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OFFICE LEASE
AGREEMENT
BETWEEN
STREET RETAIL, INC.,
LANDLORD
AND
OPNET TECHNOLOGIES, INC.,
TENANT
DATE:
December 21 st ,
2006
TABLE OF
CONTENTS
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Article/Section
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Page Number |
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ARTICLE I REFERENCE PROVISIONS,
DEFINITIONS AND EXHIBITS
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1 |
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Section 1.01
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Reference Provisions
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1 |
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A. Leased
Premises
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1 |
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B. Intentionally
Omitted
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1 |
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C. Term
Commencement Date
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1 |
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D. Termination Date
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1 |
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E. Minimum
Rent
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1 |
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F. Security
Deposit
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1 |
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G. Rent
Payments
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1 |
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H. Notice
Addresses
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1 |
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I. Building
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1 |
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J. Parking Spaces
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2 |
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K. Renewal
Option
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2 |
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L. Schedules and
Exhibits
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2 |
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Section 1.02
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Definitions
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2 |
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A. Common
Areas
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2 |
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B. Floor
Area
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2 |
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C. Interest
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2 |
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D. Lease
Year
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2 |
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E. Partial
Lease Year
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2 |
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F. Operating Year
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2 |
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G. Base
Year
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2 |
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H. Person
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2 |
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I. Additional
Rent
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2 |
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J. Rent
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2 |
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K. Tenant’s Operating Costs
Share
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2 |
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L. Tenant’s Tax
Share
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3 |
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M. Base Operating
Costs
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3 |
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N. Base
Taxes
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3 |
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O. Building
Hours
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3 |
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ARTICLE II LEASED
PREMISES
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3 |
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Section 2.01
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Leased Premises
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3 |
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ARTICLE III TERM
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4 |
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Section 3.01
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Term
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4 |
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Section 3.02
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End of Term
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4 |
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Section 3.03
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Holding Over
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4 |
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Section 3.04
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Renewal
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5 |
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ARTICLE IV USE AND OPERATION OF THE
LEASED PREMISES
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6 |
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Section 4.01
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Intentionally Deleted
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6 |
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Section 4.02
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Use
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6 |
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Section 4.03
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Intentionally Deleted
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Section 4.04
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Signs and Advertising
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7 |
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ARTICLE V RENT
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8 |
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Section 5.01
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Rent Payable
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8 |
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Section 5.02
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Payment of Minimum Rent
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8 |
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ARTICLE VI COMMON
AREAS
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8 |
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Section 6.01
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Use of Common Areas
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8 |
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Section 6.02
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Management and Operation of Common
Areas
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8 |
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Section 6.03
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Tenant’s Share of Operating Costs
and Taxes
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9 |
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ARTICLE VII SERVICES AND
UTILITIES
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12 |
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ARTICLE VIII INDEMNITY AND
INSURANCE
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14 |
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Section 8.01
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Indemnity by Landlord and
Tenant
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14 |
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A. Indemnity by Tenant
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14 |
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B. Indemnity by
Landlord
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14 |
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Section 8.02
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Landlord Not Responsible for Acts of
Others
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14 |
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Section 8.03
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Tenant’s Insurance
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14 |
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Section 8.04
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Tenant’s Contractor’s
Insurance
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15 |
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Section 8.05
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Policy Requirements
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15 |
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Section 8.06
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Increase in Insurance
Premiums
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15 |
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Section 8.07
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Waiver of Right of Recovery
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15 |
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Section 8.08
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Landlord’s Insurance
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16 |
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ARTICLE IX CONSTRUCTION AND
ALTERATIONS
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16 |
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Section 9.01
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Condition of Leased Premises Upon
Delivery
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16 |
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Section 9.03
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Alterations
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16 |
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Section 9.04
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Work Requirements
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17 |
TABLE OF
CONTENTS
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Article/Section
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Section 9.05
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Ownership of Improvements
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17 |
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Section 9.06
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Removal of Tenant’s
Property
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17 |
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Section 9.07
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Mechanic’s Liens
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17 |
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ARTICLE X REPAIRS, MAINTENANCE, AND
LANDLORD’S ACCESS
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18 |
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Section 10.01
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Repairs by Landlord
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18 |
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Section 10.02
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Repairs and Maintenance by
Tenant
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18 |
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Section 10.03
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Inspections, Access and Emergency
Repairs by Landlord
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18 |
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Section 10.04
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Landlord’s Compliance with
Laws
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18 |
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ARTICLE XI CASUALTY
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18 |
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Section 11.01
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Fire or Other Casualty
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18 |
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Section 11.02
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Right to Terminate
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18 |
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Section 11.03
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Landlord’s Duty to
Reconstruct
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19 |
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Section 11.04
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Tenant’s Duty to
Reconstruct
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19 |
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ARTICLE XII
CONDEMNATION
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19 |
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Section 12.01
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Taking of Leased Premises
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19 |
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Section 12.02
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Taking of Building
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19 |
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Section 12.03
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Condemnation Award
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19 |
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ARTICLE XIII PARKING
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20 |
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Section 13.01
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Parking Rights
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20 |
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Section 13.02
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Parking Rules and Conditions
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20 |
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ARTICLE XIV SUBORDINATION AND
ATTORNMENT
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20 |
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Section 14.01
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Subordination
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20 |
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Section 14.02
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Attornment
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20 |
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Section 14.03
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Estoppel Certificate
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20 |
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Section 14.04
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Quiet Enjoyment
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20 |
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ARTICLE XV ASSIGNMENT AND
SUBLETTING
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21 |
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Section 15.01
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Landlord’s Consent
Required
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21 |
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ARTICLE XVI DEFAULT AND
REMEDIES
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23 |
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Section 16.01
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Default
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23 |
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Section 16.02
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Remedies and Damages
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23 |
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Section 16.03
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Remedies Cumulative
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24 |
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Section 16.04
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Waiver
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24 |
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ARTICLE XVII MISCELLANEOUS
PROVISIONS
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24 |
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Section 17.01
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Notices
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24 |
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Section 17.02
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Recording
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24 |
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Section 17.03
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Interest and Administrative
Cost
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24 |
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Section 17.04
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Legal Expenses
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25 |
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Section 17.05
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Successors and Assigns
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25 |
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Section 17.06
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Limitation on Right of Recovery Against
Landlord
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25 |
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Section 17.07
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Security Deposit
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25 |
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A. Amount
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25 |
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B. Security
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25 |
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C. Form
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25 |
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D. Right to
Draw
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25 |
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E. Right to
Pledge or Assign
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26 |
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F. Reservation of
Rights
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26 |
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G. Return
of Security Deposit
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26 |
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Section 17.08
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Entire Agreement; No Representations;
Modification
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26 |
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Section 17.09
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Severability
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27 |
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Section 17.10
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Joint and Several Liability
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27 |
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Section 17.11
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Broker’s Commission
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27 |
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Section 17.12
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Irrevocable Offer, No Option
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27 |
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Section 17.13
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Inability to Perform
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27 |
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Section 17.14
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Survival
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27 |
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Section 17.15
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Corporate Tenants
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27 |
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Section 17.16
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Construction of Certain Terms
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27 |
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Section 17.17
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Showing of Leased Premises
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27 |
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Section 17.18
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Relationship of Parties
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27 |
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Section 17.19
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Intentionally Omitted
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27 |
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Section 17.20
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Choice of Law
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27 |
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Section 17.21
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Choice of Forum
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27 |
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Section 17.22
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Intentionally Omitted
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27 |
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Section 17.23
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Financial Statements
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28 |
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Section 17.24
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Time is of the Essence
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28 |
TABLE OF
CONTENTS
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Article/Section
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Page Number |
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ARTICLE XVIII RIGHT OF FIRST OFFER
FOR WACHOVIA SPACE
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28 |
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Section 18.01
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Wachovia Space
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28 |
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ARTICLE XIX ANTENNA
RIGHTS
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29 |
LIST OF CERTAIN
DEFINITIONS
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Additional Rent
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2 |
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Affiliate Notice
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22 |
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Alterations
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16 |
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Antenna
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29 |
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Availability Notice
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28 |
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Brokers
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27 |
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Building Permit
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Exhibit B |
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Casualty
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18 |
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Common Restrooms
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6 |
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Construction Documents
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Exhibit B |
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Default
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23 |
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Escalation Date
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8 |
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Relocation Notice
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28 |
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Extension Option
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5 |
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Extension Terms
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5 |
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Force Majeure
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3 |
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FRIT
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14 |
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Holdover Minimum Rent
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4 |
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Holdover Occupancy
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4 |
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Interest Rate
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23 |
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Landlord
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1 |
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Landlord’s Agent
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Exhibit B |
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Landlord’s Indemnified
Parties
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14 |
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Lease
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1 |
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Leasehold Improvements
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17 |
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Letter of Credit
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25 |
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Market Rate
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4 |
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Mortgage
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20 |
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Mortgagee
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20 |
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Negotiation Period
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5 |
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Notice
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24 |
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Operating Costs
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10 |
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Operating Costs Statement
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10 |
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Permitted Alterations Notice
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16 |
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Permitted Capital
Expenditures
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11 |
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Permitted Exterior Signage
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7 |
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Plans
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Exhibit B |
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Preliminary Plans
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Exhibit B |
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Premises Systems
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6 |
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Qualified Lender
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20 |
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Qualified Tenant Affiliate
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22 |
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Released Parties
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15 |
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Relocation Notice
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28 |
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Right of First Offer
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28 |
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Security Deposit
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1 |
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Substitute Tenant
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23 |
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Taking
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19 |
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Taxes
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11 |
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Tenant
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1 |
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Tenant Work
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Exhibit B |
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Tenant Work Allowance
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Exhibit B |
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Tenant’s Agent
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Exhibit B |
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Tenant’s Indemnified
Parties
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14 |
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Tenant’s Insurance
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15 |
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Tenant’s Property
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17 |
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Tenant’s Share of Operating Costs
and Taxes
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9 |
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Transfer
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21 |
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Transfer Response Failure
Notice
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21 |
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Transferee
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21 |
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Wachovia Lease
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28 |
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Wachovia Relocation Amendment
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28 |
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Wachovia Space
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28 |
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Waiving Party
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15 |
OFFICE LEASE
AGREEMENT
THIS OFFICE LEASE
AGREEMENT (this “Lease”) is made this 21
st
day of December, 2006, by and
between STREET RETAIL, INC ., a Maryland corporation
(“Landlord”), and OPNET TECHNOLOGIES, INC ., a
Delaware corporation (“Tenant”).
IN CONSIDERATION of
the payments of rents and other charges provided for herein and the
covenants and conditions hereinafter set forth, Landlord and Tenant
hereby covenant and agree as follows:
ARTICLE I
REFERENCE PROVISIONS,
DEFINITIONS AND EXHIBITS
As used in this Lease, the
following terms shall have the meanings set forth in Sections 1.01
and 1.02 below.
Section 1.01 Reference
Provisions.
A. Leased Premises.
The premises consisting of the entire rentable area on the second
(2 nd ) floor (designated as Suite 200) of the Building
described in Section 1.01.1, below, as shown on the floor plan
attached hereto as Exhibits A-1 , and consisting of
approximately twenty-two thousand two hundred fifty-three
(22,253) square feet of rentable office space, which square
footage is stipulated by Landlord and Tenant and shall conclusively
be deemed to be the rentable square feet of the Leased Premises for
purposes of this Lease.
B. Intentionally
Omitted.
C. Term Commencement
Date . December 20, 2006, subject to adjustment pursuant
to Section 3.01.B hereof.
Rent Commencement
Date. April 1, 2007.
D. Termination Date.
January 31, 2016, or any earlier date on which this Lease is
terminated in accordance with the provisions hereof.
