OF LEASE, Parties: 6721 gateway  llc , integral systems  inc
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Exhibit 10.01

AGREEMENT OF LEASE

by and between

6721 GATEWAY, LLC

and

INTEGRAL SYSTEMS, INC.

GATEWAY EXCHANGE III

6721 COLUMBIA GATEWAY DRIVE

 


AGREEMENT OF LEASE

6721 GATEWAY, LLC

INTEGRAL SYSTEMS, INC.

TABLE OF CONTENTS

 

1.

   Definitions and Attachments    1

2.

   Demise    3

3.

   Term    3

4.

   Intentionally Deleted    5

5.

   Use    5

6.

   Rent    5

7.

   Requirements of Applicable Law    13

8.

   Certificate of Occupancy    13

9.

   Contest-Statute, Ordinance, Etc.    13

10.

   Tenant’s Improvements    13

11.

   Repairs and Maintenance    14

12.

   Conduct on Premises    15

13.

   Insurance    16

14.

   Rules and Regulations    17

15.

   Mechanics’ Liens    17

16.

   Failure to Repair    17

17.

   Property – Loss, Damage    18

18.

   Destruction – Fire or Other Casualty    18

19.

   Eminent Domain    18

20.

   Assignment    19

21.

   Default; Remedies; Bankruptcy of Tenant    20

22.

   Damages    21

23.

   Services and Utilities    22

24.

   Electric Current    23

25.

   Telephone and Telecommunications    23

26.

   Acceptance of Premises    24

27.

   Inability to Perform    24

28.

   No Waivers    24

29.

   Access to Premises and Change in Services    24

30.

   Estoppel Certificates    25

31.

   Subordination    25

32.

   Attornment    25

33.

   Notices    26

34.

   Intentionally Deleted    26

35.

   Tenant’s Space    26

36.

   Quiet Enjoyment    27

37.

   Vacation of Premises    27

38.

   Members’ Liability    28

39.

   Separability    28

40.

   Indemnification    28

41.

   Captions    29

42.

   Brokers    29

43.

   Recordation    29

44.

   Successors and Assigns    29

45.

   Integration of Agreements    29

46.

   Hazardous Material; Indemnity    30

47.

   Americans With Disabilities Act    31

48.

   Several Liability    32

49.

   Financial Statements    32

50.

   Definition of Day and Days    32

51.

   Exterior Signage    32

52.

   Reimbursement Agreement    33

53.

   Tax Rent Credits    33

54.

   Secure Area    33

55.

   Attorneys’ Fees    33

56.

   Telecommunications Equipment    34

 

 


AGREEMENT OF LEASE

THIS AGREEMENT OF LEASE (this “Lease”) made this      day of                      , 2008 (“Effective Date”), by and between 6721 GATEWAY, LLC (the “Landlord”) and INTEGRAL SYSTEMS, INC. (the “Tenant”) , witnesseth that the parties hereby agree as follows:

W I T N E S S E T H:

THAT FOR AND IN CONSIDERATION of the mutual covenants and agreements herein contained, the parties hereto do hereby covenant and agree as follows:

1. Definitions and Attachments .

1.1 Certain Defined Terms.

1.1.1 “Building” means the office building known as Gateway Exchange III located at 6721 Columbia Gateway Drive, Columbia, Maryland 21046, which is located within Howard County, Maryland.

1.1.2 “Rentable Area of the Building” means 131,451 rentable square feet, measured in accordance with BOMA standards.

1.1.3 “Premises” means the Building.

1.1.4 “Rentable Area of the Premises” means 131,451 rentable square feet measured in accordance with BOMA standards.

1.1.5 “Initial Term” means a period of eleven (11) years plus the part of a month mentioned in Section 3.1 , commencing and ending as provided in Section 3.1 .

1.1.6 “Renewal Term” means an additional period of five (5) years, commencing and ending as provided in Section 3.3 .

1.1.7 “Annual Base Rent” means the amount set forth on the following schedule:

 

Lease Year

   PSF Rent    Annual
Base Rent
   Monthly
Installments
of Annual
Base Rent
    

1

   $ 28.00    $ 3,680,628.00    $ 306,719.00   

2

   $ 28.77    $ 3,781,845.27    $ 315,153.77   

3

   $ 29.56    $ 3,885,691.56    $ 323,807.63   

4

   $ 30.37    $ 3,992,166.87    $ 332,680.57   

5

   $ 31.21    $ 4,102,585.71    $ 341,882.14   

6

   $ 32.15    $ 4,226,149.65    $ 352,179.14   

7

   $ 33.11    $ 4,352,342.61    $ 362,695.22   

8

   $ 34.10    $ 4,482,479.10    $ 373,539.93   

9

   $ 35.13    $ 4,617,873.63    $ 384,822.80   

10

   $ 36.18    $ 4,755,897.18    $ 396,324.77   

11

   $ 37.27    $ 4,899,178.77    $ 408,264.90   

1.1.8 “Target Date” means February 15, 2009.

 

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1.1.9 “Tenant Notice Address” means

Before Commencement:

Integral Systems, Inc.

5000 Philadelphia Way

Lanham, MD 20706-4417

Attn:_William M. Bambarger, Jr.

Telephone: (301) 731-4233

Telecopier: (301) 731-3183

After Commencement:

6721 Columbia Gateway Drive, Suite 500

Columbia, MD 21046

Attn:                                                              

Telephone: (              )                                  

Telecopier (              )                                   

With a copy (both before and after commencement) to:

Howard B. Adler, Esq.

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, DC 20036-5306

Telephone: (202) 955-8589

Telecopier: (202) 530-9526

1.1.10 “Base Year Building Expenses” shall mean, collectively, the Base Year Controllable Expenses and the Base Year Non-Controllable Expenses. See Section 6 .

1.1.11 “Base Year Taxes” shall mean the actual Taxes incurred by Landlord divided by the Rentable Area of the Building for the 2009 calendar year.

1.1.12 “Allowance” means the sum of $7,405,117. See Section 35 .

1.1.13 “Broker” means The Michael Companies, Inc..

1.2 Additional Defined Terms .

The following additional terms are defined in the places in this Lease noted below:

 

Term

   Section     

“ADA”

   47   

“Applicable Laws”

   7   

“Approved Plans and Specifications”

   35   

“Building Expenses”

   6.2.2   

“Commencement Date”

   3.1   

“Common Areas”

   6.2.4   

“Cost of Building Expenses Per Square Foot”

   6.4.1   

“Cost of Taxes Per Square Foot”

   6.3.1   

“Default Rate”

   6.6   

“Hazardous Material”

   46   

“HVAC”

   23   

“Landlord’s Notice”

   3.3   

“Lease Year”

   6.2.5   

“Mortgagee”

   31   

“Normal Business Hours”

   23   

“Prevailing Market Rate”

   3.3   

“Property”

   6.2.1   

“Substantially Complete”

   3.2   

“Successor”

   32   

“Taxes”

   6.2.3   

“Tenant Improvements”

   35   

“Term”

   3.4   

 

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1.3  Attachments .

