WISCONSIN PLACE OFFICE
LLC
CAPITALSOURCE FINANCE LLC
WISCONSIN PLACE
5404 WISCONSIN AVENUE
CHEVY CHASE, MARYLAND
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2
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4
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10
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ARTICLE IV ADDITIONAL RENT
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12
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ARTICLE V SECURITY DEPOSIT
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ARTICLE VI USE OF PREMISES
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ARTICLE VII ASSIGNMENT AND SUBLETTING
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ARTICLE VIII TENANT’S MAINTENANCE AND
REPAIRS
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35
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ARTICLE IX TENANT ALTERATIONS
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ARTICLE X SIGNS AND FURNISHINGS
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ARTICLE XI TENANT’S EQUIPMENT
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ARTICLE XII ENTRY AND INSPECTION BY
LANDLORD
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ARTICLE XIV SERVICES AND UTILITIES
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ARTICLE XV LIABILITY OF LANDLORD
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ARTICLE XVI RULES AND REGULATIONS
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ARTICLE XVII DAMAGE OR DESTRUCTION
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ARTICLE XVIII CONDEMNATION
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ARTICLE XIX DEFAULT BY TENANT
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ARTICLE XXI SUBORDINATION
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ARTICLE XXII HOLDING OVER
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ARTICLE XXIII COVENANTS OF LANDLORD
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ARTICLE XXV GENERAL PROVISIONS
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ARTICLE XXVI COMMUNICATIONS AND ACCESS; BUILDING
RISERS
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70
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ARTICLE. XXVII ROOF RIGHTS
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ARTICLE XXVII [INTENTIONALLY DELETED]
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ARTICLE, XXIX [INTENTIONALLY DELETED]
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ARTICLE XXX TENANT’S EXPANSION SPACE
— OPTION SPACE
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ARTICLE XXXI TENANT’S RIGHT OF FIRST
OFFER
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78
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ARTICLE XXXII STORAGE SPACE
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82
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ARTICLE XXXIII GENERATOR AND AIR CONDITIONER
RIGHTS
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82
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ARTICLE XXXIV GOVERNMENTAL INCENTIVES
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85
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THIS OFFICE LEASE
AGREEMENT (this “ Lease ”) is dated as of the
27th day of April, 2007 (the “Effective Date”)
by and between Wisconsin Place Office LLC, a Delaware limited
liability company (“Landlord”), and
CapitalSource Finance LLC, a Delaware limited liability company
(“ Tenant ”).
A. WP Project
Developer LLC, a Delaware limited liability company (the “
Fee Owner ”), is the owner of fee simple title in and
to a certain parcel of land described as the Project Developer
Parcel in that certain Construction, Operation and Reciprocal
Easement Agreement dated August 2, 2004 (as the same may be
amended from time to time, the “ REA ”) between
WP Owner Trust, a Delaware statutory trust (“Owner
Trust”) , the predecessor-in-interest to Fee Owner, and
The May Department Stores Company, a New York
corporation.
B. Pursuant
to the REA, the Project Developer Parcel is being developed as a
mixed use development consisting of certain improvements (including
a below-grade parking structure) and a Retail Component, a
Residential Component and an Office Component, all as more
particularly defined and described in the REA (collectively the
“ Project ”).
C. Pursuant
to that certain Development Ground Lease dated August 2, 2004
between Owner Trust and Landlord (as the same may be amended from
time to time, the “Ground Lease ”), Fee Owner
leases certain real property described on
Exhibit A attached hereto (the
“Land”) to Landlord, and Landlord intends to
construct an office building (the “ Building ”)
on the Land. The Building (which will include office and retail
space) is the “Office Component”, as defined in the
REA.
D. The
Building, known as Wisconsin Place and located at 5404 Wisconsin
Avenue, Chevy Chase, Maryland, will contain a total of Three
Hundred Fifty Thousand Four Hundred Thirteen (350,413) gross square
feet, of which approximately Three Hundred Five Thousand (305,000)
gross square feet will be office space (the “Office
Portion”) and Forty-Five Thousand Four Hundred Thirteen
(45,413) gross square feet will be retail space, which is defined
as “Retail C” and “Retail D” under the REA
(the “ Retail Portion ”).
E. Tenant
desires to lease space in the Building from Landlord, and Landlord
is willing to lease space in the Building to Tenant, upon the
terms, conditions, covenants and agreements set forth
herein.
NOW, THEREFORE,
the parties hereto, intending legally to be bound, hereby covenant
and agree as set forth below:
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1.1 Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord, for
the term and upon the terms, conditions, covenants and agreements
herein provided, a total of One Hundred Sixty Thousand Six Hundred
Thirty-Four (160,634) square feet of rentable area, comprising
Fifty-Six Thousand Four Hundred Seventy-Eight (56,478) square feet
of rentable area on the second (2nd) floor, and Twenty-Six Thousand
Thirty-Nine (26,039) square feet of rentable area on each of the
eighth (8 th
), ninth (9 th ),
tenth (10’ th )
and eleventh (11 th )
floors of the Building (“ Premises ”). The
location and configuration of the Premises are outlined on
Exhibits A-l (second floor) and A-2
(floors 8-11) attached hereto and made a part hereof.
1.2 (a) The
lease of the Premises includes the non-exclusive right to use
(a) certain specified common and public areas within the
Building as more particularly shown on Exhibit A-3
attached hereto and made a part hereof (the “Office Common
Areas” ) that are designated for common use by tenants
and occupants of the Office Portion of the Building, provided,
however, Tenant shall not have the right to use certain designated
areas as shown on Exhibit A-3 ; (b) certain
specified common and public areas within the Building as more
particularly shown on Exhibit A-4 (the
“Building Common Areas” ) that are designated
for common use by tenants and occupants of both the Office Portion
and the Retail Portion of the Building; and (c) all of the
Common Areas and Common Area Improvements (as such terms are
defined in the Ground Lease) with respect to the Project
(collectively, the “project Common Areas” ) to
the extent that Landlord has the right to use, and to permit others
to use, such Project Common Areas pursuant to the Ground Lease (and
subject to the same restrictions and conditions set forth in the
Ground Lease applicable to Landlord’s use of such Project
Common Areas), but includes no other rights not specifically set
forth herein. Tenant shall not have any right to use any of the
common and public areas within the Building that are not
specifically designated as Office Common Areas or Building Common
Areas. The lease of the Premises also is subject to any covenants,
conditions and restrictions (i) set forth in the Ground Lease,
and (ii) of record (including, without limitation, the REA).
In the event of any conflict between the terms of this Lease and
the REA, such conflict shall be resolved in favor of the REA.
Tenant has reviewed the REA and the Ground Lease as existing on the
date hereof. Landlord hereby represents that none of the provisions
of the REA or the Ground Lease will now or in the future
(notwithstanding the occurrence or non-occurrence of any events
and/or the passage of time) materially impair Tenant’s rights
under this Lease or Tenant’s ability to utilize the Premises,
the Terrace, the garage, and the interior of the Building for the
purposes described in this Lease; provided, however, that the
Ground Lease and the REA have existing provisions that may affect
the use of the common areas of the Project, the use of the garage,
exterior signage on the Building, or other matters that affect the
Project and the exterior of the Building. Landlord hereby covenants
that Landlord will not, without Tenant’s consent, agree to
any amendments or revisions to the Ground Lease or the REA that
would impair Tenant’s ability to utilize the Premises, or
adversely affect Tenant’s ability to use the Building, the
Terrace, or the garage for the purposes described in this Lease for
the Term, restrict Tenant’s ability to design and construct
is signage as contemplated hereunder, or modify or conflict with
any of the provisions contained in this Lease. Landlord has
obtained all necessary approvals under the REA and the Ground Lease
for Tenant’s signage, provided that it is consistent with the
requirements indicated in Exhibit G .
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(b) In the event Tenant elects, at its option, to construct an
outdoor terrace on the roof of the portion of the Building known as
“Retail C” adjacent to the Premises (the “
Terrace ”), then Tenant shall have the exclusive right
to use the Terrace. In such event construction shall be at
Tenant’s sole cost and expense (subject to the application of
the’ Allowance in accordance with Exhibit B
) , and shall be completed as part of the Leasehold Work in
accordance with approved Leasehold Plans and the other provisions
of Exhibit Q and/or shall be completed thereafter as
an Alteration. During the Lease Term, Landlord shall not lease,
license or utilize the Terrace or place or permit the placement of
any signage on any portion of the Building façade
immediately overlooking the Terrace. The Terrace shall be deemed to
be part of the Premises for all purposes of this Lease, except that
(x) the Terrace shall not be included as part of the rentable
area of the Premises for purposes of determining the Base Rent or
Tenant’s Proportionate Share of Operating Charges or Real
Estate Taxes, (y) Landlord shall not be obligated to perform
any alterations or improvements, or to provide any allowance, to or
for the Terrace other than the roof pavers, drains, railings and
light fixtures that are identified in the plans for the Base
Building Work, and (z) Landlord shall not be obligated to
furnish any services to the Terrace, other than electricity and
water suitable for use of the Terrace the cost of which shall be
borne by Tenant. In addition, the pavers, drains, railings and
light fixtures associated with the Terrace shall be included as
part of the Base Building Modifications in the Work Letter.
Tenant’s use of the Terrace shall be subject to reasonable
rules and regulations established from time to time by Landlord for
the protection (which term shall include protection from physical
harm as well as protection from unreasonable noise, odors, debris
and unsightliness that are not consistent with a Class A
mixed-use development) of the Building the Project and the other
tenants therein. Tenant shall not place any furniture or other
items on the Terrace without the prior approval of Landlord, which
approval shall not be unreasonably withheld, conditioned or
delayed. Tenant shall not be permitted to install any fixtures or
permanently affix any items on or to the Terrace without the prior
approval of Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed, it being understood and agreed
that Tenant may install any such items that are shown on
Tenant’s Leasehold Plans which have been approved by Landlord
in accordance with Exhibit B . Tenant shall be
responsible for cleaning and maintaining all elements of the
Terrace and shall be responsible for taking all diligent efforts to
prevent trash or debris from falling or escaping from the Terrace.
In the event Tenant uses or permits the use of all or any portion
of the Terrace in violation of any condition or provision of this
Section or any other condition or provision of this Lease or in any
manner that causes damage to the Building or interferes with any
other tenant’s business operations, Landlord shall give
notice of such violation(s) to Tenant. In the event Landlord gives
notice of such violations and Tenant does not take appropriate
action to cure such violation(s) (including without Limitation,
diligently attempting to enforce such standards with respect to
Tenant’s employees and Invitees) within ten (10) days
after any such notice, then Landlord may send Tenant a follow-up
notice with bold type indicating that failure of Tenant to take
appropriate action to cure the violation(s) may result in the
forfeiture of Tenant’s right to use the Terrace, and if
Tenant fails to take appropriate action to cure the violation(s)
within ten (10) days after such follow-up notice, then
Landlord shall have the right in addition to all other rights and
remedies available to Landlord under this Lease, to revoke
Tenant’s right to use the Terrace. Furthermore, if Landlord
has given notice of Tenant’s violation of the provisions of
this Section more than three (3) times within any twelve
(12) month period (even if such violations are cured within
the
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foregoing ten
(10) day period), then Landlord shall have the right in
addition to all other rights and remedies available to Landlord
under this Lease, to revoke Tenant’s right to use the
Terrace. In addition, in the event Tenant fails to clean and
maintain the Terrace, and such failure continues for ten
(10) days after Landlord gives notice of such failure to
Tenant then Landlord shall have the right to provide such cleaning
and/or maintenance services and Tenant shall reimburse Landlord for
the cost thereof within ten (10) days of demand
therefor.
1.3 The rentable
area in the Premises and the Building have been calculated in
accordance with the American National Standards Institute,
Inc./Building Owners and Managers Association standard method of
measuring floor area, ANSI/BOMA Z65.1-1996 (“ BOMA
”), pursuant to the BOMA measurement table attached hereto as
Schedule 1.3 . The rentable area of the Premises has
been conclusively determined between Landlord and Tenant, and shall
not be subject to further modification or remeasurement (except in
the case of an occurrence, such as casualty, condemnation,
expansion or contraction, that results in a change in the amount of
space constituting the Premises).
2.1 All of the
provisions of this Lease shall be in full force and effect from and
after the Effective Date. The term of this Lease (“Lease
Term” ) shall be for one hundred eighty (180) full
calendar months, commencing on the Lease Commencement Date, as
determined pursuant to Section 2.2 hereof, and
continuing for a period of one hundred eighty (180) full calendar
months thereafter, unless such Lease Term shall be terminated
earlier in accordance with the provisions hereof or shall be
extended in accordance with the provisions of Rider No. 1 to
this Lease. Notwithstanding the foregoing, if the Lease
Commencement Date shall occur on a day other than the first day of
a month, the Lease Term shall commence on such date and continue
for the balance of such month and for a period of one hundred
eighty (180) full calendar months thereafter. The term
“Lease Term” shall include any and all renewals
and extensions of the term of the Lease.