E. Minimum Rent. Eight
Hundred Twenty-three Thousand Three Hundred Sixty-one and
Zero
/100 Dollars ($823,361.00)
for the first Lease Year, payable in twelve (12) equal monthly
installments of Sixty-eight Thousand Six Hundred Thirteen
and fort y- two /1oo Dollars ($68,613.42) for the first Lease Year (at $37.00
per rentable square foot in the Leased Premises), which shall be
increased on each Escalation Date (hereinafter defined) in
accordance with the provisions of Section 5.02
hereof.
F. Security Deposit.
One (1) month’s Minimum Rent, being Sixty-eight Thousand
Six Hundred Thirteen and *DrtlHwo /1OO Dollars ($68,613.42).
G. Rent Payments. The
rent payments due herein shall be made payable to Landlord at the
following address:
Street Retail, Inc. -
Property #1022
c/o Federal Realty Investment
Trust
P.O. Box 8500-9320
Philadelphia,
Pennsylvania
Attention: Legal
Department
H. Notice
Addresses.
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LANDLORD: |
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Street
Retail, Inc. |
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1626 East
Jefferson Street |
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Rockville, Maryland 20852-4041 |
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Attention: Legal Department |
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| TO
TENANT: |
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OPNET
Technologies, Inc. |
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7255
Woodmont Avenue |
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Bethesda,
Maryland |
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Attention: Alberto Morales |
I. Building. That
certain building, consisting of 63,068 square feet of rentable
office and retail space and currently having a street address of
7250 Woodmont Avenue, in the City of Bethesda, County of
Montgomery, in the State of Maryland, including the land upon which
the Building is situated (the legal description of which is set
forth on Exhibit A ), which square footage is stipulated by
Landlord and Tenant and shall conclusively be deemed to be the
rentable square feet of the Building for purposes of this Lease.
The Building contains 44,840 square feet of rentable office area,
which square footage is stipulated by Landlord and Tenant and shall
conclusively be deemed to be the rentable square feet of the office
area in the Building for purposes of this Lease.
J. Parking Spaces.
Twelve (12) monthly parking contracts (based upon the ratio of
one (1) monthly parking contract for every two thousand
(2,000) square feet of rentable area of the Leased Premises,
rounded up to the next whole number), the terms of which are set
forth in Article XIII.
K. Renewal Option. One
(1)five (5)-year option. as provided in Section 3.04
hereof.
L. Schedules and
Exhibits. The schedules and exhibits listed below are attached
to this Lease and are hereby incorporated in and made a part of
this Lease.
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| Exhibit
A |
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Legal
Description of the Land |
| Exhibit
A-1 |
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Second Floor
Plan |
| Exhibit
B |
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Work
Agreement |
| Exhibit
C |
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Rules and
Regulations |
| Exhibit
D |
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Rules for
Tenant’s Contractors |
| Exhibit
E |
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Intentionally Omitted |
| Exhibit
F |
|
Intentionally Omitted |
| Exhibit
G |
|
Intentionally Omitted |
| Exhibit
H |
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Additional
Exclusions to Operating Costs |
| Exhibit
I |
|
Intentionally Omitted |
| Exhibit
J |
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Form of
Letter of Credit |
| Exhibit
K |
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Location and
Parameters of Permitted Exterior Signage |
| Exhibit
L |
|
Intentionally Omitted |
| Exhibit
M |
|
Cleaning
Specifications |
| Exhibit
N |
|
Right of
First Offer |
Section 1.02
Definitions.
A. Common Areas. Any
existing or future improvements, equipment, areas and/or spaces for
the non-exclusive, common and joint use or benefit of Landlord,
Tenant and other tenants, occupants and users of the Building. The
Common Areas include without limitation sidewalks, roofs, gutters
and downspouts, parking areas, access roads, driveways, landscaped
areas, service drives and service roads, traffic islands, loading
and service areas, stairs, landings, ramps, elevators, escalators,
utility and mechanical rooms and equipment, corridors, lobbies,
public washrooms, and other similar areas and
improvements.
B. Floor Area. When
used with respect to the Leased Premises, the number of rentable
square feet set forth in Section 1.01 .A, above, which the
Leased Premises shall be deemed to contain. When used with respect
to any other space in the Building, Floor Area shall mean the
number of rentable square feet of such space as reasonably
determined by Landlord; provided, however, when used with respect
to any other office space in the Building, Floor Area shall mean
the number of rentable square feet of such space as reasonably
determined by Landlord in accordance with BOMA.
C. Interest. A rate
per annum of twelve percent (12%).
D. Lease Year. Each
twelve (12) month period beginning with the Rent Commencement
Date, and each anniversary thereof, provided the Rent Commencement
Date occurs on the first day of a month. If the Rent Commencement
Date occurs on a day other than the first day of a month, then the
first Lease Year shall begin on the Rent Commencement Date and
shall terminate on the last day of the twelfth (12
th
) full calendar month
after the Rent Commencement Date. Each subsequent Lease Year shall
commence on the date immediately following the last day of the
preceding Lease Year and shall continue for a period of twelve
(12) full calendar months, except that the last Lease Year of
the Term shall terminate on the date this Lease expires or is
otherwise terminated.
E. Partial Lease Year.
Any period during the Term which is less than a full Lease
Year.
F. Operating Year.
Each respective calendar year or part thereof during the Term of
this Lease or any renewal thereof, or at the option of Landlord,
any other twelve month period or part thereof designed by
Landlord.
G. Base Year.
The calendar year commencing January 1, 2007.
H. Person. An
individual, firm, partnership, association, corporation, limited
liability company, or any other legal entity.
I. Additional Rent.
All sums payable by Tenant to Landlord under this Lease, other than
Minimum Rent.,
J. Rent. Minimum Rent
plus Additional Rent.
K. Tenant’s
Operating Costs Share. Shall mean a fraction, the numerator of
which is the Floor Area of the Leased Premises and the denominator
of which is the total Floor Area of the office portion of the
Building, which is 44,840 rentable square feet, as measured in
accordance with BOMA. Tenant’s Operating Costs Share is
currently 49:63%.
L. Tenant’s Tax
Share. Shall mean a fraction, the numerator of which is the
Floor Area of the Leased Premises and the denominato r of
which is the total Floor Area of the office and retail portions of
the Building. Tenant’s Tax Share is currently
35.28%.
M. Base Operating
Costs. The Operating Costs for the Base Year.
N. Base Taxes. Taxes
applicable to the first Lease Year.
O. Building Hours. At
least from 8:00 a.m. until 6:00 p.m. on weekdays (excluding
holidays) and from 9:00 a.m. until 1:00 p.m. on Saturdays
(excluding holidays).
P. Force Majeure. Any
acts of God, strikes, sabotage, acts of war, fire and casualty,
legal requirements, government restrictions or controls on
construction, unusual shortages or inability to obtain labor,
materials or equipment, energy shortage, the failure in the
applicable governmental authority to promptly issue any building
permit, conduct inspections or issue any required certificate or
approval in connection with any work undertaken by Landlord, or any
causes beyond the reasonable control of Landlord.
ARTICLE II
LEASED
PREMISES
Section 2.01 Leased
Premises.
A. Landlord demises
and leases to Tenant, and Tenant leases and takes from Landlord,
the Leased Premises together with the right to use for ingress to
and egress from the Leased Premises, in common with others, the
Common Areas. Landlord has the exclusive right, subject to any
express limitation set forth in Section 4.04 and Article XIX
hereof, to (i) use the exterior faces of all perimeter walls
of the Building, the roof and all air space above the Building and
(ii) install, maintain, use, repair and replace pipes, ducts,
cables, conduits, plumbing, vents, utility lines and wires to, in,
through, above and below the Leased Premises and other parts of the
Building; provided, that if any such pipes, ducts, cables,
conduits, plumbing, vents, utility lines and wires are installed in
the Leased Premises by Landlord pursuant to this Article II or
Section 7.02, then (a) Landlord shall use reasonable
efforts to either install such items within or behind the walls or
above the ceiling or as near to a wall or ceiling of the Leased
Premises as is reasonably practicable or otherwise minimize the
impact such items may have on the interior design of the Leased
Premises, and (b) Landlord shall repair any damage caused by
such installation.
B. Provided Tenant has
delivered to Landlord evidence reasonably satisfactory to Landlord
that all insurance required to be carried by Tenant and its
contractor hereunder is effective, Tenant shall have access to the
Leased Premises immediately upon the Term Commencement Date;
provided, however, Tenant shall not be entitled to make any
alterations or improvements to the Leased Premises until the Plans
(as defined in the Work Agreement) have been finally approved by
Landlord in accordance with the Work Agreement. Except for purposes
of constructing the Tenant Work in accordance with the Work
Agreement, Tenant shall not be permitted to occupy the Leased
Premises for purposes of conducting its business therein or for any
other purpose, unless and until Tenant delivers to Landlord a
certificate of occupancy and any other approvals required for
Tenant’s occupancy of the Leased Premises from any
governmental authorities having jurisdiction over the Leased
Premises, all of which shall be obtained by Tenant at
Tenant’s sole cost and expense. If Landlord notifies Tenant
that the Leased Premises are otherwise available for Tenant to take
possession thereof, but Tenant is not permitted to take possession
of the Leased Premises because Tenant has failed to deliver to
Landlord evidence reasonably satisfactory to Landlord that all
insurance required hereunder to be carried by Tenant and its
contractor is effective, then (i) Landlord shall be deemed to
have tendered possession of the Leased Premises to Tenant,
(ii) neither the Term Commencement Date, nor the Rent
Commencement Date shall be delayed as a result thereof, and
(iii) Tenant shall be entitled to access the Leased Premises
when such evidence of insurance has been delivered to
Landlord.
C. In the event that
as of the Term Commencement Date the Common Restrooms are in
violation of any laws, rules, regulations or legal requirements,
then in effect, of any governmental authority having jurisdiction
over the Building or the Leased Premises (an “Existing
Common Restroom Violation” ) and Tenant notifies Landlord
of such Existing Common Restroom Violation within 30 days after the
Term Commencement Date ( “Violation Notice Date”
) and prior to making any improvements or alteration (other than
cosmetic alterations such as painting and floor and wall covering),
Landlord shall either (i) make such improvements or alteration
required to cure any such Existing Common Restroom Violation, or
(ii) reimburse Tenant for the reasonable cost of such
improvements or alteration required to cure any such Existing
Common Restroom Violation, provided such costs are approved by
Landlord in advance. Notwithstanding anything contained herein to
the contrary (including the provisions of Section 10.04 and
4.02.B), in the event that Tenant makes any alteration to any
component of the Common Restrooms to which any such Existing Common
Restroom Violation applies, Landlord shall not have any obligation
with respect to such Existing Common Restroom Violation and Tenant
shall be required to bring such component into compliance with any
and all laws, rules, regulations and legal requirements of any
governmental authority having jurisdiction over the Building or the
Leased Premises (including curing any Existing Common Restroom
Violation). In addition, notwithstanding any other provision of
this Lease to the contrary (including the provisions of
Section 10.04 and 4.02.B), from and after the Violation Notice
Date, Tenant, as a part of the Tenant Work and at its sole cost,
shall be required to cure any Existing Common Restroom Violation,
unless Tenant has given Landlord notice of such Existing Common
Restroom Violation prior to the Violation Notice Date and Tenant
does not alter the component of the
Common Restrooms to which such Existing
Common Restroom Violation applies. Tenant shall also be responsible
for the cost of any Tenant Work or Alteration to the Common
Restrooms undertaken by Tenant, including any improvements that
exceed current code. The cost incurred in connection with
Landlord’s repair, maintenance and cleaning of the Common
Restroom shall be included in Operating Costs, subject to and in
accordance with the terms of this Lease.
ARTICLE III
TERM
Section 3.01
Term.
A. This Lease shall be
effective as of the date hereof. The Term shall commence on the
Term Commencement Date specified in Section 1.01.C. above
(except as expressly set forth in Section 3.01 B hereof), and
shall be for the period time specified in Section 1.01.B.,
above, and expire on the Termination Date specified in
Section 1.01 .D, above.