The following documents are attached hereto, and such documents, as well as all drawings and documents prepared pursuant thereto, shall be deemed to be a part hereof:

 

 

Exhibit “A”

     Intentionally Deleted
 

Exhibit “B”

     Rules and Regulations
 

Exhibit “C”

     Base Building Specifications
 

Exhibit “C-1”

     Tenant Improvement Plans
 

Exhibit “C-2”

     Schedule of Obligations for Tenant Improvements
 

Exhibit “D”

     Estoppel Certificate
 

Exhibit “E”

     Commencement Date Agreement
 

Exhibit “F”

     Form of Sublease Agreement
 

Exhibit “G”

     Scope And Description Of Base Building HVAC System

2.  Demise . Landlord hereby leases unto Tenant, and Tenant does hereby rent from Landlord, the Premises. In addition thereto, Tenant shall have the right to use, on a non-exclusive basis, and in common with the other tenants of the Building (except with respect to the parking facilities, including the garage, in common with other tenants of the Project), the Common Areas of the Building (as that term is defined in Section 6.2.4 hereof).

3.  Term .

3.1 Commencement Date and Term . This Lease shall commence on the “Commencement Date” (as herein defined) and shall be for the Initial Term, plus the portion of a calendar month, if any, from the Commencement Date to the last day of the calendar month in which such Commencement Date occurs. As used in this Lease, the term “Commencement Date,” as advanced or postponed pursuant to the terms hereof, shall be defined as the earlier to occur of (a) the date on which Tenant takes possession and occupancy of the Premises for the ordinary conduct of its business (rather than for the performance of improvements to prepare for such occupancy), or (b) the date which is five (5) days following that date which is the first on which all of the following events have occurred, namely (i) the Premises are “substantially completed”, as defined in Section 3.2 following, and (ii) Landlord has given Tenant written notice that the Premises are “substantially completed”. Within fifteen (15) days after request from Landlord or Tenant, Tenant and Landlord shall execute and deliver the Commencement Date Agreement in substantially the form attached hereto as Exhibit “E” .

3.2 Substantial Completion . Subject to the provisions of Section 35 , Landlord shall use its reasonable efforts to “substantially complete” the Premises by the Target Date, provided that the Target Date shall be extended for the number of days that Tenant fails to satisfy its obligations under Section 35 . “Substantially complete” means that: (i) the construction of the improvements described in Section 35 , including Building Systems, has been completed in accordance with the Approved Plans and Specifications (as defined in Section 35 ) so that Tenant can use the Premises for its intended purposes without material interference to Tenant conducting its ordinary business activities, (ii) the Premises have been approved for occupancy by governmental authorities having jurisdiction, (iii) Tenant has ready access to the Building and Premises, and (iv) the Premises are ready for installation of any equipment, furniture, fixtures or decoration that Tenant will install. Landlord shall keep Tenant advised as to its progress with regard to “substantially completing” the Premises by the Target Date. Notwithstanding the foregoing, the requirements of subsection (ii) shall be deemed satisfied if all of the other subsections have been satisfied and the government approval is delayed solely as a result of either (x) the installation of furniture, fixtures or equipment which is not included within the scope of Landlord’s responsibilities under Section 35 below or (y) certification of the Secure Area (as defined in Section 54 below). If Landlord fails to Substantially Complete the Premises by May 1, 2009 (as extended by any Tenant Delays or force majeure events, as described in Section 27 ) (such date, the “Outside Completion Date”), then an abatement equal to one day of

 

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Base Rent for every day after the Outside Completion Date that Substantial Completion fails to occur. Notwithstanding the foregoing, if a Tenant Caused Delay (below defined) shall occur, and as a result thereof substantial completion of the Premises shall not occur by the Target Date, then and in such event the Commencement Date shall be deemed to be the date that substantial completion of the Premises would have occurred (but in no event prior to the Target Date or later than July 1, 2009) in the absence of the Tenant Caused Delay. For purposes hereof, a Tenant Caused Delay shall occur on a day for day basis for each day of delay in the substantial completion of the Premises resulting from (i) Tenant’s failure to provide Landlord with the information necessary for Landlord to prepare final (subject to modifications resulting by reason of county code review) construction design drawings for the Premises within thirty (30) days following the Effective Date of this Lease; (ii) Tenant’s failure to provide Landlord with its final finish selections within fifteen (15) days following receipt by Tenant of Landlord’s written approval of the final construction design drawings of the Premises; (iii) Tenant withholding its written authorization to proceed with a change order affecting the construction of the Premises or otherwise modifying the Tenant Improvements for more than three (3) business days after its receipt of a written request therefor; or (iv) Tenant’s written direction to “stop-work” at the Premises.

3.3 Option to Extend Lease Term . Provided Tenant is not in default of any material term, covenant or condition of this Lease after the expiration of any applicable notice and/or cure period, Tenant shall have the option to extend the Initial Term of this Lease for one (1) additional period of five (5) years (the “Renewal Term”) to commence immediately upon the expiration of the Initial Term.

Tenant’s rental of the Premises during the Renewal Term shall be upon the same terms, covenants and conditions contained in this Lease, except that Tenant shall pay to Landlord as Base Rent that amount equal to the “Prevailing Market Rate” for the Premises for the Renewal Term as hereinafter defined (including annual adjustments). For purposes of this Section 3.3 , the term “Prevailing Market Rate” shall mean the then prevailing market rate being charged for comparable space on comparable lease terms in comparable office buildings in the Columbia, Maryland market, with consideration given for construction allowances, commissions, free rent, and other concessions or premiums and actual savings to Landlord from such renewal ). In order to exercise its option granted herein, Tenant shall notify Landlord in writing of its intent to renew not less than three hundred sixty-five (365) days prior to the expiration of the Initial Term. Within thirty (30) days following the delivery by Tenant of such notice of its intent to renew the Lease for the Renewal Term, Landlord shall notify Tenant in writing of its determination of the Prevailing Market Rate for the Renewal Term as reasonably determined by Landlord (“Landlord’s Notice”). Within seven (7) business days after receipt of Landlord’s Notice, Tenant shall notify Landlord in writing of Tenant’s acceptance or rejection of such rate. If Tenant shall accept such Prevailing Market Rate, Landlord and Tenant shall enter into an amendment to this Lease acknowledging such renewal and setting forth any terms at variance with the terms of this Lease. If within the seven (7) business day period, Tenant shall reject such Prevailing Market Rate as determined by Landlord for the Renewal Term, then within twenty (20) days thereafter, Landlord and Tenant shall meet at a mutually acceptable time and place and shall use their reasonable efforts to agree upon the Prevailing Market Rate. If Landlord and Tenant shall fail to agree upon such Prevailing Market Rate within the twenty (20) day period, Landlord and Tenant shall each appoint an independent commercial leasing broker or appraiser licensed in the Maryland area within the next ten (10) days (the “Brokers”). Such Brokers shall deliver their respective estimates of the Prevailing Market Rate within ten (10) days after being appointed. If the estimates of the Prevailing Market Rate as quoted by the Brokers are within five percent (5%) of each other, the Prevailing Market Rate shall be deemed to be the average of the estimates presented by the Brokers. If the estimates of the Prevailing Market Rate as quoted by the Brokers differ by more than five percent (5%), then Landlord and Tenant shall jointly appoint a third independent commercial leasing broker or appraiser licensed in the Maryland area within ten (10) days after the receipt of the initial brokers’ estimates (the “Third Broker”) who shall deliver its estimate of the Prevailing Market Rate within seven (7) business days after being appointed and the Prevailing Market Rate for purposes of this Lease shall be deemed to be whichever of the estimates presented by the Brokers that is closest to the Third Broker’s estimate. Tenant shall notify Landlord within ten (10) days after determination of the Prevailing

