LEASE RREEF AMERICA REIT III-Z1 LLC,

EXHIBIT 10.1

Execution Version

LEASE

RREEF AMERICA REIT III-Z1 LLC,

Landlord,

and

SOAPSTONE NETWORKS INCORPORATED

Tenant

10/31/01 SON

Revised 12/05

CH3 1131540.4 / 39926-000061

4325251v10

TABLE OF CONTENTS

 

 

TABLE OF CONTENTS

(continued)

 

 

NET OFFICE LEASE

REFERENCE PAGES

 

 

ANNUAL RENT and MONTHLY INSTALLMENT OF RENT(Article 3):

 

Provided that Tenant is not then in default, the Monthly Installment of Rent for the Initial Space (but not including the Rent Adjustments) will be abated for the first two (2) full calendar months of the Term, but if Tenant is in default, the Monthly Installment of Rent for each of the first two (2) full calendar months of the Term shall be $40,082.00. Further, provided that Tenant is not then in default, the Monthly Installment of Rent for the Additional Space will be abated for the period of January 1, 2009 through February 28, 2009, but if Tenant is in default, the Monthly Installment of Rent for the Additional Space for January and February 2009 each shall be $9,849.00. The rent table set forth above contemplates that the Commencement Date will occur on the Scheduled Commencement Date. If the Commencement Date does not occur on the Scheduled Commencement Date, the above-table shall be adjusted to reflect the actual Commencement Date, with Tenant being entitled to two (2) full calendar months of fully abated Rent for each of the Initial Space and the Additional Space as described in the next sentence. If the month in which the Commencement Date occurs (the “Commencement Month”) is a partial calendar month, prorated Rent for the Commencement Month will be due and payable with the rent for the first full calendar month after the rent abatement period for the Initial Space for which rent is payable (by way of example only, if the Commencement Date were September 15, 2008, then the Monthly Installment of Rent would be abated for the two full calendar month period of October through November, 2008, and the portion of the Monthly Installment of Rent for the partial month of September, 2008 would be due and payable with the January, 2009, the December, 2008 rent having been prepaid per Section 3.1).

The actual dates are to be confirmed per Section 2.1.

 

 

(The remainder of this page is intentionally left blank.)

 

The Reference Pages information is incorporated into and made a part of the Lease. In the event of any conflict between any Reference Pages information and the Lease, the Lease shall control. This Lease includes Exhibits A through D, all of which are made a part of this Lease.

 

LANDLORD:						TENANT:
RREEF AMERICA REIT III-Z1 LLC , a Delaware limited liability company						SOAPSTONE NETWORKS INCORPORATED , a Delaware corporation
By:		RREEF Management Company, a Delaware corporation, Authorized Agent
By:						By:
Name:		David F. Crane				Name:
Title:		Vice President/Regional Director				Title:
Dated:		, 2008				Dated:		, 2008

 

LEASE

By this Lease Landlord leases to Tenant and Tenant leases from Landlord, subject to and upon the terms and provisions contained herein, the Premises in the Building as set forth and described on the Reference Pages. The Premises are depicted on the floor plan attached hereto as Exhibit A , and the Building is depicted on the site plan attached hereto as Exhibit A-1 . The Reference Pages, including all terms defined thereon, are incorporated as part of this Lease.

1. USE AND RESTRICTIONS ON USE .

1.1 The Premises are to be used solely for the following purposes and no others: general office, computer and electronics laboratory, research and development, shipping and receiving and other related uses. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the operation of the Café (as defined in Section 41), or allow the Premises to be used for any unlawful purpose, or commit any waste. Tenant shall not do, permit or suffer in, on, or about the Premises the sale of any alcoholic liquor without the written consent of Landlord first obtained. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises and its occupancy and shall promptly comply with all governmental orders and directions for the correction, prevention and abatement of any violations in the Building or appurtenant land, caused or permitted by, or resulting from the specific use by, Tenant, or in or upon, or in connection with, the Premises, all at Tenant’s sole expense. Tenant shall not do or permit anything to be done on or about the Premises or bring or keep anything into the Premises which will in any way increase the rate of (unless Tenant pays such increased cost), invalidate or prevent the procuring of any commercially reasonable insurance protecting against loss or damage to the Building or any of its contents by fire or other casualty or against liability for damage to property or injury to persons in or about the Building or any part thereof.