B. In the event that
Landlord has not tendered possession of the Leased Premises to
Tenant by the Term Commencement Date (as set forth in
Section 1.01.C) for any reason or cause, then the Term
Commencement Date shall be delayed and shall be the date that
Landlord tenders possession of the Leased Premises to Tenant. In
the event the Term Commencement Date is so delayed, Landlord shall
not be liable or responsible for any claims, damages, or
liabilities by reason of such delay, but the Rent Commencement Date
shall be delayed by one (1) day for each day that the Term
Commencement Date is so delayed.
C. Minimum Rent shall
commence on the Rent Commencement Date irrespective of the date
that Tenant actually completes the Tenant Work and occupies the
Leased Premises, which Rent Commencement Date is subject to
adjustment only pursuant to the provisions of Section 3.01 B
hereof. It is understood and agreed that Landlord will not make,
and is under no obligation to make, any structural or other
alterations, decorations, additions or improvements in or to the
Leased Premises in connection with Tenant’s initial occupancy
thereof. Provided Tenant has delivered to Landlord evidence
reasonably satisfactory to Landlord that all insurance required to
be carried by Tenant and its contractor hereunder is effective,
Tenant shall have access to the Leased Premises to commence the
Tenant Work in the Leased Premises in accordance with the Plans (as
defined in Exhibit B hereof; i.e., the Construction
Documents approved by Landlord) on the Term Commencement Date.
Except for purposes of constructing the Tenant Work in accordance
with Exhibit B and installing furniture and equipment,
Tenant shall not be permitted to occupy the Leased Premises for
purposes of conducting its business therein or for any other
purpose, unless and until Tenant delivers to Landlord a certificate
of occupancy and any other approvals required for Tenant’s
occupancy of the Leased Premises from any governmental authorities
having jurisdiction over the Leased Premises, all of which shall be
obtained by Tenant at Tenant’s sole cost and expense. If
Landlord notifies Tenant that the Leased Premises are otherwise
available for Tenant to take possession thereof, but Tenant is not
permitted to take possession of the Leased Premises because Tenant
has failed to deliver to Landlord evidence reasonably satisfactory
to Landlord that all insurance required hereunder to be carried by
Tenant and its contractor is effective, then (a) Landlord
shall be deemed to have tendered possession of the Leased Premises
to Tenant; (b) neither the Term Commencement Date nor the Rent
Commencement Date shall be delayed as a result thereof; and
(c) Tenant shall be entitled to access the Leased Premises
when such evidence of insurance has been delivered to
Landlord.
D. Within five
(5) days after request from Landlord, Landlord and Tenant
shall execute an amendment to the Lease setting forth the Term
Commencement Date, Rent Commencement Date and Termination
Date.
Section 3.02 End of Term.
This Lease shall terminate on the Termination Date without the
necessity of notice from either Landlord or Tenant. Upon the
Termination Date, Tenant shall quit and surrender to Landlord the
Leased Premises, broom-clean, in good order and condition, ordinary
wear and tear excepted; and shall surrender to Landlord all keys
and access cards, if applicable, to or for the Leased
Premises.
Section 3.03 Holding Over.
If Tenant fails to vacate the Leased Premises on the Termination
Date, Landlord shall have the benefit of all provisions of law
respecting the speedy recovery of possession of the Leased Premises
(whether by summary proceedings or otherwise). In addition to and
not in limitation of the foregoing, occupancy subsequent to the
Termination Date (“Holdover Occupancy”) shall be a
tenancy at will. Holdover Occupancy shall be subject to all terms,
covenants, and conditions of this Lease (including those requiring
payment of Additional Rent), except that the Minimum Rent for each
day that Tenant holds over (“Holdover Minimum Rent”)
shall be equal to one and one-half (1 1/2) times the per diem
Minimum Rent payable in the last Lease Year. Landlord also shall be
entitled to recover all damages, including lost business
opportunity regarding any prospective tenant(s) for the Leased
Premises, suffered by Landlord as a result of Tenant’s
Holdover Occupancy; provided, however, Landlord shall waive its
right to such damages if Tenant vacates and surrenders to Landlord
the Leased Premises in the condition required pursuant to this
Lease on or before the date that is forty-five (45) days after
the expiration of the Term.
Section 3.04
Renewal.
A. Landlord grants
Tenant the option (referred to as the “Extension
Option,”) to extend the Term for one (1) period of five
(5) years (the “Extension Term”). Tenant shall
have no right to an extension of the Term if at the time Tenant
seeks to exercise the Extension Option, or at the time the
Extension Term would have otherwise commenced, Tenant (i) has
then assigned this Lease (other than to a Qualified Tenant
Affiliate) or sublet more than fifty percent (50%) of the
Leased Premises (other than to a Qualified Tenant Affiliate);
(ii) is then in an uncured Default (as defined in
Section 16.01 hereof); or (iii) has been in Default (as
defined in Section 16.01 hereof) under this Lease two
(2) or more times in the prior thirty-six (36) month
period. To exercise the Extension Option, Tenant shall give notice
of its exercise to Landlord not earlier than eighteen
(18) months prior to the Termination Date and not later than
twelve (12) months prior to the Termination Date. If Tenant is
entitled to and gives Landlord notice in accordance with the terms
of this Section, the Term shall be extended for the period of the
Extension Term commencing on the day after expiration of the
initial Term, and except as set forth below in this Section, shall
be on the same terms and condition as are set forth in this Lease.
Minimum Rent during the extended Term shall be the then-current
(i.e., as of the commencement of the applicable Extension
Term) market rent for renewal tenants in first-class office
properties of comparable quality and character to the Building in
Bethesda, Maryland, taking into consideration market concessions,
allowances and other relevant factors applicable to renewal tenant
at such time (the “Market Rate”), but in no event less
than ninety percent (90%) of the Minimum Rent payable as of
the Termination Date, with subsequent escalations in Minimum Rent
thereafter to be determined by market practice with respect to
comparable space, as such Minimum Rent is reasonably determined by
Landlord (and notice thereof delivered to Tenant on or before the
date that is the later of (i) sixty (60) days after
Tenant’s notice of exercise of the Extension Option or
(ii) thirteen (13) months prior to the Extension
Term).
B. If Tenant disagrees
with Landlord’s determination of Minimum Rent for any
Extension Term, Tenant shall give Landlord notice of objection
within fifteen (15) days after Tenant receives
Landlord’s notice of Landlord’s Minimum Rent
determination; otherwise Landlord’s determination shall be
deemed conclusive. If Tenant timely delivers to Landlord such
notice of objection as provided above, then Landlord and Tenant
shall negotiate in good faith to determine the amount of Minimum
Rent within ten (10) days of the date of Landlord’s
receipt of Tenant’s written notice of objection (the
“Negotiation Period”).
C. In the event
Landlord and Tenant are unable to agree upon the Minimum Rent for
the Extension Term within the Negotiation Period, then either
Landlord or Tenant shall be entitled to elect to proceed with the
binding arbitration process set forth below by delivering written
notice of such election to the other party within twenty
(20) days after the expiration of the Negotiation Period. If
either party timely elects to proceed with binding arbitration,
then the Minimum Rent for the Extension Term shall be based upon
the Market Rate for renewal tenants in first-class office
properties of comparable quality and character to the Building in
Montgomery County, Maryland (taking into consideration market
concessions, allowances and other relevant factors applicable to
renewal tenant at such time), as determined by binding arbitration
in accordance with the following procedures. Within fifteen
(15) days after either party first delivers notice to the
other party of its election to proceed to binding arbitration,
Landlord and Tenant shall each select a real estate broker (based
on the criteria set forth in Section 3.04.D hereof). Within
twenty (20) days of their selection, each broker shall make a
written determination of the Market Rate for the Extension Term.
All determinations of the Market Rate shall be in writing. The
party appointing each broker shall be obligated, promptly after
receipt of the valuation report prepared by the broker appointed by
such party, to deliver a copy of such valuation report to an escrow
agent who, after receiving both valuation reports, shall deliver
each party’s valuation report to the other party. If the
Market Rate determination of the broker designated by Landlord is
within five percent (5%) of the Market Rate determination of
the broker designated by Tenant, then the Minimum Rent for the
applicable Extension Term shall be the average of the two Minimum
Rent determinations for the Extension Term. If the Market Rate
determinations of these two brokers vary by more than five percent
(5%), then a third broker shall be selected by the initial two
brokers within fifteen (15) business days after the initial
two valuation reports have been delivered to the parties (the third
broker also having the qualifications set forth in Section 1
.D(iv) below). If a third broker is appointed, the third broker
shall review the valuation reports of the initial two brokers and
select the one of the initial two valuation reports that most
closely reflects the Market Rate for the Extension Term. The third
broker shall promptly deliver a report of his determination to each
of the parties. The determination of the Market Rate for the
applicable Extension Term pursuant to this Section 3.04.C
hereof (but in no event less than ninety percent (90%) of the
Minimum Rent payable as of the Termination Date) shall be final and
binding upon Landlord and Tenant. The expenses of each of the first
two brokers appointed under this Section 3.04.C shall be borne
by the party appointing such broker. The expenses of the third
broker appointed under this Section 3.04.C shall be paid
one-half (1/2) by Landlord and one-half (1/2) by
Tenant.
D. The real estate
brokers selected by Landlord and Tenant shall have the following
qualifications: (i) must be a independent and licensed real
estate broker in the State of Maryland; (ii) must have a
minimum of ten (10) years’ experience in commercial
office leasing in the Montgomery County, Maryland area;
(iii) must be an active broker in the Montgomery County,
Maryland area and known for commercial office expertise;
(iv) in the case of the third broker only, must have
experience representing both landlords and tenants; (v) in the
case of the third broker only, is not then representing either
Landlord or Tenant; and (vi) in the case of the third broker
only, shall not have been involved in any disputes with Landlord,
Tenant or any of the other brokers. In the event that real estate
brokers with the qualifications described in this
Section 3.04.D are unavailable, qualified consultants with
similar qualifications may be substitutes.
E. An amendment
modifying this Lease to set forth the Minimum Rent for the Leased
Premises during the Extension Term shall be executed by Landlord
and Tenant within ten (10) days of Landlord’s
determination thereof, of the parties’ agreement thereto (if
applicable) or of the determination of the Minimum
Rent by the brokers pursuant to
Section 3.04.C hereof. In the event that (i) Tenant and
Landlord fail to agree on the Minimum Rent for the Extension Term
within the Negotiation Period, and neither Landlord nor Tenant
timely elects to proceed with binding arbitration, or (ii) any
of the conditions set forth in Section 3.04.A, above are not
satisfied, then, at Landlord’s option, this Extension Option
shall be null, void and of no further force or effect and this
Lease shall end on the date otherwise scheduled for expiration
thereof, unless earlier terminated in accordance with the terms
thereof. Tenant shall have no further right or option to extend the
Term. Time is of the essence with respect to this
Section 3.04.
ARTICLE IV
USE AND OPERATION OF THE
LEASED PREMISES
Section 4.01
Intentionally Deleted.
Section 4.02 Use.
A. Tenant shall use
the Leased Premises solely for general office use, and for no other
purpose, and to the extent permitted under applicable zoning
statutes, laws, rules, orders, regulations and ordinances, computer
labs and training rooms, provided that no more than 20% of the
rentable area in the Leased Premises may be used for such purposes
and provided further that Tenant complies with all other provisions
hereof in connection therewith (including any provisions governing
the equipment and improvements installed in the Lease
Premises).