 

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Market Rate (whether as resulting from the average of the Brokers or from the Third Broker, as applicable), whether Tenant shall accept such Prevailing Market Rate, whereupon Landlord and Tenant shall enter into an amendment to this Lease acknowledging such renewal and setting forth any terms at variance with the terms of this Lease. If (i) Tenant shall fail to respond to Landlord’s Notice as provided above, (ii) Tenant shall fail to deliver the requisite notice exercising its option to extend by the date prescribed above, (iii) Tenant does not respond within seven (7) business days following receipt of Landlord’s Notice or (iv) Tenant does not accept the Prevailing Market Rate within ten (10) days following Landlord’s notification of the Prevailing Market Rate, as determined either by the average of the Brokers or from the Third Broker, as applicable, then Tenant’s option to extend this Lease for the Renewal Term shall be void and inoperable. Landlord and Tenant shall each pay the fee of the broker designated by them originally and shall split the fees of the Third Broker.

3.4 Definition of “Term” . As used herein, the word “Term” shall refer to the Initial Term and the Renewal Term, if applicable.

4.  Intentionally Deleted .

5.  Use . Tenant covenants that it shall use the Premises during the Term of this Lease solely for general office purposes and the intended uses shown on Exhibit “C-1” (“Tenant’s Permitted Use”) in accordance with applicable zoning regulations and for no other purpose. For purposes of this Lease, the term “general office use” shall not include use as a school, college, university or educational institution of any type, use for any purposes which is not consistent with the operation of the Building as a first class office building, use as an recruitment or temporary help service or agency, or any use involving regular traffic by the general public.

6.  Rent .

6.1 Base Rent . As rent for the Premises during each year of the Term, Tenant shall pay to Landlord an Annual Base Rent, in equal monthly installments, in advance on the first day of each calendar month during the Term, and without deduction, setoff or demand in accordance with the schedule set forth in Section 1.1.7 above. In addition to the Base Rent, if the Term should commence on a day other than the first day of a calendar month, Tenant shall pay to Landlord upon the Commencement Date, a sum equaling that percentage of the monthly rent installment which equals the percentage of such calendar month falling within the Term.

6.2 Definitions . For the purposes hereof, the following definitions shall apply:

6.2.1 “Property” shall mean the Building, the Project, the land upon which same is situated and all fixtures and equipment thereon or therein, all commonly owned or shared appurtenances, including but not limited to, parking areas, walkways, landscaping and utilities, whether located on the land upon which the Building is situated or elsewhere. “Project” shall mean the Building, 6711 Columbia Gateway Drive and 6731 Columbia Gateway Drive.

6.2.2 “Building Expenses” shall be all those expenses paid or incurred by Landlord in connection with the owning, maintaining, operating and repairing of the Property or any part thereof, in a manner deemed reasonable and necessary by Landlord and shall include, without limitation, the following:

6.2.2.1 All costs and expenses of operating, repairing, lighting, cleaning, and insuring (including liability for personal injury, death and property damage and workers’ compensation insurance covering personnel) the Property or any part thereof, as well as all costs incurred in removing snow, ice and debris therefrom and of policing and regulating traffic with respect thereto, and depreciation of all machinery and equipment used therein or thereon, replacing or repairing of pavement, parking areas, curbs, walkways, drainage, lighting facilities, landscaping (including replanting and replacing flowers and other planting);

6.2.2.2 Electricity, steam and fuel used in lighting, heating, ventilating and air conditioning and all costs, charges, and expenses incurred by Landlord in connection with

 

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any change of any company providing electricity service, including, without limitation, maintenance, repair, installation and service costs associated therewith, as well as all expenses associated with the installation of any energy or cost savings devices;

6.2.2.3 Maintenance and repair of mechanical and electrical equipment including heating, ventilating and air conditioning equipment;

6.2.2.4 Window cleaning and janitor service, including equipment, uniforms, and supplies and sundries;

6.2.2.5 Maintenance of elevators, stairways, rest rooms, lobbies, hallways and other Common Areas;

6.2.2.6 Repainting and redecoration of all Common Areas;

6.2.2.7 Repair and maintenance of the parking areas, including without limitation, the resurfacing and striping of said areas;

6.2.2.8 Sales or use taxes on supplies or services;

6.2.2.9 Management fees, wages, salaries and compensation of all persons engaged in the maintenance, operation or repair of the Property and the provision of amenities to all tenants in the Property (including Landlord’s share of all payroll taxes and the cost of an on-site or near-site office and segregated storage area for Landlord’s parts, tools and supplies);

6.2.2.10 Legal, accounting and engineering fees and expenses, except for those related to disputes with tenants or which are a result of and/or are based on Landlord’s negligence or other tortious conduct;

6.2.2.11 Costs and expenses that may result from compliance with any governmental laws or regulations that were not applicable to the Common Areas at the time same were originally constructed; and

6.2.2.12 All other expenses which under generally accepted accounting principles would be considered as an expense of maintaining, operating, or repairing the Property. Notwithstanding the foregoing, (x) all expenses (whether or not such expenses are enumerated on items 1 through 11 of this Section 6.2.2 ) which would be considered capital in nature under generally accepted accounting principles shall be excluded from “Building Expenses” unless same are amortized in accordance with generally accepted accounting principles (“Amortized Portion”) and (y) with regard to any Lease Year, the inclusion of any capital expenditures in “Building Expenses” for such Lease Year shall be limited to the Amortized Portion.

Notwithstanding the foregoing, the following items shall not be included in Building Expenses:

6.2.2.13 Taxes;

6.2.2.14 any expenses incurred in connection with placing or maintaining any mortgage or other financing or refinancing securing the Building, and the payments of interest on and amortization of indebtedness of Landlord, financing and refinancing costs in respect of any indebtedness of Landlord, whether secured or unsecured, including legal and accounting fees and expenses, prepayment penalties and interest and amortization payments in connection therewith;

6.2.2.15 leasing commissions paid to agents of Landlord, other brokers or any other persons in connection with the leasing of premises in the Building or any portion of the Property;

 

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6.2.2.16 expenses relating to leasing, improving or demolishing any tenant spaces in the Building (including the cost of tenant installations and decorations, workletters, allowances, leasing commissions, advertising or promotional expenses, costs of take-over or take back expenses with respect to tenant obligations under leases in other buildings, and concessions) or any other costs incurred in the leasing or sale of the Building or any portion thereof or the Property underlying the same, or any direct or indirect interest therein;

6.2.2.17 fixed rent, percentage rent and all other rent (except those items of rent which otherwise constitute Building Expenses or Taxes under this Lease) under superior leases, if any;

6.2.2.18 wages, salaries and benefits paid to any persons above the grade of senior property manager;