1.2 Tenant shall not, and shall not direct, suffer or permit any of its agents, contractors, employees, licensees or invitees (collectively, the “Tenant Entities”) to at any time handle, use, manufacture, store or dispose of in or about the Premises or the Building any (collectively “Hazardous Materials”) flammables, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or derivatives or any substance subject to regulation by or under any federal, state and local laws and ordinances relating to the protection of the environment or the keeping, use or disposition of environmentally hazardous materials, substances, or wastes, presently in effect or hereafter adopted, all amendments to any of them, and all rules and regulations issued pursuant to any of such laws or ordinances (collectively “Environmental Laws”), nor shall Tenant suffer or permit any Hazardous Materials to be used in any manner not fully in compliance with all Environmental Laws, in the Premises or the Building and appurtenant land or allow the environment to become contaminated with any Hazardous Materials. Notwithstanding the foregoing, Tenant may handle, store, use or dispose of products containing small quantities of Hazardous Materials (such as aerosol cans containing insecticides, toner for copiers, paints, paint remover and the like to the extent customary and necessary for the use of the Premises for the purposes permitted under Section 1.1 above); provided that Tenant shall always handle, store, use, and dispose of any such Hazardous Materials in a safe and lawful manner and never allow such Hazardous Materials to contaminate the Premises, Building and appurtenant land or the environment. Tenant shall protect, defend, indemnify and hold each and all of the Landlord Entities (as defined in Article 30) harmless from and against any and all loss, claims, liability or costs (including court costs and attorney’s fees) incurred by reason of any actual or asserted failure of Tenant to fully comply with all applicable Environmental Laws, or the presence, handling, use or disposition in or from the Premises of any Hazardous Materials by Tenant or any Tenant Entity (even though permissible under all applicable Environmental Laws or the provisions of this Lease), or by reason of any actual or asserted failure of Tenant to keep, observe, or perform any provision of this Section 1.2.

Landlord agrees to indemnify, defend and hold Tenant and its officers, partners, directors, shareholders, employees and agents harmless from any claims, judgments, damages, fines, penalties, costs (including attorney, consultant and expert fees), liabilities (including sums paid in settlement of claims) or losses which arise during or after the in connection with or arising directly or indirectly out of Hazardous Materials (i) existing as of the Commencement Date at the Lot, the Building, the Premises or in the soil, groundwater or soil vapor on or under the Building or (ii) brought or introduced on or into the Lot or the Building by Landlord or anyone acting by, through or under Landlord, unless such Hazardous Materials are present as a result of the acts of Tenant, its officers, employees or agents.

 

1.3 Tenant and the Tenant Entities will be entitled to the non-exclusive use of the common areas of the Building and the lot of land upon which the Building is located (the “Lot”), as shown on Exhibit A-1, as they exist from time to time during the Term, including, without limitation, the loading docks, common hallway leading to the Café (hereinafter defined), bathrooms for the Cafe and parking facilities, subject to Landlord’s reasonable and uniformly enforced rules and regulations regarding such use (provided Tenant is provided written notice thereof). However, in no event will Tenant or the Tenant Entities park more vehicles in the parking facilities than Tenant’s Proportionate Share of the total parking spaces located on the Lot. The foregoing shall not be deemed to provide Tenant with an exclusive right to any parking spaces or any guaranty of the availability of any particular parking spaces or any specific number of parking spaces. However, Landlord shall use commercially reasonable efforts to take such commercially reasonable measures as Tenant may reasonably request in writing (such as issuing written notices to other tenants and to the owners or occupancy of adjacent buildings) in order to ensure that tenants in other buildings owned by Landlord or others in the vicinity of the Building do not utilize the parking spaces on the Lot, other than in connection with the café. If reasonably necessary, Landlord shall, at its expense, install signage indicating that except for certain mutually agreeable parking spaces designated for use by patrons of the Café (not to exceed an amount such that Tenant will have its Proportionate Share of the parking on the Lot), all parking spaces on the Lot are reserved for the exclusive use of Tenant. Tenant shall have exclusive use of all bathrooms in the Building (except for the bathrooms shown on Exhibit A as designated for the use of Café patrons) and exclusive use of the main lobby of the Building. For purposes of this Section 1.3, the “term :”reasonable efforts” shall not require Landlord to make any out-of-pocket, third party expenditures or to initiate litigation against any third party.