2.2
(a) Subject to Tenant Delay (as defined in
Exhibit B ), the Lease Commencement Date shall
be the earlier to occur of (i) the date on which Landlord
substantially completes the Phase I Leasehold work (as defined in
Exhibit B ) in accordance with the provisions of
Exhibit E , but in no event earlier than the
Anticipated Substantial Completion Date (defined in Section
2.3(a) ), or (ii) the date on which Tenant commences
beneficial use of Phase I (as defined in) of the Premises. Tenant
shall be deemed to have commenced beneficial use of Phase I of the
Premises when Tenant begins the conduct of its customary business
in Phase I of the Premises. Tenant and its contractors shall be
allowed access to any floor of the Premises as well as the Office
Common Areas and the Building Common Areas thirty (30) days prior
to the anticipated date of substantial completion of the Phase I
Leasehold Work in the Premises (or earlier, if appropriate and
reasonably approved by Landlord) for the purpose of installing
Tenant’s computers, telephones or other special equipment and
fixtures, and to perform other related activity (including, without
limitation, installation and testing of Tenant’s network
operations center, data/telecom systems, and backup power
facilities), and such installation and related activity shall not
be considered the commencement of beneficial use of any portion of
the Premises by Tenant. Notwithstanding the foregoing, (i) in
the event such
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access by
Tenant’s contractors prior to substantial completion of the
Phase I Leasehold ‘Work would cause any delay in the
completion of the Phase I Leasehold Work, then the completion of
the Phase I Leasehold Work shall take priority; and (ii) if
Landlord is delayed in completing the Phase I Leasehold Work as a
result of any Tenant Delay, then for purposes of determining the
Lease Commencement Date, the Phase I Leasehold Work shall be deemed
to have been substantially completed on the date that the Phase I
Leasehold Work would have been substantially completed if such
Tenant Delay had not occurred. In the event that delivery of
possession of the Premises to Tenant with the Base Building Work
and Phase I Leasehold Work substantially complete is delayed,
regardless of the reasons or causes of such delay, except as
otherwise provided in Section 2.3 below, this Lease
shall not be rendered void or voidable as a result of such delay,
and the term of this Lease shall commence on the Lease Commencement
Date as determined pursuant to this Section 2.2 (a.
Furthermore, Landlord shall not have any liability whatsoever to
Tenant on account of any such delay, except as otherwise set forth
herein. Any Phase of the Leasehold Work shall be deemed to be
substantially complete when (x) the Phase I Leasehold Work or
Phase II Leasehold Work, as applicable, has been completed in
conformity in all material aspects with the Phase I Leasehold Plans
or Phase II Leasehold Plans (as such terms are defined in
Exhibit B ), as applicable, as certified by
Tenant’s architect in its professional judgment, except for
long-lead specialty items and punchlist items (as defined in
Section 9 of Exhibit B ), and
(y) Tenant may lawfully occupy the applicable portion of the
Premises.
(b) All terms
and conditions of this Lease, including, without limitation, the
insurance, release and waiver of liability provisions of
Articles XIII and XV hereof, shall apply to and be
effective during any period of occupancy or access to the Premises
by Tenant prior to the Lease Commencement Date, except for
Tenant’s obligation to pay any Base Rent or Additional Rent
attributable to Operating Expenses or Real Estate Taxes.
(c) All work
required to prepare the Premises for Tenant’s occupancy shall
be performed in accordance with the terms of
Exhibit B hereof.
2.3 (a)(i) On or
before the earlier to occur of (i) Commencement of
Construction (as defined below), or (ii) January 31, 2008
(the “Completion Notice Date” ), Landlord shall
give notice (the “Completion Notice’) to Tenant
of the date that Landlord anticipates that the Phase I Leasehold
Work will be substantially completed (the “Anticipated
Substantial Completion Date” ), which Anticipated
Substantial Completion Date shall be no earlier than fourteen
(14) months and no later than eighteen (18) months after
the date Landlord gives Tenant the Completion Notice. If Landlord
fails to give such notice within such time period, then the
Anticipated Substantial Completion Date shall be the date that is
eighteen (18) months after the Completion Notice Date. In the
event the Anticipated Substantial Completion Date is earlier than
sixteen (16) months after the Completion Notice Date, then for
any period between the Lease Commencement Date and the date that is
sixteen (16) months after the Completion Notice Date, one-half
(1/2) of the Base Rent (but not any additional rent) otherwise
due hereunder shall be abated.
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(ii) Landlord
anticipates that Commencement of Construction (as hereinafter
defined) of the Building shall occur between October l, 2007 and
January 31, 2008. Prior to Commencement of Construction, and
upon written request of Tenant, Landlord shall give Tenant updates
on when Landlord anticipates Commencement of Construction to occur.
As used herein, the term “Construction Commencement
Deadline” shall mean May 31, 2008; however,
(i) in the event Commencement of Construction is delayed as a
result of Force Majeure Delay, then the Construction Commencement
Deadline shall be extended by one day for each such day of Force
Majeure Delay, but in no event by more than sixty (60) days,
and (ii) in the event Commencement of Construction is delayed
as a result of Tenant Delay, then the Construction Commencement
Deadline shall be extended by one day for each such day of Tenant
Delay. In the event Commencement of Construction has not occurred
on or before the Construction Commencement Deadline (as defined in,
and as the same may be extended pursuant to the provisions of, this
Section 2.3(b) ), and an Event of Default has not occurred
under this Lease, Tenant shall have the right to terminate this
Lease by delivering written notice of the exercise of such right to
Landlord. Such right of termination may be exercised by Tenant only
during the period commencing on the Construction Commencement
Deadline and continuing through ten (10) business days after
the Construction Commencement Deadline, and if such right is not
exercised by Tenant, such right shall thereafter lapse and be of no
further force or effect. If this Lease is terminated pursuant to
this Section 2.3(a) , then neither party shall have any
further obligations or liability hereunder to the other party,
except that Landlord shall be obligated to disburse to Tenant all
portions of the Phase I Allowance that have been expended or
irrevocably committed prior to the date of such
termination.
(b) In the
event the Commencement of Construction has not occurred on or
before July 31, 2008 as a result of Force Majeure Delay and/or
Tenant Delay and Landlord reasonably determines that Commencement
of Construction cannot occur within one hundred twenty
(120) days thereafter, Landlord shall have the right to
terminate this Lease by delivering written notice of the exercise
of such right to Tenant. If this Lease is terminated pursuant to
this Section 2.3(b) , then neither party shall have any
further obligations or liability hereunder to the other party,
except that Landlord shall be obligated to disburse to Tenant all
portions of the Allowance that have been expended or irrevocably
committed prior to the date of such termination.
(c) “
Commencement of Construction” shall mean commencement
of work on the structural concrete for the Building on top of the
pad that constitutes the top of the parking structure by a
contractor under contract to Landlord to perform such
work.
(d) Landlord
anticipates that the Building will be rendered water-tight by the
three hundredth (300 th )
day after Commencement of Construction (the “Anticipated
Watertight Date” ). As used herein, the term
“Watertight Deadline” shall mean the date that
is one hundred twenty (120) days after the Anticipated
Watertight Date; however (i) in the event the Building being
rendered water-tight is delayed as a result of Force Majeure Delay,
then the Watertight Deadline shall be extended by one day for each
such day of Force Majeure Delay, but in no event by more than sixty
(60) days, and (ii) in the event the Building being
rendered water-tight is delayed as a result of Tenant Delay, then
the Watertight Deadline shall be extended by one day for each such
day of Tenant Delay. In the event the Building has not been
rendered water-tight
6
on or before
the Watertight Deadline (as defined in, and as the same may be
extended pursuant to the provisions of this
Section 2.3(d) ), and an Event of Default has not
occurred under this Lease, Tenant shall have the right to terminate
this Lease by delivering written notice of the exercise of such
right to Landlord. Such right of termination may be exercised by
Tenant only during the period commencing on the Watertight Deadline
and continuing through ten (10) business days after the
Watertight Deadline, and if such right is not exercised by Tenant
on or before ten (10) business days after the Watertight
Deadline, such right shall thereafter lapse and be of no further
force or effect. If this Lease is terminated pursuant to this
Section, then neither party shall have any further obligations or
liability hereunder to the other party, except that Landlord shall
be obligated to disburse to Tenant all portions of the Phase I
Allowance that have been expended or irrevocably committed prior to
the date of such termination.
(e) In the
event the Building is not rendered water-tight within one hundred
eighty (180) days following the Anticipated Watertight Date as a
result of Force Majeure Delay and/or Tenant Delay, and Landlord
reasonably determines that the Building cannot be rendered
watertight within one hundred twenty (120) days thereafter,
Landlord shall have the right to terminate this Lease by delivering
written notice of the exercise of such right to Tenant. If this
Lease is terminated pursuant to this Section 2.3(e) ,
then neither party shall have any further obligations or liability
hereunder to the other party, except that Landlord shall be
obligated to disburse to Tenant all portions of the Phase I
Allowance that have been expended or irrevocably committed prior to
the date of such termination.
(f) As used
herein, the term “Substantial Completion
Deadline” shall mean the date that is one hundred twenty
(120) days after the Anticipated Substantial Completion Date;
however, (i) in the event Landlord’s substantial
completion of the Phase I Leasehold Work is delayed as a result of
Force Majeure Delay, then the Substantial Completion Deadline shall
be extended by one day for each such day of Force Majeure Delay,
but in no event by more than sixty (60) days, and (ii) in
the event Landlord’s substantial completion of the Phase I
Leasehold Work is delayed as a result of Tenant Delay, then the
Substantial Completion Deadline shall be extended by one day for
each such day of Tenant Delay. In the event Landlord fails to
substantially complete the Phase I Leasehold Work on or before the
Substantial Completion Deadline (as defined in, and as the same may
be extended pursuant to the provisions of this
Section 2.3(f) , then Tenant shall have the option to
terminate this Lease. In the event Tenant elects to terminate this
Lease pursuant to this Section 2.3(f) , such right of
termination may be exercised by Tenant only during the period
commencing on the Substantial Completion Deadline and continuing
through ten (10) business days after the Substantial
Completion Deadline, and if such right is not exercised by Tenant
on or before ten (10) days after the Substantial Completion
Deadline, such right shall thereafter lapse and be of no further
force or effect. If this Lease is terminated pursuant to this
Section 2.3, then neither parry shall have any further
obligations or liability hereunder to the other party, except that
Landlord shall be obligated to disburse to Tenant all portions of
the Allowance that have been expended or irrevocably committed
prior to the date of such termination and except for any
obligations that accrued prior to the effective date of such
termination and any other obligations that expressly survive
termination hereunder.
(g) In the
event the Phase I Leasehold Work is not substantially completed
within one hundred eighty (180) days following the Anticipated
Substantial Completion Date as a result of Force Majeure Delay
and/or Tenant Delay, and Landlord reasonably determines that the
Phase I
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Leasehold Work
cannot be substantially completed within one hundred twenty
(120) days thereafter, Landlord shall have the right to
terminate this Lease by delivering written notice of the exercise
of such right to Tenant. If this Lease is terminated pursuant to
this Section 2.3(g), then neither party shall have any
further obligations or liability hereunder to the other party,
except that Landlord shall be obligated to disburse to Tenant all
portions of the Allowance that have been expended or irrevocably
committed prior to the date of such termination.
(h) In the
event (i) Tenant does not terminate this Lease pursuant to
Section 2.3(f) above, and (ii) Landlord does not
terminate this Lease pursuant to Section 2.3(g) above
as a result of a Tenant Delay, then Landlord agrees to reimburse
Tenant for all loss, cost, damage or liability incurred by Tenant
during the Applicable Accrual Period (defined below) as a result of
the delay in substantially completing the Phase I Leasehold Work.
The damages recoverable by Tenant shall include (without
limitation) any damages or losses suffered by Tenant due to
Tenant’s inability to timely vacate the premises currently
occupied by Tenant at 4445 Willard Avenue, Chevy Chase, Maryland,
which damages or losses may relate (without limitation) to
Tenant’s inability to deliver possession of such space to an
intended assignee or subtenant(s) or Tenant’s inability to
surrender possession of such space to the landlord thereof if
Tenant has agreed to or is otherwise obligated to surrender
possession of such space to such landlord. Notwithstanding the
foregoing, and subject to Section 4(f) of Exhibit B,
the damages recoverable by Tenant pursuant to this
Section 2.3(h) shall be subject to the Damages Cap
(hereinafter defined). The “Damages Cap” shall
mean (i) an overall cap of One Million Nine Hundred Thousand
Dollars ($1,900,000.00) for all damages of any kind in the
aggregate; and (ii) a cap on the amount of damages that can be
incurred by Tenant and recovered from Landlord in any one month of
Four Hundred Thousand Dollars ($400,000.00). The
“Applicable Accrual Period” shall commence on
the Anticipated Substantial Completion Date, unless substantial
completion is delayed beyond such date as a result of (i) Force
Majeure Delays, in which event the commencement of the Applicable
Accrual Period shall be extended by one day for each such day of
Force Majeure Delay, but in no event by more than sixty
(60) days; and/or Tenant Delays, in which event the
commencement of the Applicable Accrual Period shall be extended by
one day for each such day of Tenant Delay. The Applicable Accrual
Period shall expire on the earlier to occur of (x) the
termination of this Lease pursuant to a provision other than
Section 2.3(f) or (g)), or (y) the Lease Commencement
Date.
(i) If the
Phase I Leasehold Work is not substantially completed within one
year after the Substantial Completion Deadline for any reason, then
either party shall have the right to terminate this Lease by notice
delivered to the other party given prior to the date the Premises
are delivered to Tenant with the Phase I Leasehold Work
substantially complete; provided, however, that Landlord may
terminate this Lease pursuant to this Section 2.3(i)
only if Landlord is terminating all leases that Landlord has
entered into with tenants or prospective tenants of the Building.
If this Lease is terminated pursuant to this Section, then neither
party shall have any further obligations or liability hereunder to
the other party, except that (i) Landlord shall be obligated
to disburse to Tenant all portions of the Allowance that have been
expended or irrevocably committed prior to the date of such
termination and (ii) all liabilities accruing prior to the
date of such termination, including Landlord’s liabilities
pursuant to Section 2.3(h) above, shall survive such
termination.