6.2.2.19 legal and accounting fees relating to, and disbursements, court costs and expenses incurred in connection with the preparation for, negotiation of, defending against or resolving of (in each instance whether through legal proceeding, audit or arbitration) (A) disputes with tenants, prospective tenants or other occupants of the Building, (B) disputes with purchasers, prospective purchasers, mortgagees or prospective mortgagees of the Building or the Property or any part of either, (C) the negotiation or enforcement of leases, space leases, lease amendments, consents to assignments and subleases, or any modifications, renewals or surrenders thereof, or contracts of sale or mortgages, or (D) judgments, settlements or arbitrations resulting from any tort liability on the part of Landlord and the amounts of such judgments or settlements;

6.2.2.20 costs of services provided to other tenants of the Building on a “rent-inclusion” basis which are not provided to Tenant on such basis;

6.2.2.21 costs that are reimbursed out of insurance, warranty or condemnation proceeds, or which are reimbursed by any third parties, Tenant or other tenants other than pursuant to an expense escalation clause;

6.2.2.22 costs in the nature of penalties or fines, including, without limitation, fines and penalties incurred because of violations of legal requirements that arise by reason of Landlord’s failure to construct, maintain or operate the Building or any part thereof in compliance with such requirements, but excluding the costs of compliance, permits and approvals required to comply with such requirements in the ordinary course of the operation or maintenance of the Building (which excluded costs of compliance, permits and approvals shall be included in Building Expenses);

6.2.2.23 costs for services, supplies or repairs paid to any related entity in excess of costs that would be payable in an “arm’s length” or unrelated situation for comparable services, supplies or repairs;

6.2.2.24 allowances, concessions or other costs (inclusive of permits, licenses and inspections) and expenses of improving, renovating or decorating any demised or demisable space in the Building (including rental paid for or reimbursed to any tenant and any other consideration, incentive or amount paid or given to any tenant in consideration of moving into or out of the Building;

6.2.2.25 appraisal, advertising and promotional expenses;

6.2.2.26 the costs of installing, operating and maintaining a specialty improvement, including a cafeteria, broadcasting, child care, auditorium, lodging or private dining facility, observatory, private balconies, rooftop decks or an athletic, luncheon or recreational club unless Tenant is permitted to make use of such facility without additional cost or on a subsidized basis consistent with other users; provided that, the costs of operating and maintaining any conference center shall be included in Building Expenses, except to the extent of any fees or charges paid by users of such conference center (which fees and charges shall offset such included costs and expenses of operating and maintaining such conference center);

 

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6.2.2.27 any costs or expenses (including fines, interest, charges, penalties and legal fees) arising out of Landlord’s failure to timely pay any of its obligations, including, without limitation, Building Expenses or Taxes;

6.2.2.28 costs incurred to comply with applicable requirements relating to any Hazardous Materials which were in existence in the Building or on the Property prior to the Effective Date of this Lease, and were of such a nature that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such Hazardous Materials, in the state, and under the conditions that it then existed in the Building or on the Property, would have then required the removal of such Hazardous Materials or other remedial or containment action with respect thereto;

6.2.2.29 costs incurred to remove, remedy, contain, or treat Hazardous Materials (as defined herein), which Hazardous Materials are brought into the Building or onto the Property after the Effective Date of this Lease by Landlord, any other tenant of the Building or any third party and is of such a nature, at that time, that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such Hazardous Materials, in the state, and under the conditions, that it then existed in the Building or on the Property, would have then required the removal of such Hazardous Materials or other remedial or containment action with respect thereto;

6.2.2.30 expenses in connection with services or other benefits which are not offered to Tenant or for which Tenant is charged directly but which are provided to another tenant or occupant of the Building, without charge;

6.2.2.31 costs incurred by Landlord due to the violation by Landlord or any tenant of the terms and conditions of any lease of space in the Building;

6.2.2.32 any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord or by others, provided that any commercially reasonable compensation paid to any concierge at the Building shall be includable as a Building Expense;

6.2.2.33 costs of third party non-tenant parties or events, which are not consented to by an authorized representative of Tenant;

6.2.2.34 any bad debt loss, rent loss, or reserves for bad debts or rent loss or any reserves of any kind;

6.2.2.35 overhead and profit increment paid to the Landlord or to subsidiaries or affiliates of the Landlord for services in the Building to the extent the same exceeds the costs of such services rendered by qualified, first-class unaffiliated third parties on a competitive basis;

6.2.2.36 costs associated with the operation of the business of the partnership or entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Building (which Building operational costs shall specifically include, but not be limited to, accounting costs associated with the operation of the Building); it being understood that costs associated with the operation of the business of the partnership or entity which constitutes the Landlord include costs of partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee or tenant (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Building or the Property, and costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Building management, or between Landlord and other tenants or occupants, and Landlord’s general corporate overhead and general and administrative expenses shall be excluded from Building Expenses;

6.2.2.37 advertising and promotional expenditures, and the costs of promotional signs (and the reasonable allocation of utilities thereto), excluding the costs associated with building directories, general building signage and signage for equipment rooms and Common Areas, in or on the Building or the Property which identify other tenants or entities;

 

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6.2.2.39 costs arising from charitable contributions made by Landlord on behalf of tenants of the Building in excess of Five Thousand Dollars ($5,000) per calendar year (subject to CPI Adjustment), political contributions or dues to professional or lobbying associations (other than Building Owners and Managers Association);

6.2.2.40 costs associated with the acquisition and/or rental of sculptures, paintings and other objects of art;

6.2.2.41 entertainment and travel expenses incurred by Landlord, its employees, agents, partners and affiliates, other than local travel expenses incurred directly in connection with the operation, maintenance or repair of the Building or the Property;

6.2.2.42 costs incurred by Landlord in connection with the purchase of any flowers, balloons or any other types of gifts for any entity whatsoever, including, but not limited to, Tenant, other tenants, employees, vendors, contractors, prospective tenants or agents;

6.2.2.43 reserves of any kind in excess of amounts included in the Base Year Building Expenses;

6.2.2.44 the depreciation of the Building and other structures on the Real Property, and any other depreciation or amortization;

6.2.2.45 expenses incurred by Landlord for use of any portions of the Building to accommodate events including, but not limited to shows, promotions, kiosks, displays, filming, photography, private events or parties, ceremonies, and advertising beyond the normal expenses otherwise attributable to providing Building services, such as lighting and HVAC to such public portions of the Building in normal Building operations during Normal Business Hours (as defined herein);

6.2.2.46 costs arising from Landlord’s breach of this Lease, including, without limitation, breach of Landlord’s representations made hereunder;

6.2.2.47 costs of validated parking for Landlord’s visitors to the Building;

6.2.2.48 costs allocable to any facility other than the Building, except to the extent that such costs relate to both the Building and such other facility and such costs are reasonably allocated to reflect that portion thereof which relates to the Building;

6.2.2.49 the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Building, unless such wages and benefits are prorated to reflect time spent on operating and managing the Building vis-à-vis time spent on matters unrelated to operating and managing the Building;

6.2.2.50 costs in connection with the acquisition of air or development rights or any zoning or tax lot changes;

6.2.2.51 costs and expenses otherwise includable in Building Expenses, to the extent that Landlord is reimbursed by Tenant, other tenants or from other sources for such costs and expenses, other than as fixed rent or as additional rent for operating expense recoveries for the Building;

6.2.2.52 costs and expenses arising from the gross negligence or willful acts of Landlord, any affiliate of Landlord, or any such party’s agents, contractors, employees or representatives, and the cost of any judgment, settlement, or arbitration award resulting from any liability of Landlord and all expenses incurred in connection therewith; and

 

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6.2.2.53 costs relating to withdrawal liability or unfunded pension liability under the Multi-Employer Pension Plan Act or similar law.