2. TERM .

2.1 The Term of this Lease shall begin on the date (“Commencement Date”) which shall be the later of the Scheduled Commencement Date as shown on the Reference Pages and the date that Landlord shall tender possession of the Premises to Tenant in compliance with the terms of this Section 2, and shall terminate on the date as shown on the Reference Pages (“Termination Date”), unless sooner terminated by the provisions of this Lease. Landlord shall tender possession of the Premises (and it shall be a condition of the occurrence of the Commencement Date) free and clear of all other tenants and occupants, in professionally cleaned condition, and with all the work to be performed by Landlord pursuant to the work letter (the “Work Letter”) attached as Exhibit B to this Lease (collectively, “Landlord’s Work”) substantially completed, except for Landlord’s Café Work purposes hereof, Landlord’s Work (other than the Landlord’s Café Work) shall not be deemed substantially completed until such time as Tenant is entitled to legally occupy the entire Premises for the uses permitted under Section 1.1 above and any remaining items of incomplete Landlord’s Work are such that there shall be no material interference with Tenant’s use of or access to the Premises, provided , however , that if Tenant is not legally able to occupy the Premises for the uses permitted under Section 1.1 on account of any work to be performed by Tenant to prepare for its occupancy or on account of Tenant’s failure to secure any license, permit or other approval required for a use other than general office use, then the requirement that Tenant be “entitled to legally occupy the entire Premises” for such uses shall not apply. Tenant shall deliver a punch list of items of Landlord’s Work not completed within thirty (30) days after Landlord tenders possession of the Premises and Landlord agrees to proceed with due diligence to perform its obligations regarding such items within thirty (30) days thereafter, but where an incomplete item of Landlord’s Work cannot reasonably be completed within such time for seasonal or other reasons, Landlord shall have such additional time as may be reasonably required under the circumstances so long as it is proceeding diligently with such work to completion and keeps Tenant reasonably informed as to the status of such items. Following the occurrence of the Commencement Date, Tenant shall, at Landlord’s request, execute and deliver a memorandum agreement provided by Landlord in the form of Exhibit C attached hereto, setting forth the actual Commencement Date, Termination Date and, if necessary, a revised rent schedule. Should Tenant fail to do so within thirty (30) days after Landlord’s request, or respond in writing to Landlord’s request setting forth any objection Tenant may have to Landlord’s proposed Commencement Date, the information set forth in such memorandum provided by Landlord shall be conclusively presumed to be agreed and correct.

2.2 Tenant agrees that in the event of the inability of Landlord to deliver possession of the Premises on the Scheduled Commencement Date for any reason, Landlord shall not be liable for any damage resulting from such inability, but (a) Tenant shall not be liable for any rent until the date which is two (2) full calendar months after Landlord, following at least two (2) business days prior written notice to Tenant, delivers possession of the Premises to Tenant in the condition required hereunder, and (b) if Landlord fails to deliver possession of the Premises as required hereunder on or before the date which is fifteen (15) business days after the Scheduled Commencement Date for any reason other than a Tenant Delay (hereinafter defined) or Landlord’s inability to complete the Landlord’s Lobby Work, then Tenant shall be entitled to an

 

abatement of the Annual Fixed Rent that would otherwise be due under this Lease in the amount of one (1) day’s Annual Fixed Rent for the Initial Premises for each day of delay (after the initial 15 business days) through the date upon which the Premises are so delivered. No such failure to give possession on the Scheduled Commencement Date shall affect the other obligations of Tenant under this Lease, except that if Landlord is unable to deliver possession of the Premises within one hundred twenty (120) days after the Scheduled Commencement Date (other than as a result of strikes, shortages of materials, holdover tenancies or similar matters beyond the reasonable control of Landlord and Tenant is notified by Landlord in writing as to such delay within ten (10) days following the date Landlord becomes aware of such delay), Tenant shall have the option to terminate this Lease unless said delay is as a result of: (i) Tenant’s failure to respond with either approval of or reasonable comments to plans or other documents described in the Work Letter within the applicable time therefor as set forth in the Work Letter; (ii) Tenant’s request for materials, finishes or installations which require long lead times (provided that Landlord informs Tenant thereof at the time Tenant requests such materials, finishes or installations) ; (iii) Tenant’s change in any plans or specifications once approved in accordance with the terms of the Work Letter; or, (iv) performance or completion by a party employed by Tenant (each of the foregoing, to the extent the same causes an actual delay in the performance of Landlord’s Work, is hereinafter referred to as a “Tenant Delay”). If any delay in the performance of Landlord’s Work is the result of a Tenant Delay, the Commencement Date and the payment of Rent under this Lease shall be accelerated by the number of days of such Tenant Delay. Landlord shall notify Tenant of any Tenant Delay as promptly as practicable once Landlord becomes aware that the Tenant Delay exists.

2.3 Tenant shall be permitted prior to the Commencement Date early access to the Premises for the sole purpose of installing furniture, fixtures and equipment, telecommunications wiring and otherwise preparing the Premises for its occupancy, provided that Tenant does not materially interfere with Landlord’s Work. Landlord shall cause its contractors performing Landlord’s Work to reasonably cooperate with Tenant so as to coordinate Tenant’s preparations for occupancy (i.e. permitting Tenant’s wiring to be installed when walls are open, etc.). Such entry, use or occupancy shall be subject to all the provisions of this Lease other than the payment of rent, including, without limitation, Tenant’s compliance with the insurance requirements of Article 11. Said early possession shall not advance the Termination Date.

