DEED OF LEASE

Exhibit 10.2

 

DEED OF LEASE

 

BETWEEN

 

PARKRIDGE PHASE TWO ASSOCIATES LIMITED PARTNERSHIP

 

AS LANDLORD,

 

AND

 

INPHONIC

 

AS TENANT

 

For 13,064 rentable square feet

 

In Parkridge Two

 

Dated: July 27, 2005

 

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DEED OF LEASE

 

THIS DEED OF LEASE (this “Lease”) is made as of the 27th day of July 2005, (the “Date of Lease”), by Parkridge Phase Two Associates Limited Partnership, a Virginia Limited Partnership (“Landlord”), and Inphonic, Inc. a Delaware corporation (“Tenant”).

 

NOW, THEREFORE, WITNESSETH, that for and in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant, intending legally to be bound, hereby covenant and agree as set forth below.

 

ARTICLE I

 

FUNDAMENTAL LEASE DEFINITIONS

 

The following terms, when used herein, shall have the meanings set forth below.

 

1.1 Landlord : Parkridge Phase Two Associates Limited Partnership.

 

1.2 Landlord’s Address: c/o Walker and Company, 12007 Sunrise Valley Drive, Suite 400, Reston, Virginia, 20191.

 

1.3 Landlord’s Representative: Christopher W. Walker.

 

1.4 Manager: Walker Management, Inc., 12007 Sunrise Valley Drive, Suite 400, Reston, Virginia, 20191.

 

1.5 Tenant : Inphonic, Inc.

 

1.6 Tenant Address : 10790 Parkridge Boulevard, Suite 100, Reston, Va. 20191

 

1.7 Tenant’s Representative : Aaron Daniels.

 

1.8 Guarantor : N/A.

 

1.9 Guarantor’s Address: N/A.

 

1.10 Building: The building containing approximately 98,109 square feet shown on Exhibit A-1 attached hereto and made a part hereof, and all alterations, additions, improvements, restorations or replacements now or hereafter made thereto, located at 10803/10805 Parkridge Boulevard, Reston, Fairfax County, Virginia, 20191, in the Parkridge Center.

 

1.11 Premises: Approximately 13,064 rentable square feet of the Building, as outlined in Exhibit A-2 attached hereto and made a part hereof.

 

1.12 Term: Eighteen (18) months.

 

1.13 Commencement Date : The earlier of actual occupancy or September 1, 2005.

 

1.14 Expiration Date: February 28, 2007, subject to adjustment as set forth in Article III.

 

1.15 Basic Rent: $26,128.00 per month, as set forth in Exhibit A-3.

 

1.16 Lease Year: Each successive twelve (12) month period following the Commencement Date.

 

1.17 Expense Stop: Base Year 2005. Operating Expenses will be based upon 95% or higher actual occupancy, not to exceed 100%. Operating Expenses above Base Year will be passed through to Tenant beginning in the second (2 ^nd ) Lease Year.

 

1.18 Tenant’s Proportionate Share: Rentable floor area of the Premises divided by rentable floor area of the Building, or thirteen point thirty-two percent (13.32%).

 

1.19 Security Deposit: $52,256.00, due at Lease execution.

 

1.20 Landlord’s Architect: N/A.

 

1.21 Tenant Finish Work Submission Date: N/A.

 

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1.22 Tenant Broker: The Staubach Company Northeast, Inc.

 

1.23 Land: The land on which the Building is located as described in Exhibit A-1.

 

1.24 Common Area: All areas, improvements, facilities and equipment from time to time designated by Landlord for the common use or benefit of Tenant, other tenants of the Building and their Agents, including, without limitation, roadways, entrances and exits, landscaped areas, open areas, park areas, exterior lighting, service drives, loading area, pedestrian walkways, sidewalks, atriums, courtyards, concourses, stairs, ramps, washrooms, maintenance and utility rooms and closets, exterior utility lines, hallways, lobbies, elevators and their housing and rooms, common window areas, common walls, common ceilings, common trash areas and parking facilities.

 

1.25 Permitted Use: General office and Call Center.

 

1.26 Agents: Officers, partners, directors, employees, agents, licensees, customers, invitees, and contractors.

 

1.27 Substantial Completion: N/A

 

1.28 Interest Rate: Per annum interest rate listed as the base rate on corporate loans at large U.S. money center commercial banks as published from time to time under “Money Rates” in the Wall Street Journal plus two percent (2%), with a minimum rate of 12% per annum (1% per month), but in any event not greater than the maximum rate permitted by law. In the event the Wall Street Journal ceases to publish such rates, Landlord shall choose at Landlord’s sole discretion a similar publication which publishes such rates.

 

1.29 Mortgage: Any mortgage, deed of trust, security interest or title retention interest affecting the Building or the Land.

 

1.30 Mortgagee: The holder of any note or obligation secured by a mortgage, deed of trust, security interest or title retention interest affecting the Building or the Land, including, without limitation, Landlord’s lenders, lessors under ground leases, sale-leasebacks and lease-leasebacks.