8
2.4 Declaration
and Determination of Lease Commencement Date . Promptly after
the Lease Commencement Date is ascertained, Landlord and Tenant
shall execute and deliver a written declaration (the
“Declaration”) setting forth, among other items,
the Lease Commencement Date, the date upon which the initial term
of this Lease will expire, and the other information set forth
therein. The form of the Declaration is attached hereto as
Exhibit D , and is made a part hereof. Any
failure of the parties to execute such Declaration shall not affect
the validity of the Lease Commencement Date as determined in
accordance with this Section. If Tenant disagrees with the Lease
Commencement Date and/or any other information set forth in the
reasonably proposed Declaration delivered by Landlord to Tenant,
Tenant shall have thirty (30) days from the receipt thereof to
provide Landlord with notice of Tenant’s objection to such
Lease Commencement Date and/or other information, and Tenant shall
have thirty (30) days from the receipt of such Declaration
delivered by Landlord to Tenant to provide Landlord with
Tenant’s reasonable determination of what the Lease
Commencement Date and/or any other information should be and any
reasons therefore; however, in the event of any such dispute Tenant
shall pay Base Rent based on Landlord’s determination until
such dispute is resolved in accordance with this
Section 2.4 (subject to Tenant’s right to receive
a refund of any overpayment within thirty (30) days following
resolution of such dispute). If Tenant does not notes Landlord in
writing within such thirty (30) day period of any objection to the
Lease Commencement Date and/or any other information set forth in
the proposed Declaration and/or or fails to provide Tenant’s
determination and reasons therefor within such thirty (30) day
period, then Tenant shall be deemed to have waived such objection
and the Lease Commencement Date and other information set forth in
Landlord’s proposed Declaration shall be final and
conclusive. The parties shall have ten (10) business days
after Landlord receives Tenant’s reasonable determination of
what the Lease Commencement Date and./or other information should
be in which to agree on what such date and or other information
should be. The parties shall be obligated to conduct such
negotiations in good faith. If during such ten (10) business day
period, the parties are unable to agree on what the Lease
Commencement Date and/or other information should be, then either
party may provide the other (the “Notice
Recipient”) with written notice (the “LCD
Dispute Notice”) thereof. To the extent the dispute rests
on a determination of when the Phase I Leasehold Work was actually
substantially completed (but not with respect to any other
determinations such as the occurrence of a Tenant Delay or Landlord
Delay), then such date shall be determined in accordance with the
following procedure: Within three (3) business days following the
Notice Recipient’s receipt of the LCD Dispute Notice, the
parties shall appoint an independent, unaffiliated architect who
shall be mutually agreeable to both Landlord and Tenant shall have
at least ten (10) years relevant experience, and shall be
knowledgeable in office construction in the Market Area (as
hereinafter defined). If the parties are unable to agree on an
architect within such three (3) business day period, then each
party, within five (5) business days following the Notice
Recipient’s receipt of the LCD Dispute Notice, shall appoint
an independent, unaffiliated architect (with the same
qualifications) and such two (2) architects shall attempt to
agree on the date of substantial completion of the Phase I
Leasehold Work. if within five (5) business days after their
appointment such two architects are unable to agree, then the two
(2) architects shall together appoint a third independent,
unaffiliated architect with the same qualifications within three
(3) business days after expiration of such five
(5) business day period. The third (3rd) architect so
appointed then shall determine, within three (3) business days
after the appointment of such architect, the date of substantial
completion of the Phase I Leasehold Work and the
9
determination
of such third architect shall be final and conclusive. Landlord and
Tenant shall each bear the cost of its architect and shall share
equally the cost of the third architect.
2.5 For purposes
of this Lease, the term “Lease Year” shall mean
a period of twelve (12) consecutive calendar months, commencing on
the Lease Commencement Date and each successive twelve (12) month
period, except that if the Lease Commencement Date shall occur on a
date other than the first day of a month, then the first Lease Year
shall also include the period from the Lease Commencement Date to
the first day of the following month.
3.1 During the
Lease Term, Tenant shall pay to Landlord as base rent (used
interchangeably as “Base Rent” or “base
rent” ) for the Premises, without set off, deduction or
demand (except as otherwise expressly provided in
Section 3.6 of this Lease), an amount per annum equal
to the product of Thirty-Four and 50/100ths Dollars ($34.50)
multiplied by the total number of square feet of rentable area in
the Premises as set forth in Section 1.1 . (as the same
may be modified in accordance with Section 1.3 ), which
amount shall be increased as provided in Section 3.2 below and
may be abated as provided in Section 2.3(a), if applicable. In
addition, Tenant shall pay to Landlord along with each monthly
installment of Base Rent an amount equal to the Additional
Allowance Rent Payments (if applicable) as defined in
Section 3.5 below and the Storage Space Rent as defined
in Article XXXII below. The annual Base Rent, the
Additional Allowance Rent Payments and the Storage Space Rent
payable hereunder during each Lease Year shall be divided into
equal monthly installments and such monthly installments shall be
due and payable in advance on the first day of each month during
such Lease Year. If the Lease Term begins on a date other than on
the first day of a month, rent from such date until the first day
of the following month shall be prorated on a per diem basis at the
Base Rent rate payable during the first Lease Year, and such
prorated rent shall be payable in advance on the Lease Commencement
Date.
3.2 Commencing on
the first (1st) day of the second (2nd) Lease Year and on the first
day of each and every Lease Year thereafter during the Lease Term,
the annual Base Rent shall be increased by two and one-half percent
(2.5%) of the amount of annual Base Rent payable for the preceding
Lease Year. The annual Base Rent for the initial Lease term shall
be as follows:
|
|
|
|
|
|
|
|
|
Annual Base
|
|
|
|
Rent Per
|
|
|
|
Rentable
|
|
Lease
Year
|
|
Square Foot
|
|
|
|
|
|
|
|
|
|
$
|
34.50
|
|
|
|
|
$
|
35.36
|
|
|
|
|
$
|
36.24
|
|
|
|
|
$
|
37.15
|
|
|
|
|
$
|
38.08
|
|
|
|
|
$
|
39.03
|
|
10
|
|
|
|
|
|
|
|
|
Annual Base
|
|
|
|
Rent Per
|
|
|
|
Rentable
|
|
Lease
Year
|
|
Square Foot
|
|
|
|
|
|
|
|
|
|
$
|
40.01
|
|
|
|
|
$
|
41.04
|
|
|
|
|
$
|
42.04
|
|
|
|
|
$
|
43.09
|
|
|
|
|
$
|
44.17
|
|
|
|
|
$
|
45.27
|
|
|
|
|
$
|
46.40
|
|
|
|
|
$
|
47.56
|
|
|
|
|
$
|
48.75
|
|
3.3 All rent shall
be paid to Landlord in legal tender of the United States by wire
transfer of immediately available funds pursuant to the wire
instructions set forth on Schedule 3.3 attached hereto,
or pursuant to such other instructions as Landlord may provide to
Tenant from time to time in writing. If Landlord shall at any time
accept rent after it shall become due and payable, such acceptance
shall not excuse a delay upon subsequent occasions, or constitute
or be construed as a waiver of any of Landlord’s rights
hereunder.
3.4 Landlord and
Tenant agree that no rental or other payment for the use or
occupancy of the Premises is or shall be based in whole or in part
on the net income or profits derived by any person or entity from
the Building or the Premises. Tenant further agrees that it will
not enter into any sublease, license, concession or other agreement
for any use or occupancy of the Premises which provides for a
rental or other payment for such use or occupancy based in whole or
in part on the net income or profits derived by any person or
entity from the Premises so leased, used or occupied. Nothing in
the foregoing sentence, however, shall be construed as permitting
or constituting Landlord’s approval of any sublease, license,
concession, or other use or occupancy agreement not otherwise
approved by Landlord or otherwise permitted in accordance with the
provisions of Article VII.
3.5 If Tenant
elects to use all or any portion of the Additional Allowance (as
defined in Exhibit B attached hereto), then
Tenant shall pay to Landlord as Additional Rent the total amount of
(i) the Additional Allowance so accepted by Tenant in
accordance with Exhibit B , and
(ii) interest thereon at a fixed annual rate equal to eleven
percent (11%) per annum (such amount, the “Additional
Allowance Rent Payments”). Sub Additional Allowance Rent
Payments shall be paid by Tenant in equal monthly installments over
a fifteen (15) year period commencing on the Lease
Commencement Date, and continuing for fifteen (15) years
thereafter. Tenant shall pay to Landlord such monthly installments
of Additional Allowance Rent Payments at the same time and in the
same manner as Base Rent for the Premises is payable hereunder;
provided, however, that the Additional Allowance Rent Payments
shall not be subject to the annual escalations that apply to Base
Rent pursuant to Section 3.2 of this Lease. The amount of
the Additional Allowance and the amount of the Additional Allowance
Rent Payments shall be confirmed on the declaration attached to
this Lease as Exhibit D . Notwithstanding
anything herein to the contrary, (i) under no circumstances
shall any abatement, set off or reduction whatsoever apply to the
Additional Allowance Rent Payments, and (ii) in the event this
Lease is
11
terminated
prior to its scheduled expiration date, Tenant shall reimburse
Landlord, not later than the termination date, for the full amount
of the unamortized Additional Allowance.
3.6
Notwithstanding anything in this Lease to the contrary, and subject
to the limitation set forth below in this Section 3.6 ,
Tenant shall have the right to offset against Base Rent any sums
owed by Landlord to Tenant, if and when a final, non-appealable
judgment is entered by a court of competent jurisdiction holding
that Landlord owes such sums (the “Judgment Amount”) to
Tenant, and Landlord fails to pay such Judgment Amount to Tenant
within thirty (30) days following entry of such judgment.
Tenant’s right to offset against Base Rent shall be limited
to twenty percent (20%) of the Base Rent due in any particular
month until the Judgment Amount is fully paid. The Judgment Amount
(or any portion thereof that remains outstanding from time to time)
shall bear interest at the Default Rate (as defined in Section
19.5 below) from the date judgment is entered through the date
such amount is recovered by Tenant through payment or through
Tenant’s exercise of its right of offset pursuant to this
Section 3.6 .
ARTICLE IV
ADDITIONAL RENT
4.1 Operating
Expenses and Real Estate Taxes .
(a) Commencing
on the Lease Commencement Date and continuing with each calendar
year thereafter during the Lease Term, Tenant shall pay Landlord,
as additional rent (the “Additional Rent” or
“additional rent”) for the Premises
(i) Tenant’s Proportionate Share of Operating Expenses
(as such terms are defined below) during any calendar year (and a
pro rata share of such expenses for any calendar year falling
partly within the Lease Term); and (ii) Tenant’s
Proportionate Share (as defined in Section 4.1(b)) of
Real Estate Taxes (as defined in Section 4.1(h))
determined in accordance with Section 4.1(h) (and a pro
rata share of such Real Estate Taxes for any calendar year falling
partly within the Lease Term).
(b)
“Tenant’s Proportionate Share” or
“Tenant’s proportionate share” shall be that
percentage which is equal to a fraction, the numerator of which is
the rentable area of the Premises from time to time and the
denominator of which is the rentable area of the Office Portion of
the Building from time to time; however, it is understood that the
number comprising such denominator is subject to change because of
changes in the use or configuration of space in the Building or the
addition of space to the Office Portion of the Building or the
deletion of space from the Office Portion of the Building;
provided, however, that any such change in rentable area shall be
determined in accordance with the standard set forth in
Section 1.3 of this Lease Tenant’s Proportionate
Share shall increase or decrease from time to time in the event the
rentable area of the Premises expands or contracts during the Lease
Term (for example, by reason of casualty, condemnation, expansion
or contraction). The specific obligations of Tenant with respect to
Operating Expenses shall be governed by the remaining sections of
this Article IV .
(c)
“Operating Expenses” shall mean the Office
Common Expenses, the Building Common Expenses, and the Project
Common Expenses (as such terms are hereinafter defined).
12
(d)
“Office Common Expenses” shall mean costs and
expenses that Landlord reasonably determines to be attributable to
the maintenance, repair, ownership and/or operation of the Office
Portion of the Building and the Office Common Areas, including but
not limited to, the costs and expenses set forth in
Section 4.1(g)(l) , but excluding the costs and
expenses set forth in Section 4.1(g)(2) .
(e)
“Building Common Expenses” shall mean the Office
Portion Share (as hereinafter defined) of costs and expenses that
Landlord reasonably determines to be attributable to the Building
Common Areas or the entire Building that benefit the tenants and
occupants of both the Office Portion and the Retail Portion of the
Building. Building Common Expenses shall include (without
limitation) the following expenses with respect to the Building:
(A) premiums, commercially-reasonable deductibles actually
incurred (provided that deductibles that are carried on a blanket
policy that covers at least twenty (20) buildings shall be
deemed to be commercially reasonable), and other charges for
insurance applicable to the Building shell; (B) fifty percent
(50%) of the cost of the maintenance, operation, repair and
replacement of (x) the telephone and electric rooms shown on
Exhibit J attached hereto (the “Utility
Rooms” ), and (y) the building shared exit corridors
shown on Exhibit K attached hereto (the
“Shared Exit Corridors” ); (C) operation,
maintenance, repair and replacement expenses for (i) the
Building’s base fire alarm system (including, without
limitation, the Building’s fire command center), (ii) the
Building’s storm water management system, (iii) the
Building’s exterior facade, (iv) exterior Building
lighting systems, (v) Building Common Area lighting systems,
(vi) the Building’s emergency generator and associated
equipment (including associated electrical panels), (vii) the
Building’s electrical switchgear and bussduct,
(viii) the Building’s fire sprinkler system, water
connection, sanitary sewer connection, building common exits and
gas utility system, (ix) the doors listed on
Exhibit L attached hereto (the “Common
Doors” ), and (x) the Building’s roof and
exterior façade (other than cleaning, maintenance, repair or
replacement of windows or doors that are not Common Doors), capital
expenditures due to breakage, casualty or normal wear and tear to
the extent the capital replacement cost is less than the costs of
repair then immediately required and (E) Building personnel
costs to the extent reasonably attributable to Building Common
Areas. The “Office Portion Share” shall be that
percentage which is equal to a fraction, the numerator of which is
the rentable area of the Office Portion of the Building from time
to time and the denominator of which is the rentable area of the
Building from time to time; however, it is understood that the
numbers comprising such numerator and denominator are subject to
change because of changes in the use or configuration of space in
the Building or the addition of space to the Building (or to the
Office Portion) or the deletion of space from the Building (or the
Office Portion) so that Tenant actually pays its fair share of
Building Common Expenses; provided, however, that any such change
in rentable area shall be determined in accordance with the
standard set forth in Section 1.3 of this
Lease.