B. Tenant shall comply
with all statutes, laws, rules, orders, regulations and ordinances
affecting the Leased Premises or relating to the use, occupancy or
alteration thereof and all the orders or recommendations of any
insurance underwriters, insurance rating bureau or any insurance
companies providing insurance to Landlord. Except as may otherwise
be provided in this Lease, Tenant shall not be required to make any
alterations outside of the Leased Premises or to any base Building
systems or to the Common Restrooms (hereinafter defined) in order
to comply with the any of the foregoing requirements; provided,
however, that, if Landlord makes any alteration to any part of the
Building as a result of any damage or alteration to the Leased
Premises caused or made by or on behalf of Tenant or in order to
comply with any requirement of any statutes, laws, rules, orders,
regulations and ordinances and such requirement is a result of
Tenant’s particular business or use of the Leased Premises,
then Tenant shall reimburse Landlord upon demand for the cost
thereof. For purposes of this Lease, the base Building HVAC ducts,
VAV boxes, central air handlers, that portion of the electrical
system the supplies power to the main electrical closet serving the
Leased Premises, and that portion of the plumbing system that
supplies water and sewage service to the existing bathrooms and wet
stacks serving the Leased Premises and the vertical main sprinkler
line for the Building shall be part of the base Building systems in
the Leased Premises. All other electrical, mechanical, plumbing and
any other systems within the Leased Premises or exclusively
servicing the Leased Premises, including without limitation, any
supplemental HVAC systems exclusively servicing the Leased Premises
and telecommunication systems (the “Premises Systems”)
shall not be part of the base Building systems and shall be the
sole responsibility of Tenant to repair and maintain in a manner
that is reasonably comparable to other similar first class office
buildings in the Montgomery County, Maryland area of a similar
location, size and age. “Common Restrooms” shall mean
the restrooms (but not any private restrooms) located on any floor
of the Building that is occupied entirely by Tenant, to the extent
such restrooms would have been part of the common area of the
Building had Tenant not occupied such entire floor. In no event
shall Tenant use the Leased Premises for purposes which are
prohibited by zoning or similar laws or regulations, or covenants,
conditions or restrictions (provided that with respect to any
covenants conditions or restrictions that are not of record as of
the date hereof, Tenant shall have received written notice
thereof). Tenant acknowledges and agrees it is solely responsible
for determining if its business complies with the applicable zoning
regulations, and that Landlord makes no representation (explicit or
implied) concerning such zoning regulations.
C. Tenant shall, at
its sole expense: (i) keep the Leased Premises in a good order
and condition consistent with the operation of similar first-class
office buildings in the Montgomery County, Maryland area (which
obligation shall not relieve Landlord from providing to the Leased
Premises janitorial and other services required of Landlord
pursuant to the provisions of this Lease); (ii) pay before
delinquency any and all taxes, assessments and public charges
levied, assessed or imposed upon Tenant’s business, upon the
leasehold estate created by this Lease or upon Tenant’s
fixtures, furnishings or equipment in the Leased Premises;
(iii) not use or permit or suffer the use of any portion of
the Leased Premises for any unlawful purpose; (iv) not use the
plumbing facilities for any purpose other than that for which they
were constructed, or dispose of any foreign substances therein;
(v) not place a live load on any floor exceeding 100 pounds
per square foot, and not install, operate or maintain in the Leased
Premises any heavy item of equipment except in such manner as to
achieve a proper distribution of weight; (vi) not strip,
overload, damage or deface the Leased Premises, or the hallways,
stairways, elevators, parking facilities or other public areas of
the Building, or the fixtures therein or used therewith, nor permit
any hole (except in connection with hanging customary weight
pictures and similar office decorations on the walls of the Leased
Premises) to be made in any of the same; (vii) not to move any
furniture or equipment into or out of the Leased Premises except at
such reasonable times and in such manner as Landlord may from time
to time reasonably approve; (viii) not install or operate in
the Leased Premises any electrical heating, air conditioning or
refrigeration equipment, or other equipment not shown on approved
plans which will increase the amount of electricity required for
use of the Leased Premises as general office space (other than
ordinary office kitchenette appliances customarily found in
first-class office buildings in Montgomery County, Maryland and
office equipment such as personal computers, printers, copiers and
the like) without first obtaining the written consent of Landlord;
(ix) not install any other equipment of any kind or nature
which will or may necessitate any changes, replacements or
additions to, or in the use of, the water, heating, plumbing, air
conditioning or electrical systems of the Leased Premises or the
Building, without first obtaining the written consent of
Landlord.
D. In addition to and
not in limitation of the other restrictions on use of the Leased
Premises set forth in this Section 4.02, Tenant hereby agrees
that the following uses of the Leased Premises shall not be
considered to be “office use” and shall not be
permitted: (1) any use of the Leased Premises by an
organization or person enjoying sovereign or diplomatic immunity;
(2) any use of the Leased Premises by or for any medical,
mental health or dental practice; (3) any use of the Leased
Premises by or for an employment agency or bureau; (4) any use
of the Leased Premises for classroom purposes (other than for
training purposes for employees, vendors and customers provided
that in no event shall the area of the training facilities be more
than fifteen percent (15%) of the rentable square feet in the
Leased Premises); (5) any use of the Leased Premises by or for
any user which distributes governmental or other payments, benefits
or information to persons that personally appear at the Leased
Premises; (6) any other use of the Leased Premises or any
portion of the Building by any user that will attract a volume,
frequency or type of visitor or employee to the Leased Premises or
any portion of the Building which is not consistent with the
standards of a high quality, first-class, office building in the
general area of the Building or that will in any way impose an
excessive demand or use on the facilities or services of the Leased
Premises or the Building.
Section 4.03
Intentionally Deleted.
Section 4.04 Signs and
Advertising. Except for the Permitted Exterior Signage
(hereinafter defined), Tenant shall not inscribe, paint, affix, or
otherwise display any sign, advertisement or notice on any part of
the outside or inside of the Building. Landlord shall provide, at
the cost of Tenant, standard suite entry signage, if applicable, to
be affixed at the entrance to the Leased Premises. Landlord shall
also prepare and install at Tenant’s expense a name plate
designating Tenant on the directory for the Building. Landlord
shall not unreasonably withhold its consent to any signage in the
lobby of the Leased Premises on any floor that is entirely occupied
by Tenant, provided that such signage is consistent with a
first-class office building in Montgomery County, Maryland. If any
other signs, advertisements or notices are painted, affixed, or
otherwise displayed that are outside the Leased Premises or visible
from outside the Leased Premises without the prior approval of
Landlord, Landlord shall have the right to remove the same, and
Tenant shall be liable for any and all costs and expenses incurred
by Landlord in such removal. Tenant, at Tenant’s sole cost
and expense, shall have the non-exclusive right to install one
(1) sign at the top of the Building (in the location and
subject to the parameters set forth on Exhibit K )
identifying “OPNET Technologies, Inc.” (or similar
trade name of Tenant) as a tenant of the Building (the
“Permitted Exterior Signage”), provided that
(i) the Permitted Exterior Signage is permitted under the
laws, rules and regulations of the Montgomery County, Maryland and
any other governmental authorities having appropriate jurisdiction
over the Building; (ii) the Permitted Exterior Signage
conforms to all such laws, rules and regulations, and to the terms
and conditions hereinafter set forth; (iii) Tenant has
obtained all permits, licenses and approvals that may be required
in order to install the Permitted Exterior Signage; and
(iv) Tenant has not assigned this Lease (other than to a
Qualified Tenant Affiliate) and is occupying at least one
(1) full floor i.e., all the rentable area on such
floor) of the Building. The exact design, location, dimensions and
style of the Permitted Exterior Signage shall be subject to
Landlord’s prior review and prior written approval exercised
in good faith; provided that such approval shall not be
unreasonably withheld, conditioned or delayed if such design,
location, dimensions and style of the Permitted Exterior Signage is
consistent with Exhibit K hereof (it being understood that
the size of Tenant’s sign shall be no greater that 50% of the
signage area permitted under applicable law for office tenants of
the building). The Permitted Exterior Signage may be illuminated,
provided that such sign is not internally illuminated, and the
Permitted Exterior Signage shall not be a “box sign.”
The quality of the installation of the Permitted Exterior Signage
is extremely important to Landlord, and Landlord reserves the right
to approve in its sole discretion the manner in which the sign is
affixed. In order to obtain Landlord’s approval, Tenant must
submit to Landlord for Landlord’s approval samples of
materials to be used for the Permitted Exterior Signage (showing,
among other things, the thickness thereof), samples of any colors
used for the Permitted Exterior Signage, complete shop drawings of
the Permitted Exterior Signage and plans and specifications for the
actual construction and attachment of the Permitted Exterior
Signage and any illumination thereof. All Permitted Exterior
Signage shall be installed by a contractor selected by Tenant and
reasonably approved by Landlord and maintained by a contractor
reasonably acceptable to Landlord. On or before the end of the
Term, or in the event that Tenant at anytime is leasing less than
one (1) full floor in the Building or Tenant assigns this
Lease (other than to a Qualified Tenant Affiliate) or Tenant or
such Qualified Tenant Affiliate occupies less than seventy-five
percent (75%) of the total rentable square feet of the Leased
Premises (by reason of a sublet of all or a portion of the Leased
Premises or otherwise), Tenant shall, at its expense, have a
contractor selected by Landlord remove the Permitted Exterior
Signage and repair the Building affected thereby to the condition
such part of the Building was in at the time such Permitted
Exterior Signage was installed. Tenant hereby agrees to indemnify
and hold Landlord and its agents, officers, directors and employees
harmless from and against any cost, damage, claim, liability or
expense (including reasonable attorneys’ fees) incurred by or
claimed against Landlord and its agents, officers, directors and
employees, directly or indirectly, as a result of or in any way
arising from the installation and maintenance of any Permitted
Exterior Signage, except to the extent caused by the negligence of
Landlord. Tenant shall obtain property insurance coverage for such
Permitted Exterior Signage and such Permitted Exterior Signage.
Tenant’s rights under this Section 4.04 are personal to
OPNET Technologies, Inc., and no assignee (other than to a
Qualified Tenant Affiliate in connection with an assignment of this
Lease) or sublessee of Tenant shall have any signage rights
hereunder. Tenant will pay for all costs associated with the
Permitted Exterior Signage, including without limitation all
design, construction, installation and permitting costs as well as
all ongoing maintenance, repair and removal costs.
ARTICLE V
RENT
Section 5.01 Rent
Payable.
A. Tenant shall pay
all Rent to Landlord, without prior notice or demand and without
offset, deduction or counterclaim whatsoever, in the amounts, at
the rates and times set forth herein, and at such place as is
provided in Section 1.01 .G, above, or by wire transfer to
Landlord’s bank account or at such other place as Landlord
may from time to time designate by notice to Tenant.
B. If Tenant fails to
make any payment of Rent within ten (10) days from the date
that such Rent is due, Tenant shall pay Landlord a late payment
charge equal to the greater of (i) five percent (5%) of
such payment of Rent, or (ii) Twenty Dollars ($20.00) per day
from the date such Rent is due until the date such Rent is
received; provided, however, on the first occasion of the late
payment of Rent in any twelve (12)-month period, and no more than
once in any twelve (12)-month period, Landlord agrees to waive its
right to collect such late payment charge on such payment of Rent
if such payment is made no later than the fifth (5
th
) day after Landlord
delivers to Tenant written notice of such late payment. Payment of
such late charge shall not excuse or waive the late payment of
Rent.
C. If Landlord
receives two (2) or more checks from Tenant that are
dishonored by Tenant’s bank within any 24-month period, all
checks for Rent thereafter shall be bank certified and Landlord
shall not be required to accept checks except in such form. Tenant
shall pay Landlord any bank service charges resulting from
dishonored checks, plus Fifty Dollars ($50.00) for each dishonored
check as compensation to Landlord for the additional cost of
processing such check.
D. Any payment by
Tenant of less than the total Rent due shall be treated as a
payment on account. Acceptance of any check bearing an endorsement,
or accompanied by a letter stating, that such amount constitutes
“payment in full” (or terms of similar import) shall
not be an accord and satisfaction or a novation, and such statement
shall be given no effect. Landlord may accept any check without
prejudice to any rights or remedies which Landlord may have against
Tenant.