 

1.31 Exhibits and Addenda: The Exhibits and Addenda listed below in this section are incorporated in this Lease by reference and are to be construed as part of this Lease:

 

Exhibit A-1 - Plat Showing Land and Building

Exhibit A-2 – Plan Showing the Premises

Exhibit A-3 - Rent Schedule

Exhibit B-1 – Work Agreement

Exhibit C - Rules and Regulations

Exhibit D - Holidays

Exhibit E - Cleaning Specifications

Exhibit F - Low Voltage Cabling

Exhibit G - SMART Arbitration Rules

Addendum 1 – Lease Renewal Option

Addendum 2 – Right of First Refusal

Addendum 3 – Roof Rights

Addendum 4 – Non-Disturbance and Attornment Agreement

 

ARTICLE II

 

THE PREMISES

 

2.1 Description of the Premises. Landlord hereby leases to Tenant, subject to and with the benefit of the provisions of the Lease and subject to existing easements, agreements, rights and encumbrances of record, the Premises, and also grants to Tenant the right to use, together with other tenants of the Building and members of the public, and subject to the rules and regulations of Landlord attached as Exhibit C, all Common Area, walkways, and driveways from time to time located on the Land.

 

2.2 Landlord’s Rights Reserved. Landlord reserves unto itself, and its Agents, the right to use, maintain, repair and replace any portion of the Common Area, including without limitation, the elevators, hallways, staircases, shaftways, and other common facilities in the Building, and the right to access, maintain, use, construct, repair, and replace pipes, ducts, wires, meters and any other equipment, machinery, apparatus and fixtures therein as well as within or leading through the Premises, using commercially best efforts will not cause unreasonable interference with Tenant’s use, and subject to Tenant’s security requirements. To the extent practicable, such items shall be located above the ceilings, behind the walls, or within the columns of the Premises. Landlord expressly reserves the right permanently to change, modify or eliminate, or temporarily to close, any portion of the Common Area, providing such change does not materially affect Tenant’s use of Premises. In addition to the other rights of Landlord under this Lease, Landlord reserves the right (i) to change the street address and/or name of the Building, (ii) to maintain exclusive control over the use of the roof, exterior walls, airspace or plenum, and floor and ceiling slabs of the Building, (iii) to change the size, height or layout of the Building or its Common Area. No easement, license or other right to light, air or view is created by this lease. 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 Tenant’s use or occupancy of the Premises.

 

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ARTICLE III

 

TERM

 

The Term shall commence on the Commencement Date and expire at midnight on the Expiration Date. If requested by Landlord, Tenant shall within fifteen (15) days after such request sign a declaration in recordable form acknowledging the Commencement Date and the Expiration Date.

 

ARTICLE IV

 

RENT

 

4.1 Basic Rent. Tenant shall pay to Landlord the Basic Rent as specified in Section 1.15, increased annually as set forth on Exhibit A-3. The first month’s rent shall be due at Lease execution.

 

4.2 Payment of Basic Rent. Basic Rent for each Lease Year shall be payable in equal monthly installments, in advance, without demand, notice, deduction, offset or counterclaim, on or before the first day of each and every calendar month during the Term; provided, however, that the installment of the Basic Rent payable for the first full calendar month of the Term (and, if the Commencement Date occurs on a date other than on the first day of a calendar month, Basic Rent prorated from such date until the first day of the following month) shall be due and payable on the full execution and delivery of this Lease. Tenant shall pay the Basic Rent and all Additional Rent, by good check or in lawful currency of the United States of America, to Landlord at Landlord’s Address, or to such other address or in such other manner as Landlord from time to time specifies by written notice to Tenant. Any payment made by Tenant to Landlord on account of Basic Rent may be credited by Landlord to the payment of any late charges then due and payable and to any Basic Rent or Additional Rent then past due before being credited to Basic Rent currently due.

 

4.3 Additional Rent. All sums payable by Tenant under this Lease, other than Basic Rent, shall be deemed “Additional Rent,” and, unless otherwise set forth herein, shall be payable in the same manner as set forth above for Basic Rent and Landlord shall have the same rights and remedies in the collection of Additional Rent as Landlord has in the collection of Basic Rent. Basic Rent and Additional Rent are collectively referred to hereinafter as “Rent.”

 

4.4 Late Payment. If Tenant fails to pay any Rent within five (5) days after such Rent becomes due and payable, Tenant shall pay to Landlord a late charge of five percent (5%) of the amount of such overdue Rent. In addition, any such late Rent payment shall bear interest from the date such Rent became due and payable to the date of payment thereof by Tenant at the Interest Rate. Such late charge and interest shall be due and payable within two (2) days after written demand from Landlord.

 

ARTICLE V

 

SECURITY DEPOSIT

 

Simultaneous with the execution of this Lease, Tenant shall deposit the Security Deposit with Landlord, which shall be held by Landlord, without obligation for interest, as security for the complete and timely performance of Tenant’s obligations and covenants under this Lease. It is expressly understood and agreed that such deposit is not an advance rental deposit or a measure of Landlord’s damages in case of an Event of Default. If an Event of Default shall occur or if Tenant fails to surrender the Premises in the condition required by this Lease, Landlord shall have the right (but not the obligation), and without prejudice to any other remedy which Landlord may have on account thereof, to apply all or any portion of the Security Deposit to cure such default or to remedy the condition of the Premises. If Landlord so applies the Security Deposit or any portion thereof before the Expiration Date or earlier termination of the Lease, Tenant shall deposit with Landlord, upon demand, the amount necessary to restore the Security Deposit to its original amount. If Landlord shall sell or transfer its interest in the Building, Landlord shall have the right to transfer the Security Deposit to such purchaser or transferee, in which event Tenant shall look solely to the new landlord for the return of the Security Deposit. Although the Security Deposit shall be deemed the property of Landlord, any remaining balance of the Security Deposit shall be returned to Tenant at such time after the Expiration Date or earlier termination of this Lease that all of Tenant’s obligations under this Lease have been fulfilled.

