<PAGE>
Exhibit 10.11
OFFICE LEASE AGREEMENT
BY AND BETWEEN
APA PROPERTIES NO. 1, L.P.,
A Delaware limited partnership
AND
SYTEL, INC.
DULLES GATEWAY CENTER
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S>
<C>
ARTICLE I DEFINITIONS
..................................................... 1
ARTICLE II PREMISES
.......................................................
2
ARTICLE III TERM
..........................................................
2
ARTICLE IV BASE RENT
...................................................... 3
ARTICLE V INCREASES IN OPERATING CHARGES
AND REAL ESTATE TAXES ............ 4
ARTICLE VI USE OF PREMISES
................................................ 6
ARTICLE VII ASSIGNMENT AND SUBLETTING
..................................... 9
ARTICLE VIII MAINTENANCE AND REPAIRS
...................................... 11
ARTICLE IX ALTERATIONS
.................................................... 12
ARTICLE X SIGNS
...........................................................
13
ARTICLE XI SECURITY DEPOSIT
............................................... 14
ARTICLE XII INSPECTION
.................................................... 14
ARTICLE XIII INSURANCE
.................................................... 14
ARTICLE XIV SERVICES AND UTILITIES
........................................ 16
ARTICLE XV LIABILITY OF LANDLORD
.......................................... 16
ARTICLE XVI RULES
.........................................................
18
ARTICLE XVII DAMAGE OR DESTRUCTION
........................................ 18
ARTICLE XVIII CONDEMNATION
................................................ 19
ARTICLE XIX DEFAULT
.......................................................
19
ARTICLE XX BANKRUPTCY
..................................................... 22
ARTICLE XXI SUBORDINATION
................................................. 23
ARTICLE XXII HOLDING OVER
................................................. 23
ARTICLE XXIII COVENANTS OF LANDLORD
....................................... 24
ARTICLE XXIV PARKING
...................................................... 24
ARTICLE XXV GENERAL PROVISIONS
............................................ 25
EXHIBIT A - Plan Showing Premises
EXHIBIT B - Work Agreement
EXHIBIT C - Rules
EXHIBIT D - Certificate Affirming Lease
Terms
</TABLE>
<PAGE>
OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT (this "Lease")
is dated as of the 18 day of
February, 1999, by and between APA
PROPERTIES NO. 1, L.P., a Delaware limited
partnership ("Landlord"), and SYTEL, INC.,
a Maryland corporation ("Tenant").
ARTICLE I
DEFINITIONS
1.1 Building: a
six (6) story building containing (or that will contain
upon completion thereof) approximately One
Hundred Forty-Six Thousand (146,000)
square feet of total rentable area and
located at 13921 Park Center Road,
Herndon, Virginia 20171 and the lot on
which the Building is constructed (which
lot is also sometimes referred to herein as
the "Land").
1.2 Premises:
approximately ten thousand nine hundred eighty-one (10,981)
square feet of rentable area located on the
second (2nd) floor of the Building,
as more particularly designated on Exhibit
A.
1.3 Lease Term:
eighty-four (84) full calendar months.
1.4
[Intentionally Deleted.]
1.5 Base Rent:
two hundred fifty-eight thousand fifty-three dollars and
fifty cents ($258,053.50) for the first
Lease Year (which amount is based on
twenty-three dollars and fifty cents
($23.50) per square foot of rentable area
in the Premises, and shall be adjusted as
necessary if the first Lease Year
(determined in accordance with Section 3.4)
is longer than twelve (12) full
calendar months).
1.6 Rent
Escalation Percentage: three percent (3%).
1.7 Operating
Charges Base Year: calendar year 1999.
1.8 Real Estate
Taxes Base Year: calendar year 1999.
1.9 Tenant's
Proportionate Share: 7.52% as of the date hereof (based on the
Premises containing ten thousand nine
hundred eighty-one (10,981) square feet of
rentable area and the Building containing
one hundred forty-six thousand
(146,000) square feet of rentable area,
excluding storage and roof space,
however Tenant's Proportionate Share shall
be adjusted in accordance with
Section 5.1 below).
1.10 Security
Deposit Amount: twenty-one thousand five hundred four dollars
and forty-six cents ($21,504.46), subject
to the provisions of Article XI.
1.11 Brokers):
Cushman & Wakefield of Virginia, Inc. and Spaulding &
Slye
Colliers International.
1.12 Tenant
Notice Address: 6430 Rockledge Drive, Suite 400, Bethesda,
Maryland 20817, Attn: Ms. Renee Williams,
until Tenant has commenced beneficial
use of the Premises, and at the Premises,
after Tenant has commenced beneficial
use of the Premises.