E. For any portion of
a calendar month at the beginning of the Term, Tenant shall pay in
advance the pro-rated amount of the Rent for each day included in
such portion of the month.
Section 5.02 Payment of Minimum
Rent. The Minimum Rent for the first Lease Year shall be as set
forth in Section 1.01 .E, above. Commencing on the first day
of the second Lease Year, and on the first day of each Lease Year
thereafter (each, an “Escalation Date”), the Minimum
Rent then in effect shall be increased by an amount equal to
(i) the Minimum Rent then in effect, times (ii) three
percent (3%) of the Minimum Rent then in effect. Tenant shall
pay Landlord the Minimum Rent in equal monthly installments, in
advance, commencing on the Term Commencement Date, and on the first
day of each calendar month thereafter throughout the Term. An
amount equal to the first month’s Minimum Rent shall be paid
in advance upon execution of this Lease and such amount shall be
credited toward the first payment of Minimum Rent due.
ARTICLE VI
COMMON
AREAS
Section 6.01 Use of Common
Areas. Tenant shall have a non-exclusive license to use the
Common Areas for ingress to and egress from the Leased Premises,
subject to the exclusive control and management of Landlord and the
rights of Landlord and of other tenants. Tenant shall comply with
such rules and regulations as Landlord prescribes regarding use of
the Common Areas. Tenant shall not use the Common Areas for any
sales or display purposes, or for any purpose which would impede or
create hazardous conditions for the flow of pedestrian or other
traffic. Landlord shall use good faith efforts to enforce any
provision in the leases of other office tenants in the Building
that similarly prohibits the use of the Common Areas by such tenant
for any purpose which would impede or create hazardous conditions
for the flow of pedestrian or other traffic. The Common Areas shall
at all times be subject to the exclusive control and management of
Landlord.
Section 6.02 Management and
Operation of Common Areas. Landlord shall operate, repair,
equip and maintain the Common Areas and shall have the exclusive
right and authority to employ and discharge personnel with respect
thereto. Without limiting the foregoing, provided that
Tenant’s use of the Leased Premises that is permitted
hereunder and reasonable access to the Leased Premises are not
materially adversely affected, Landlord may (i) use the Common
Areas for promotions, exhibits, displays, outdoor seating, food
facilities and any other use which tends to benefit the Building,
tenants of the Building or visitors to the Building;
(ii) grant the right to conduct sales in the Common Areas;
(iii) erect, remove and lease kiosks, planters, pools,
sculptures and other improvements within the Common Areas;
(iv) enter into, modify and terminate easements and other
agreements pertaining to the use and maintenance of the Building;
(v) construct, maintain, operate, replace and remove lighting,
equipment, and signs on all or any part of the Common Areas,
provided that Tenant’s rights expressly set forth in
Section 4.04 hereof are not materially adversely affected;
(vi) provide security personnel for the Building; and
(vii) restrict parking in the Building, provided that
Tenant’s parking rights are not thereby diminished. Landlord
and Tenant agree that the Common Restrooms and elevator lobbies
within the Leased Premises shall not be deemed part of the Common
Areas for purposes of this Lease. Landlord reserves the right at
any time and from time to time to change or alter the location,
layout, nature or arrangement of the Common Areas or any portion
thereof, including but not limited to the arrangement and/or
location of
entrances, passageways, doors,
corridors, stairs, lavatories, elevators, parking areas, and other
public areas of the Building, which work shall be at
Landlord’s sole cost and shall not be included in Operating
Costs, unless (a) such work is performed in connection with
the operation, maintenance, repair or management of the Building or
in order to comply with any and all applicable laws, rules,
regulations and requirements of any governmental authority having
jurisdiction over the Building, and (b) the cost of such work
is not expressly excluded from Operating Costs pursuant to Exhibit
H hereof. Landlord shall have the right to close temporarily all or
any portion of the Common Areas to such extent as may, in the
reasonable opinion of Landlord, be necessary for repairs,
replacements or maintenance to the Common Areas, provided such
repairs, replacements or maintenance are performed expeditiously
and in such a manner as not to deprive Tenant of access to the
Leased Premises. Landlord shall have the right, at any time, to
(i) make alterations or additions to any part of, the
Building; (ii) build other buildings or improvements in or
about the land on which the Building is located; and
(iii) convey to others or withdraw portions of such land;
provided, however, that (a) Landlord shall use reasonable
efforts to minimize any interference with Tenant’s business
operations in connection with such work, (b) Landlord shall
use reasonable efforts to provide Tenant with forty-eight
(48) hours (or 30 days if it relates to clause (ii) or
(iii) hereof) prior notice (except in the event of an
emergency, when no such notice shall be required) if such work is
likely to have a material adverse affect on Tenant’s business
operations in the Leased Premises, and (c) if as a direct
result of any such work performed by Landlord at Landlord’s
election, the Leased Premises or any substantial part thereof are
rendered untenantable for three (3) consecutive business days
and Tenant in fact does not occupy the Leased Premises (or the
untenantable portion thereof), then the Base Rent which the Tenant
is obligated to pay hereunder shall abate proportionately (based on
the number of square feet rendered untenantable and not occupied)
as of the fourth (4th) business day after the Leased Premises
(or any substantial part thereof) are rendered untenantable until
the Leased Premises or such part thereof are again tenantable,
unless such work performed by Landlord is requested by, or is for
the benefit of, Tenant or is required to comply with any legal
requirements applicable to the Building (other than to cure a
violation existing as of the Term Commencement Date of any legal
requirement in effect as of the Term Commencement Date) or to
fulfill Landlord’s obligations hereunder or as a result of
any casualty or damage to the Building, in which case no Base Rent
shall abate, unless otherwise expressly provided in this Lease. In
connection with Landlord’s construction of any such
additional improvements on the land on which the Building is
located, Landlord may temporarily restrict (but in no event more
than two (2) consecutive weeks) Tenant’s use of certain
of its parking spaces as Landlord deems reasonably appropriate to
facilitate such construction. Landlord shall use reasonable efforts
to minimize the disruption to Tenant’s use of such parking
spaces and in the event Tenant is prohibited from using any such
spaces, Landlord shall make arrangements for alternative parking in
reasonably close proximity to the Building for the number of spaces
that Tenant is entitled to use in the Building’s parking
area, but is prohibited from using as a result of such
construction.
Section 6.03 Tenant’s
Share of Operating Costs and Taxes.
A. For the Operating
Year commencing January 1, 2008 and each Operating Year
thereafter, Tenant shall pay to Landlord, in the manner provided
herein, Tenant’s share of increases in Operating Costs and
Taxes (“Tenant’s Share of Operating Costs and
Taxes”), which shall be equal to the sum of (i) the
product obtained by multiplying Tenant’s Operating Costs
Share times the amount, if any, by which Operating Costs for such
Operating Year exceed the Base Operating Costs, and (ii) the
product obtained by multiplying Tenant’s Tax Share times the
amount, if any, by which Taxes for such Operating Year exceed the
Base Taxes; provided, however, that for the Operating Years during
which the Term begins and ends, Tenant’s Share of Operating
Costs and Taxes shall be prorated based upon the actual number of
days Tenant occupied, or could have occupied, the Leased Premises
during each such Operating Year. If for any Operating Year after
the Base Year the management fee percentage (i.e., the percentage
applied to Landlord’s gross receipts for purposes of
calculating the management fee) used for determining the management
fee for such Operating Year is greater than the management fee
percentage used in the Base Year, then for purposes of determining
Tenant’s Share of Operating Costs and Taxes for such
Operating Year, the management fee for the Base Year shall be
recalculated based upon the management fee percentage used in such
Operating Year. In addition if for any Operating Year after the
Base Year the management fee percentage used for determining the
management fee for such Operating Year is less than the management
fee percentage used in any prior Operating Year or the Base Year,
then for purposes of determining Tenant’s Share of Operating
Costs and Taxes for such Operating Year, the management fee for the
Base Year shall be recalculated based upon the management fee
percentage used in such Operating Year, it being understood that
for purposes of determining Tenant’s Share of Operating Costs
and Taxes for any Operating Year, the management fee for the Base
Year shall be calculated based upon the management fee percentage
used in such Operating Year. Tenant’s Share of Operating
Costs and Taxes shall be abated for the period from January 1,
2008 until March 31, 2008.
B. Tenant’s
Share of Operating Costs and Taxes shall be paid, in advance,
without notice, demand, abatement (except as otherwise specifically
provided in this Lease), deduction or set-off, on the first day of
each calendar month during the Term, said monthly amounts to be
determined on the basis of estimates prepared by Landlord on an
annual basis and delivered to Tenant prior to the commencement of
each Operating Year. If, however, Landlord fails to furnish any
such estimate prior to the commencement of an Operating Year, then
(a) until the first day of the month following the month in
which such estimate is furnished to Tenant, Tenant shall pay to
Landlord on the first day of each month an amount equal to the
monthly sum payable by Tenant to Landlord under this
Section 6.03 in respect of the last month of the preceding
Operating Year; (b) promptly after such estimate is furnished
to Tenant, Landlord shall give notice to Tenant whether the
installments of Tenant’s Share of Operating Costs and Taxes
paid by Tenant for the current Operating Year have resulted in a
deficiency or overpayment compared to payments which would have
been paid under such estimate, and Tenant, within thirty
(30)
days after receipt of such estimate,
shall pay any deficiency to Landlord and any overpayment shall, at
Tenant’s option, be credited against future payments required
by Tenant under such estimate or refunded to Tenant promptly; and
(c) on the first day of the month following the month in which
such estimate is furnished to Tenant and monthly thereafter
throughout the remainder of the Operating Year, Tenant shall pay to
Landlord the monthly payment shown on such estimate. Landlord may
at any time or from time to time furnish to Tenant a revised
estimate of Tenant’s Share of Operating Costs and Taxes for
such Operating Year, and in such case, Tenant’s monthly
payments shall be adjusted and paid or credited, as the case may be
substantially in the same manner as provided in the preceding
sentence. After the expiration of each Operating Year, Landlord
shall submit to Tenant a statement showing the determination of
Tenant’s Share of Operating Costs and Taxes (the
“Operating Costs Statement”). If such statement shows
that the total of Tenant’s monthly payments pursuant to this
Section 6.03 exceed Tenant’s Share of Operating Costs
and Taxes, then Landlord will refund such overpayment with the
notice; provided, however, that no such refund shall be made while
Tenant remains in default of any non-monetary provision of this
Lease (beyond any applicable notice and cure period expressly set
forth herein) or is in default of any monetary provision of this
Lease. If such Operating Costs Statement shows that Tenant’s
Share of Operating Costs and Taxes exceeded the aggregate of
Tenant’s monthly payments pursuant to this Section 6.03
for the applicable Operating Year, then Tenant shall, within thirty
(30) days after receiving the statement, pay such deficiency
to Landlord. Each Operating Costs Statement provided by Landlord
shall be conclusive and binding upon Tenant unless within one
hundred twenty (120) days after receipt thereof, Tenant
notifies Landlord that it disputes the correctness thereof. If
Tenant believes that any Operating Costs Statement includes charges
that are not permitted pursuant to this Section 6.03 or
contains an error in calculation or otherwise, then Tenant shall be
entitled to the following audit right. Such audit right shall be
exercisable by Tenant providing Landlord, within one hundred twenty
(120) days of receipt of such Operating Costs Statement,
notice of such objection, notice of its exercise of such audit
right. If within sixty (60) 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
sixty (60)-day period Tenant shall notify Landlord that it wishes
to employ an independent certified public accounting firm
reasonably acceptable to Landlord to inspect and audit
Landlord’s books and records relating to the Operating Costs
Statement. If Tenant elects to employ such accountant as set forth
above, then Tenant shall deliver to Landlord a confidentiality and
nondisclosure agreement 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 between
thirty (30) and ninety (90) days after Tenant delivers to
Landlord such notice (but in no event between January 1 and
April 1 of any year (“Blackout Dates”); provided
that if all or a part of such 60 day period (i.e., the period
between 30 and 90 days after Tenant delivers to Landlord such
notice) falls between the Blackout Dates of any year, then starting
on April 2 of such year and continuing for such number of the
60 days falling between such Blackout Dates, Tenant shall be
entitled to conduct such examination of Landlord’s books and
records in accordance with the terms hereof. The firm or person
engaged by Tenant to conduct such audit cannot be compensated on a
“contingency” or “success fee” basis. Such
audit shall be limited to a determination of whether Landlord
calculated the Operating Costs Statement in accordance with the
terms and conditions of this Lease. All costs and expenses of any
such audit shall be paid by Tenant. Any audit performed pursuant to
the terms of this section shall be conducted only by an independent
certified public accounting firm reasonably acceptable to Landlord.