 

 

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ARTICLE VI

 

OPERATING EXPENSES

 

6.1 Tenant’s Proportionate Share. For each Lease Year throughout the Term, Tenant covenants and agrees to pay to Landlord Tenant’s Proportionate Share of Landlord’s Operating Expenses in the amount, if any, by which the total of Landlord’s Operating Expenses (as defined in Section 6.2 hereof) for said Lease Year or portion thereof exceeds the amount of the Expense Stop. In the event that the Commencement Date or the Expiration Date are other than the first day of a calendar year then Tenant’s Proportionate Share of such excess of Landlord’s Operating Expenses shall be adjusted to reflect the actual period of occupancy during the calendar year.

 

6.2 Landlord’s Operating Expenses Defined. As used herein, the term “Landlord’s Operating Expenses” shall mean all expenses and costs of every kind and nature which Landlord incurs because of or in connection with the ownership, maintenance, management and operation of the Land, the Building and the Common Area including all additional costs and expenses of operation, management and maintenance of the Land, the Building and the Common Area or, at the very minimum, which Landlord determines that it would have paid or incurred during any calendar year if the Building had been no less than ninety-five percent (95%) occupied. Landlord’s Operating Expenses and include, without limitation, all costs, expenses and disbursements incurred or made in connection with the following and treated uniformly during the base year and any subsequent years:

 

(i) Wages and salaries of all employees, whether employed by Landlord or the Building’s management company, engaged in the operation and maintenance or security of the Land, the Building, and the Common Area, and all costs related to or associated with such employees or the carrying out of their duties, including uniforms and their cleaning, taxes, auto allowances and insurance and benefits (including, without limitation, contributions to pension and/or profit sharing plans and vacation or other paid absences);

 

(ii) All supplies and materials, including janitorial and lighting supplies, used directly in the operation and maintenance of the Building, the Land and the Common Area;

 

(iii) All installation and use charges for utilities, including, without limitation, electricity, telephone, water, sewer, power, gas, heating, lighting and air conditioning for the Land, the Building and the Common Area, except to the extent such utilities are charged directly to or paid directly by a tenant of the Building;

 

(iv) All maintenance, operation and service agreements for the Building, the Land and the Common Area and any equipment related thereto, including, without limitation, service and/or maintenance agreements for the security, energy management, HVAC, plumbing and electrical systems, and for window cleaning, elevator maintenance, janitorial service, groundskeeping, interior and exterior landscaping and plant maintenance;

 

(v) All insurance purchased by Landlord or the Building’s management company relating to the Building, the Land and the Common Area and any equipment or other property contained therein or located thereon including, without limitation, casualty, liability, rental loss, sprinkler and water damage insurance, and all deductible amounts paid pursuant thereto;

 

(vi) All repairs to the Building and the Common Area, including interior, exterior, structural or nonstructural repairs, and regardless of whether foreseen or unforeseen, including expenses to have the Building comply with all applicable federal, state and local laws, codes, regulations, rules and orders (excluding only repairs paid for by the proceeds of insurance or by Tenant or other third parties);

 

(vii) All maintenance of the Building, the Land and the Common Area, including, without limitation, painting, ice and snow removal, window washing, landscaping, groundskeeping, roof repair or replacement, relamping or replacement of luminaries, HVAC repairs and maintenance to include replacement of compressors, trash removal and the patching, painting and resurfacing of roads, driveways and parking lots;

 

(viii) A management allowance for property management in an amount not to exceed five percent (5%) of Basic and Additional Rent for space in the Building payable to Landlord or the company or companies managing the Building, the Land and the Common Area, if any provided to the managements fee percentage does not increase the above the percentage charged in the Base Year;

 

(ix) Accounting and legal fees incurred in connection with the ownership, operation and maintenance of the Building, the Land and the Common Area or related thereto;

 

(x) Any additional services not provided to the Building, the Land or the Common Area at the Commencement Date but thereafter provided by Landlord as Landlord shall deem necessary or desirable in connection with the management or operation of the Building, the Land and the Common Area;

 

(xi) Any capital improvements made to the Building after the Commencement Date made to reduce Building Operating Expense, the cost of which shall be amortized over the reasonable life of the improvement, together with interest on the unamortized balance of such cost at the Interest Rate or such higher rate as may have been paid by Landlord on funds borrowed for the purposes of constructing said capital improvements. The cost may not exceed the actual reduction in Building Operating Expense;

 

(xii) All Landlord’s Taxes which are defined in Sections 6.3 below;

 

(xiii) The costs incurred in implementing and operating any transportation management program, ride sharing program or similar program including, but not limited to, the cost of any transportation program fees, mass transportation fees or similar fees charged or assessed by any governmental or quasi-governmental entity;

 