6.2.3 “Taxes” shall mean all real property taxes imposed on the Property including currently due installments of assessments, sewer rents, ad valorem charges, water rates, rents and charges, front foot benefit charges, and all other governmental impositions in the nature of any of the foregoing. Excluded from Taxes are (i) federal, state or local income taxes, (ii) franchise, gift, transfer, excise, capital stock, estate or inheritance taxes, and (iii) penalties or interest charged for late payment of Taxes. If at any time during the Term the method of taxation prevailing at the commencement of the Term shall be altered so as to cause the whole or any part of the items listed in the first sentence of this subparagraph to be levied, assessed or imposed, wholly or partly as a capital levy, or otherwise, on the rents received from the Building, wholly or partly in lieu of imposition of or in addition to the increase of taxes in the nature of real estate taxes issued against the Property, then the charge to Landlord resulting from such altered additional method of taxation shall be deemed to be within the definition of “Taxes.”

6.2.4 “Common Areas” shall mean those areas and facilities which may be from time to time furnished to the Building and the Project by Landlord for the non-exclusive general common use of tenants and other occupants of the Building, their officers, employees, and invitees, including (without limitation) the hallways, stairs, parking facilities including the garage, washrooms, and elevators.

6.2.5 “Lease Year” shall mean the first twelve (12) month period following the Commencement Date and each succeeding twelve (12) month period thereafter up to the end of the Term; provided, however, that if the Commencement Date shall occur on a day other than the first day of a calendar month, then the first Lease Year shall include that portion of a calendar month in which the Commencement Date occurs in addition to the first twelve (12) month period.

6.2.6 “Base Year Controllable Expenses” shall mean the actual Controllable Expenses incurred by Landlord for the 2009 calendar year divided by the Rentable Area of the Building.

6.2.7 “Base Year Non-Controllable Expenses” shall mean the actual Non-Controllable Expenses incurred by Landlord for the 2009 calendar year divided by the Rentable Area of the Building.

6.3 Rent Adjustments for Taxes .

6.3.1 On or before July 31 of each Lease Year, Landlord shall total the Taxes and shall allocate such Taxes to the Rentable Area of the Building in the following manner: Taxes for the foregoing calendar year shall be totaled and such total shall be divided by the total Rentable Area of the Building thereby deriving the “Cost of Taxes Per Square Foot” of rentable area.

6.3.2 For so long as this Lease has not been amended to reduce the size of the Premises, Tenant shall be responsible for one hundred percent of the Cost of Taxes that are greater than the Base Year Taxes. Otherwise, in the event that the Cost of Taxes Per Square Foot assessed for any calendar year which is wholly or partly within the Term are greater than the Base Year Taxes, Tenant shall pay to Landlord, as additional rent at the time such Taxes are due and payable, the amount of such excess times the number of Rentable Area of the Premises. Any additional rent due Landlord under this Section shall be due and payable within thirty (30) days after Landlord shall have submitted a written statement to Tenant showing the amount due. For Tenant’s obligation for such additional rent at the beginning or end of the Lease, see Section 6.5 . Landlord may, in its discretion, make a reasonable estimate of such additional rent with respect to Taxes, and require Tenant to pay each month during such year  1 / 12 of such amount, at the time of payment of monthly installments of Base Rent. In such event, Tenant shall pay, or Landlord shall refund or credit to Tenant’s account, any underpayment or overpayment of such additional rent within thirty (30) days of Landlord’s annual written statement of Taxes due.

 

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Tenant shall have the right to examine, at Tenant’s sole expense, Landlord’s records with respect to any such increases in additional rent; provided, however, that unless Tenant shall have given Landlord written notice of exception to any such statement within thirty (30) days after delivery thereof, the same shall be conclusive and binding on Tenant (subject to any subsequent reduction in Taxes). No credit shall be given to Tenant if the Cost of Taxes Per Square Foot are less than the Base Year Taxes. Failure of Landlord to provide any statement within the time prescribed will not relieve Tenant of its obligations under this Section 6.3 ; provided, however, that Tenant will have no obligation to pay its portion of any increase in Taxes until receipt of a statement from Landlord as described above.

All reasonable expenses incurred by Landlord (including attorneys’, appraisers’ and consultants’ fees, and other costs) in contesting any increase in Taxes or any increase in the assessment of the Property shall be included as an item of Taxes for the purpose of computing additional rent due hereunder. If any refunds are paid or credits made to Landlord for any Taxes for which Tenant has made any payment of additional rent pursuant to this Section 6.3.2, Landlord shall promptly thereafter refund to Tenant the amount that Tenant overpaid such additional rent after taking into account such refund or credit.

Tenant shall have the right to direct Landlord to appeal any assessment for Taxes hereunder, and Tenant shall have the right to approve any settlement pursuant to such appeal that is outside of the normal assessment appeal process.

6.4 Rent Adjustments for Building Expenses .

6.4.1 On or before April 30 of each Lease Year, Landlord shall compute the Building Expenses for such year and shall allocate such costs to the Rentable Area of the Building in the following manner: Building Expenses shall be totaled and such total shall be divided by the total Rentable Area of the Building thereby deriving the “Cost of Building Expenses Per Square Foot”. If Landlord incurs an extraordinary, uncontrollable expense during the Base Year to determine Building Expenses ( e.g. , excessive snow or blizzard), such extraordinary expenses shall not be included in the computation of Base Year Building Expenses, but such item shall be included in Base Year Building Expenses in an amount equal to the average amount of ordinary expenses for such item by averaging the three (3) prior years’ expenses for such item.

6.4.2 For so long as this Lease has not been amended to reduce the size of the Premises, Tenant shall be responsible for one hundred percent of the Cost of Building Expenses that are greater than the Base Year Building Expenses. Otherwise, in the event that the Cost of Building Expenses Per Square Foot of rentable area for any year which is wholly or partly within the Term are greater than the Base Year Building Expenses, Tenant shall pay to Landlord, as additional rent, the amount of such excess times the number of square feet of Rentable Area of the Premises, as set forth in Section 1.1.4 above. If occupancy of the Building during any calendar year, including the Base Year for Building Expenses, is less than ninety-five percent (95%), then Building Expenses for that calendar year shall be “grossed up” to that amount of Building Expenses that, using reasonable projections, would normally be expected to be incurred during the calendar year in question if the Building was ninety-five percent (95%) occupied during the applicable calendar year period, as determined under generally accepted accounting principles; it being understood that the written statement submitted to Tenant shall provide a reasonably detailed description of how the Building Expenses were grossed up and that only those component expenses that are affected by variations in occupancy levels shall be grossed up. Such additional rent shall be computed on a year-to-year basis. Any such additional rent shall be due within thirty (30) days after Landlord has submitted a written statement to Tenant showing the amount due. Landlord may, in its discretion, make a reasonable estimate of such additional rent with respect to any calendar year, and require Tenant to pay each month during such year 1/12 of such amount, at the time of payment of monthly installments of Base Rent. In such event, Tenant shall pay, or Landlord shall refund or credit to Tenant’s account, any underpayment or overpayment of such additional rent within thirty (30) days of Landlord’s written statement of actual Building Expenses for the Calendar year. Tenant, at Tenant’s sole expense, shall have the right to examine Landlord’s records with respect to any such increases in