(f)
“Project Common Expenses” shall mean the Office
Portion Share of the Building’s Share (as hereinafter
defined) of all costs and expenses attributable to the maintenance,
repair, and operation of the Project Common Areas (and appurtenant
areas such as adjacent sidewalks) that would be included as
“Operating Expenses” as defined in Subsection 4.1(g)
below (and subject to the exclusions set forth therein) if the
entire Project were part of the same parcel of Land on which the
Building is located. In addition, “Project Common
Expenses”
13
shall include
all “Common Area Maintenance Costs” as defined in the
excerpt from the REA attached hereto as Schedule 4.1(f). The
term “Building’s Share” shall mean the
share of Project Common Expenses allocated to the Building pursuant
to the terms and conditions of the Ground Lease and the
REA.
(g) Operating
Expenses shall include, without limitation, the costs and expenses
described in subsection (1) below, but shall not include the
costs and expenses described in subsection (2) below.
(1) Included
costs and expenses (which shall in all cases be net of any
discounts, credits, reimbursements (other than payments of
additional rent by tenants [including Tenant] pursuant to
“pass-through” provisions such as this
Section 4.1 ) and rebates received by
Landlord):
(i) Gas,
water, sewer, electricity and other utility charges (including
surcharges) of every type and nature.
(ii) Insurance
premiums paid by Landlord.
(iii) Personnel
costs of the Building, including, but not limited to, salaries,
wages, fringe benefits and other direct and indirect costs of
engineers, superintendents, watchmen, porters, property accountants
and any other personnel related to the management, maintenance,
repair and operation of the Building (“ Personnel
”).
(iv) Costs
of service and maintenance contracts, including, but not limited
to, chillers, boilers, controls, elevators, mail chute, windows,
access control service, landscaping, snow and ice removal,
management fees (such management fees shall be three percent (3%)
of the rental revenues of the Building for the first ten
(10) Lease Years and thereafter shall be based on prevailing
market rate management fees for buildings in the Market Area
managed to a comparable Class-A standard by an owner or
owner-affiliate but in no event greater than five percent (5%) of
the rental revenues of the Building), and air and water quality
testing.
(v) All
other maintenance and repair expenses and supplies which are
deducted by Landlord in computing its Federal income tax
liability.
(vi) Amortization
over the Approved Period (as defined below), with interest at
Landlord’s cost of borrowing, or, if the improvement is not
debt financed, at the prime rate reported by the Bank of America on
the date of such expenditure) for capital expenditures made by
Landlord (A) to reduce operating expenses if and to the extent
the annual reduction in Operating Expenses will be equal to or will
exceed the annual amortization and financing costs therefor, or
(B) to comply with all present and future laws, ordinances
(including zoning ordinances and land use requirements),
regulations and orders of Montgomery County, Maryland, the United
States of America and any other public or quasi-public authority
having jurisdiction over the Premises (collectively,
“Legal Requirements” ), which Legal Requirements
are first applicable to the Building after the Lease Commencement
Date; the “Approved
14
Period” shall mean the time period equal to the longest
allowable useful life of the improvement permitted under generally
accepted accounting principles, except that with respect to an
improvement made for the purpose of reducing Operating Expenses,
Landlord may reduce such time period to the number of years that it
will take to fully amortize the cost of the capital expenditure if
the yearly amortization amount (including interest as aforesaid) is
equal to the projected annual savings as reasonably estimated by
Landlord.
(vii) Any
other costs and expenses reasonably incurred by Landlord in
maintaining or operating the Building, except as provided in
(2) below.
(viii) The
costs of any additional category of services not provided to the
Building at the Lease Commencement Date, provided that Landlord
shall not add any such additional category of service that will
result in an additional expense to Tenant pursuant to this
Section 4.1(g)(viii) of more than $30,000 per year
without Tenant’s approval, which Tenant shall not
unreasonably withhold, condition or delay; provided however, that
Tenant’s approval shall not be required for services required
by Legal Requirements or for any service relating to security of
the Building or tenants if such security service is comparable to
security services then typically being provided at other
Class A mixed-use buildings in the Market Area.
(ix) Charges
for concierge, access control, janitorial, char and cleaning
services and supplies and for operation and maintenance of the
Building and/or loading dock serving the Building.
(x) Personnel
costs of the regional building property manager, even if such
person works off-site, so long as such manager is not part of the
corporate office and only if and to the extent such manager’s
time is reasonably allocable to the Building.
(xi) Costs
of maintaining on-site management or engineering offices for the
Building, including, without limitation, the costs of telephone
services, office equipment, including upgrades and replacements
thereof, and office supplies, but excluding any cost for imputed
rent or the initial furnishing of such offices.
(xii) Accounting
expenses reasonably incurred by Landlord in calculating Operating
Expenses and legal fees and expenses reasonably incurred by
Landlord in connection with proceedings undertaken to reduce
Operating Expenses.
(xiii) Capital
expenditures due to breakage, casualty or normal wear and tear, if
the capital expenditure is less than the cost of repair would have
been.
(2)
Excluded costs and expenses :
(i) Principal
or interest payments on, and any other charges paid by Landlord in
connection with, any mortgages, deeds of trust or other financing
encumbrances.
15
(ii) Rental
payments (including percentage rent and any increases in base rent)
made under any ground lease, except to the extent such rental
payments represent payment of Real Estate Taxes (as hereinafter
defined) or Operating Expenses.
(iii) Leasing
commissions and other marketing and leasing costs payable by
Landlord.
(iv) Deductions
for depreciation for the Building.
(v) Depreciation
and amortization of capital improvements that are not deducted by
Landlord in computing its federal income tax liability, except to
the extent included in subsection (l) above.
(vi) The
costs of special services, tenant improvements and concessions,
repairs, maintenance items or utilities separately chargeable to,
or specifically provided for, individual tenants of the Building,
including, without limitation, the cost of preparing any space in
the Building for occupancy by any tenant and,/or for altering,
renovating, repainting, decorating, planning and designing spaces
for any tenant in the Building in connection with the renewal of
its lease and/or costs of preparing or renovating any vacant space
for lease in the Building (including permit license and inspection
fees).
(vii) Attorneys’
fees and disbursements, recording costs, mortgage recording taxes,
title insurance premiums, title closer’s gratuity and other
similar costs, incurred in connection with any mortgage financing
or refinancing or execution, modification or extension of any
ground lease; loan prepayment penalties, premiums, fees or
charges.
(viii) Salaries
and all other compensation (including fringe benefits and other
direct and indirect personnel costs) of partners, officers and
executives above the grade of regional property manager or building
manager of Landlord or the managing agent.
(ix) The
costs of repairs, replacements and alterations for which and to the
extent that Landlord is actually reimbursed therefor from any
source; it being understood that any rent payments or other
payments by tenants in the nature of additional rent as provided in
this Section 4.1 shall not be deemed sources of
reimbursement to Landlord for such costs.
(x) Fees,
costs and expenses incurred by Landlord in connection with or
relating to claims against or disputes with tenants of the Building
or the negotiation of leases with tenants or prospective tenants,
including, without limitation, legal fees and
disbursements.
(xi) Capital
expenditures due to breakage, casualty o¡ normal wear and
tear, except to the extent includable pursuant to subsection
(1) above.
(xii) Costs
incurred by Landlord for the original construction and development
of the Building or the Project and for the completion of any work
relating to a
16
zoning
condition or requirement of any governmental agency in connection
with the original approval of the construction and development of
the Building or the Project.
(xiii) Any
costs and expenses incurred by Landlord in connection with causing
the common and public areas of the Building and the Project which
are within Landlord’s sole and exclusive control to comply
with applicable Legal Requirements, except to the extent included
in subsection (1) above.
(xiv) Costs
and expenses incurred by Landlord for services which are
duplicative of any management fees paid by Landlord.
(xv) That
portion of any Operating Expenses which is paid to any entity
affiliated with Landlord which is in excess of the amount which
would otherwise be paid to an entity which is not affiliated with
Landlord for the provision of the same service.
(xvi) Sums
paid by Landlord for any indemnity, damages, fines, late charges,
penalties or interest for any late payment or to correct violations
of building codes or other laws, regulations or ordinances
applicable to the Building, except for expenditures for repairs,
maintenance and replacement or other items that would otherwise
reasonably constitute Operating Expenses and except as otherwise
provided in subsection (l) above.
(xvii) Costs
attributable to any “tap fees” or one-time lump sum
sewer or water connection fees payable in connection with the
initial construction of the Building or the Project.
(xviii) Costs
and expenses incurred by Landlord in connection with damage,
casualty or condemnation of all or a portion of the Building;
provided, however, that with respect to the cost to repair damage,
Landlord may include in Operating Expenses (1) the amount of a
commercially reasonable deductible applied to each such occurrence
and (2) if Landlord determines, in its reasonable judgment,
that the effect of making a claim under Landlord’s insurance
policy or policies would be to increase, in the aggregate, the
future cost of insurance premiums and repair and maintenance
expenses relating to the Building, Landlord may include in
Operating Expenses the cost to repair such damage to the extent
such cost does not exceed two hundred percent (200%) of the
commercially reasonable deductible amount applicable under
Landlord’s insurance policy or policies to such occurrence in
any calendar year; provided, however that Landlord may only include
such cost in Operating Expenses, if Landlord actually makes such
repair and does not submit an insurance claim in connection
therewith.
(xix) Rental
for personal property leased to Landlord except for rent for
personal property leased to Landlord the purchase price for which,
if purchased, would be fully includable in Operating Expenses in
the year of purchase.
(xx) Any
costs actually reimbursed under the warranty of any general
contractor, subcontractor or supplier and realized by
Landlord.
17
(xxi) Attorneys’
fees and disbursements, brokerage commissions, transfer taxes,
recording costs and taxes, title insurance premiums, title
closer’s fees and gratuities and other similar costs incurred
in connection with the sale or transfer of an interest in Landlord
or the Building.
(xxii) Costs
and expenses of administration and management of partnership and/or
limited liability company activities of Landlord.
(xxiii) Nonrecurring
costs and expenses incurred by Landlord in curing, repairing or
replacing any structural portion of the Building made necessary as
a result of defects in design, workmanship or materials.
(xxiv) costs
of staffing and managing parking operations in the garage; gas,
water, sewer, electricity and other utility charges allocable to
the garage; and costs of cleaning, lighting and signage for the
garage.
(xxv) General
corporate overhead and administrative expenses of Landlord or its
managing agent that are unrelated to the operation, management, or
maintenance of the Building.
(xxvi) costs
incurred as a result of Landlord’s breach of its obligations
under this Lease.
(xxvii) Costs
and expenses attributable to any testing, investigation,
management, maintenance, remediation, or removal of Hazardous
Materials, other than any testing or monitoring customarily
conducted by owners of buildings comparable to the Building in the
ordinary course of operating and managing the same and any
reasonable testing required by the holder of any mortgage
encumbering the Building or the Land (except to the extent any such
testing or monitoring is required as a result of Landlord’s
failure to comply with its obligations under
Section 6.4 hereof).
(xxviii) The
purchase price or rental of sculptures, paintings, and other works
of art (but not the reasonable costs of maintaining the
same).
(xxix) Costs
actually reimbursed by insurers or by governmental authorities in
eminent domain proceedings and realized by Landlord.
(xxx) Costs
incurred for any items to the extent Landlord recovers under a
manufacturer’s, materialman’s, vendor’s or
contractor’s warranty.
(xxxi) Charitable
or political contributions.
18
(xxxii) Costs
(including costs, such as, but not limited to, attorneys’
fees and disbursements, associated with any court judgment or
arbitration award obtained against Landlord) directly resulting
from the breach of any other lease or agreement by Landlord, the
negligence or willful misconduct of Landlord and its employees, or
the gross negligence or willful misconduct of Landlord’s
agents or contractors (including the costs of increased insurance
premiums as a result thereof).
(xxxiii) Compensation
paid to clerks, attendants or other persons in commercial
concessions operated by Landlord or by the operator thereof
(i.e., newsstands).
(xxxiv) “Takeover
expenses” (i.e., expenses of another tenant or
prospective tenant incurred by Landlord with respect to space
located in the Building or another building of any kind or nature
in connection with the leasing of space in the
Building).
(xxxv) Accounting
and legal expenses, except if and to the extent that the same are
directly related to operating the Building.
(xxxvi) Excess
personnel costs due to any overlapping of staff during a staff
transition, other than the costs of staffing property management
positions in anticipation of impending turnover of
staff.
(xxxvii) the
Retail Common Expenses, as hereinafter defined.