3. RENT .

3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time to time by paying the Monthly Installment of Rent then in effect on or before the first day of each full calendar month during the Term, except that the first full month’s rent shall be paid upon the execution of this Lease. The Monthly Installment of Rent in effect at any time shall be one-twelfth (1/12) of the Annual Rent in effect at such time. Rent for any period during the Term which is less than a full month shall be a prorated portion of the Monthly Installment of Rent based upon the number of days in such month. Said rent shall be paid to Landlord, without deduction or offset and without notice or demand (all except as expressly provided in this Lease), at the Rent Payment Address, as set forth on the Reference Pages, or to such other person or at such other place as Landlord may from time to time designate in writing with at least ten (10) days prior written notice. If an Event of Default occurs, Landlord may require by written notice to Tenant that all subsequent rent payments be made by an automatic payment from Tenant’s bank account to Landlord’s account, without cost to Landlord. Tenant must implement such automatic payment system prior to the next scheduled rent payment or within ten business (10) days after Landlord’s notice, whichever is later. Unless specified in this Lease to the contrary, all amounts and sums payable by Tenant to Landlord pursuant to this Lease shall be deemed additional rent.

3.2 Tenant recognizes that late payment of any rent or other sum due under this Lease will result in administrative expense to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any other sum is not paid when due and payable pursuant to this Lease, a late charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) five percent (5%) of the unpaid rent or other payment. However, no late charge shall be payable on the first instance of late payment during any Lease Year (hereinafter defined), provided that Tenant makes such payment within five (5) business days following written notice from Landlord that the same is overdue. The amount of the late charge to be paid by Tenant shall be reassessed and added to Tenant’s obligation for each successive month until paid. The provisions of this Section 3.2 in no way relieve Tenant of the obligation to pay rent or other payments on or before the date on which they are due, nor do the terms of this Section 3.2 in any way affect Landlord’s remedies pursuant to Article 19 of this Lease in the event said rent or other payment is unpaid after date due.

 

4. RENT ADJUSTMENTS .

4.1 For the purpose of this Article 4, the following terms are defined as follows:

4.1.1 Lease Year: Each fiscal year (as determined by Landlord from time to time) falling partly or wholly within the Term.

4.1.2 Expenses: Subject to the exclusions set forth in this Section 4.1.2, all costs incurred by Landlord in connection with the operation, maintenance, repair, replacement and management of the Building and the Lot, as determined in accordance with generally accepted accounting principles, consistently applied (“GAAP”“), including the following costs by way of illustration, but not limitation: water and sewer charges; insurance charges of or relating to all insurance policies and endorsements deemed by Landlord to be reasonably necessary or desirable and relating in any manner to the protection, preservation, or operation of the Building or any part thereof; utility costs, including, but not limited to, the cost of heat, light, power, steam, gas; waste disposal; the cost of janitorial services, if applicable; the cost of security and alarm services (including any central station signaling system); costs of cleaning, repairing, replacing and maintaining the common areas, including parking and landscaping, window cleaning costs; labor costs; costs and expenses of managing the Building including management fees; air conditioning maintenance costs; elevator maintenance fees and supplies; material costs; equipment costs including the cost of maintenance, repair and service agreements and rental and leasing costs; purchase costs of equipment; current rental and leasing costs of items which would be capital items if purchased; tool costs; licenses, permits and inspection fees; wages and salaries; employee benefits and payroll taxes; accounting and legal fees; any sales, use or service taxes incurred in connection therewith. In addition, Landlord shall be entitled to include in Expenses Tenant’s Proportionate Share of an allocable portion of the cost of capital expense items (as determined under GAAP) which are either (i) incurred to repair or replace the Building’s fire sprinklers, fire suppression system and other life safety equipment, (ii) reasonably calculated to reduce Expenses; or (ii) required under any governmental laws, regulations or ordinances which were not applicable to the Building at the time it was constructed; but the costs described in this sentence shall be amortized over the reasonable life of such expenditures in accordance with such reasonable life and amortization schedules as shall be determined by Landlord in accordance with generally accepted accounting principles, with interest on the unamortized amount at one percent (1%) in excess of the Wall Street Journal prime lending rate announced from time to time. Landlord reserves the right to enter into joint agreements with other ownership in the Fields Industrial Park (the “Fields”) to provide services, such as common snow plowing, on property outside of the Building and within the Fields, and the Building’s proportionate share of the cost of such services shall be included in Expenses. The Building’s proportionate share of such expenses shall be based on (i) the rentable square footage of all buildings which are part of the Fields and owned by Landlord or any of its affiliates, currently consisting of the Building and the properties presently known as Two Federal Street and Five Federal Street and, and (ii) an equitable share (based upon rentable floor area and/or such other commercially reasonable factors as may be set forth in Landlord’s agreements with other ownership in the Fields) allocated to buildings within the Fields owned by parties other than Landlord or its affiliates and participating in such joint agreements, and is hereinafter referred to as “Tenant’s Fields Share”) shall be included in the Expenses. It is expressly agreed that Tenant’s Fields Share shall never be greater than 27.54%, which is the percentage that the Building’s rentable floor area bears to the total rentable floor area of the Building and the buildings at Two Federal Street and Five Federal Street. In the event Tenant desires to provide any services within the Building or on the Lot through provider(s) and under terms that Landlord has received reasonable prior notice and approves (which approval shall not be unreasonably withheld, conditioned or delayed), Landlord may grant such approval, and thereafter the cost of such services shall be excluded from Expenses, provided that Tenant shall be responsible for any and all termination fees and/or penalties which Landlord incurs for terminating any and all existing contracts for such services (but Landlord shall endeavor to advise Tenant when Tenant proposes to provide services of such fees and/or penalties and endeavor to coordinate the cessation of its contracts with Tenant’s provision of its own services to minimize the same). Expenses shall not include depreciation or amortization of the Building or equipment in the Building except as provided herein, loan principal payments, leasing commissions, interest expenses on loans or advertising costs and the following items:

 

(i)

the cost of capital expenses (except as set forth above and amortized as required);

 

(ii)

principal payments of mortgage and other non-operating debts of Landlord, together with other costs paid in connection with any such mortgage or operating debts, such as late fees, penalties and reserves;

 

(iii)

the cost of repairs, replacements or improvements or other work to the extent Landlord is reimbursed by insurance, condemnation proceeds, warranty or otherwise so that Landlord shall never recover for any item more than once;

 

(iv)

costs in connection with leasing, including, without limitation, brokerage commissions, promotional expenses, preparation of leases;

 

(v)

lease concessions, rental abatements, expenses of relocating tenant(s) and construction allowances granted to specific tenants, and the costs of painting, decorating, renovating or otherwise improving rentable space to prepare the same for a tenant’s occupancy or vacant rentable space, including all permit, license, testing and inspection costs and the cost of supervising the leasehold improvement work of other tenants;

 

(vi)

costs incurred in connection with the sale, financing or refinancing of the Building or other buildings in the Fields;

 

(vii)

fines, interest and penalties incurred due to the late payment of Taxes or Expenses, unless caused by Tenant’s late payment to Landlord on account thereof;

 

(viii)

organizational expenses associated with the creation, maintenance and operation of the entity which constitutes Landlord or any of its affiliates;

 

(ix)

any penalties or damages that Landlord pays to Tenant under this Lease or to other tenants in the Building or the Fields under their respective leases;

 

(x)

wages, salaries or fringe benefits paid to any employees above the grade of Senior Property Manager;

 

(xi)

ground lease rentals;

 

(xii)

attorney’s fees and other expenses incurred in connection with negotiations or disputes with Tenant;

 

(xiii)

the cost or expense of any services or benefits provided generally to other tenants in the Fields and not provided or available to Tenant;

 

(xiv)

any expenses for which Landlord has received actual reimbursement (other than through Expenses);

 

(xv)

sums paid to subsidiaries or other affiliates of Landlord, but only to the extent that the costs of such services exceed the competitive cost for such services rendered by persons or entities of similar skill, competence and experience;

 

(xvi)

costs incurred by Landlord in connection with the correction of defects in design and original construction of the Building;

 

(xvii)

cost of environmental monitoring, compliance, testing and remediation;

 

(xviii)

costs incurred in connection with the repair, maintenance or replacement of any structural elements of the Building (i.e., roof, foundation, structural columns, etc.);

 

(xviv)

all costs of purchasing or leasing sculptures, paintings or other works or objects of art;

 

(xx)

fines or penalties incurred as a result of violation by Landlord of any applicable laws, unless caused by Tenant;

 

(xxi)

any legal or accounting fees incurred in connection with Landlord’s obtaining of any debt or equity financing or in connection with any reports, returns or other financial or tax reporting or accounting performed expressly for the benefit of investors, partners or affiliates of Landlord (as opposed to those performed for the benefit of Landlord);

 

(xxii)

costs incurred in performing work or alterations exclusively to or for the benefit of individual tenants;

 

(xxiii)

INTENTIONALLY OMITTED;

 

(xxiv)

INTENTIONALLY OMITTED;

 

(xxv)

Taxes (hereinafter defined);

 

(xxxvi)

any expenses not billed to Tenant within three (3) years of the date the same were incurred.

 

(xxvii)

Costs attributable to services and materials provided to property other than the Building and the Lot, except for Tenant’s Fields Share of services provided to all buildings which are part of the Fields; and

 

(xxviii)

Costs attributable to the maintenance, operation or otherwise in connection with the Café, except there shall be included in Expenses Tenant’s Fields Share of the non-capital costs actually incurred by Landlord to repair and maintain the Café and its associated hallway and bathrooms and to subsidize the operation of the Cafe (including, without limitation, a reasonable amount of overhead and profit or loss for the Café operator), all to the extent not offset by profits from the Café. However, costs incurred in connection with the initial design, construction and fixturing of the Café, or separately metering its utilities from the remainder of the Building shall not be included in Expenses.