 

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additional rent; provided, however, that unless Tenant shall have given Landlord written notice of exception to any such statement within forty-five (45) days after delivery thereof, the same shall be conclusive and binding on Tenant and Landlord. No credit shall be given to Tenant if the cost of Building Expenses Per Square Foot are less than the Base Year Building Expenses. Notwithstanding anything to the contrary contained herein, Landlord shall use diligent efforts to keep Building Expenses at reasonable amounts, while maintaining the Building as a first class building. Tenant acknowledges that with regard to certain Building Expenses, some tenants may be paying various fees directly to the service provider (including, without limitation, janitorial services and electricity charges), in which event the computation of Building Expenses per rentable square foot for such items shall be determined by using the total rentable square footage of the Building reduced by the rentable square footage of the tenants who are paying such fees directly to the service provider. Failure of Landlord to provide any statement within the time prescribed will not relieve Tenant of its obligations under this Section 6.4 ; provided, however, that Tenant will have no obligation to pay its portion of any increase in Building Expenses until receipt of a statement from Landlord as described above.

Notwithstanding anything to the contrary set forth in this Section 6 of this Lease for purposes of determining the amount of Building Expenses, with respect to any expense that is not a Non-Controllable Expense, as hereinafter defined (the “Controllable Expenses”), Tenant shall not be responsible for paying any increase of more than seven percent (7%) over the amount of the previous calendar year’s Controllable Expenses. The parties agree and acknowledge that only the following are non-controllable Building Expenses and shall not be subject to the foregoing cap: Taxes, insurance, common area utilities, snow removal and labor, including security, expenses (the “Non-Controllable Expenses”). The parties acknowledge that for purposes of this Section 6.4.2 , the Building Expenses shall be computed separately as between the Controllable Expenses and the Non-Controllable Expenses. The annual statement provided to Tenant pursuant to this Section 6.4.2 shall include computation for both the Controllable Expenses and the Non-Controllable Expenses as well as a combined total thereof reflecting Tenant’s overpayment or underpayment for the applicable calendar year. At Tenant’s request, Landlord will use reasonable efforts to provide Tenant with the annual budget for Building Expenses.

6.5 Tenant’s Right to Review Books and Records . Tenant shall be entitled at any reasonable time during regular business hours, on an annual basis after giving prior written notice thereof to Landlord of at least five (5) business days, to inspect in Landlord’s business office (or at such other location as they may be kept) Landlord’s books and records relating to the Building Expenses for the Building and the allocation thereof to Tenant for the prior two (2) years, and to obtain an audit thereof by an independent certified public accountant selected by Tenant on a non-contingency basis to determine the accuracy of the amount of such Building Expenses attributed by Landlord to Tenant. If any such audit discloses a liability for Tenant’s proportionate share of Building Expenses for any calendar year which is less than that amount which Landlord has attributed to Tenant for such calendar year, Landlord shall promptly refund to Tenant so much of such amount paid by Tenant for such calendar year as exceeds the amount for which Tenant is actually liable, as disclosed by such audit, with interest which would have accrued on the amount of the overpayment in the amount of ten percent (10%) per annum from the date such overpayment was made by Tenant. If any such audit discloses a liability for Tenant’s proportionate share of Building Expenses for either such calendar year which is less than ninety-five (95%) of that amount which Landlord has attributed to Tenant for such calendar year, Landlord shall, in addition to the refund of such excess, pay to Tenant the reasonable cost of such audit for such calendar year. Tenant’s right to audit shall include a one-time right to audit the Base Year Building Expenses during the Term of the Lease. Accordingly, if Tenant’s audit includes an audit of the Base Year Building Expenses, Tenant shall not be permitted to re-audit such Base Year Building Expenses during the Term of the Lease.

6.6 Additional Rent Payments . Tenant’s obligation to pay any additional rent accruing during the Term pursuant to Sections 6.3 and 6.4 hereof shall apply pro rata to the proportionate part of a calendar year as to Taxes and Building Expenses, in which this Lease begins or ends, for the portion of each such year during which this Lease is in effect. Such obligation to make payments of such additional rent shall survive the expiration or sooner termination of the Term.

 

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6.7 Payments . All payments or installments of any rent hereunder and all sums whatsoever due under this Lease (including but not limited to court costs and attorneys’ fees) shall be deemed rent and shall be paid to Landlord at the address designated by Landlord. If any amount of Annual Base Rent or additional rent shall remain unpaid for five (5) calendar days after such payment becomes due, Tenant shall pay Landlord, without notice or demand, a late charge equal to the greater of (i) $35.00 and (ii) five percent (5%) of the such overdue amount to partially compensate Landlord for its administrative costs in connection with such overdue payment; which administrative costs Tenant expressly acknowledges are reasonable and do not constitute a penalty. In addition, such overdue amounts shall bear interest at the rate of 18% per annum (but not more than the maximum allowable legal rate applicable to Tenant) (the “Default Rate”) until paid. Additionally, if any of Tenant’s checks for payment of rent or additional rent are returned to Landlord for insufficient funds, Tenant shall pay to Landlord as additional rent the greater of (i) $50.00 or (ii) the amount of actual charges incurred by Landlord, for each such check returned for insufficient funds, and if two or more of Tenant’s checks in payment of rent or additional rent due hereunder are returned for insufficient funds in any calendar year, Landlord reserves the right upon ten (10) days advance written notice to Tenant to thereafter require Tenant to pay all rent and additional rent and other sums whatsoever due under this Lease in cash, by money order or by certified check or cashier’s check.

7.  Requirements of Applicable Law . Landlord warrants that on the Commencement Date, the Property shall comply with all applicable laws, ordinances, rules and regulations of governmental authorities having jurisdiction over the Property (“Applicable Laws”). Tenant, at its sole cost and expense, shall thereafter comply promptly with all Applicable Laws now in force or which may hereafter be in force, which impose, due to the particular manner of use of the Premises by Tenant, any duty upon Landlord or Tenant with respect to the use, occupancy or alteration of the Premises or any part thereof and for the prevention of fires; provided, however, that Landlord and not Tenant shall correct all structural defects in the Building necessary to comply with Applicable Laws, and make all repairs, changes or alterations necessary because the Building was not constructed in compliance with any of the Applicable Laws or applicable other than due to the particular manner of use of the Premises by Tenant. Tenant’s Permitted Use is in compliance with the zoning regulations in effect as of the Effective Date.

8. Certificate of Occupancy . Subject to the provisions of Sections 7 and 9 , Tenant shall not use or occupy the Premises in violation of any certificate of occupancy, permit, or other governmental consent issued for the Building. Subject to the provisions of Section 9 below, if any governmental authority, after the commencement of the Term, shall contend or declare that the Premises are being used for a purpose which is in violation of such certificate of occupancy, permit, or consent, then Tenant shall, upon five (5) days’ notice from Landlord, immediately discontinue such use of the Premises. Subject to the provisions of Section 9 below, if thereafter the governmental authority asserting such violation threatens, commences or continues criminal or civil proceedings against Landlord for Tenant’s failure to discontinue such use, in addition to any and all rights, privileges and remedies given to Landlord under this Lease for default therein, Landlord shall have the right to terminate this Lease forthwith. Tenant shall indemnify and hold Landlord harmless of and from any and all liability for any such violation or violations.