Notwithstanding anything contained herein to the contrary, Tenant
shall be entitled to exercise its right to audit pursuant to this
Section 6.03 only in strict accordance with the foregoing
procedures and each such audit shall relate only to the most recent
calendar year covered by the audited Operating Costs Statement and
the Base Year (provided that such audit of the Base Year is
conducted only once and is conducted within three (3) years of
the end of such Base Year). If on account of any errors in the
Operating Costs Statement under audit, Tenant is entitled to a
refund or credit of the amount paid by Tenant for Tenant’s
Share of Operating Costs and Taxes for the Operating Year under
audit because such Expense Statement overstated the amounts to
which Landlord was entitled hereunder, then Landlord shall refund
such amount to Tenant promptly after becoming aware thereof, and if
such Operating Costs Statement overstated the amounts to which
Landlord was entitled hereunder by more than four percent
(4%) of the amount of Operating Costs and Taxes for the
applicable Operating Year, then Landlord shall also promptly
reimburse Tenant for the reasonable costs and expenses incurred in
any audit conducted in connection with such Operating Costs
Statement, but in no event more than Ten Thousand Dollars
($10,000.00) (“Audit Fee Cap”) for such audit, which
Audit Fee Cap shall be increased on the first day of each Operating
Year by 3% of the Audit Fee Cap in effect for the prior Operating
Year.
C. “Operating
Costs” means all expenses and costs (but not specific costs
which are allocated or separately billed to and paid by specific
tenants) of every kind and nature which Landlord shall pay or
become obligated to pay, on an accrual basis (consistently
applied), because of or in connection with owning, operating,
managing, painting, repairing, insuring and cleaning the Building,
including, but not limited to, the following:
(i) cost of all
supplies and materials used, and labor charges incurred, in the
operation, maintenance, decoration, repairing and cleaning of the
Building, including janitorial service for all Floor Area leased to
tenants;
(ii) cost of all
equipment purchased or rented which is utilized in the performance
of Landlord’s obligations hereunder, and the cost of
maintenance and operation of any such equipment;
(iii) cost of all
maintenance and service agreements for the Building and the
equipment therein, including, without limitation, alarm service,
security service, window cleaning, and elevator
maintenance;
(iv) costs of roof and
exterior maintenance (including repainting) repair or
replacement;
(v) wages, salaries
and related expenses of all on-site agents or employees engaged in
the operation, maintenance, security and management of the Building
up to the level of property manager; provided, however, the wages,
salaries and related expenses of any agents or employees not
exclusively engaged in the operation, maintenance, security and
management of the Building shall be reasonably
apportioned;
(vi) cost of all
insurance coverage for the Building from time to time maintained by
Landlord, including but not limited to the costs of premiums for
insurance with respect to personal injury, bodily injury, including
death, property damage, business interruption, workmen’s
compensation insurance covering personnel and such other insurance
as Landlord shall deem reasonably necessary, which insurance
Landlord may maintain under policies covering other properties
owned by Landlord in which event the premium shall be reasonably
allocable;
(vii) cost of repairs,
replacements and general maintenance to the Building, including
without limitation the mechanical, plumbing, fire and life/safety,
electrical and heating, ventilating and air-conditioning equipment
and/or systems;
(viii) any and all
Common Area maintenance and repair (except for any item expressly
excluded under Exhibit H attached hereto), including repainting and
exterior and interior landscaping;
(ix) cost of removal
of trash, rubbish, garbage and other refuse from the Building as
well as removal of ice and snow from the sidewalks on or adjacent
to the Building;
(x) all charges for
electricity, gas, water, sewerage service, heating, ventilation and
air-conditioning and other utilities furnished to the
Building;
(xi) annual amounts
amortizing the following items (“Permitted Capital
Expenditures”): capital expenditures incurred either to
improve the efficient operation of the Building or reduce Operating
Costs (provided that Landlord in good faith believes that the
annual costs savings will exceed the annual amortization for such
item) or to comply with any law, order or regulation of any
governmental, quasi-governmental, public or other authority (other
than to cure a violation existing as of the Term Commencement Date
of any legal requirement in effect as of the Term Commencement
Date); provided that (i) the cost of each such capital
improvement shall be amortized (on any basis permitted under
generally accepted accounting principals) and only that portion
attributable to each Operating Year shall be included herein for
such Operating Year, and (ii) in no event shall Landlord
include in Operating Costs for any Operating Year amortization of
Permitted Capital Expenditures in excess of fifty centers ($.50)
per square foot of space in the Building; and
(xii) management
fees.
Notwithstanding anything
contained herein to the contrary, Operating Costs shall not include
(a) payments of principal and interest on any mortgages, deeds
of trust or other financing instruments relating to the financing
of the Building; (b) leasing commissions or brokerage fees;
(c) costs associated with preparing, improving or altering for
space for any leasing or releasing of any space within the
Building; and (d) the additional exclusions from Operating
Costs set forth on !Exhibit H.
D. “Taxes”
means all governmental or quasi-governmental real estate taxes,
fees, charges and assessments (whether general, special, ordinary,
or extraordinary) applicable to the Building (including without
limitation any assessments or charges by any business improvement
district, together with all reasonable costs and fees (including
reasonable appraiser, consultant and attorney’s fees)
incurred by Landlord in any tax contest, appeal or negotiation.
“Taxes” shall also include that portion of any ground
rent payments made by Landlord that represent the pass-through of
real estate taxes from any ground lessor to Landlord and all rent
or services taxes and/or so-called “gross receipts” or
“receipts” taxes (including, but not limited to, any
business license, sales, use or similar taxes) whether or not
enacted in addition to, in lieu of or in substitution for any other
tax. Taxes shall be accounted for on an accrual basis (consistently
applied). “Taxes” shall also include any personal
property taxes incurred on Landlord’s personal property used
in connection with the Building. “Taxes” shall not
include personal income taxes, personal property taxes, inheritance
taxes, or franchise taxes levied against the Landlord, and not
directly against said property, even though such taxes might become
a lien against said property. If Taxes paid by Landlord for any
calendar year during the Term, or any part thereof, for which
Tenant has paid Tenant’s Share of Operating Costs and Taxes,
are refunded to Landlord as a result of a final determination of
such Taxes, then, provided Tenant is not then in default under this
Lease, Tenant shall be entitled to a refund of Taxes in an amount
equal to Tenant’s Tax Share of such refund (net of expenses
incurred to obtain the refund); provided, however, that no such
refund shall be made while Tenant remains in default of any
non-monetary provision of this Lease (beyond any applicable notice
and cure period expressly set forth herein) or is in default of any
monetary provision of this Lease. Notwithstanding the foregoing, if
the garage in the Building is leased to a third party operator and
such operator of the garage pays a portion of Taxes attributable to
the garage pursuant to its lease, then “Taxes” shall
exclude such amount received by Landlord from the garage operator.
Taxes in the Base Year and any subsequent Operating Year during
which the Building is assessed for Taxes at a time when less than
ninety-five percent (95%) of the rentable area of the Building
is occupied with tenants paying rent for the entire year, shall
be
grossed up to the amount that Landlord
reasonably determines that such Taxes would have been had the
Building been at least ninety-five percent (95%) occupied
(with tenant’s paying rent) for such entire year, determined
as follows: (1) in the event the real estate tax
assessor’s worksheet for any such year’s assessment
reflects any deductions to the capitalized value of stabilized net
operating income for items such as (x) losses due to the
failure to achieve at least ninety-five percent
(95%) occupancy (with tenants paying rent); (y) the costs
of required capital improvements to achieve ninety-five percent
(95%) occupancy (with tenants paying rent) which are not yet
completed; and/or (z) items similar to the foregoing made for
purposes of adjustments due to the failure to achieve at least
ninety-five percent (95%) occupancy (with tenants paying
rent), then and in such event the Real Estate Taxes shall be
grossed up to reflect the amount of Real Estate Taxes which would
have been payable during such year in the absence of such
deduction(s); and (2) in the event that the real estate tax
assessors worksheet indicates that an income approach was not
considered as a part of the Base Year assessment, then Taxes in the
Base Year shall be adjusted to be the amount that Landlord
reasonably estimates such Taxes would have been had the Building
been ninety-five percent (95%) occupied (with the tenant
paying rent) for the entire Base Year and had the assessment
therefor taken into consideration, in addition to the other factors
typically used, a typical income approach. Landlord agrees to
either provide Tenant with a copy of the assessor’s worksheet
or to authorize Tenant to obtain a copy of same from the assessor
upon its request.
E. If for any period
during the Term less than ninety-five percent (95%) of the
Floor Area of the office portion of the Building is occupied by
tenants during any part of such period, then, in calculating
Operating Costs for such period (including without limitation, the
Base Year), Landlord shall increase those components of Operating
Costs that Landlord reasonably believes would have been incurred
during such period assuming the Building were ninety-five percent
(95%) occupied during the entire period. In addition, if for
any period during the Term any part of the Building is leased to a
tenant who, in accordance with the terms of its lease, provides its
own cleaning services and/or any other services otherwise included
in Operating Costs during any part of such period, then Operating
Costs for such period shall be increased by the additional costs
for cleaning and/or such other applicable expenses that Landlord
reasonably estimates would have been incurred by Landlord if
Landlord had furnished and paid for cleaning and/or such other
services for the space occupied by such tenant during the entire
period.