4.1.3 Taxes: Real estate taxes and any other taxes, charges and assessments by governmental authority which are levied with respect to the Building or the Lot, or with respect to any improvements, fixtures and equipment or other property of Landlord, real or personal, located in the Building and used in connection with the operation of the Building and said land, and all commercially reasonable fees, expenses and costs incurred by Landlord in investigating, protesting, contesting or in any way seeking to reduce or avoid increase in any assessments, levies or the tax rate pertaining to any Taxes to be paid by Landlord in any Lease Year. Taxes shall not include any corporate franchise, or estate, inheritance or net income tax, or tax imposed upon any transfer by Landlord of its interest in this Lease or the Building or any taxes to be paid by Tenant pursuant to Article 28. Landlord agrees to consider in good faith any request by Tenant for Landlord to seek an abatement of Taxes attributable to the Building.

4.2 Beginning as of the Commencement Date, Tenant shall pay as additional rent for each Lease Year Tenant’s Proportionate Share of Expenses and Taxes incurred for such Lease Year. Notwithstanding the foregoing, for the period beginning on the Commencement Date and ending on the earlier to occur of: (a) December 31, 2008, or (b) the date upon which Tenant commences using any material portion of the Additional Space for its business purposes, Tenant’s Proportionate Share with respect to Expenses (other than utility costs) and Taxes shall be 76.35 %. Tenant’s Proportionate Share with respect to utility costs included in Expenses is 100% from the Commencement Date forward.

4.3 The annual determination of Expenses shall be made by Landlord, and shall be binding upon Landlord and Tenant, subject to the provisions of this Section 4.3. During the Term, Tenant may review, at Tenant’s sole cost and expense, the books and records supporting such determination in an office of Landlord, or Landlord’s agent, during normal business hours, upon giving Landlord five (5) days advance written notice within one hundred eighty (180) days after receipt of such determination, but in no event more often than once in any one (1) year period, subject to execution of a confidentiality agreement reasonably acceptable to Landlord, and provided that if Tenant utilizes an independent accountant to perform such review it shall be one which is not compensated on a contingency basis and is also subject to such confidentiality agreement. If Tenant fails to object to Landlord’s determination of Expenses one hundred eighty (180) days after receipt, or if any such objection fails to state the reason for the objection, Tenant shall be deemed to have approved such determination and shall have no further right to object to or contest such determination

 

4.4 Prior to the actual determination thereof for a Lease Year, Landlord may from time to time (but not more than on two (2) occasions during any Lease Year) estimate Tenant’s liability for Expenses and/or Taxes under Section 4.2, Article 6 and Article 28 for the Lease Year or portion thereof. Landlord will give Tenant written notification of the amount of such estimate and Tenant agrees that it will pay, by increase of its Monthly Installments of Rent due in such Lease Year, additional rent in the amount of such estimate. Any such increased rate of Monthly Installments of Rent pursuant to this Section 4.4 shall remain in effect until further written notification to Tenant pursuant hereto.

4.5 When the above mentioned actual determination of Tenant’s liability for Expenses and/or Taxes is made for any Lease Year and when Tenant is so notified in writing, then:

4.5.1 If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of Expenses and/or Taxes for the Lease Year is less than Tenant’s liability for Expenses and/or Taxes, then Tenant shall pay such deficiency to Landlord as additional rent in one lump sum within thirty (30) days of receipt of Landlord’s bill therefor; and

4.5.2 If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of Expenses and/or Taxes for the Lease Year is more than Tenant’s liability for Expenses and/or Taxes, then Landlord shall credit the difference against the then next due payments to be made by Tenant under this Article 4, or, if the Lease has terminated, refund the difference in cash.

4.6 If the Commencement Date is other than January 1 or if the Termination Date is other than December 31, Tenant’s liability for Expenses and Taxes for the Lease Year in which said Date occurs shall be prorated based upon a three hundred sixty-five (365) day year.

5. SECURITY DEPOSIT .

5.1 Tenant shall deposit the Security Deposit with Landlord upon the execution of this Lease. Said sum shall be held by Landlord as security for the faithful performance by Tenant of all the terms, covenants and conditions of this Lease to be kept and performed by Tenant and not as an advance rental deposit or as a measure of Landlord’s damage in case of Tenant’s default. If Tenant defaults with respect to any provision of this Lease beyond any applicable notice or cure period, Landlord may use any part of the Security Deposit for the payment of any rent or any other sum in default, or for the payment of any amount which Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion is so used, Tenant shall within five (5) business days after written demand therefor, deposit with Landlord an amount sufficient to restore the Security Deposit to its original amount and Tenant’s failure to do so shall be a material breach of this Lease. Except to such extent, if any, as shall be required by law, Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on such deposit. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit or any balance thereof shall be returned to Tenant at such time after termination of this Lease when Landlord shall have determined that all of Tenant’s obligations under this Lease have been fulfilled, but in no event beyond the date which is 30 days from and after the expiration or earlier termination of this Lease. In the event of a transfer of Landlord’s interest in the Premises, Landlord shall transfer the Security Deposit to its transferee and thereupon the Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of said security deposit to a new landlord.