(h)
“Real Estate Taxes” shall mean (i) all real
estate taxes and other impositions, including general and special
assessments, and other similar taxes and assessments if any, which
are imposed upon Landlord or assessed against the Office Portion of
the Building and the Land upon which the Office Portion of the
Building is situated; (ii) any other present or future taxes
or governmental charges that are imposed upon Landlord or assessed
against the Office Portion of the Building or the Land, including,
but not limited to, any tax levied on or measured by the rents
payable by tenants of the Office Portion of the Building, which are
in the nature of, or in substitution for, real estate taxes;
(iii) all taxes which are imposed upon Landlord, and which are
assessed against the value of any improvements to the Premises made
by Tenant or any machinery, equipment, fixtures or other personal
property of Tenant used therein; and (iv) reasonable expenses
(including attorneys’ fees) incurred in reviewing,
protesting, negotiating or seeking (whether formally or informally)
a reduction or abatement of Real Estate Taxes. If the entire
Building (including the Retail Portion and the Office Portion) is
assessed together, or if any of the buildings that may comprise the
Project are assessed together, then Real Estate Taxes for the
Office Portion of the Building shall be a fraction thereof, the
numerator of which is the number of square feet of rentable area in
the Office Portion of the Building and the denominator of which is
the number of square feet of rentable area in the Building or the
Project, as applicable. Real Estate Taxes shall not include any
income taxes, excess profits taxes, excise taxes, franchise taxes,
estate taxes, succession taxes and transfer taxes, except to the
extent any of such taxes are in the nature of or are in
substitution for or recharacterization or replacement of Real
Estate Taxes. If Landlord contests the Real Estate Taxes for any
calendar year, and such
19
contest results
in an increase in Real Estate Taxes for such calendar year, then
Landlord shall have the right to bill Tenant for prior
underpayments of Real Estate Taxes thereby resulting. If Landlord
contests the Real Estate Taxes for any calendar year, and such
contest results in a refund of Real Estate Taxes for such calendar
year, then Landlord shall credit to Tenant Tenant’s share of
such refund, net of the expenses incurred by Landlord in connection
with obtaining such refund. landlord shall notify Tenant each year
whether or not Landlord intends to contest the Real Estate Taxes
for such year. In making a final determination whether or not to
contest the Real Estate Taxes in any particular year, Landlord
agrees that it will consult with Tenant and in good faith take
Tenant’s wishes into account; provided, however, that the
final determination whether or not to contest the Real Estate Taxes
shall be made by Landlord. Landlord shall deliver to Tenant a copy
of each real estate tax bill received by Landlord with respect to
the Building, promptly following Landlord’s receipt thereof,
and shall furnish Tenant with such supporting documentation with
respect thereto or with respect to the calculation of
Tenant’s Pro Rata Share of Real Estate Taxes as Tenant may
reasonably request from time to time. ’ Notwithstanding anything in this
Article IV to the contrary, any abatement of Real
Estate Taxes negotiated by Tenant in accordance with
Article XXXIII below shall not be treated as a
reduction in .Real Estate Taxes hereunder, but shall accrue solely
to Tenant as provided in Article XXXIII.
(i) As used
above, the term “Retail Common Expenses” shall
mean any cost or expense that Landlord determines to be solely
attributable to the maintenance, ‘ repair, ownership or operation of the Retail
Portion of the Building, and any cost or expense which is incurred
on behalf of or for the sole benefit of one or more retail tenants,
including but not limited to, the cost of providing utilities or
janitorial services to any retail tenant space.
4.2 In the event
the average occupancy rate for the entire Building shall be less
than one hundred percent (100%) or if any tenant is paying
separately for electricity or other utilities or services for any
calendar year, for purposes of calculating the Additional Rent
payable by Tenant pursuant to this Article IV for each
calendar year, the Operating Expenses for such calendar year shall
be increased by the amount of additional costs and expenses that
Landlord reasonably estimates would have been incurred if the
average occupancy rate for the entire Building had been one hundred
percent (100%) and as if no tenants had separately paid for
electricity or other utilities and services for such calendar year.
It is the intent of this provision to permit Landlord to recover
from Tenant its proportionate share of Operating Expenses
attributable to occupied space in the Building even though the
aggregate of such expenses shall have been reduced as a result of
vacancies in the Building. In no event will Landlord recover more
than one hundred percent (100%) of the actual Operating Expenses
for the Building. In the event any portion of the Premises leased
by Tenant hereunder is at any time vacant but is still included in
the Premises, then this section 4.2 shall be applied to Tenant in
an equitable manner such that Tenant pays a sum equal to the actual
cost (as nearly as such cost can practicably be determined) of the
utilities and services furnished to the Premises.
4.3 Commencing on
the Lease Commencement Date and at the beginning of each calendar
year thereafter during the Lease Term, Landlord shall submit to
Tenant a statement setting forth Landlord’s reasonable
estimate of (a) the amount of Operating Expenses and Real
Estate Taxes that are expected to be incurred during such calendar
year, and (b) the computation
20
of
Tenant’s proportionate share of such anticipated Operating
Expenses and Real Estate Taxes. Except as otherwise provided
herein, Tenant shall pay to Landlord on the first day of each month
following receipt of such statement (provided that Tenant’s
obligation to make the first of such payments shall commence on the
later to occur of (x) the first day of the first month
following receipt of such statement, or (y) twenty
(20) days after receipt of such statement) during such
calendar year an amount equal to Tenant’s proportionate share
of the anticipated Operating Expenses and Real Estate Taxes
multiplied by a fraction, the numerator of which is l, and the
denominator of which is the number of months during such calendar
year which fall entirely or partly within the Lease Term and follow
the date of the foregoing statement. Landlord shall have the right,
upon twenty (20) days’ notice to Tenant to adjust the
estimated payments of Operating Expenses and Real Estate Taxes
during any Lease Year based on Landlord’s reasonable good
faith estimate of changes in such Operating Expenses and Real
Estate Taxes. Within approximately one hundred twenty
(120) days after the expiration of each calendar year falling
entirely or partly within the Lease Term, Landlord shall submit to
Tenant a statement showing (i) the actual Operating Expenses
and Real Estate Taxes paid or incurred by Landlord during the
immediately preceding calendar year, (ii) a computation of
Tenant’s proportionate share if the Operating Expenses and
Real Estate Taxes actually incurred during the preceding calendar
year, and (iii) the aggregate amount of the estimated payments
made by Tenant on account thereof. If the aggregate amount of such
estimated payments exceeds Tenant’s actual liability, then
Tenant shall deduct the net overpayment from its next estimated
payment or payments due under this Article IV for the
then current year or, in the case of the reconciliation for the
calendar year in which the Lease Term expires, Landlord shall pay
Tenant the net overpayment (after deducting therefrom any amounts
then due from Tenant to Landlord). If Tenant’s actual
liability for such amounts exceeds the estimated payments made by
Tenant on account thereof, then Tenant shall pay to Landlord the
total amount of such deficiency as Additional Rent due hereunder in
accordance with Section 25.16 below.
4.4 In the event
the Lease Term begins or expires on a day other than the first and
last day of a calendar year, respectively, the Operating Expenses
and Real Estate Taxes for such calendar year shall be apportioned
by multiplying the amount of Tenant’s proportionate share
thereof for the full calendar year by a fraction, the numerator of
which is the number of days during such calendar year falling
within the Lease Term, and the denominator of which is
365.
4.5 All payments
required to be made by Tenant pursuant to this
Article IV shall be paid to Landlord, without setoff or
deduction, in the same manner as annual Base Rent is payable
pursuant to Article III hereof.
4.6 Tenant’s
liability for its proportionate share of Operating Expenses and
Real Estate Taxes described in Section 4.1 hereof for the
last calendar year falling entirely or partly within the Lease Term
shall survive the expiration of the Lease Term. Similarly,
Landlord’s obligation to refund to Tenant the excess, if any,
of the amount of Tenants estimated Payments on account of such
Operating Expenses and Real Estate Taxes for such last calendar
year over Tenant’s actual liability therefor shall survive
the expiration of the Lease Term.
4.7 Tenant shall
have the right, for a period of one hundred eighty (180) days
(the “Review Period” ) following the receipt by
Tenant of any statement required of Landlord pursuant to Section
4.3 hereof (the “Operating Expense
Statement” ), to cause Landlord’s
21
books and
records relating to Operating Expenses to be inspected by
Tenant’s personnel or by an accountant or real estate
consultant employed by Tenant on a non-contingency basis. In the
event that Tenant, following such inspection, in good faith,
believes that the amounts paid by Tenant to Landlord relating to
Operating Expenses during any calendar year failing within the
Lease Term exceeded the amounts to which Landlord was entitled
hereunder and Tenant details the alleged discrepancy, in writing to
Landlord, then, if Landlord disputes the existence of such
discrepancy, an independent, certified public accountant designated
by Tenant (which independent, certified public accountant shall be
employed by a nationally or regionally recognized full-service
accounting firm, or another firm reasonably acceptable to Landlord,
which shall be hired by Tenant on a non-contingency basis) shall
have the right, during regular business hours and after giving ten
(10) days’ advance written notice to Landlord, to
inspect and complete an audit of Landlord’s books and records
relating to such Operating Expenses during the Review Period. If
such audit shows that the amounts paid by Tenant to Landlord on
account of such charges exceeded the amounts to which Landlord was
entitled hereunder, or that Tenant is entitled to a credit with
respect to any such charges, Landlord shall promptly refund to
Tenant the amount of such excess or the amount of such credit, as
the case may be. Similarly, if it is determined that the amounts
paid by Tenant to Landlord on account of Operating Expenses were
less than the amounts to which Landlord was entitled hereunder,
then Tenant shall promptly Pay to Landlord, as Additional Rent
hereunder, the amount of such deficiency in accordance with
Section 25.16 below. Tenant shall (and shall cause its
agents to) keep the results of such audit strictly confidential and
shall execute Landlord’s reasonable standard form of
Confidentiality Agreement. All costs and expenses of any such audit
shall be paid by Tenant except that if such audit shows that the
aggregate amount of Operating Expenses (excluding Project Common
Expenses and Real Estate Taxes) was overstated by Landlord by more
than three percent (3%), Landlord shall reimburse tenant for the
reasonable out-of-pocket costs and expenses incurred by tenant in
such audit, up to a maximum of the amount of the overstatement of
Tenant’s proportionate share of Operating Expenses. If such
audit shows that the amounts paid by Tenant to Landlord on account
of such charges exceeded the amounts to which Landlord was entitled
hereunder, or that Tenant is entitled to a credit with respect to
any such charges, then (x) after at least ten (10) days
prior written notice to Landlord, for a period of sixty
(60) days following the completion of Tenant’s audit
Tenant may also examine in such manner Landlord’s books and
records for the previous two (2) calendar years with respect
solely to line items for which a discrepancy was found, and
(y) Landlord shall refund to Tenant the amount of such excess
or the amount of such credit, as the case may be within twenty
(20) days after the date it is determined that a refund is
due. Subject to the immediately preceding sentence, if Tenant does
not notify Landlord in writing of any objection to the Operating
Expense Statement within the Review Period, then Tenant shall be
deemed to have waived any such objection, except that, in the event
Landlord revises any Operating Expense Statement then Tenant shall
have an additional one hundred eighty (180) day Review Period,
commencing as of the date such revised Operating Expense Statement
is delivered to Tenant, but solely to review the portions of the
Operating Expense Statement that were revised from the originally
delivered Operating Expense Statement ‘ . Any Operating Expense Statement shall become
binding upon Landlord (except with respect to Real Estate Taxes),
and shall not be subject to further modification by Landlord
(except with respect to Real Estate Taxes), twelve (12) months
after the issuance of such Operating Expense Statement by Landlord.
In addition, notwithstanding the foregoing, Tenant acknowledges
that Landlord has no control over the calculation of “Project
Common Expenses,” and that “Project
22
common
Expenses” are determined by a statement prepared by Project
Developer (as defined in the REA) regarding the amount of Project
Common Expenses that are allocated to the Building pursuant to the
Ground Lease and the REA. Tenant shall have no right to audit the
Project Common Expenses.
ARTICLE V
SECURITY DEPOSIT
5.1
(a) Within five (5) business days after Tenant’s
execution of this Lease, Tenant shall post a Letter of Credit (as
defined below) in an amount equal to One Million Nine Hundred
Eighty-Three Thousand Four Hundred Twenty-Eight and 32/100ths
Dollars ($1,983,428.12), as a security deposit (hereinafter
referred to as “security deposit” or
“Security Deposit” ). The foregoing initial
Security Deposit is calculated as three (3) months’ of
Full Service Rent (as defined below) based on the Premises
containing 160,634 square feet of rentable area. In addition, if
Tenant elects to accept any Additional Allowance pursuant to (and
as defined in) Exhibit B hereto, then, within ten
(10) business days of Tenant making such election, the
Security Deposit shall be increased by adding thereto a Letter of
Credit in an amount equal to one hundred percent (100%) of the
Additional Allowance. The term “Full service
Rent” shall mean, collectively, all Base Rent Operating
Expenses, and Real Estate Taxes payable by Tenant hereunder based
upon Landlord’s reasonable estimate for Operating Expenses
and Real Estate Taxes pursuant to Section 4.3 hereof,
which, for purposes of determining the Security Deposit due upon
execution of this Lease, shall be deemed to be Fourteen and
89/100ths Dollars ($14.89) per rentable square foot.
(b) In
the event at any time during the Term hereof, the Revenues
Requirement (as defined in Section 5.1(f) below) is not
satisfied, then Tenant shall provide an additional security deposit
(the “Additional security Deposit”) (in the form
of a letter of credit meeting the requirements of this Article
V ) in the amount of nine (9) months of Full service Rent
based upon the configuration of the Premises as of the end of the
calendar quarter in which the Revenue Requirement was not satisfied
(with no other notice or grace period being applicable thereto,
notwithstanding anything in the Lease to the contrary). Such
Additional Security Deposit shall be provided by Tenant to Landlord
within fifteen (15) days after the end of any calendar quarter
in which the Revenues Requirement was not satisfied. The foregoing
Additional Security Deposit shall be part of the Security Deposit
and shall be in addition to the applicable Security Deposit
required pursuant to the provisions set forth above and in addition
to the Additional Allowance Security Deposit, if any, for a total
Security Deposit of ten (10) or twelve (12) months’
Full Service Rent (plus the Additional Allowance Security Deposit.
if any), as applicable, based upon whether the Security Deposit was
previously reduced pursuant to Section 5.1(f)(i)
below. In the event Tenant is required to post the Additional
Security Deposit hereunder, such Additional Security Deposit shall
be held by Landlord until such time thereafter as the quarterly net
income of the Guarantor (as defined in Section 5.1(f)
below) meets the Revenues Requirement for eight
(8) consecutive quarters, at which time the Additional
Security Deposit shall be released.