ARTICLE VII
SERVICES AND
UTILITIES
Section 7.01 Landlord shall
provide the following facilities and services to Tenant as part of
Landlord’s Operating Costs (except as otherwise provided
herein):
A. Electricity serving
the Leased Premises for normal lighting purposes and the operation
of ordinary office equipment, subject to Section 7.03,
below;
B. Normal and usual
cleaning and char services after Building Hours each day except on
Saturdays, Sundays and legal holidays recognized by the United
States Government. Attached hereto as Exhibit M are the
cleaning specifications currently applicable to the Building, which
are subject to change from time to time in Landlord’s sole
(but good faith) discretion; provided, however, if Landlord changes
such cleaning specifications, such new cleaning specifications must
be comparable to the cleaning specifications that are normally and
customarily used for comparable first-class office buildings in the
Montgomery County, Maryland area;
C. Rest room
facilities and necessary lavatory supplies, including hot and cold
running water at the points of supply, toilet tissue and paper
towels as provided for the general use of all tenants in the
Building and routine maintenance, painting, and electric lighting
service for all Common Areas of the Building in such manner as
Landlord deems reasonable;
D. During Building
Hours (i.e., a total of 54 hours a week during non-holiday weeks),
central heating and air conditioning during the seasons of the year
when these services are normally and usually furnished based upon
standard electrical energy requirements of 5 watts per square foot
and a human occupancy of not more than one person for each 150
square feet of rentable area of the Leased Premises. After-hours
HVAC (i.e., anytime other than Building Hours) shall be provide
upon Tenant’s request at a cost equal to Landlord’s
reasonable estimate of the cost of utilities, maintenance and
depreciation in connection with such service plus a 15%
administrative fee. The Landlord will modify the HVAC controls so
that (a) the individual package units can be run
independently, such that any one (or more) of the package units may
be turned on without the necessity of turning all of the units on
and (b) the Tenant will have the ability to turn on the after
hours HVAC with a switch in the Leased Premises. Regarding the two
HVAC units exclusively serving the second (2nd) floor, since
these HVAC units will be modified to run independently, the
Landlord will provide HVAC services to the second (2
nd
) floor of the Leased
Premises for up to 54 hours per week (less 10 hours per holiday day
occurring during any such week) at times and days of the week
selected by Tenant, which time/days may change from time to time
(Tenant must give Landlord minimum 48 hours advance notice for any
changes to the schedule). Any hours in excess of 54 hours for any
week will be deemed after hours HVAC use, the charge for which
shall be as set forth above. Regarding the third HVAC unit, which
serves both the 2nd and 3rd floors, Tenant shall have use of the
third HVAC unit during Building Hours and pay for any use of the
unit after- hours;
E. Elevator service by
means of automatically operated elevators at least during the
Building Hours. Landlord shall have the right to remove elevators
from service as the same shall be required for moving freight or
for servicing or maintaining the elevators and/or the Building;
provided, however, that at least one elevator will remain in
service 24 hours per day, 365 days per year, subject to compliance
with Landlord’s reasonable rules and regulations concerning
after Building Hours and weekend access. Tenant shall have access
to the Leased Premises 24 hours per day, 365 days per
year;
F. All electric bulbs
and fluorescent tubes for building standard light fixtures in the
Leased Premises and Common Areas, at Tenant’s request and
Landlord shall, at Tenant’s sole cost, reasonably stock all
non-standard electric bulbs and fluorescent tubes for
Tenant’s light fixtures in the Leased Premises purchased by
Tenant. The cost of installing such bulbs and tubes shall be
included in Operating Costs;
G. Landlord shall
provide a proximity card reader electronic access system with
computerized card access (or similar devise) 24 hours per day, 365
days per year, for (i) access to the Building through the
office lobby of the Building at the Woodmont Avenue entrance to the
Building, (ii) access to the Building from the parking
structure, and (iii) access to each floor of the Leased
Premises from the elevator lobby on each such floor that is
occupied entirely by Tenant. The current card reader electronic
access system for the Building or for the 7255 Building
(hereinafter defined) will be modified, at Landlord’s sole
cost, to be sufficiently compatible with each other, so that
Tenant’s access card will be able to work at the entrance to
both the Building and the 7255 Building. Landlord shall not be
responsible for the quality, action or inaction of the Building
access system or for any damage or injury to Tenant, its employees,
invitees or others, or their property, resulting from any failure,
action or inaction of the Building access system; provided,
however, that Landlord shall repair any damage to such access
system reasonably promptly after Tenant notifies Landlord thereof
in writing. Tenant shall be entitled to one (1) access card
per employee at the Leased Premises as of the Term Commencement
Date. Any additional or replacement cards shall be at the then
prevailing rate charged by Landlord, which is currently Ten Dollars
($10.00) per card. Landlord shall use reasonable efforts to provide
any such additional or replacement cards to Tenant within two
(2) days after receipt of a written request therefor;
and
H. Notwithstanding the
foregoing, in the event that for any reason not caused by Tenant
(or any of its employees or agents) or an event of Force Majeure
any interruption or stoppage of any service Landlord is required
hereunder to provide to the Building shall continue for more than
five (5) consecutive business days and shall render at least
twenty-five percent (25%) of the Leased Premises untenantable
for general office purposes and Tenant shall actually cease to
conduct business in such portion of the Leased Premises, then,
provided no default exists, the portion of Minimum Rent
attributable to such untenantable area shall, commencing on the
sixth (6 th ) business day after receipt from Tenant of written notice
that Tenant has experienced such an interruption or stoppage of
services and has ceased the use thereof, abate until the earlier of
the date that (i) Tenant again uses such portion of the Leased
Premises, or (ii) such portion of the Leased Premises is again
tenantable.
Section 7.02 Landlord shall
have access to and reserves the right, subject to the provisions of
Section 2.01 .A, to inspect, erect, use, connect to, maintain
and repair pipes, ducts, conduits, cables, plumbing, vents and
wires, and other facilities in, to and through the Leased Premises
as and to the extent that Landlord may now or hereafter deem to be
necessary or appropriate for the proper operation and maintenance
of the Building (including the servicing of other tenants in the
Building) and the right at all times to transmit water, heat, air
conditioning and electric current through such pipes, conduits,
cables, plumbing, vents and wires and the right to interrupt the
same in emergencies without eviction of Tenant or abatement of Rent
(except as may be provided pursuant to Section 7.01.H, above).
Any failure by Landlord to furnish the foregoing services,
resulting from circumstances beyond Landlord’s reasonable
control or from interruption of such services due to repairs or
maintenance, shall not render Landlord liable in any respect for
damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of Rent hereunder, nor
relieve Tenant from any of its obligations hereunder. If any public
utility or governmental body shall require Landlord or Tenant to
restrict the consumption of any utility or reduce any service for
the Leased Premises or the Building, Landlord and Tenant shall
comply with such requirements, whether or not the utilities and
services referred to in this Article VII are thereby reduced or
otherwise affected, without any liability on the part of Landlord
to Tenant or any other person or any reduction or adjustment in
Rent payable hereunder. Landlord and its agents shall be permitted
reasonable access to the Leased Premises for the purpose of
installing and servicing systems within the Leased Premises deemed
reasonably necessary by Landlord to provide the services and
utilities referred to in this Article VII to Tenant and other
tenants in the Building. Landlord recognizes that Tenant is a
government contractor and, except in the case of an emergency, in
connection with any access to the Leased Premises by Landlord
pursuant hereto, Landlord shall complying with such reasonable
security requirements of any applicable law or regulation enacted
by the United States Government governing such access, provided
Tenant delivers to Landlord written notice and a copy of such
requirements.
Section 7.03 Landlord shall
be under no obligation to furnish electrical energy to Tenant in
amounts greater than needed for lighting and normal and customary
items of equipment for general office purposes (i.e., not more than
an average of five (5) watts per square foot of the Leased
Premises), and Tenant shall not install or use within the Leased
Premises any electrical equipment, appliance or machine which shall
require amounts of electrical energy exceeding such standard
wattage provided for the Building, unless the installation and use
of such additional electrical equipment, appliance, or machine has
been approved by Landlord, which approval may be conditioned upon
the payment by Tenant, as Additional Rent, of the cost of the
additional electrical energy and modifications to the
Building’s electrical system required for the operation of
such electrical equipment, appliance or machine. Landlord shall
have the right to charge Tenant for the cost of its electricity
consumption beyond Business Hours (to the extent Landlord
reasonably determines that such after hours use is in excess of the
average for the Building) or in excess of five (5) watts per
square foot of rentable area of the Leased Premises and for the
cost of any additional wiring or other improvements to the Building
as may be occasioned by or required as a result of any such excess
use. In the event of any such excessive consumption of any
utilities
(including without limitation any
consumption beyond Building Hours to the extent Landlord reasonably
determines that such after hours use is in excess of the average
for the Building), Landlord shall be entitled to require that
Tenant install in the Leased Premises (at Tenant’s cost and
in a location approved by Landlord) submeters to measure
Tenant’s utility consumption for the Leased Premises or for
any specific equipment causing excess consumption, as Landlord
shall require; in which case, Tenant shall maintain in good order
and repair (and replace, if necessary) such submeters. If submeters
are installed for measuring Tenant’s consumption of any
utilities, Tenant shall pay the costs of the same to Landlord as
Additional Rent, within thirty (30) days of its receipt of a
bill therefor based on such submeter readings.
ARTICLE
VIII
INDEMNITY AND
INSURANCE
Section 8.01 Indemnity by
Landlord and Tenant.
A. Indemnity by
Tenant. Tenant shall indemnify, defend and hold Landlord and
its lessors, shareholders, members, trustees, agents, employees and
Mortgagee(s) (collectively, the “Landlord’s Indemnified
Parties”) harmless from and against all liabilities,
obligations, damages, judgments, penalties, claims, costs, charges
and expenses, including reasonable architects’ and
attorneys’ fees, which may be imposed upon, incurred by, or
asserted against any of the Landlord’s Indemnified Parties
and arising, directly or indirectly, out of or in connection with
(i) Tenant’s breach of its obligations under this Lease,
(ii) the acts or negligence of Tenant, its agents,
contractors, and employees, (iii) the use or occupancy of the
Leased Premises or the Building by Tenant, its agents, servants,
employees, and contractors; and (iv) injury or death to
individuals or damage to property sustained in or about the Leased
Premises. If any action or proceeding is brought against any of
Landlord’s Indemnified Parties by reason of any of the
foregoing, Tenant shall reimburse Landlord for the cost of
defending such action or proceeding or, upon Landlord’s
request and at Tenant’s sole cost and expense, resist and
defend such action and proceeding by competent counsel. Tenant
shall not be obligated to indemnify Landlord’s Indemnified
Parties against loss, liability, damage, cost or expense arising
out of a claim for which Tenant is released from liability pursuant
to Section 8.07, below (or a claim arising out of the willful
or negligent acts or omissions of Landlord or its agents, employees
or contractors). Except in connection with any default under the
provisions of Sections 3.03, 14.01 or 14.03, in no event shall
Tenant have any liability to Landlord on account of any claims for
any indirect, consequential or punitive damages arising from the
foregoing indemnity; provided, however, in no event shall the
foregoing relieve Tenant of any obligations hereunder with respect
to the payment of any Rent payable hereunder.
B. Indemnity by
Landlord. Landlord shall indemnify, defend and hold Tenant, its
officers, shareholders, members, trustees, principals, agents and
employees (collectively “Tenant’s Indemnified
Parties”) harmless from and against all liabilities,
obligations, damages, penalties, claims, costs, charges and
expenses, including reasonable attorneys’ fees which may be
imposed upon, incurred by, or asserted against any of the
Tenant’s Indemnified Parties and arises out of the negligence
or willful acts or omissions of Landlord, its agents, contractors
and employees, except as shall be occasioned by the negligence or
willful acts or omissions of Tenant, its agents, servants and/or
employees. In no event, however, shall Landlord’s Indemnity
cover, or shall Landlord otherwise be liable for any lost revenue
or business or any consequential damages ( e.g., lost
profits), punitive damages or any damages other than direct, actual
and compensatory damages incurred by Tenant. Landlord shall not be
obligated to indemnify Tenant’s Indemnified Parties against
loss, liability, damage, cost or expense arising out of a claim for
which Landlord is released from liability pursuant to
Section 8.07, below (or a claim arising out of the willful or
negligent acts or omissions of Tenant or its agents, employees or
contractors).
Section 8.02 Landlord Not
Responsible for Acts of Others. To the maximum extent permitted
by law, Landlord’s Indemnified Parties shall not be liable
for, and Tenant waives all claims for, loss or damage to
Tenant’s business or injury or damage to Person or property
sustained by Tenant, or any Person claiming by, through or under
Tenant, resulting from any accident or occurrence in, on, or about
the Building, including claims for loss, theft, injury or damage
resulting from: (i) any equipment or appurtenances being or
becoming out of repair; (ii) wind or weather; (iii) any
defect in or failure to operate any sprinkler, HVAC equipment,
electric wiring, gas, water or steam pipe, stair, railing or walk;
(iv) broken glass; (v) the backing up of any sewer pipe
or downspout; (vi) the escape of gas, steam or water;
(vii) water, snow or ice being upon the Building or coming
into the Leased Premises; (viii) the falling of any fixture,
plaster, tile, stucco or other material; or (ix) any act,
omission or negligence of other tenants, licensees or any other
Persons including occupants of the Building, occupants of adjoining
or contiguous buildings, owners of adjacent or contiguous property,
or the public; provided, however, in the event of any injury or
damage to Person or property resulting directly from
Landlord’s negligent failure to fulfill any of its repair
obligations expressly set forth herein (with respect to a condition
of which Landlord had knowledge prior to such injury or damage),
the indemnity provisions of Section 8.01 hereof shall apply in
such case, subject to the limitations set forth therein and
otherwise in this Lease.