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(xiv) Operating Costs shall not include (i) depreciation of the building (except otherwise provided herein), (ii) payments of the principal and interest on any mortgages (hereinafter defined) encumbering the Building; (iii) the cost of painting, decorating or renovating a specific tenant’s space (specifically excluding base building improvements and systems and the common areas of the Property), unless such items are similarly provided to, or benefit generally, other tenant’s in the Building; (iv) the cost of any repair, restoration, replacement or other item, to the extent Landlord is actually reimbursed therefore by insurance, warranties or condemnation proceeds; (v) leasing commissions, attorney’s fees and advertising costs incurred to lease space in the Building to tenants or prospective tenants of the Building or to enforce rent provisions in leases; (vi) rental payments made under any ground lease, except with respect to any portion thereof relating to the passthrough of any operating costs or real estate taxes incurred by the ground lessor; (vii) legal expenses of negotiating leases for tenants of the Building; (viii) salaries and fringe benefits of employees above the grade of building manager, excepting the chief engineer and director of building services and unless said employee is providing services relating to the operation, maintenance or repair of the Building; (ix) depreciation expenses on any capital improvements; (x) costs relating to damage to property or injury to persons arising directly from the gross negligence or willful misconduct of Landlord, but only to the extent that such costs would not have been incurred, but for such gross negligence or willful misconduct; (xi) the profit increment paid by Landlord for services to a corporation or entity controlling, controlled by or under common control with Landlord, to the extent the total amount paid by Landlord for such services are not comparable to amounts paid for similar services provided to first-class office buildings in the Reston, Virginia area providing services similar to, and to the same level as, those provided in the Building; provided, however, for the purpose of this exclusion item, “control” shall be deemed to be ownership of more than fifty (50%) of the stock or other voting interest of the controlled corporation or other business entity (except for property management with Walker Management, Inc.); (xii) costs of repairs, restoration replacements or other work occasioned by the exercise of the right of eminent domain or condemnation proceeds therefore; (xiii) general overhead, general administrative expenses, accounting, record-keeping and clerical support of Landlord to the extent associated with maintaining the legal entity which constitutes Landlord; (xiv) costs with respect to the creation of a mortgage or superior lease or in connection with the sale of the Building, including without limitation survey costs, legal fees, transfer and recordation taxes, costs of appraisal and engineering and inspection reports associated with the sale; (xv) the costs of acquiring or constructing any capital improvements related thereto; (xvi) any tenant improvement allowance or rental abatement given to any tenant of the Building; (xvii) any rental concessions to, or lease buyouts of, Tenant or any other tenant in the Building; (xviii) the fees of any asset manager or investment advisor representing Landlord in connection with Landlord’s ownership of the Building, it being understood that Operating Costs shall include management fees incurred by Landlord in connection with providing management services to the Building; (xix) penalties or interest incurred as the result of Landlord’s failure to pay any Real Estate taxes due, provided that Tenant is current on all payments of Rent payable to Landlord at the time such Real Estate Taxes were due and at the time any interest or penalties was incurred; (xx) any cost incurred by Landlord to remedy any violation existing as of the Lease Commencement Date, of any governmental statue, law, code, ordinance, rule or regulation then in effect and applicable to the Building; (xxi) any costs or expenses incurred to remove or remediate any Hazardous Materials (hereinafter defined) from the base of the structure or the common areas of the Property to the extent such (a) exists therein as of the Lease Commencement Date in violation of any applicable laws then in effect, or (b) was introduced to the Building by Landlord in violation of any applicable laws then in effect; (xxii) non-cash items, such as bad debt losses and rental losses, (xxiii) ; (xxiv) Landlord’s charitable and/or political contributions;

 

6.3 Landlord’s Taxes Defined. “Landlord’s Taxes” shall mean all taxes and assessments, including but not limited to, general or special, ordinary or extraordinary, foreseen or unforeseen, assessed, levied or imposed by any governmental authority upon the Building, the Land, the Common Area, and upon the fixtures, machinery, equipment or systems in, upon or used in connection with any of the foregoing, and the rental, revenue or receipts derived therefrom, under the current or any future taxation or assessment system, or modification of, supplement to, or substitute for such system. Landlord’s Taxes also shall include special assessments which are in the nature of or in substitution for real estate taxes, including, without limitation, road improvement assessments, special use area assessments, school district assessments, and transportation taxes, fees or assessments, including, but not limited to, mass transportation fees, regional transportation district fees, metrorail fees, trip fees and similar fees and assessments, fees assessed by any air quality management district or other governmental or quasi-governmental entity regulating pollution, parking fees or parking taxes paid by Landlord. Real Estate Taxes shall not include any federal, or state income tax net income, franchise, transfer, inheritance, estate, gift, corporation, excise, capital stock or succession taxes but shall include BPOL tax. If at any time the method of taxation prevailing at the Date of Lease shall be altered so that in lieu of, as a substitute for or in addition to the whole or any part of the taxes now levied or assessed, there shall be levied or assessed a tax of whatever nature, then the same shall be included as Landlord’s Taxes hereunder. Further, for the purposes of this Article, Landlord’s Taxes shall include the reasonable expenses (including, without limitation, attorneys’ fees) incurred by Landlord in challenging or obtaining or attempting to obtain a reduction of such Landlord’s Taxes, regardless of the outcome of such challenge. Notwithstanding the foregoing, Landlord shall have no obligation to challenge Landlord’s Taxes.

 

6.4 Estimated Payments. Landlord shall submit to Tenant, before the beginning of each calendar year, a statement of Landlord’s estimate of Landlord’s Operating Expenses payable by Tenant during such calendar year. In addition to the Basic Rent, Tenant shall pay to Landlord on or before the first day of each month during such calendar year an amount equal to one-twelfth (1/12) the estimated Landlord’s Operating Expenses payable by Tenant for such calendar year as set forth in Landlord’s statement. If Landlord fails to give Tenant notice of its estimated payments due under this Section for any calendar year, the Tenant shall continue making monthly estimated payments in accordance with the estimate for the previous calendar year until a new estimate is provided. If Landlord reasonably determines that, because of unexpected increases in Landlord’s Operating Expenses or other reasons, Landlord’s estimate of Landlord’s Operating Expenses was too low, then Landlord shall have the right to

 

 

 

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give a new statement of the estimated Landlord’s Operating Expenses due from Tenant for such calendar year or the balance thereof and to bill Tenant for any deficiency which may have accrued during such calendar year, and Tenant shall thereafter pay monthly estimated payments based on such new statement.