1.13 Landlord
Notice Address: c/o Peter Lawrence of Virginia, Inc.
("Agent"), 11440 Isaac Newton Square North,
Suite 208, Reston, Virginia 20190,
Attn: General Manager.
1.14 Building
Hours: 8:00 a.m. to 6:00 p.m. on Monday through Friday
(excluding le-gal public holidays) and 9:00
a.m. to 1:00 p.m. on Saturday
(excluding legal public holidays), and such
other hours, if any, as Landlord
from time to time determines.
1.15
Guarantor(s): None.
ARTICLE II
PREMISES
<PAGE>
2.1 Tenant
leases the Premises from Landlord for the term and upon the
conditions and covenants set forth in this
Lease. Tenant will have the
non-exclusive right to use the common and
public areas of the Building. Except
as may otherwise be expressly provided in
this Lease (including, but not limited
to Article XXIV), the lease of the Premises
does not include the right to use
the roof, mechanical rooms, electrical
closets, janitorial closets, telephone
rooms, parking areas or other non-common or
non-public areas of the Building.
2.2
[Intentionally Deleted.]
2.3 At such time
as Landlord's architect determines the exact number of
square feet of rentable area included in
the Premises (using the method of
measurement set forth in Section 25.18
below), Landlord and Tenant shall confirm
such measurement on a certificate in the
form of Exhibit D attached hereto.
ARTICLE III
TERM
3.1 All of the
provisions of this Lease shall be in full force and effect
from and after the date first above
written. The Lease Term shall commence on
June 1, 1999 (the "Lease Commencement
Date") and shall expire on May 31, 2006,
unless the Lease Term is sooner terminated
in accordance with this Lease. The
Lease Term shall also include any properly
exercised renewal or extension of the
term of this Lease.
3.2
[Intentionally Deleted.]
3.3 Landlord
shall deliver the Premises to Tenant within three (3) business
days after the full execution of this Lease
so that Tenant can commence
construction of the improvements; provided,
however, that if Landlord does not
deliver possession of the Premises by such
date, Landlord shall not have any
liability whatsoever, and this Lease shall
not be rendered void or voidable, as
a result thereof, except that if the
Premises are not delivered to Tenant within
such three (3) business day period, then
the Lease Commencement Date shall be
extended on a day for day basis for each
business day in the period commencing
on the day after such three (3) business
day period and continuing through the
day preceding the date the Premises are
delivered to Tenant.
3.4 "Lease Year"
shall mean a period of twelve (12) consecutive months
commencing on the Lease Commencement Date,
and each successive twelve (12) month
period thereafter; provided, however, that
if the Lease Commencement Date is not
the first day of a month, then the second
Lease Year shall commence on the first
day of the month following the month in
which the first anniversary of the Lease
Commencement Date occurs.
3.5 Landlord
hereby grants to Tenant the conditional right, exercisable at
Tenant's option, to renew the term of this
Lease for one five (5) year term (the
"Renewal Term"). If exercised, and if the
conditions applicable thereto have
been satisfied, the Renewal Term shall
commence immediately following the end of
the initial Lease Term provided in Section
3.1 of this Lease. The right of
renewal herein granted to Tenant shall be
subject to, and shall be exercised in
accordance with, the following terms and
conditions:
(a) Tenant shall exercise its right of renewal with respect to
the
Renewal Term by giving Landlord written
notice of such election not earlier than
fifteen (15) months nor later than twelve
(12) months prior to the expiration of
the initial Lease Term. The parties shall
have sixty (60) days after Landlord's
timely receipt of such notice in which to
agree on the base rent, escalation
factor and additional rent which shall be
payable during the Renewal Term. Among
the factors to be considered by the parties
during such negotiations in
determining applicable market rent shall be
the general office rental market in
Fairfax County, Virginia, the rental rates
then being quoted by Landlord to
comparable tenants for comparable space in
the Building, and the rents being
charged similar tenants for similar office
space in multi-tenanted, multi-story,
first-class office buildings. In no event,
however, shall Landlord be under any
obligation to agree to an applicable market
rent, escalation factor or
additional rent for the Renewal Term which
is less than the annual base rent,
escalation factor or additional rent in
effect under this Lease during the Lease
Year immediately preceding the commencement
of the Renewal Term. If during such
sixty (60) day period the parties agree
on
<PAGE>
such base rent, escalation factor and
additional rent payable during each year
of the Renewal Term, then they shall
promptly execute an amendment to this Lease
stating the rent so agreed upon. If during
such sixty (60) day period the
parties are unable, for any reason
whatsoever, to agree on such base rent,
escalation factor and additional rent
payable, then Tenant's rights with respect
to the Renewal Term shall lapse and be of
no further force or effect.