Section 8.03 Tenant’s
Insurance. Commencing on the date of delivery of possession of
the Leased Premises to Tenant and at all times thereafter, Tenant
shall carry and maintain, at its sole cost and expense:
A. Commercial General
Liability Insurance (ISO form or equivalent) naming Tenant as the
named insured and Landlord and (at Landlord’s request)
Landlord’s mortgagee (and managing agent), if any, and
Federal Realty Investment Trust (“FRIT”), if FRIT is
not the Landlord under this Lease, as additional insureds,
protecting Tenant and the additional insureds against liability for
bodily injury, death and property damage occurring upon or in the
Leased Premises, with a minimum combined single limit of One
Million Dollars ($1,000,000.00) and a general aggregate limit of
Two Million Dollars ($2,000,000.00).
If the policy also covers locations
other than the Leased Premises, the policy shall include a
provision to the effect that the aggregate limit of Two Million
Dollars ($2,000,000.00) shall apply separately at the Leased
Premises. If Tenant sells, serves or distributes alcoholic
beverages in or on the Leased Premises, then such General Liability
Insurance shall include, at the same minimum limits of liability as
shown above, Liquor Legal Liability coverage.
B. “All
Risks” or “Special Form” property insurance
covering all Leasehold Improvements and all of Tenant’s
Property (as defined in Section 9.05, below), and written for
at least the full replacement cost with a deductible of not more
than Five Thousand Dollars ($5,000.00).
C. Worker’s
Compensation or similar insurance policy offering statutory
coverage and containing statutory limits, which policy shall
provide Employer’s Liability Coverage of not less than Five
Hundred Thousand Dollars ($500,000.00) per occurrence.
Section 8.04 Tenant’s
Contractor’s Insurance. Tenant shall cause any contractor
performing work on the Leased Premises to obtain, carry and
maintain, at no expense to Landlord: (i) worker’s
compensation insurance and employer’s liability as required
by the jurisdiction in which the Building is located;
(ii) builder’s risk insurance with a deductible no
greater than Ten Thousand Dollars ($10,000.00), in the amount of
the full replacement cost of the Tenant’s Property and the
Leasehold Improvements; and (iii) Commercial General Liability
Insurance providing on an occurrence basis a minimum combined
single limit of One Million Dollars ($1,000,000.00) per occurrence
(and Two Million Dollars ($2,000,000.00) general aggregate, if
applicable). If the contractor fails to acquire such insurance,
Tenant shall provide such insurance (except worker’s
compensation insurance and employer’s liability) at its sole
cost and expense.
Section 8.05 Policy
Requirements. Any company writing any insurance which Tenant is
required to maintain or cause to be maintained under Sections 8.03
and 8.04, above, as well as any other insurance pertaining to the
Leased Premises or the operation of Tenant’s business therein
(all such insurance being referred to as ‘Tenant’s
Insurance”) shall at all times be licensed and qualified to
do business in the jurisdiction in which the Leased Premises are
located and shall have received an A or better (and be in a
financial size category of class VII or higher) rating by the
latest edition of A.M. Best’s Insurance Rating Service. All
of Tenant’s Insurance may be carried under a blanket policy
covering the Leased Premises and any other location of Tenant, if
(i) the coverage afforded Landlord and any designees of
Landlord shall not be reduced or otherwise adversely affected, and
(ii) such blanket policy allocates to the properties and
liabilities to be insured under this Article VIII an amount not
less than the amount of insurance required to be covered pursuant
to this Article VIII, so that the proceeds of such insurance shall
not be less than the proceeds that would be available if Tenant
were insured under a unitary policy. All policies of Tenant’s
Insurance shall contain endorsements requiring the insurer(s) to
give to all additional insureds at least thirty
(30) days’ advance notice of any material reduction,
cancellation, termination or non-renewal of said insurance. Tenant
shall be solely responsible for payment of premiums for all of
Tenant’s Insurance. Tenant shall deliver to Landlord at least
fifteen (15) days prior to the time Tenant’s Insurance
is first required to be carried by Tenant, and upon renewals at
least fifteen (15) days prior to the expiration of the term of
any such insurance policy, a certificate of insurance of all
policies procured by Tenant in compliance with its obligations
under this Lease. The limits of Tenant’s Insurance shall not
limit Tenant’s liability under this Lease, at law, or in
equity. If Tenant fails to deposit a certificate of insurance with
Landlord for a period of three (3) days after notice from
Landlord, Landlord may acquire such insurance, and Tenant shall pay
Landlord the amount of the premium applicable thereto within five
(5) days following notice from Landlord.
Section 8.06 Increase in
Insurance Premiums. Tenant shall not keep or do anything in the
Leased Premises that will (i) result in an increase in the
rate of any insurance on the Building; (ii) violate the terms
of any insurance coverage on the Building carried by Landlord or
any other tenant; (iii) prevent Landlord from obtaining such
policies of insurance acceptable to Landlord or any Mortgagee of
the Building; or (iv) violate the rules, regulations or
recommendations of Landlord’s insurers, applicable insurance
rating bureau, the National Fire Protection Association, or any
similar body having jurisdiction over the Leased Premises. If
Tenant does so, Tenant shall pay to Landlord upon demand the amount
of any increase in any such insurance premium. In determining the
cause of any increase in insurance premiums, the schedule or rate
of the organization issuing the insurance or rating procedures
shall be conclusive evidence of the items and charges which
comprise the insurance rates and premiums on such
property.
Section 8.07 Waiver of Right of
Recovery.
A. Landlord and Tenant
(each, a “Waiving Party”) each hereby waives and
releases all rights of recovery against the other and the
other’s agents and employees (the “Released
Parties”) on account of loss or damage to the property of the
Waiving Party to the extent that such loss or damage is required to
be insured against under any property damage insurance policies
required to be carried by this Lease. By this waiver it is the
intent of the parties that the Released Parties shall not be liable
to the Waiving Party or any insurance company (by way of
subrogation or otherwise) insuring the Waiving Party for any loss
or damage insured against (or that could have been insured against)
under any property damage insurance required by this Article VIII,
even though such loss or damage might be caused by the negligence
of one (1) or more of the Released Parties; provided, however,
the mutual release contained herein shall not apply to damage to
the Waiving Party’s property caused by the willful misconduct
of any of the Released Parties. If the Waiving Party does not
carry, or is not required to carry, property damage insurance
pursuant to this Lease, this release shall apply to damage to the
Waiving Party’s property that would have been covered by a
policy of “all risk” or “special form”
property damage insurance if the Waiving Party had maintained such
insurance.
B. Each of Landlord
and Tenant shall include in each of its property damage insurance
policies a waiver of the insurer’s right of subrogation
against the other party and the officers, directors, agents and
employees of, and the partners and members in, the other party. If
such waiver is not, or ceases to be, obtainable without additional
charge (other than a nominal administrative charge) or at all, the
insuring party shall so notify the other party promptly after
notice thereof. If the other party agrees in writing to pay the
insurer’s additional charge therefor, such waiver shall (if
obtainable) be included in the policy. Landlord and Tenant hereby
acknowledge that such waiver is obtainable under normal commercial
insurance practice on the date of this Lease at no additional
charge (other than a nominal administrative charge).
C. The waiver and
release in Section 8.07.A, above, shall not apply to loss or
damage to property of the Waiving Party to the extent of the
deductible contained in the Waiving Party’s policies of
property damage insurance.
Section 8.08 Landlord’s
Insurance. Landlord agrees to maintain in full force throughout
the Term, a policy of insurance upon the Building (provided that
Landlord shall have no obligation to insure any improvements,
alterations or additions in the Leased Premises or any other
tenants’ premises) insuring against fire and other casualties
covered under an “all risk” coverage endorsement in an
amount at least equal to at least eighty percent (80%) of the
full replacement value of the Building (excluding costs of
excavation, foundations and footings), as well as insurance against
breakdown of boilers. Landlord shall supply to Tenant from time to
time, upon written request of Tenant (but no more often that
annually), certificates of all such insurance issued by or on
behalf of the insurers named therein by a duly authorized agent.
Notwithstanding anything to the contrary contained in this Lease,
Landlord may self insure against the risks covered by the
aforementioned insurance provided: (1) Landlord has a net
worth of Twenty-five Million Dollars ($25,000,000.00);
(2) Landlord maintains loss histories evidencing the losses
incurred by Landlord; and (3) Landlord establishes and funds a
reserve adequate to cover the amount of losses projected by the
loss histories. Furthermore, provided the insurance coverage
carried by Landlord pursuant to (i) above shall not be reduced
or otherwise adversely affected, all of Landlord’s insurance
may be carried under a blanket policy covering the Building and any
other property owned, leased or operated by Landlord or its
affiliates, provided the insurance requirements in this Lease are
fulfilled and the insurance coverage is not diminished in
anyway.
ARTICLE IX
CONSTRUCTION AND
ALTERATIONS
Section 9.01 Condition of Leased
Premises Upon Delivery. It is understood and agreed that
Landlord is under no obligation to make any alterations,
decorations, additions or improvements in or to the Leased Premises
from its “as is” condition, except as otherwise
expressly provided in this Lease (including Exhibit B attached
hereto); provided, however the foregoing shall not limit any repair
and maintenance obligations that Landlord may have
hereunder.
Section 9.02 Tenant
Improvements. Landlord and Tenant, at their respective sole cost
and expense, agree to provide all improvements to the Leased
Premises in accordance with their respective obligations set forth
in Exhibit B .
Section 9.03 Alterations.
Except with respect to Permitted Alterations (hereinafter defined),
Tenant shall not make or cause to be made any alterations,
additions, renovations, improvements or installations
(“Alterations”) in or to the Leased Premises without
Landlord’s prior consent, which such consent shall not be
unreasonably withheld, conditioned or delayed, unless Landlord
determines that the proposed Alterations could (i) affect the
exterior or common areas of the Building or aversely affect the
Building’s structure or safety; (ii) adversely affect in
any material respect the electrical, plumbing or mechanical systems
of the Building or the functioning thereof; (iii) be or become
visible from the exterior of the Leased Premises; or
(iv) interfere with the operation of the Building or the
provision of services or utilities to other tenants in the
Building. Landlord shall have fifteen (15) business days from
the receipt of Tenant’s request for Landlord’s approval
of any Alteration (together with all information required under
this Lease in connection therewith, including without limitation
plans and specification therefor, and other information reasonably
requested by Landlord with respect thereto) to review
Tenant’s request and to notify Tenant whether it will consent
to such proposed Alteration, provided that Tenant in its written
request for such approval refers to this provision and states in
capital bold letters in such request and on the outside of the
envelope containing such request the following: “LANDLORD
MUST RESPOND TO TENANT’S REQUEST CONTAINED HEREIN WITHIN
FIFTEEN (15) BUSINESS DAYS.” If (i) Landlord
fails to notify Tenant whether or not it will consent to such
proposed Alteration within such fifteen (15) business day
period, and, thereafter, Tenant delivers notice (“Alteration
Response Failure Notice”) to Landlord of such failure (which
Alteration Response Failure Notice must refer to this provision and
state in capital bold letters in the Alteration Response Failure
Notice and on the outside of the envelope containing the Sublet
Response Failure Notice the following: “LANDLORD MUST
RESPOND TO TENANT’S REQUEST CONTAINED HEREIN WITHIN SEVEN
(7) BUSINESS DAYS OF RECEIPT OR SUCH REQUEST SHALL BE DEEMED
APPROVED,” and (ii) Landlord fails to respond to
such request within seven (7) business days after
Landlord’s receipt of the Alteration Response Failure Notice,
then Landlord’s consent to such proposed Alteration shall be
deemed given. If Landlord consents to any such alterations,
additions, renovations, improvem
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