(c)
[Intentionally Omitted]
23
(d) The
Security Deposit shall be security for the performance by Tenant of
all of Tenant’s obligations, covenants, conditions and
agreements under this Lease. Within ninety (90) days after the
expiration of the Lease Term, and provided Tenant has vacated the
Premises and is not in default hereunder, Landlord shall return the
Security Deposit to Tenant, less such portion thereof as Landlord
shall have appropriated to satisfy any default by Tenant hereunder,
including any required estimated payments of Operating Expenses and
Real Estate Taxes that have not been paid by Tenant. Upon the
occurrence of an Event of Default by Tenant hereunder, Landlord
shall have the right, but shall not be obligated, to use, apply or
retain all or any portion of the Security Deposit for (i) the
payment of any annual Base Rent or Additional Rent or any other sum
as to which Tenant is in default, (ii) the payment of any
amount which Landlord may spend or become obligated to spend to
repair physical damage to the Premises or the Building pursuant to
Section 8.2 hereof, or (iii) other than the
payment of annual Base Rent or Additional Rent or any other sum
pursuant to clause (i) herein, the payment of any amount
Landlord may spend or become obligated to spend, or for the
compensation of Landlord for any losses incurred, by reason of
Tenant’s default hereunder, including, but not limited to,
any damage or deficiency arising in connection with the relating of
the Premises. Notwithstanding anything in this Lease to the
contrary, in the event Tenant does not timely pay any amounts when
due pursuant to Article IX below and
Exhibit B attached hereto or otherwise in
connection with the Alterations and such failure continues for five
(5) Business Days after notice of such failure from Landlord,
then Landlord shall have the right to immediately draw upon the
Letter of Credit with notice to Tenant (it being understood that
Landlord shall not be obligated to provide Tenant with prior
notice, and that no other notice or cure or grace period shall be
applicable with respect to Landlord’s right to immediately
draw upon the Letter of Credit as aforesaid) and apply the proceeds
to the payment of any amount Landlord may spend or become obligated
to spend, or for the compensation of Landlord for any losses
incurred, by reason of Tenant’s failure to timely pay such
amounts. If any portion of the Security Deposit is so used or
applied, within ten (10) business days after written notice to
Tenant of such use or application, Tenant shall restore the
Security Deposit by providing a replacement or additional Letter of
Credit such that Landlord is holding one or more Letters of Credit
or cash in the aggregate amount of the Security Deposit required
hereunder, and Tenant’s failure to do so shall constitute an
Event of Default under this Lease. Among other things, Landlord
intends to assign to the holder of the mortgage now or hereafter
encumbering the Building, all of Landlord’s interest in this
Lease, including, without limitation, the Security Deposit. Tenant
hereby authorizes Landlord to deposit the Security Deposit with the
holder of any mortgage (as defined in Section 21.1) if
and to the extent required by said holder; provided, however, that
such holder shall hold the Security Deposit subject to
Tenant’s rights with respect to the Security Deposit set
forth herein.
(e) The
Security Deposit shall be in the form of one or more unconditional,
irrevocable letters of credit (each, a “Letter of
Credit” ), subject to the following terms and conditions.
Such Letter of Credit shall be (i) substantially in the form
attached hereto as Exhibit F or otherwise in
form and substance satisfactory to Landlord in its reasonable
discretion; (ii) at all times in the amount of the Security
Deposit, and shall permit multiple draws; (iii) issued by a
commercial bank reasonably acceptable to Landlord from time to
time; (iv) made payable to, and expressly transferable and
assignable by, the owner from time to time of the Building or, at
Landlord’s option, the holder of any mortgage (which
transfer/assignment shall be conditioned only upon the execution of
a written document in connection therewith;
24
provided,
however, that in the event the issuing bask of the Letter of Credit
charges a fee for a transfer and/or assignment, any and all such
reasonable fees shall be payable by Landlord); (v) payable at
sight upon presentation of a simple sight draft; (vi) of a
term not less than one year; and (vii) at least thirty
(30) days prior to the then-current expiration date of such
Letter of Credit, renewed (or automatically and unconditionally
extended) from time to time through the ninetieth (90th) day after
the expiration of the Lease Term. Notwithstanding anything in this
Lease to the contrary, any cure or grace periods set forth in this
Lease shall not apply to any of the foregoing, and, specifically,
if Tenant fails to timely comply with the requirements of
subsection (vii) above, then Landlord shall have the right to
immediately draw upon the Letter of Credit without notice to Tenant
and hold the proceeds thereof as a cash Security Deposit until
Tenant delivers to Landlord a substitute Letter of Credit
satisfying the requirements of this Section. Each Letter of Credit
shall be issued by a commercial bank that has a credit rating with
respect to certificates of deposit, short term deposits or
commercial paper of at least P-2 (or equivalent) by Moody’s
Investor Service, Inc., or at least A-2 (or equivalent) by Standard
& Poor’s Corporation. If the issuer’s credit rating
is reduced below P-2 (or equivalent) by Moody’s Investors
Service, Inc. or below A-2 (or equivalent) by Standard &
Poor’s Corporation, then Landlord shall have the right the
require that Tenant obtain from a different issuer a substitute
letter of credit that complies in all respects with the
requirements of this Section, and Tenant’s failure to obtain
such substitute letter of credit within fifteen (15) days
following Landlord’s written demand therefor (with no other
notice or cure or grace period being applicable thereto,
notwithstanding anything in this Lease to the contrary) shall
entitle Landlord to immediately draw upon the then existing Letter
of Credit in whole or in part, without notice to Tenant, and hold
the proceeds thereof as a cash Security Deposit until Tenant
delivers to Landlord a substitute Letter of Credit satisfying the
requirements of this Section. In the event, the issuer of any
Letter of Credit held by Landlord is placed into receivership or
conservatorship by the Federal Deposit Insurance Corporation or any
successor or similar entity, then, effective as of the date such
receivership or conservatorship occurs, said Letter of Credit shall
be deemed to not meet the requirements of this Section, and, within
fifteen (15) days thereof, Tenant shall replace such Letter of
Credit with a substitute Letter of Credit satisfying the
requirements of this Section (and Tenant’s failure to do so
shall, notwithstanding anything in this Lease to the contrary,
constitute an Event of Default for which there shall be no notice
or grace or cure periods being applicable thereto other than the
aforesaid fifteen (15) day period). Any failure or refusal of
the issuer to honor the letter of credit shall be at Tenant’s
sole risk and shall not relieve Tenant of its obligations hereunder
with respect to the Security Deposit.
(f) (i) Provided
that, as of the Reduction Date (as defined and extended below)
(i) no Event of Default (as defined in
Section 19.1) has occurred and is continuing hereunder,
and (ii) the Revenues Requirement (as defined below) is
satisfied, Tenant shall have the right to reduce the Security
Deposit (excluding any Additional Allowance Deposit) to one
(1) month of Full Service Rent based upon the configuration of
the Premises as of the Reduction Date. The fifth (5th) anniversary
of the Lease Commencement Date shall be the “Scheduled
Reduction Date” ; provided however, in the event Tenant
is in monetary or material non- monetary default hereunder (without
the expiration of any applicable grace or cure period) as of the
Scheduled Reduction Date, then Landlord shall have the right to
extend the Scheduled Reduction Date until the earlier to occur of
(x) such default being cured by Tenant prior to the expiration
of any applicable grace or cure periods (in which event the
Security Deposit shall be
25
reduced as set
forth in this subsection (i)), or (y) the expiration of any
applicable grace or cure periods without such default being cured
(in which latter event, an Event of Default shall have occurred,
and Landlord shall not be obligated to reduce the Security
Deposit). The Scheduled Reduction Date, as so extended, if
applicable, shall be the “Reduction Date” . The
“Revenues Requirement” shall mean that no
calendar quarter has occurred in which the net income of the
Capitalsource Inc., a Delaware corporation
(“Guarantor”) (as set forth in the Guarantor’s
financial statement filed with the U.S. Securities and Exchange
Commission) has dropped below Twenty-One Million Dollars ($2
1,000,000.00).
(ii) In
addition, provided that, as of the Additional Allowance Reduction
Date (as defined below) (i) no Event of Default has occurred
and is continuing hereunder, Tenant shall have the right to reduce
the Additional Allowance Deposit portion of the Security Deposit,
if any , by the amount set forth below with respect to each
Scheduled Additional Allowance Reduction Date set forth below,
provided however, in the event Tenant is in monetary or material
non-monetary default hereunder (without the expiration of any
applicable grace or cure period) as of any Scheduled Additional
Allowance Reduction Date, then Landlord shall have the right to
extend such Scheduled Additional Allowance Reduction Date until the
earlier to occur of (x) such default being cured by Tenant
prior to the expiration of any applicable grace or cure periods (in
which event the Security Deposit shall be reduced as set forth in
this subsection (ii)), or (y) the expiration of any applicable
grace or cure periods without such default being cured (in which
event, an Event of Default shall have occurred, and Landlord shall
not be obligated to reduce the Security Deposit). The Scheduled
Additional Allowance Reduction Date, as so extended, if applicable,
shall be the “Additional Allowance Reduction
Date.”
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Percentage Reduction
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Scheduled
Additional
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of Additional
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Allowance
Reduction Date
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Allowance Deposit
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First day of second Lease Year
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2.78
|
%
|
|
|
|
|
First day of third Lease Year
|
|
|
3.10
|
%
|
|
|
|
|
First day of fourth Lease Year
|
|
|
3.46
|
%
|
|
|
|
|
First day of fifth Lease Year
|
|
|
3.86
|
%
|
|
|
|
|
First day of sixth Lease Year
|
|
|
4.30
|
%
|
|
|
|
|
First day of seventh Lease Year
|
|
|
4.80
|
%
|
|
|
|
|
First day of eighth Lease Year
|
|
|
5.36
|
%
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Reduction
|
|
|
|
|
|
Scheduled
Additional
|
|
of Additional
|
|
|
|
|
|
Allowance
Reduction Date
|
|
Allowance Deposit
|
|
|
|
|
|
|
First day of ninth Lease Year
|
|
|
5.98
|
%
|
|
|
|
|
First day of tenth Lease Year
|
|
|
6.67
|
%
|
|
|
|
|
First day of eleventh Lease Year
|
|
|
7.44
|
%
|
|
|
|
|
First day of twelfth Lease Year
|
|
|
8.30
|
%
|
|
|
|
|
First day of thirteenth Lease Year
|
|
|
9.26
|
%
|
|
|
|
|
First day of fourteenth Lease Year
|
|
|
10.33
|
%
|
|
|
|
|
First day of fifteenth Lease Year
|
|
|
11.53
|
%
|
|
|
|
|
End of initial Lease Term
|
|
Balance
|
|
|
|
|
(iii) With
respect to a reduction of the Security Deposit pursuant to
Subsections 5.1(f)(i) or (ii) above, if all of the
applicable conditions are met, upon Tenant’s request,
Landlord shall promptly notify the issuer of the Letter of Credit
that the Letter of Credit may be reduced in the amount of the
reduction so authorized, and the Security Deposit shall be so
reduced in accordance with this Section 5.1(f) . Such
reduction shall occur by means of delivery by Tenant to Landlord of
an amendment to the Letter of Credit reducing the amount thereof as
directed by Landlord, or a substitute Letter of Credit in such
amount and in strict conformity with the terms of this
Article V, in which latter event, the original Letter
of Credit will be simultaneously returned to Tenant.
Notwithstanding anything contained herein to the contrary, in no
event shall the Letter of Credit be reduced unless the issuing bank
receives prior written notice from Landlord, authorizing a
reduction by a certain amount (it being understood that in no event
shall the reduction exceed the amount so authorized by Landlord).
Furthermore, and notwithstanding anything contained herein to the
contrary, if an Event of Default has occurred, then there shall
occur no further reduction in the Security Deposit. Landlord agrees
that, in the event Tenant is entitled to a reduction in the Letter
of Credit pursuant to the terms hereof but no notice of reduction
has been delivered to the issuing bank pursuant to the terms of
this Section 5.1(f)(iii) , then Landlord shall be
entitled to draw only the portion of such Letter of Credit to which
Landlord would have been entitled hereunder had the notice of
reduction been delivered to the issuing bank pursuant to this
Section 5.1(f)(iii) (and if Landlord has erroneously drawn
more than such reduced amount under the Letter of Credit, then
Landlord shall deliver the excess to Tenant promptly upon
demand).
5.2 In the event
of the sale or transfer of Landlord’s interest in the
Building, Landlord shall have the right to transfer the Security
Deposit to the purchaser or assignee, and, Tenant shall, at
Tenant’s sole expense, within ten (10) business days
after Landlord’s request therefor, have the Letter of Credit
amended or reissued by the issuing bank to indicate the new
beneficiary; provided, however, that Landlord shall reimburse
Tenant for any reasonable transfer
27
fee. If
Landlord transfers the Security Deposit to a purchaser or assignee,
Tenant shall look only to such purchaser or assignee for the return
of the Security Deposit, and Landlord shall thereupon be released
from all liability to Tenant for the return of the Security
Deposit.