 

6.5 Actual Landlord’s Operating Expenses. Within ninety (90) days after the end of each calendar year, Landlord shall submit a statement to Tenant showing the actual Landlord’s Operating Expenses for such calendar year and Tenant’s Proportionate Share of the amount by which such Landlord’s Operating Expenses exceed the Expense Stop. If for any calendar year, Tenant’s estimated monthly payments exceed Tenant’s Proportionate Share of the amount by which the actual Landlord’s Operating Expenses for such calendar year exceed the Expense Stop, then Landlord shall give Tenant a credit in the amount of the overpayment toward Tenant’s next monthly payments of estimated Landlord’s Operating Expenses except if overpayment is determined following the expiration of the Lease Term then Landlord shall within 30 days after actual costs have been identified send payment to Tenant If for any calendar year Tenant’s estimated monthly payments are less than Tenant’s Proportionate Share of the amount by which the actual Landlord’s Operating Expenses for such calendar year exceed the Expense Stop, then Tenant shall pay the total amount of such deficiency to Landlord within thirty (30) days after receipt of the statement from Landlord. If Tenant fails to pay such deficiency within thirty (30) days from receipt of the statement from Landlord, Tenant shall pay Landlord a late charge of five percent (5%) of the amount of such deficiency and any such deficiency shall bear interest, at the Interest Rate, from the thirty-first (31st) day to the date of payment thereof by Tenant. Landlord’s and Tenant’s obligations with respect to any overpayment or underpayment of Landlord’s Operating Expenses shall survive the expiration or termination of this Lease.

 

6.6 Allocation of Landlord’s Operating Expenses to Tenant. Landlord shall equitably apportion to the extent possible the costs of utilities or services which are provided to one tenant or tenants to an appreciably different degree than to Building tenants at large. In the event that Tenant shall request that Landlord provide utilities or services other than, or in addition to, those contemplated at the commencement of this Lease, as specified in Section 12.1 below. Tenant agrees that Landlord may, by fifteen (15) days prior written notice to Tenant, charge Tenant for the cost of such additional utility or service as Additional Rent, including the cost of any additional transformers, distribution panels, wiring or separate meters, as deemed necessary or desirable by Landlord in its reasonable discretion.

 

6.7 Review Procedure. If Tenant shall dispute any item or items included by Landlord in determining Landlord’s Operating Expenses or other Additional Rent for any Lease Year, and if such dispute is not resolved between Landlord and Tenant within sixty (60) days after such accounting has been rendered, either party may notify the other of its election to arbitrate said dispute. In such event, such dispute shall be resolved by an independent certified public accountant acceptable to Landlord and Tenant, which decision shall be conclusive and binding on both parties and final judgment thereon may be entered in any court of competent jurisdiction.

 

6.8 Accounting Year. Landlord may adopt a different accounting year than the calendar year, in which case the times for payment of Additional Rent shall be adjusted accordingly.

 

6.9 Credit for Refunds. In the event that, during or after the Term of this Lease, Landlord shall receive a refund for any tax or other sum included in the calculation of Landlord’s Operating Expenses and paid by Tenant, Landlord shall repay Tenant’s Proportionate Share of such refund (after deducting therefrom the cost and expense of obtaining such refund).

 

6.10 If Tenant reasonably believes that any Expense Statement includes any charges that are not permitted pursuant to this Article VI or contains an error in calculation or otherwise, then within thirty (30) days of receipt of such Expense Statement, Tenant shall be entitled to the following audit right. Such audit right shall be exercisable by Tenant providing Landlord with a written notice of its exercise of such audit right and a statement enumerating reasonably detailed reason’s for Tenant’s objections to such Expense Statement. If within thirty (30) days after Landlord’s receipt of Tenant’s written notice and statement, Landlord and Tenant are unable to resolve Tenant’s objections, then not later than fifteen (15) days after the expiration of such thirty (30)day period Tenant shall notify Landlord that it wishes to employ an independent “big four” certified public accounting firm or any other independent accounting firm to inspect and audit Landlord’s books and records raised in Tenant’s statement. If Tenant elects to employ such accountant as set forth above, then Tenant shall deliver to Landlord a confidentiality and nondisclosure agreement reasonably satisfactory to Landlord executed by such accountant, and provide Landlord not less than thirty (30)days notice of the date on which the accountant desires to examine Landlord’s books and records during regular business hours; provided, however, that such date shall be thirty (30) days after Tenant delivers such notice. Such audit shall be limited to a determination of whether Landlord calculated the Expense Statement in accordance with the Terms and Conditions of the Lease. All costs and expenses of any such audit shall be paid by the Tenant, except in the event of an error(s) are found totaling more than five percent (5%) of Tenant’s operating expense pass-throughs, then in addition to the refund Landlord shall pay for Tenant’s accountant’s fees.

 

ARTICLE VII

 

USE

 

7.1 General. Tenant shall occupy the Premises solely for the Permitted Use. The Premises shall not be used for any other purpose without the prior written consent of Landlord. Tenant shall comply, at Tenant’s expense, with (i) all present and future laws, ordinances, regulations and orders of the United States of America, the

 

 

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Commonwealth of Virginia and any other public or quasi-public federal, state or local authority having jurisdiction over the Land, Building or the Premises, and (ii) any reasonable requests of Mortgagee or any insurance company providing coverage, with respect to the Land, Building or the Premises. Tenant shall not use or occupy the Land, Building or the Premises in any manner that is unlawful or dangerous or that shall constitute waste, unreasonable annoyance or a nuisance to Landlord or the other tenants of the Building.