5.2 The required Security Deposit shall be either a cash security deposit or in the form of an Irrevocable Standby Letter of Credit in favor of Landlord (the “letter of credit”) in the amount set forth on the Reference Pages. Under any circumstance under which Landlord is entitled to the use of all or a part of the Security Deposit, then, Landlord, in addition to all other rights and remedies provided under the Lease, shall have the right to draw down the full balance of the letter of credit and retain the proceeds. The following terms and conditions shall govern the letter of credit:

5.2.1 Upon expiration of the Term, the letter of credit shall be returned to Tenant when Tenant is entitled to return of its Security Deposit.

 

5.2.2 The letter of credit shall be in favor of Landlord, shall be issued by a commercial bank reasonably acceptable to Landlord having a Standard & Poors rating of “A” or better, shall comply with all of the terms and conditions of this Section 5.2 and shall otherwise be in form reasonably acceptable to Landlord. The initial letter of credit shall have an expiration date not earlier than fifteen (15) months after the Commencement Date. A draft of the form of letter of credit must be submitted to Landlord for its approval prior to issuance.

5.2.3 The letter of credit or any replacement letter of credit shall be irrevocable for the term thereof and shall automatically renew on a year to year basis until a period ending not earlier than three (3) months after the Termination Date (“End Date”) without any action whatsoever on the part of Landlord; provided that the issuing bank shall have the right not to renew the letter of credit by giving written notice to Landlord not less than sixty (60) days prior to the expiration of the then current term of the letter of credit that it does not intend to renew the letter of credit. Tenant understands that the election by the issuing bank not to renew the letter of credit shall not, in any event, diminish the obligation of Tenant to maintain such an irrevocable letter of credit in favor of Landlord through such date.

5.2.4 Landlord, or its then managing agent, shall have the right from time to time to make one or more draws on the letter of credit at any time that an Event of Default has occurred. The letter of credit must state that it can be presented for payment at the office of the issuer or an approved correspondent in the Boston, Massachusetts area. Funds may be drawn down on the letter of credit upon presentation to the issuing or corresponding bank of Landlord’s (or Landlord’s then managing agent’s) certificate stating as follows:

“Beneficiary is entitled to draw on this credit pursuant to that certain Lease dated for reference April 3, 2008 between RREEF AMERICA REIT III-Z1 LLC, a Delaware limited liability company, as Landlord and SOAPSTONE NETWORKS INCORPORATED, a Delaware corporation as Tenant, as amended from time to time.”

It is understood that if Landlord or its managing agent be a corporation, partnership or other entity, then such statement shall be signed by an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity).

5.2.5 Tenant acknowledges and agrees (and the letter of credit shall so state) that the letter of credit shall be honored by the issuing bank without inquiry as to the truth of the statements set forth in such draw request and regardless of whether the Tenant disputes the content of such statement.

5.2.6 In the event of a transfer of Landlord’s interest in the Premises, Landlord shall have the right to transfer the letter of credit to the transferee and thereupon the Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of said letter of credit to a new landlord; and Tenant shall pay all fees to the issuer necessary to effect and evidence such transfer.

5.2.7 Without limiting the generality of the foregoing, if the letter of credit expires earlier than the End Date, or the issuing bank notifies Landlord that it will not renew the letter of credit, Landlord shall accept a renewal thereof or substitute letter of credit (such renewal or substitute letter of credit to be in effect not later than thirty (30) days prior to the expiration of the expiring letter of credit), irrevocable and automatically renewable as above provided to the End Date upon the same terms as the expiring letter of credit or upon such other terms as may be acceptable to Landlord. However, if (i) the letter of credit is not timely renewed, or (ii) a substitute letter of credit, complying with all of the terms and conditions of this Section is not timely received, then Landlord may present the expiring letter of credit to the issuing bank, and the entire sum so obtained shall be paid to Landlord, to be held by Landlord until Tenant would otherwise be entitled to the return of the letter of credit, and to be retained by Landlord if a default occurs.

5.2.8 If, as disclosed by any of Tenant’s quarterly earnings reports, Tenant’s cash-on-hand as of the expiration of any fiscal quarter is less than Fifty Million Dollars ($50,000,000.00), Tenant shall (i) be required to so notify Landlord in writing and failure to do so shall be a material default under this Lease; and (ii) within ten (10) business days increase the Security Deposit by increasing the amount of the letter of credit by (a) $123,638.66; plus (b) the then unamortized balance of Landlord’s actual contribution towards the tenant improvements pursuant to Exhibit B (not to exceed $25.00 per square foot of Premises), leasing commissions incurred in connection with this Lease and free rent provided under the Lease (collectively, “Lease Costs”), assuming straight-line amortization in full of the Lease Costs without interest over the initial Term of the Lease.