(b) If Tenant's renewal notice is not given timely, then
Tenant's
right of renewal shall lapse and be of no
further force or effect.
(c) If Tenant is in default under this Lease on the date Tenant
sends
a renewal notice or any time thereafter
until the Renewal Term is to commence,
then, at Landlord's election, the Renewal
Term shall not commence and the term
of this Lease shall expire at the
expiration of the initial term of this Lease.
(d) If at any time fifty percent (50%) or more of the square feet
of
rentable area of the Premises has been
subleased or assigned, or if this Lease
has been terminated with respect to any
such portion, then Tenant's rights
pursuant to this Section shall lapse and be
of no further force or effect.
(e) Tenant's right of renewal under this Section may be exercised
only
by Tenant and may not be exercised by any
transferee, sublessee or assignee of
Tenant.
ARTICLE IV
BASE RENT
4.1 From and
after the Lease Commencement Date, Tenant shall pay the Base
Rent in equal monthly installments in
advance on the first day of each month
during a Lease Year. On the first day of
the second and each succeeding Lease
Year the Base Rent in effect shall be
increased by the product of (a) the Rent
Escalation Percentage, multiplied by (b)
the amount of the Base Rent payable
during the immediately preceding Lease
Year.
4.2 Concurrently
with Tenant's execution of this Lease, Tenant shall pay an
amount equal to one (1) monthly installment
of the Base Rent payable during the
first Lease Year, which amount shall be
credited toward the monthly installment
of the Base Rent payable for the first full
calendar month of the Lease Term. If
the Lease Commencement Date is not the
first day of a month, then the Base Rent
from the Lease Commencement Date until the
first day of the following month
shall be prorated on a per diem basis at
the rate of one-thirtieth (1/30th) of
the monthly installment of the Base Rent
payable during the first Lease Year,
and Tenant shall pay such prorated
installment of the Base Rent on the Lease
Commencement Date.
4.3 All sums
payable by Tenant under this Lease, whether or not stated to
be Base Rent, additional rent or otherwise,
shall be paid to Landlord in legal
tender of the United States, without
setoff, deduction or demand (except as
otherwise permitted by this Lease), at the
Land-lord Payment Address, or to such
other party or such other address as
Landlord may designate in writing.
Landlord's acceptance of rent after it
shall have become due and payable shall
not excuse a delay upon any subsequent
occasion or constitute a waiver of any of
Landlord's rights hereunder. If any sum
payable by Tenant under this Lease is
paid by check which is returned due to
insufficient funds, stop payment order,
or otherwise, then: (a) such event shall be
treated as a failure to pay such sum
when due; and (b) in addition to all other
rights and remedies of Landlord
hereunder, Landlord shall be entitled (i)
to impose a returned check charge of
Forty Dollars ($40.00) to cover Landlord's
administrative expenses and overhead
for processing, and (ii) to require that
all future payments be remitted by wire
transfer, money order, or cashier's or
certified check.
ARTICLE V
INCREASES IN OPERATING CHARGES AND REAL ESTATE TAXES
5.1 (a) If the
Building is operated as a part of a complex of buildings or
in con-junction with other buildings, then
Landlord shall prorate the common
expenses and costs with respect to each
such building in such manner as
Landlord, in its reasonable judgment, shall
determine.
<PAGE>
(b) Commencing on January 1, 2000 and continuing thereafter
through
the Lease Term, (i) Tenant shall pay as
additional rent Tenant's Proportionate
Share (as defined be-low) of the amount by
which Operating Charges (as defined
in Section 5.2(a)) for each calendar year
falling entirely or partly within the
Lease Term exceed a base amount (the
"Operating Charges Base Amount") equal to
the Operating Charges incurred during the
Operating Charges Base Year, and (ii)
Tenant shall pay as additional rent
Tenant's Proportionate Share of the amount
by which Real Estate Taxes (as defined in
Section 5.3(a)) for each calendar year
falling entirely or partly within the Lease
Term exceed a base amount (the "Real
Estate Taxes Base Amount") equal to the
Real Estate Taxes incurred during the
Real Estate Taxes Base Year. Tenant's
Proportionate Share shall be that
percentage which is equal to a fraction,
the numerator of which is the number of
square feet of rentable area in the
Premises set forth in Section 1.2, and the
denominator of which is the number of
square feet of rentable area in the
Building (excluding storage, roof and
garage space), as measured (or remeasured)
by Landlord from time to time in accordance
with Section 25.18 of this Lease.