 

7.2 Hazardous Materials. Tenant will not store, use or dispose of any hazardous materials in, on or about the Premises, the Building or the Land. Tenant shall not use the Premises for any use which may give rise to the existence on the Premises, the Building or the Land of toxic materials, hazardous substances or hazardous waste as those terms are used in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 USC ss 9601 et seq, as amended, Superfund Amendments and Reauthorization Act of 1986, Resource Conservation and Recover Act of 1976 or in any other applicable Federal, state or local law (and all regulations promulgated under any of same), as such laws are amended from time to time. Tenant will be solely responsible for and will defend, indemnify and hold Landlord and its Agents harmless from and against all claims, costs and liabilities, including attorney’s fees and costs, arising out of or in connection with Tenant’s breach of its obligations under this Section. Tenant will be solely responsible for and will defend, indemnify and hold Landlord and its Agents harmless from and against any and all claims, costs, and liabilities, including attorney’s fees and costs, arising out of or in connection with the removal, clean-up and restoration work and materials necessary to return the Land, Building and the Premises and any other property of whatever nature located on the Land to their condition existing prior to the appearance of Tenant’s hazardous materials on the Premises. Tenant’s obligations under this Section will survive the expiration or earlier termination of this Lease. Landlord represents and warrants as of the Effective Date of this Lease, the Building and common area are ADA compliant and free of any Asbestos or other environmental Hazardous Material including mold.

 

ARTICLE VIII

 

PARKING

 

8.1 Parking Spaces. Tenant will have pro-rata use of the 3.6/1000 parking ratio on a first-come, first-served basis of the vehicular and bicycle parking spaces on the Land. Landlord agrees to grant Tenant the non-exclusive use of an additional 4.4/1000 SF leased parking at the Building. This additional parking shall be free of charge, but in the event Landlord leases space in the Building to a tenant requiring a portion or all of Tenant’s additional parking, then Landlord may give Tenant sixty (60) days notice that the additional parking is no longer available for Tenants use.

 

8.2 Changes to Parking Facilities. Landlord shall have the right, from time to time, without Tenant’s consent, to change, alter, add to, temporarily close or otherwise affect the parking facilities on the Land in such manner as Landlord, in its sole but reasonable discretion, deems appropriate including, without limitation, the right to eliminate spaces or to designate reserved spaces available only for use by one or more tenants (however, in such event, those parking spaces shall still be deemed Common Area for the purpose of the definition of Landlord’s Operating Expenses), provided that, except in emergency situations or situations beyond Landlord’s control, Landlord shall provide alternative parking facilities.

 

ARTICLE IX

 

SIGNS

 

No sign, advertisement or notice shall be inscribed, painted, affixed, placed or otherwise displayed by Tenant on any part of the Land or the outside or the inside (including, without limitation, the windows) of the Building or Premises, except for the suite signage provided by Landlord, Landlord shall also provide, at Landlord’s expense, a listing on the Building directory of Tenant’s business name. If any prohibited sign, advertisement or notice is nevertheless exhibited by Tenant, Landlord shall have the right to remove the same, and Tenant shall pay any and all expenses incurred by Landlord in such removal, together with interest thereon at the Interest Rate, upon demand. Landlord shall have the right to prohibit any sign, advertisement, notice, display or publication to the public by Tenant which, in Landlord’s opinion, tends to impair the reputation of the Building or its desirability as a first class office building.

 

ARTICLE X

 

INITIAL CONSTRUCTION; ALTERATIONS; SURRENDER

 

10.1 Initial Construction. Landlord and Tenant agree that the construction of the Tenant work and other initial construction with respect to the Premises shall be performed in accordance with Exhibit B-1 attached hereto and made a part hereof.

 

10.2 Alterations. (A) For the purposes of this Section, “Alterations” shall mean any alterations, additions, decorations, or improvements to the Premises or the Building. Tenant shall have the right without Landlord’s prior consent to make Alterations to or upon the Premises which i) are non-structural in nature, ii) do not disrupt any other tenants of the Building, iii) do not affect any Building systems, and iv) are not visible from outside the Premises; provided, however, that Tenant must furnish Landlord with notice and detailed plans and specifications of any such Alterations at least fifteen (15) days prior to the commencement of such work. Tenant

 

 

 

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shall not make or permit any other Alterations without the prior written consent of Landlord. Regardless of whether or not Landlord’s consent is required to an Alteration, Landlord may impose any reasonable conditions to the performance of the Alterations, including without limitation, (i) delivery to Landlord of written and unconditional waivers of mechanic’s and materialmen’s liens as to the Premises, the Building and the Land for all work, labor and services to be performed and materials to be furnished, signed by all contractors, subcontractors, materialmen and laborers participating in the Alterations, (ii) prior approval by Landlord of the plans and specifications and Tenant’s contractor(s) with respect to the Alterations, (iii) for structural improvements supervision of the Alterations by Landlord’s representative at Tenant’s expense and (iv) delivery to Landlord of payment and performance bonds naming Landlord and Mortgagee as obligees. All Alterations, whether or not Landlord’s consent is required, shall conform to the requirements of Landlord’s and Tenant’s insurers and of the Federal, state and local governments having jurisdiction over the Premises, including but not limited to all applicable building and fire codes, shall be performed in accordance with the terms and provisions of this Lease in a good and workmanlike manner befitting a first class office building and shall not adversely affect the value, utility or character of the Premises. Should permits of any kind and nature be required by Federal, state or local government(s) having jurisdiction over the Premises, Tenant shall be responsible for securing the permits and the cost of same and furnishing copies of such permits to Landlord.