5.3 Tenant hereby
acknowledges that Tenant will not look to the holder of any
mortgage (as defined in Section 21.1) encumbering the
Building for return of the Security Deposit if such holder, or its
successors or assigns, shall succeed to the ownership of the
Building, whether by foreclosure or deed in lieu thereof, except if
and to the extent the Security Deposit is actually transferred to
such holder.
ARTICLE VI
USE OF PREMISES
6.1 Tenant shall
use and occupy the Premises solely for general office use
(including ancillary uses, such as food service for Tenant’s
employees) consistent with other office tenant uses in Class A
office buildings in the Market Area, and for no other use or
purpose. Tenant shall not use or occupy the Premises for any
unlawful purpose or in any manner that will constitute waste,
nuisance or unreasonable annoyance to the Landlord or other tenants
of the Building. Tenant shall comply with all Legal Requirements
concerning the use, occupancy or condition of the Premises and all
machinery, equipment and furnishings therein, and any Alterations
made by Tenant, including, but not limited to the Americans with
Disabilities Act and regulations promulgated from time to time
thereunder applicable to the Premises, but excluding
(i) common areas, Base Building Systems and the Base Building
Work to be performed by Landlord, and (ii) alterations to the
Base Building Work that apply to the Building as a whole, as
opposed to Tenant’s particular use of the Premises (as
distinct from office use generally). If any Legal Requirement
requires an occupancy or use permit or license for the Premises or
the operation of the business conducted therein, then Tenant shall!
obtain and keep current such permit or License at Tenant’s
expense and shall promptly deliver a copy thereof to Landlord. It
is expressly understood that if any change in the use of the
Premises by Tenant, or any alterations to the Premises by Tenant,
or any future law, ordinance, regulation or order requires a new or
additional permit from, or approval by, any governmental agency
having jurisdiction over the Building, such permit or approval
shall be obtained by Tenant on its behalf and at its sole expense.
Further, Tenant shall comply with all Legal Requirements which
shall impose a duty on Landlord or Tenant relating to or as a
result of the use or occupancy of the Premises (subject to the
exclusions to Tenant’s obligation set forth above). Tenant
shall pay all fines, penalties and damages that may arise out of or
be imposed on Landlord or Tenant because of Tenant’s failure
to comply with the provisions of this Lease.
6.2 Tenant shall
pay any business, rent or other taxes that are now or hereafter
levied upon Tenant’s use or occupancy of the Premises, the
conduct of Tenant’s business at the Premises, or
Tenant’s equipment, fixtures or personal property. In the
event that any such taxes are enacted, changed or altered so that
any of such taxes are levied against Landlord or the mode of
collection of such taxes is changed so that Landlord is responsible
for collection or payment of such taxes, Tenant shall pay any and
all such taxes to Landlord upon written demand from
Landlord.
28
6.3 Tenant shall
not cause or permit any Hazardous Materials (as defined below) to
be generated, used, released, stored or disposed of in or about the
Building, provided that Tenant may use and store in accordance with
all Environmental Laws reasonable quantities of standard cleaning
and office materials as may be reasonably necessary for Tenant to
conduct normal general office use operations in the Premises. At
the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises to Landlord free of Hazardous Materials and
in compliance with all Environmental Laws. “Hazardous
Materials” means (a) asbestos and any asbestos
containing material and any substance that is then defined or
listed in, or otherwise classified pursuant to, any Environmental
Law or any other applicable Law as a “hazardous
substance,” “hazardous material,”
“hazardous waste,” “infectious waste,”
“toxic substance,” “toxic pollutant” or any
other formulation intended to define, list, or classify substances
by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, or Toxicity Characteristic Leaching Procedure
(TCLP) toxicity, (b) any petroleum and drilling fluids,
produced waters, and other wastes associated with the exploration,
development or production of crude oil, natural gas, or geothermal
resources, and (c) any petroleum product, polychlorinated
biphenyls, urea formaldehyde, radon gas, radioactive material
(including any source, special nuclear, or byproduct material),
medical waste, chlorofluorocarbon, lead or lead-based product, and
any other substance whose presence could be detrimental to the
Building or the Land or hazardous to health or the environment.
“Environmental Law” means any present and future
law and any amendments (whether common law, statute, rule, order,
regulation or otherwise), permits and other requirements or
guidelines of governmental authorities applicable to the Building
or the Land and relating to the environment and environmental
conditions or to any Hazardous Material (including, without
limitation, CERCLA, 42 U.S.C. § 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. §
1801 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
§ 1251 et seq., the Clean Air Act, 33 U.S.C. § 7401 et
seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. § 300 feet seq.,
the Emergency Planning and Community Right-To-Know Act, 42 U.S.C.
§ 1101 et seq., the Occupational Safety and Health Act, 29
U.S.C. § 651 et seq., and any so-called “Super
Fund” or “Super Lien” law, any Law requiring the
filing of reports and notices relating to hazardous substances,
environmental laws administered by the Environmental Protection
Agency, and any similar state and local laws, all amendments
thereto and all regulations, orders, decisions, and decrees now or
hereafter promulgated thereunder concerning the environment,
industrial hygiene or public health or safety). Notwithstanding any
termination of this Lease, Tenant shall indemnify and hold
Landlord, its employees and agents harmless from and against any
damage, injury, loss, liability, charge, demand or claim based on
or arising out of the presence or removal of, or failure to remove,
Hazardous Materials generated, used, released, stored or disposed
of by Tenant or any invitee in or about the Building, whether
before or after Lease Commencement Date. In addition, Tenant shall
give Landlord immediate verbal and follow-up written notice of any
actual or threatened Environmental Default (as defined below),
which Environmental Default Tenant shall cure in accordance with
all Environmental Laws and to the satisfaction of Landlord and only
after Tenant has obtained Landlord’s prior written consent,
which shall not be unreasonably withheld, conditioned or delayed.
An “Environmental Default” means any of the
following by Tenant or any Invitee: a violation of an Environmental
Law; a release, spill or discharge of a Hazardous Material on or
from the Premises, the Land or the Building; an
environmental
29
condition
requiring responsive action; or an emergency environmental
condition. Upon any Environmental Default, in addition to all other
rights available to Landlord under this Lease, at law or in equity,
Landlord shall have the right but not the obligation to immediately
enter the Premises, to supervise and approve any actions taken by
Tenant to address the Environmental Default, and, if Tenant fails
to immediately address same to Landlord’s satisfaction, to
perform, at Tenant’s sole cost and expense, any lawful action
necessary to address same. If any fender or governmental agency
shall require, as a result of any act or omission by Tenant or its
Invitees, testing to ascertain whether an Environmental Default is
pending or threatened, then Tenant shall pay the reasonable costs
therefor as Additional Rent. Promptly upon request, Tenant shall
execute from time to time affidavits, representations and similar
documents concerning Tenant’s best knowledge and belief
regarding the presence of Hazardous Materials at or in the
Building, the Land or the Premises. Landlord represents that,
except as specified in that certain Phase I Environmental Site
Assessment prepared by O’Brien & Gere dated May 1,
1995, that certain Phase I Environmental Site Assessment prepared
by Engineering Consulting Services dated September 22, 1998
and Addendum dated December 17, 1998, and that certain Phase I
Environmental Site Assessment prepared by Blackstone Consulting
dated December 27, 2002 (collectively, the
“Environmental Report” ),to its actual knowledge
as of the date of this Lease, based solely and exclusively on the
Environmental Report and no further or additional. inspection or
inquiry having been made, neither the Premises, nor the Land
(collectively, “Property” ) contain any
Hazardous Materials nor have any Hazardous Materials been used in
the construction or development of the Property, nor will the use
of any such materials knowingly be permitted by Landlord. In the
event Landlord is advised, or it shall come to Landlord’s
attention, that Hazardous Materials exist in the Property (i.e., in
the Building or in, on, or about the Land), if mandated by any
Legal Requirement, Landlord shall take all reasonable steps
necessary to promptly remove or otherwise abate, at
Landlord’s expense, all such Hazardous Materials, and in
doing so, Landlord shall use its reasonable efforts not to
materially interfere with the conduct of Tenant’s business;
provided, however, that Landlord shall remove, at Tenant’s
expense, any Hazardous Materials from the Premises which Tenant,
its employees, agents, subcontractors or subtenants shall have
introduced or otherwise brought in, on or about the
Premises.
ARTICLE VII
ASSIGNMENT AND SUBLETTING
7.1
(a) Tenant shall not have the right to assign, transfer,
mortgage or otherwise encumber this Lease or its interest herein
without first obtaining the prior written consent of Landlord
(except as otherwise provided in this Article VII) . No
assignment or transfer of this Lease or the right of occupancy
hereunder may be effectuated by operation of law or otherwise
without the prior written consent of Landlord (except as otherwise
provided in this Article VII) . If Tenant is a
partnership or a limited liability company, a withdrawal or change,
whether voluntary, involuntary or by operation of law , of
partners or members owning, individually or collectively, a
controlling interest in Tenant (occurring in one transaction or in
a series of related transactions) shall be deemed a voluntary
assignment of this Lease and shall be subject to the foregoing
provisions. If Tenant is a corporation, any dissolution, merger,
consolidation or other reorganization of Tenant, or the sale or
transfer of a controlling interest of the capital stock of Tenant
(occurring in one transaction or in a series of related
transactions), shall be deemed a voluntary assignment of this Lease
and subject to the foregoing provisions. However, the
30
preceding
sentence shall not apply to corporations the stock of which is
traded through a national or regional stock exchange. Any attempted
assignment or transfer by Tenant of this Lease or its interest
herein without Landlord’s consent shall, .at the option of
Landlord, terminate this Lease; however, in the event of such
termination, Tenant shall remain liable for all rent and other sums
due under this Lease and all damages suffered by Landlord on
account of such breach by Tenant.
(b) In
the event of any assignment or sublease of this Lease, Tenant shall
remain fully liable as a primary obligor and principal for
Tenant’s obligations and responsibilities under this Lease,
including without limitation, the payment of all rent and other
charges required hereunder and the performance of all conditions
and obligations to be performed under this Lease.
7.2
(a) Tenant shall have the right to assign this Lease or to
sublease all or any portion of the Premises with Landlord’s
approval, which shall not be unreasonably withheld, delayed, or
conditioned; provided however it shall not be unreasonable for
Landlord to withhold its consent if it reasonably determines that
(1) the character of the proposed assignee or subtenant or the
nature of the activities to be conducted by the proposed assignee
or subtenant would materially adversely affect the other tenants of
the Building or would impair the reputation of the Building as a
Class A office building, or (2) the character of the
assignee’s or subtenant’s business to be conducted in
the Premises or the proposed use of the Premises (i) is likely
to materially increase Operating Expenses (unless Tenant agrees to
be responsible for any such increase in Operating Expenses);
(ii) is likely to materially increase the burden on elevators
or other Building systems (unless Tenant agrees to be responsible
for this increase, whether financial or otherwise, and such terms
are agreeable to Landlord, in its sole but reasonable discretion);
(iii) is likely to violate any use or occupancy restriction
contained in the Lease or in retail leases with other tenants in
the Building or the Project; or (iv) is likely to result in
the use of the Premises for a Medical Use (hereinafter defined).
Tenant shall give Landlord written notice in the event Tenant
enters into (or intends to enter into) an assignment or sublease,
which notice shall include the party it intends to assign or sublet
to, along with sufficient information about the proposed assignee
or subtenant to enable Landlord to make a determination. In such
case, within twenty (20) days after receipt of such notice and
sufficient information about the proposed assignee or subtenant to
enable Landlord to make a determination, Landlord shall notify
Tenant in writing whether or not Landlord is granting its approval
of the proposed assignee or sublessee. Notwithstanding the
foregoing, Tenant shall in no event have the right to sublease the
Premises, or any portion thereof, to more than ten
(10) subtenants at any one time; provided that subleases to
Relationship Subtenants (as defined in Section 7.6
below) shall not be counted against such limitation.
(b) Tenant
shall give Landlord written notice of its desire to assign or
sublease all or a portion of the premises at least-thirty
(30) days prior to listing the Premises (or portion thereof)
on the market for assignment or sublease. Such notice shall specify
the portion of the Premises proposed to be assigned or sublet and
the date such portion is to be made available for subleasing. If
(i) Tenant desires to assign or sublease all or a portion of
the Premises for ninety percent (90%) or more of the remainder of
the Lease Term, or (ii) Tenant occupies, or as a result of
such sublease would occupy, less than fifty percent (50%) of the
rentable area in the original Premises, then Landlord shall have
the right to retake possession of the portion of the
Premises
31
proposed to be
assigned or sublet (the “ Proposed Sublet Space
”) Within twenty (20) days after receipt of such notice,
Landlord shall notify Tenant in writing whether or not Landlord
will retake possession of the Proposed Sublet Space and thereby
delete the Proposed Sublet Space from the Premises being leased to
Tenant hereunder. If Landlord elects to retake possession of the
Proposed Sublet Space, then, (i) Landlord shall retake
possession of the Proposed Sublet Space on the date specified in
Tenant’s notice, (ii) Tenant’s obligation to pay
rent for the Proposed Sublet Space shall cease on such date and
(iii) Landlord and Tenant shall promptly execute an amendment
to the Lease setting forth the new square footage of the reduced
premises to be occupied by Tenant. Thereafter, Tenant shall not
have any further rights of any kind, including any rights of
renewal, in or to the Proposed Sublet Space so retaken. If Landlord
elects to recapture said space, it shall be solely responsible for
the demising of the Proposed Sublet Space.