 

6. ALTERATIONS .

6.1 Except for those, if any, specifically provided for in the Work Letter , Tenant shall not make or suffer to be made any alterations, additions, or improvements (collectively, “Alterations”), including, but not limited to, the attachment of any fixtures or equipment in, on, or to the Premises or any part thereof or the making of any improvements as required by Article 7, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. When applying for such consent, Tenant shall, if requested by Landlord, furnish complete plans and specifications for such alterations, additions and improvements. Provided that Tenant gives reasonable prior notice to Landlord, Landlord’s consent shall not be required with respect to the making of improvements or alterations which (i) are not structural in nature, (ii) are not visible from the exterior of the Building, (iii) do not affect or require material modification of the Building’s electrical, mechanical, plumbing, HVAC or other systems, and (iv) in aggregate do not cost more than $50,000 per Lease Year.

6.2 In the event Landlord consents to the making of any such alteration, addition or improvement by Tenant, the same shall be made by using either Landlord’s contractor or a contractor reasonably approved by Landlord (such approval not to be unreasonably withheld or conditioned), in either event at Tenant’s sole cost and expense. If Tenant shall employ any contractor other than Landlord’s contractor and such other contractor or any subcontractor of such other contractor shall employ any non-union labor or supplier, Tenant shall be responsible for and hold Landlord harmless from any and all delays, damages and extra costs suffered by Landlord as a result of any dispute with any labor unions concerning the wage, hours, terms or conditions of the employment of any such labor. In any event, if Landlord provides construction management services, Landlord may charge Tenant a construction management fee not to exceed five percent (5%) of the cost of such work to cover its overhead as it relates to such proposed work, plus third-party costs actually incurred by Landlord in connection with the proposed work and the design thereof, with all such amounts being due thirty (30) days after Landlord’s demand.

6.3 All alterations, additions or improvements proposed by Tenant shall be constructed in accordance with all government laws, ordinances, rules and regulations, using Building standard materials (or equal or better quality) where applicable, and Tenant shall, prior to construction, provide the additional insurance required under Article 11 in such case, and also all such assurances to Landlord as Landlord shall reasonably require to assure payment of the costs thereof, including but not limited to, notices of non-responsibility, waivers of lien (upon completion of work), surety company performance bonds and funded construction escrows (both only for alterations expected to cost in excess of $100,000.00) and to protect Landlord and the Building and appurtenant land against any loss from any mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to any sums due pursuant to Article 4, any increase in real estate taxes attributable to any such alteration, addition or improvement for so long, during the Term, as such increase is ascertainable; at Landlord’s election said sums shall be paid in the same way as sums due under Article 4.

6.4 Landlord’s consent to any alterations, additions and improvements may be conditioned upon Landlord’s retaining the right to require the removal of same or any portion thereof upon the expiration or sooner termination of the Term. Tenant shall have the right to request of and receive from Landlord, at the time of Landlord’s consent of any Alterations and also with respect to the initial alterations done by Tenant pursuant to Exhibit B and any other Alterations not requiring Landlord’s consent, a list (or designation on plans) of which items Landlord will require to be removed upon the expiration or earlier termination of the Term. If Tenant requests such list prior to making any Alterations and Landlord does not advise Tenant in writing either at the time of its consent thereto, or within ten (10) business days after Tenant’s request if Landlord’s consent is not required, that such Alterations (or any specific components thereof) will be required to be removed from the Premises upon the expiration or sooner termination of the Term, then Landlord shall be deemed to have irrevocably agreed that such Alterations may remain at the Premises upon the expiration or sooner termination of the Term. Without limiting any of the foregoing, with respect to any Alterations made by Tenant which do not require Landlord’s consent, if Tenant fails to request of Landlord whether such Alterations will be required to be removed from the Premises at the expiration or sooner termination of the Term, then Landlord shall have the option upon the expiration of the Term whether such Alterations (or any specific components thereof) will be required to remain at the Premises or be removed by Tenant in accordance with the terms and provisions contained in Section 26.2 below. Notwithstanding any of the foregoing, it is

 

expressly agreed that all components of the Landlord’s Premises Work, the Landlord’s HVAC Work, the Landlord’s Lobby Work and the Landlord’s Café Work shall all remain at the Premises upon the expiration or sooner termination of this Lease, and Tenant shall not be required to remove the same.

7. REPAIR.

7.1 Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises, except as specified in Exhibit B and except that Landlord shall, in a good and workmanlike manner and in compliance with all applicable laws, statutes, rules. codes and regulations, repair, maintain and replace as reasonably necessary (a) the structural portions of the Building (roof, foundation, windows,