 

(B) If the Alterations are not performed as herein required, Landlord shall have the right, at Landlord’s option, to halt any further Alterations, or to require Tenant to perform the Alterations as herein required or to require Tenant to return the Premises to its condition before such Alterations.

 

(C) Providing Landlord has provided architectural and M.E.P. backgrounds to Tenant within thirty (30) days of the completion of the Alterations, Tenant shall furnish Landlord with one set of reproducible sepias showing the actual, as-built Alterations as they were delivered in the Premises, certified and inspected by the architects and engineers who prepared the plans and specifications.

 

(D) Notwithstanding the foregoing, if any mechanic’s or materialmen’s lien is filed against the Premises, the Building or the Land for work claimed to have been done for, or materials claimed to have been furnished to or for the benefit of, Tenant, such lien shall be discharged of record by Tenant within ten (10) days by the payment thereof or the filing of any bond required or permitted by law. If Tenant shall fail to discharge any such lien, Landlord may (but shall not be obligated) discharge the same, the cost of which shall be paid by Tenant within three (3) days of demand by Landlord. If Tenant fails to pay the cost within three (3) days of demand by Landlord, Tenant shall pay to Landlord a late charge of five percent (5%) of the amount. In addition, such late payment shall bear interest, at the Interest Rate, from the fourth (4th) day to the date of payment thereof by Tenant. Such discharge by Landlord shall not be deemed to waive or release the default of Tenant in not discharging the same. Neither Landlord’s consent to any Alteration nor anything contained in this Lease shall be deemed to be the agreement or consent of Landlord to subject Landlord’s interest in the Premises, the Building or the Land to any mechanic’s or materialmen’s liens which may be filed in respect of any Alteration.

 

10.3 Treatment of Alterations at Expiration Date or Earlier Termination of Lease . When Landlord approval is required, Landlord shall notify Tenant prior to granting its approval of the extent of any Alterations which shall remain on the Premises, which Alterations shall be surrendered at the end of the Lease Term as the property of the Landlord. Landlord shall not waive any rights with respect to Alterations made by Tenant and not known to Landlord two months before the end of the Lease Term. Tenant shall not have any obligation to remove any improvements which per Article 10.2 did not require Landlord approval.

 

Tenant shall have the obligation, with respect to other Alterations, to restore the Premises to the condition existing prior to such Alterations, at Tenant’s expense, to include all necessary design and permit costs, using licensed contractors acceptable to Landlord, unless this obligation was affirmatively waived by Landlord in writing prior to the time such request for approval to construct such Alterations were initially made. Tenant shall have the option, with respect to such Alterations, to pay Landlord the amount of money which would necessary to have the Premises restored to a condition existing prior to such Alterations using an outside licensed third party contractor, to including supervisory, design and permit costs or make the restorations itself. In the former circumstance, if Tenant fails to pay the amount invoiced due within thirty (30) days from receipt of an itemized invoice from Landlord, Tenant shall pay Landlord a late charge of five (5%) percent of the amount invoiced for each month the payment is overdue, plus interest at the Interest Rate from thirty (30) days after invoice submittal until date of payment by Tenant, in addition to the sums described in the original invoice.

 

10.4 Landlord Alterations. Landlord shall have no obligation to make any Alterations in or to the Premises, the Building, the Common Area or the Land except as specifically provided in Exhibit B-1. Landlord hereby reserves the right, from time to time, to make Alterations to the Building, change the Building dimensions, erect additional stories thereon and attach other buildings and structures thereto, and to erect such scaffolding and other aids to construction as Landlord deems appropriate, and no such Alterations, changes, construction or erection shall constitute an eviction, constructive or otherwise, or permit Tenant any abatement of Rent or claim against Landlord.

 

10.5 Low Voltage Cabling . Low voltage cabling for control, alarms, phone, data, and computer networking shall be installed in accordance with local codes and the current version of the National Electrical Code. All cabling shall be hung off building structural elements via J-hooks or raceways accessible from the underside, in accordance with said codes. If copper wiring is used for data communications or networking, it shall be in accordance with the attached specifications (see Exhibit F). To the extent not superseded by the specifications of

 

 

 

 

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Exhibit F, the cable plant shall conform to EIA/TIAA standards 568A, 569, 606, 607, and TSB 67,72 75 where applicable. Cabling penetrations between fire-rated areas shall be made with UL rated fixtures incorporating removable sleeves to facilitate re-wiring. Each cable runout from a central distribution point to a wall socket shall be tested to a 155 Mhz transmission rate, and copies of test reports for each run shall be kept and supplied to Landlord upon request. A current wiring map shall be maintained for all low voltage cabling within the Premises and the terminations of each cabling runs shall be identified by number both at the end of the wires and on the socket plate within the wall, to enable rapid re-use of such cabling by a successor tenant. Network hubs and switches shall be considered personal property of the Tenant, but all other cabling infrastructure shall either be surrendered to the Landlord in good operating condition at Lease termination, or at Landlord’s option, removed at Tenant’s expense.

 

10.6 Surrender of the Premises. Tenant shall peaceably surrender the Premises, including any and all fixtures installed during the Term regardless of whether Landlord or Tenant installed or paid for them, to Landlord on the Expiration Date or earlier termination of this Lease, in broom-clean condition and in as good condition as when Tenant took possession, including, without limitation, the repair of any damage to the Premises caused by the removal of any of Tenant’s personal property from the Premises, except for reasonable wear and tear and loss by fire or other casualty not caused by Tenant or its Agents. Any of Tenant’s personal property left on or in the Premises, the Building or the Common Area after the Expiration Date or earlier termination of this Lease shall be deemed to be abandoned, and, at Landlord’s options, shall become property of title shall pass to Landlord under this Lease.