5.2 (a)
"Operating Charges" shall mean the sum of the following
expenses
incurred by Landlord in the ownership and
operation of the Building: (1)
electricity, gas, water, HVAC, sewer and
other utility charges of every type and
nature; (2) commercially reasonable
premiums and other charges for insurance;
(3) management fees that are customary in
the industry for comparable services
in comparable buildings and personnel costs
of the Building; (4) costs of
service and maintenance contracts relating
to the Building as a whole; (5)
maintenance, repair and replacement
expenses and supplies which are properly
deducted by Landlord in computing its
federal income tax liability; (6)
depreciation for capital expenditures made
by Landlord to reduce operating
expenses if Landlord reasonably estimates
that the annual reduction in operating
expenses shall exceed such depreciation or
to comply with legal or insurance
requirements which are first applicable
after the date hereof; (7) charges for
janitorial and cleaning services and
supplies furnished to the Building; (8) any
business, professional and occupational
license tax payable by Landlord with
respect to the Building; (9) [Intentionally
Deleted]; (10) landscaping, snow
removal, security, maintenance and repair
of parking areas; and (11) any other
expense incurred by Landlord in
maintaining, repairing or operating the
Building. Operating Charges shall not
include: (i) principal or interest
payments on any Mortgages (as defined in
Section 21.1); (ii) leasing commissions
with respect to the negotiation of leases;
(iii) depreciation for capital
expenditures, except as specified above;
(iv) the costs of special services and
utilities separately charged to particular
tenants of the Building; (v) costs
reimbursed to Landlord from any source
including insurance claims and warranties
(but excluding payments by other tenants
for Operating Charges); (vi) costs of
financing the Building and/or the Land;
(vii) wages, salaries and other
compensation paid to employees of Landlord
or its managing agent above the level
of senior property manager; (viii) leasing
commissions, attorneys' fees,
accounting fees, construction fees or other
fees and expenses if such fees and
expenses are incurred in connection with
negotiations or disputes with tenants
or prospective tenants of the Building;
(ix) costs of administering the affairs
of the ownership entity which are unrelated
to the maintenance, management and
ownership of the Building; (x) expenses in
connection with services or other
benefits for which Landlord is separately
reimbursed directly as an additional
charge over and above the Base Rent and
increases in Operating Charges; (xi)
reserves; (xii) charitable or political
contributions: (xiii) costs to remove
Hazardous Materials from the Building, Land
or surrounding area that were
released in or upon the Building or the
Land in violation of any applicable
Environmental Laws: (xiv) rental payments
for office space for management
personnel; (xv) all depreciation and other
items not reflecting a current cash
expenditure except as otherwise permitted
above: and (xvi) tap fees and other
one-time lump sum sewer or water connection
fees payable in connection with the
initial construction of the Building or
leasehold improvements for any ten-ant.
It' any product or service includable in
Operating Charges is furnished by an
entity owned or controlled by Landlord or
sharing a common parent with Landlord,
then the cost of such product or service
shall be included in Operating Charges
only to the extent of customary cost of
similar quality products and services
provided in arms length transactions to
first-class office buildings in the
vicinity of the Building.
(b) If the average occupancy rate for the Building during any
calendar
year (including the Operating Charges Base
Year) is less than one hundred
percent (100%), or if any tenant is
separately paying for (or does not require)
electricity or janitorial services or other
services or utilities furnished to
its premises, then Operating Charges for
such year shall be deemed to include
all additional expenses, as reasonably
estimated by Landlord, which would have
been incurred during such year if such
average occupancy rate had been one
hundred per-cent (100%) and if Landlord
paid for electricity and
<PAGE>
janitorial services and other services and
utilities furnished to such premises.
(c) Tenant shall make estimated monthly payments to Landlord on
account of the amount by which Operating
Charges that are expected to be
incurred during each calendar year (or
portion thereof) would exceed the
Operating Charges Base Amount. At the
beginning of calendar year 2000 and at the
beginning of each calendar year thereafter,
Landlord may submit a statement
setting forth Landlord's reasonable
estimate of such excess and Tenant's
proportionate share thereof Tenant shall
pay to Landlord on the first day of
each month following receipt of such
statement, until Tenant's receipt of the
succeeding annual statement, an amount
equal to one-twelfth (1/12) of each such
share (estimated on an annual basis without
proration pursuant to Section 5.4).