(c) Tenant’s
right to assign or sublease the Proposed Sublet Space shall expire
two hundred ten (210) days after the giving of the notice
required pursuant to subsection (b) above. Thereafter, Tenant
shall have no right to assign or sublease the Proposed Sublet Space
described in the notice furnished pursuant to subsection (b),
unless Tenant shall have again complied with the procedures set
forth in Section 7.2(b); provided, however, that in the
event Tenant is in active negotiation of a sublease or assignment
upon the expiration of such two hundred ten (210) day period,
then Tenant shall be entitled to pursue such negotiations for an
additional one hundred twenty (120) day period before Tenant
must again comply with the procedures set forth in
Section 7.2(b).
(d) Provided
no Event of Default has occurred and is continuing, Tenant shall be
entitled to retain fifty percent (50%) of any profit derived from
assigning this Lease or subletting the Premises or any part
thereof, after first deducting reasonable advertising costs,
brokerage commissions, improvement allowances and other reasonable
costs associated with the assignment of this Lease or subletting of
the Premises. Landlord shall have the right to reasonably inspect
and audit Tenant’s books and records relating to any sublease
or assignment and expenses incurred by Tenant in connection
therewith. Upon Landlord advising Tenant of any potential adverse
effect of any proposed sublease or assignment on the real estate
investment trust qualification tests applicable to Landlord and its
affiliates or unrelated business taxable income concerns of its
lender, and proposing one or more solutions to such effect, Tenant
will exercise reasonable efforts to structure any such proposed
sublease or assignment so that the portion of the excess rents that
become payable to Landlord will not have such adverse effect, and
if Tenant is unable so to structure any proposed sublease or
assignment, then Landlord shall have the right in its sole and
absolute discretion to withhold its consent to the proposed
sublease or assignment. .
7.3
Notwithstanding the provisions of Section 7.1 or
7.2 hereof to the contrary, if consent to any assignment or
subletting is required by the holder of any mortgage on the
Building, no assignment of this Lease or sublease of all or any
portions of the Premises shall be permitted without the prior
written consent of such holder. Landlord shall not grant any such
holder approval rights with respect to proposed assignments or
subleases that are more restrictive in terms of the standards of
approval than the approval rights reserved by Landlord hereunder,
provided, however, that Landlord shall be entitled to give the
holder a longer response time than the response time required of
Landlord hereunder, up to a maximum of ten (10) additional
days.
32
7.4 The consent by
Landlord to any assignment or subletting shall not be construed as
a waiver or release of Tenant from any and all liability for the
performance of all covenants and obligations to be performed by
Tenant under this Lease, nor shall the collection or acceptance of
rent from any assignee, transferee or subtenant constitute a waiver
or release of Tenant from any of its liabilities or obligations
under this Lease. Landlord’s consent to any assignment or
subletting shall not be construed as relieving Tenant from the
obligation of complying with the provisions of
Sections 7.1 or 7.2 hereof, as applicable, with
respect to any subsequent assignment or subletting. For any period
during which Tenant is in default hereunder, Tenant hereby assigns
to Landlord the rent due from any subtenant of Tenant and hereby
authorizes each subtenant to pay said rent directly to Landlord.
Tenant further agrees to submit any and all instruments of
assignment and sublease to Landlord for Landlord’s prior
written approval as to form and substance, which approval shall not
be unreasonably withheld, conditioned or delayed. Tenant shall
reimburse Landlord for all reasonable, out-of-pocket costs incurred
by Landlord in connection with any request by Tenant to sublease
all or any portion of the Premises or to assign this Lease, up to a
maximum of One Thousand and 00/100 Dollars ($1,000.00) per request
(whether or not Landlord’s consent thereto is
granted).
7.5
Notwithstanding the above restrictions on subletting and
assignments, Landlord’s prior consent shall not be required,
and Sections 7.2(b), (c) & (d) shall be
inapplicable, with respect to any assignment or subletting to an
“Affiliate of Tenant” (as hereinafter defined)
or a “Successor of Tenant” (as hereinafter
defined), provided (i)the Guarantor has a creditworthiness
(e.g., assets and capitalization) and net worth (which shall
be determined on a pro forma basis using generally accepted
accounting principles consistently applied and using the most
recent financial statements) immediately following the
effectiveness of any assignment pursuant to this
Section 7.5 which are at least as strong as such
standards were for the Guarantor immediately prior to the
effectiveness of such assignment pursuant to this
Section 7.5 , (ii) the assignee Affiliate (if such
Affiliate falls under the definition in subclause (i) of
clause (b) below) or Successor of Tenant, as applicable, has a
creditworthiness and net worth (determined as set forth above)
immediately following the effectiveness of such assignment pursuant
to this Section 7.5 which is at least as strong as such
standards were for the Tenant immediately prior to the
effectiveness of such assignment pursuant to this
Section 7.5 , (iii) the original Tenant shall not
be released from its obligations hereunder (it being acknowledged,
however, that the original Tenant may cease to exist in a
transaction resulting in the substitution of a Successor of Tenant
for the original Tenant hereunder); (iv) that such assignee or
sublessee agrees in writing to be bound by the terms and conditions
of this Lease and to assume all of the obligations and liabilities
of Tenant under this Lease (or, in the case of a sublessee, to
assume the non-economic obligations under this Lease to the extent
applicable to the sublet premises), (v) that such assignee or
sublessee shall use the Premises in a manner permitted pursuant to
Article VI of this Lease, (vi) that Tenant
provides Landlord at least fifteen (15) days’ prior
written notice of its intent to assign or sublease all or a portion
of the Premises (unless Tenant is not permitted to do so by
applicable Legal Requirements, in which case such notice shall be
given as soon as legally permissible), which notice shall certify
that each condition required to met by this Section 7.5
has been satisfied or will be as of the effective date of such
assignment and/or sublease (it being understood and agreed that
Tenant shall provide such information as reasonably requested by
Landlord, if any, in support of such certification),
(vii) that the character
33
of such person
or entity and the nature of its activities on the Premises and in
the Building will not adversely affect other tenants in the
Building or impair the reputation of the Building as a Class A
office building, and (viii) that the sublease with .such
person or entity is not a so-called “sham” transaction
intended by Tenant to circumvent the provisions of this
Article VII .
(a) In
the event of any such assignment or subletting pursuant to this
Section 7.5 , Tenant shall remain fully liable as a primary
obligor and principal for Tenant’s obligations and
responsibilities under this Lease, including without limitation,
the payment of all rent and other charges required hereunder and
the performance of all conditions and obligations to be performed
under this Lease.
(b) For
purposes of this Section 7.5 , an “Affiliate
of Tenant” shall mean any corporation, association,
trust, partnership or other entity (i) which Controls (as
herein defined) Tenant or (ii) which is under the Control of
Tenant through stock ownership or otherwise or (iii) which is
under common Control with Tenant. For the purposes hereof, a
“Successor of Tenant” shall mean any
corporation, association, trust, partnership or other entity into
which or with which Tenant is merged or consolidated or which
acquires all or substantially all of the assets of Tenant or all or
substantially all of the stock, shares, membership interests or
other ownership interests in Tenant. The terms
“Control” or “Controls” as
used in this Section 7.5 shall mean the power directly
or indirectly to influence the direction, management or policies of
Tenant or such other entity.
7.6
Notwithstanding the above restrictions on subletting,
Landlord’s prior consent shall not be required, and
Sections 7.2(b), (c) & (d) shall be
inapplicable, with respect to any subleasing of an aggregate of not
more than 20,000 rentable square feet in the Premises to
Relationship Subtenants (as hereinafter defined), provided
(i) that each such Relationship Subtenant agrees in writing to
be bound by the terms and conditions of this Lease and to assume
all of the non-economic obligations under this Lease to the extent
applicable to its sublet premises, (ii) that each such
Relationship Subtenant shall use the Premises in a manner permitted
pursuant to Article VI of this Lease, (iii) that
Tenant provides Landlord with prior written notice of its intent to
sublease a portion of the Premises to a Relationship Subtenant,
which notice shall certify that each condition required to met by
this Section 7.6 has been satisfied or will be
satisfied as of the effective date of such sublease (it being
understood and agreed that Tenant shall provide such information as
reasonably requested by Landlord, if any, in support of such
certification), (iv) that the character of each such
Relationship Subtenant and the nature of its activities on the
Premises and in the Building will not adversely affect other
tenants in the Building or impair the reputation of the Building as
a Class A office building. For purposes hereof, a
“Relationship Subtenant” shall mean a person or
entity with which Tenant has an ongoing business relationship (such
as, without limitation, a client of Tenant, a service provider to
Tenant , an entity in which Tenant holds an investment
interest, or a partner or other participant in business ventures
with Tenant), where the nature of such business relationship
between Tenant and such other person or entity makes it desirable
for such other person or entity to be co-located with Tenant in the
Premises.
7.7 No part of the
rent payable under this Lease shall be based in whole or in part on
the income or profits derived from the Premises. If the holder of
any Mortgage or any lender
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providing
financing in connection with all or any portion of the Premises,
the Land and/or the Building succeeds to Landlord’s interests
under this Lease and such holder and/or lender’s counsel
advises Landlord that all or any portion of the rent payable under
this Lease is or may be deemed to be unrelated business income
within the meaning of the Internal Revenue Code or regulations
issued thereunder, such holder and/or lender may elect to amend
unilaterally the calculation of rent so that none of the rent
payable to such holder and/or lender under this Lease will
constitute unrelated business income but the amendment shall not
increase Tenant’s payment obligations or other liability
under this Lease or reduce Landlord’s obligations under this
Lease. At such holder’s or lender’s request, Tenant
shall execute any document such holder and/or lender deems
necessary to effect such amendment of this Lease. Any sublease of
all or any portion of the Premises shall be consistent with the
foregoing provisions of this Section 7.6 .
ARTICLE VIII
TENANT’S MAINTENANCE AND REPAIRS
8.1 Tenant will
keep and maintain the Premises and all fixtures and equipment
located therein in clean, safe and sanitary condition, will take
good care thereof and make all required repairs thereto, and will
suffer no waste or injury thereto, all in a manner consistent with
a Class A office Building. Tenant acknowledges the importance
of maintaining a uniform and attractive appearance in all areas of
the Premises that are visible from: (i) common or public areas
of the Building; (ii) the lobby areas serving the Building;
(iii) other tenant premises; and (iv) the exterior of the
Building, and agrees to comply with all Rules and Regulations
pursuant to Section 16.1 . At the expiration or
other termination of the Lease Term, Tenant shall surrender the
Premises, broom clean, in the same order and condition in which
they are in on the Lease Commencement Date, ordinary wear and tear
and unavoidable damage by the elements excepted. Landlord shall
provide and install (subject to reimbursement in accordance with
Article IV ) replacement tubes and bulbs for Building
standard light fixtures in the Premises, if any. All other bulbs
and tubes for the Premises shall be Tenant’s responsibility;
however, at Tenant’s request, Landlord shall stock and
install such other bulbs and tubes and Tenant shall reimburse
Landlord for its cost and expenses incurred in connection with said
stocking and installation.
8.2 Except as
otherwise provided in Article XVII hereof, all injury,
breakage and damage to the Premises and to any other part of the
Building or Project caused by any act or omission of Tenant, or of
any agent, employee, subtenant, contractor, customer, client,
licensee, guest or other invitee of Tenant (each, an
“Invitee” or, collectively,
“Invitees”), shall be repaired by and at the
sole expense of Tenant, except that Landlord shall have the right,
at its option, to make such repairs of damage occurring outside the
Premises and/or damage that occurs inside the Premises and affects
other tenants and/or Building Systems or structural elements of the
Building, and to charge Tenant for all reasonable costs and
expenses incurred in connection therewith as Additional Rent
hereunder. The liability of Tenant for such costs and expenses
shall be reduced by the amount of any insurance proceeds received
by Landlord on account of such injury , breakage or
damage.
8.3 Landlord shall
keep and maintain (a) the exterior and demising walls,
foundations, roof and common areas that form a part of the
Building, and the Building standard mechanical, electrical, HVAC,
vertical transportation, fire/life-safety and plumbing
systems,
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pipes and
conduits, and (b) other components or equipment that are
provided or utilized (e.g. additional standard VAV boxes installed
as part of the Leasehold Work) by Landlord in the provision of
services to the Building or the Premises on a non-exclusive basis
(collectively, the “Base Building Systems” ), in
clean, safe, sanitary and operating condition in accordance with
standards customarily maintained by Class A office buildings
in the Bethesda-Chevy Chase, Maryland area ( “Market
Area” ) and will make all required repairs thereto. All
common or public areas of the Building (including without
limitation the first floor lobby area) shall be maintained by
Landlord in accordance with standards customarily maintained by
Class A office buildings in the Market Area. Landlord shall
endeavor to cause the Building garage to be maintained in
accordance with standards customarily maintained by Class A
mixed use developments in the Market Area. Tenant shall promptly
provide Landlord with written notice of any defect or need for
repairs in or about the Building of which Tenant is aware;
provided, however, Landlord’s obligation to repair hereunder
shall not be limited to matters of which it has been given notice
by Tenant. Notwithstanding any of the foregoing to the contrary:
(a) maintenance and repair of special tenant areas, facilities,
finishes and equipment (including, but not limited to, any special
fire protection equipment, telecommunications and computer
equipment, kitchen/gallery equipment, or internal staircase(s)
which may be installed by or at the request of Tenant, supplemental
air-conditioning equipment serving the Premises only and all other
furniture, furnishings and. equipment of Tenant and all
Alterations) shall be the sole responsibility of Tenant and shall
be deemed not to be a part of the Building structure and systems;
and (b) Landlord shall have no obligation to make any repairs
brought about by any act or neglect of Tenant or any
Invitee.
ARTICLE IX
TENANT ALTERATIONS
9.1 Landlord shall
perform the Base Building Work in accordance with Exhibit
B attached hereto and made a part hereof. Landlord shall
perform the Leasehold Work in the P
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