 

10.7 Dispute Resolution . Any dispute over the rights or obligations of Landlord or Tenant with respect to issues covered by this Article X, either party will have the right to invoke binding arbitration with respect to such issues pursuant to the procedure set forth in Exhibit G.

 

ARTICLE XI

 

MAINTENANCE AND REPAIR

 

11.1 Landlord’s Obligation. As long as no Event of Default has occurred and is continuing, Landlord shall keep and maintain in good repair and working order the Building, the Common Area, and the equipment within and serving the Premises and the Building (excluding above-standard improvements installed or paid for by Tenant) that are required for the normal maintenance and operation of the Premises and the Building. The cost of such maintenance and repairs to the Building, the Common Area and said equipment shall be included in the Landlord’s Operating Expenses and paid by Tenant as provided in Article VI herein. Tenant agrees to give Landlord prompt notice of any defective conditions which come to its attention.

 

11.2 Tenant’s Obligation. Tenant shall maintain in good repair and working order the Premises, any equipment, fixtures or other improvements to the Premises, and all personal property within the Premises and shall repair, at its expense, any and all damage caused by Tenant or Tenant’s Agents to the Building, the Common Area, or the Premises, including equipment within and serving the Building, ordinary wear and tear excepted. Notwithstanding the foregoing, Tenant shall bear the cost of but shall not perform any such repairs which would affect the Building’s structure or mechanical or electrical systems or which would be visible from the exterior of the Building or any interior Common Area of the Building. In the event Landlord makes such repair or performs such maintenance, Landlord may add the cost thereof to the first installment of Rent which shall thereafter become due.

 

11.3 Landlord’s Right to Maintain or Repair. If, within fifteen (15) days following notice to Tenant, Tenant fails to commence to repair or replace any damage to the Premises or Building which is Tenant’s obligation to perform, and diligently pursue timely completion of such repair and replacement, Landlord may, at its option, cause all required maintenance, repairs or replacements to be made. Tenant shall promptly pay Landlord all costs incurred in connection therewith plus interest thereon at the Interest Rate from the due date until paid. In addition, where Tenant is prevented under Section 11.2 from performing certain maintenance or repairs which are Tenant’s obligation to pay for and Landlord performs same, Tenant shall promptly pay to Landlord all costs incurred in connection therewith plus interest thereon at the Interest Rate from the due date until paid.

 

ARTICLE XII

 

LANDLORD SERVICES AND UTILITIES

 

12.1 Ordinary Services to the Premises. As long as no Event of Default is continuing, Landlord shall furnish to the Premises throughout the Term (i) electricity, heating and air conditioning appropriate for the Permitted Use during the normal business hours set forth in Exhibit C, except for holidays set forth in Exhibit D at a level of 5 watts per square foot for Tenants lights and plugs (excluding base building heating and air conditioning) during said normal business hours set forth in Exhibit C; (ii) normal and customary janitorial and char services as outlined in Exhibit E; (iii) regular trash removal from the Premises; (iv) hot and cold water from points of supply; (v) restrooms as required by applicable code; and (vi) elevator service; provided that Landlord shall have the right to remove such elevators from service as may be required for moving, freight or for servicing or maintaining the elevators or the Building. The cost of all services provided by Landlord hereunder shall be included within Landlord’s Operating Expenses, unless charged directly (and not as or part of Landlord’s Operating Expenses) to Tenant or another tenant of the Building.

 

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12.2 After-Hours Services to the Premises. If Tenant requires or requests that the services to be furnished by Landlord (except Building standard electricity and elevator service) be provided during periods in addition to the periods set forth in Section 12.1, then Tenant shall obtain Landlord’s consent thereto and, if such consent is granted, shall pay upon demand Landlord’s additional expenses resulting therefrom. Landlord may, from time to time during the Term, set a per hour charge for after-hours service which shall include the cost of the utility, service, labor costs, reasonable administrative costs and a reasonable cost for depreciation of the equipment used to provide such after-hours service. The current charge is $65 per hour.

 

12.3 Interruption of Services. Landlord shall not be liable for, nor shall there be any abatement of Rent or constructive eviction for, the failure to furnish, or the delay or suspension in furnishing, any of the services either ordinary or extraordinary required under this Article, whether caused by breakdown, maintenance, repair, strikes, scarcity of labor or materials, acts of God or any other cause whatsoever, unless due to the gross negligence or willful misconduct of Landlord. Landlord agrees to use commercially best efforts to restore services as soon as possible.

 

12.4 Meters. Landlord reserves the right to separately meter or monitor the utility services provided to the Premises and bill the charges directly to Tenant or to separately meter any other tenant and bill the charges directly to such tenant and to make appropriate adjustments to the Expense Stop based on the meter charges. Tenant also shall have the right to arrange its own separately metered service, with all costs thereof to be paid for by Tenant.

 

12.5 Utility Charges. All telephone, electricity, gas, heat and other utility service used by Tenant in the Premises shall be paid for by Tenant except to the extent the cost of same is included within Landlord’s Operating Expenses.

 

ARTICLE XIII

 

RULES AND REGULATIONS

 

Tenant and its Agents shall at all times abide by and observe the rules and regulations attached as Exhibit C and any amendments or supplements thereto (the “Rules and Regulations”) that may be promulgated from time to time by Landlord for the operation and maintenance of the Building and the Common Area, and the Rules and Regulations shall be deemed to be covenants of the Lease to be performed and/or observed by Tenant. Nothin