9.  Contest-Statute, Ordinance, Etc . Tenant may, after notice to Landlord, by appropriate proceedings conducted promptly at Tenant’s own expense in Tenant’s name and whenever necessary in Landlord’s name, contest in good faith the validity or enforcement of any such statute, ordinance, law, order, regulation or requirement and may similarly contest any assertion of violation of any certificate of occupancy, permit, or any consent issued for the Building. Tenant may, pending such contest, defer compliance therewith if, in the opinion of counsel for Landlord, such deferral shall not subject either Landlord or the Premises or the Property (or any part thereof) to any penalty, fine or forfeiture, and if Tenant shall post a bond with corporate surety approved by Landlord sufficient, in Landlord’s opinion, fully to indemnify Landlord from loss.

10. Tenant’s Improvements . Except to the extent that Landlord is responsible for making

 

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improvements to the Premises pursuant to Section 35 of this Lease, Tenant shall have the right to make such non-structural improvements to the Premises as it may deem necessary at its sole cost and expense. Tenant shall not make any alterations, decorations, installations, additions or improvements to the Premises, including but not limited to, the installation of any fixtures, amenities, equipment, appliances, or other apparatus, the cost of which exceeds the greater of (1) Five Dollars ($5.00) per square foot of the area being altered and (2) $250,000 (increased by three percent (3%) each Lease Year), without Landlord’s prior written consent (such consent not to be unreasonably conditioned, delayed or withheld), and then only by contractors or mechanics employed or reasonably approved by Landlord and provided that Landlord is given plans and CADD drawings for such alterations. All such work, alterations, decorations, installations, additions or improvements shall be done at Tenant’s sole expense and at such times and in such manner as Landlord may from time to time reasonably designate. Landlord’s consent to and/or approval of Tenant’s plans and specifications for the aforesaid improvements shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations of governmental agencies or authorities. All alterations, decorations, installations, additions or improvements made by either of the parties hereto upon the Premises, except movable office furniture put in at the expense of Tenant and other items as mutually agreed upon in writing, shall be the property of Landlord and shall remain upon and be surrendered with the Premises at the termination of this Lease without molestation or injury. Upon request by Landlord, Tenant, at Tenant’s expense, shall remove any and all special improvements to the Premises or Common Areas made by or on behalf of Tenant, including, without limitation, supplemental HVAC and raised flooring. If Tenant fails to remove any such items, Landlord shall have the right, but not the obligation, to remove and dispose of such items, and restore the Premises accordingly and Tenant shall reimburse Landlord for the costs of such removal, disposal and restoration within thirty (30) days after receipt of an invoice therefore, together with interest at the Default Rate if not paid within said 30 day period. Notwithstanding the foregoing, no work performed pursuant to Section 35 hereof shall be required to be removed by Tenant at the end of the Term, except at Landlord’s option, internal stairwells constructed as part of the Tenant Improvements.

11.  Repairs and Maintenance .

11.1 Tenant’s Care of the Premises and Building . During the Term Tenant shall:

(i) keep the Premises and the fixtures, appurtenances and improvements therein (other than roof, foundation, exterior walls, interior structural walls, all structural components, windows and the Building Systems, as hereinafter defined) in good order and condition;

(ii) make repairs and replacements to the Premises required because of Tenant’s misuse or primary negligence, except to the extent that the repairs or replacements are covered by Landlord’s insurance as required hereunder;

(iii) repair and replace special equipment or decorative treatments installed by or at Tenant’s request and that serve the Premises only, except to the extent the repairs or replacements are needed because of Landlord’s misuse or primary negligence, and are not covered by Tenant’s insurance as required hereunder;

(iv) pay for all damage to the Building, its fixtures and appurtenances, as well as all damages sustained by Tenant or occupants of the Building due to any waste, misuse or neglect of the Premises, its fixtures and appurtenances by Tenant, except to the extent that the repair of such damage is covered by Landlord’s insurance as required hereunder to the extent that Landlord actually receives proceeds therefrom or would have been covered had Landlord maintained the insurance required hereunder; and

(v) not commit waste.

In addition Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot area, which is 100 pounds live load, which such floor was designed to

 

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carry and which may be allowed under Applicable Laws. Landlord reserves the right to prescribe the weight and position of all heavy equipment brought onto the Premises and prescribe any reinforcing required under the circumstances, all such reinforcing to be at Tenant’s expense.

11.2 Landlord’s Repairs . Except for the repairs and replacements that Tenant is required to make pursuant to Section 11.1 above, Landlord shall make all other repairs and replacements to the Premises, Common Areas and Building (including Building fixtures and equipment) as shall be reasonably deemed necessary to maintain the Building in a condition comparable to other first class suburban office buildings in the Baltimore-Washington corridor area. This maintenance shall include the roof, foundation, exterior walls, windows, interior structural walls, all structural components, and all systems such as mechanical, electrical, multi-tenant HVAC, and plumbing, (the “Building Systems”), provided that Building Systems shall expressly exclude any supplementary HVAC units or other electrical equipment installed by Tenant or as part of the Tenant Improvements. The costs associated with such repairs shall be deemed a part of Building Expenses; provided, however, that costs of all of such repairs which would be considered capital in nature under generally accepted accounting principles shall be paid by Landlord. There shall be no allowance to Tenant for a diminution of rental value, no abatement of rent, and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord, Tenant or others making any repairs or performing maintenance as provided for herein.

11.3 Time for Repairs . Repairs or replacements required pursuant to Section 11.1 and 11.2 above shall be made within a reasonable time (depending on the nature of the repair or replacement needed—generally no more than fifteen (15) days) after receiving notice or having actual knowledge of the need for a repair or replacement.

11.4 Surrender of the Premises . Upon the termination of this Lease, without the need for prior notice from Landlord, Tenant shall surrender the Premises to Landlord in the same broom clean condition that the Premises were in on the Commencement Date except for:

(i) ordinary wear and tear;

(ii) damage by the elements, fire, and other casualty unless Tenant would be required to repair under the provisions of this Lease;

(iii) damage arising from any cause not required to be repaired or replaced by Tenant; and

(iv) alterations as permitted by this Lease unless consent was conditioned on their removal.

On surrender Tenant shall remove from the Premises its personal property, trade fixtures and any alterations required to be removed pursuant to the terms of this Lease and repair any damage to the Premises caused by this removal. Any items not removed by Tenant as required above shall be considered abandoned. Landlord may dispose of abandoned items as Landlord chooses and bill Tenant for the cost of their disposal.

12. Conduct on Premises . Tenant shall not do, or permit anything to be done in the Premises, or bring or keep anything therein which shall, in any way, increase the rate of fire insurance on the Building, or invalidate or conflict with the fire insurance policies on the Building, fixtures or on property kept therein, or obstruct or interfere with the rights of Landlord or of other tenants, or in any other way injure or annoy Landlord or the other tenants, or subject Landlord to any liability for injury to persons or damage to property, or interfere with the good order of the Building, or conflict with Applicable Laws, or the Maryland Fire Underwriters Rating Bureau. Tenant agrees that any increase of fire insurance premiums on the Building or contents caused by the occupancy of Tenant and any expense or cost incurred in consequence of negligence or carelessness or the willful action of Tenant, Tenant’s employees, agents, servants, or invitees shall, as they accrue be added to the rent heretofore reserved and be paid as a part thereof; and Landlord shall have all the rights and remedies for the collection of same as are conferred upon Landlord for the collection of rent provided to be paid pursuant to the terms of this Lease.

 

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13.  Insurance .

13.1 Tenant’s Insurance . Tenant shall keep in force at its own expense, so long as this Lease remains in effect, (a) public liability insurance, including insurance against assumed or contractual liability under this Lease, with respect to the Premises, to afford protection with limits, per person and for each occurrence, of not less than Two Million Dollars ($2,000,000), combined single limit, with respect to personal injury and death and property damage, such insurance to provide for only a reasonable deductible, (b) all-risk property and casualty insurance, including theft, written at replacement cost value and with replacement cost endorsement, covering all of Tenant’s personal property in the Premises and all improvements installed in the Premises by or on behalf of Tenant whether pursuant to the terms of Section 35 , Section 10 , or otherwise, such insurance to provide for only a reasonable deductible, (c) if, and to the extent, required by law, workmen’s compensation or similar insurance offering statutory coverage and containing statutory limits (d) insurance covering all plate and other interior glass in the Premises for and in the name of Landlord and (e) business interruption insurance in an amount sufficient to reimburse Tenant for loss of earnings attributable to prevention of access to the Building or the Premises for a period of at least twelve (12) months. Such policies shall be maintained with companies and in form reasonably acceptable to Landlord and shall be written as primary policy coverage and not contributing with, or in excess of, any coverage which Landlord shall carry. Tenant shall deposit the policy or policies of such required insurance or certificates thereof with Landlord prior to the Commencement Date, which policies shall name Landlord or its designee and, at the request of Landlord, its mortgagees, as additional insured and shall also contain a provision stating that such policy or policies shall not be canceled except after thirty (30) days’ written notice to Landlord or its designees. All such policies of insurance shall be effective as of the date Tenant occupies the Premises and shall be maintained in force at all times during the Term of this Lease and all other times during which Tenant shall occupy the Premises. In addition to the foregoing insurance coverage, Tenant shall require any contractor retained by it to perform work on the Premises to carry and maintain, at no expense to Landlord, during such times as contractor is working in the Premises, a non-deductible (i) comprehensive general liability insurance policy, including, but not limited to, contractor’s liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement and contractor’s protective liability coverage, to afford protection with limits per person and for each occurrence, of not less than Two Hundred Thousand Dollars ($200,000.00), combined single limit, with respect to personal injury and death and property damage, such insurance to provide for no deductible, and (ii) workmen’s compensation insurance or similar insurance in form and amounts as required by law. In the event of damage to or destruction of the Premises and the termination of this Lease by Landlord pursuant to Section 18 herein, Tenant agrees that it shall pay Landlord all of its insurance proceeds relating to improvements made in the Premises by or on behalf of Tenant whether pursuant to the terms of Section 35 , Section 10 , or otherwise. If Tenant fails to comply with its covenants made in this Section, if such insurance would terminate or if Landlord has reason to believe such insurance is about to be terminated, Landlord may at its option cause such insurance as it in its sole judgment deems necessary to be issued, and in such event Tenant agrees to pay promptly upon Landlord’s demand, as additional rent the premiums for such insurance.

13.2 Landlord’s Insurance . Landlord shall keep in force at its own expense (a) contractual and comprehensive general liability insurance, including public liability and property damage, with a minimum combined single limit of liability of Two Million Dollars ($2,000,000.00) for personal injuries or death of persons occurring in or about the Building and Premises, and (b) all-risk property and casualty insurance written at replacement cost value covering the Building and all of Landlord’s improvements in and about same.

13.3 Waiver of Subrogation . Each party hereto waives claims arising in any manner in its favor and against the other party and agrees that neither party hereto shall be liable to the other party or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to the Building, the Premises or other tangible property, or any

 

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resulting loss of income, or losses under worker’s compensation laws and benefits, or against liability on or about the Building, even though such loss or damage might have been occasioned by the negligence of such party, its agents or employees if any such loss or damage is covered by insurance benefiting the party suffering such loss or damage as was required to be covered by insurance carried pursuant to this Lease. Landlord shall cause each insurance policy carried by it insuring against liability on or about the Building or insuring the Premises and the Building or income resulting therefrom against loss by fire or any of the casualties covered by the all-risk insurance carried by it hereunder to be written in such a manner as to provide that the insurer waives all right of recovery by way of subrogation against Tenant in connection with any loss or damage covered by such policies. Tenant shall cause each insurance policy carried by it insuring against liability or insuring the Premises (including the contents thereof and Tenant’s Improvements installed therein by Tenant or on its behalf) against loss by fire or any of the casualties covered by the all-risk insurance required hereunder to be written in such a manner as to provide that the insurer waives all right of recovery by way of subrogation against Landlord in connection with any loss or damage covered by such policies.

14. Rules and Regulations . If the Building becomes multi-tenanted building, Tenant shall be bound by the rules and regulations set forth on the schedule attached hereto as Exhibit “B” and made a part hereof. Landlord shall have the right, from time to time, to issue additional or amended rules and regulations regarding the use of the Building, so long as the rules shall be reasonable, non-discriminatory between tenants and do not materially interfere with Tenant’s use of the Premises as contemplated by this Lease. When so issued the same shall be considered a part of this Lease and Tenant covenants that the additional or amended rules and regulations shall likewise be faithfully observed by Tenant, the employees of Tenant and all persons invited by Tenant into the Building, provided, that the additional or amended rules are made applicable to all office tenants similarly situated as Tenant. Landlord shall not be liable to Tenant for the violation of any of the rules and regulations, or the breach of any covenant or condition in any lease, by any other tenant in the Building.

15. Mechanics’ Liens . Tenant shall not do or suffer to be done any act, matter or thing whereby Tenant’s interest in the Premises, or any part thereof, may be encumbered by any mechanics’ lien. Tenant shall discharge or bond off, within ten (10) days after the date of filing, any mechanics’ liens filed against Tenant’s interest in the Premises, or any part thereof, purporting to be for labor or material furnished or to be furnished to Tenant. Landlord shall not be liable for any labor or materials furnished or to be furnished to Tenant upon credit, and no mechanics’ or other lien for labor or materials shall attach to or affect the reversionary or other estate or interest of Landlord in and to the Premises, or the Property.

16. Failure to Repair . In the event that Tenant fails after reasonable prior written notice from Landlord, to keep the Premises in a good state of condition and repair pursuant to Section 11 above, or to do any act or make any payment required under this Lease or otherwise fails to comply herewith, Landlord may, at its option (but without being obliged to do so) immediately, or at any time thereafter and without notice, perform the same for the account of Tenant, including the right to enter upon the Premises at all reasonable hours to make such repairs, or do


 
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