From time to time during any calendar year,
Landlord may revise Landlord's
estimate and adjust Tenant's monthly
payments to reflect Landlord's revised
estimate. Within approximately one hundred
twenty (120) days after the end of
each calendar year, or as soon there-after
as is feasible, Landlord shall submit
a statement showing (1) Tenant's
proportionate share of the amount by which
Operating Charges incurred during the
preceding calendar year exceeded the
Operating Charges Base Amount, and (2) the
aggregate amount of Tenant's
estimated payments made on account of
Operating Charges during such year. If
such statement indicates that the aggregate
amount of such estimated payments
exceeds Tenant's actual liability, then
Land-lord shall credit the net
overpayment toward Tenant's next payment(s)
due under this Lease, 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 there
from any amounts then due from Tenant to
Landlord). If such statement indicates
that Tenant's actual liability exceeds the
aggregate amount of such estimated
payments, then Tenant shall pay the amount
of such excess as additional rent.
Each party's obligation under the preceding
two sentences shall survive
expiration or termination of this
Lease.
(d) For a period of ninety (90) days after Tenant's receipt of
such
statement, Tenant, or an independent,
certified public accountant who is hired
by Tenant on a non-contingent fee basis and
who offers a full range of
accounting services and is reasonably
acceptable to Landlord, shall have the
right, during regular business hours and
after giving at least ten (10) days'
advance written notice to Landlord, to
inspect and complete an audit of
Landlord's books and records relating to
Operating Charges for the immediately
preceding calendar year, including any
proration if there is more than one
building in the complex. Tenant shall (and
shall cause its employees, agents and
consultants to) keep the results of any
such audit strictly confidential. If
such audit shows that the amounts paid by
Tenant to Landlord on account of
increases in Operating Charges exceed the
amounts to which Landlord is entitled
hereunder, Landlord shall credit the amount
of such excess toward the next
monthly payments of Operating Charges due
hereunder. All costs and expenses of
any such audit shall be paid by Tenant;
provided that, if such audit shows that
the aggregate amount of Operating Charges
set forth in such statement was
overstated by Landlord by more than five
percent (5%), Landlord shall reimburse
Tenant for the reasonable, out-of-pocket
costs and expenses incurred by Tenant
in connection with such audit up to a
maximum amount of Two Thousand Dollars
($2,000). If Tenant does not notify
Land-lord in writing of any objection to any
statement within ninety (90) days after
receipt thereof, then Tenant shall be
deemed to have waived such objection.
5.3 (a) "Real
Estate Taxes" shall mean (1) all real estate taxes, vault
and/or public space rentals, rates and
assessments (including general and
special assessments, if any), ordinary and
extraordinary, foreseen and
unforeseen, which are imposed upon Landlord
or assessed against the Building or
the Land or Landlord's personal property
used in connection therewith, (2) any
other present or future taxes or
governmental charges that are imposed upon
Landlord or assessed against the Building
or the Land which are in the nature of
or in substitution for real estate taxes,
including any tax levied on or
measured by the rents payable by tenants of
the Building, and (3) expenses
(including, without limitation, attorneys'
and consultants' fees and court
costs) incurred in reviewing, protesting or
seeking a reduction of real estate
taxes, whether or not such protest or
reduction is ultimately successful.
Subject to the foregoing, Real Estate Taxes
shall not include any inheritance,
estate, gift, franchise, corporation, net
income, excise, recordation or
transfer taxes or net profits tax assessed
against Landlord from the operation
of the Building.
(b) If during any calendar year (including the Real Estate Taxes
Base
Year) the Building is not fully assessed
for tax purposes, then Real Estate
Taxes for such year shall be deemed to
include all additional taxes, as
reasonably estimated by Landlord, which
would have been incurred during such
year if the Building had been fully
assessed.
<PAGE>
5.4 Tenant shall
make estimated monthly payments to Landlord on account of
the amount by which Real Estate Taxes that
are expected to be incurred during
each calendar year would exceed the Real
Estate Taxes Base Amount. At the
beginning of calendar year 2000 and at the
beginning of each calendar year
thereafter, Landlord may submit a statement
setting forth Landlord's reasonable
estimate of such amount and Tenant's
proportionate share thereof. Tenant shall
pay to Landlord on the first day of each
month following receipt of such
statement, until Tenant's receipt of the
succeeding annual statement, an amount
equal to one-twelfth (1/12) of such share
(estimated on an annual basis without
proration pursuant to Section 5.4). From
time to time during any calendar year,
Landlord may revise Landlord's estimate and
adjust Tenant's monthly payments to
reflect Landlord's revised estimate. Within
approximately one hundred twenty
(120) days after the end of each calendar
year, or as soon thereafter as is
feasible, Land-lord shall submit a
statement showing (1) Tenant's proportionate
share of the amount by which Real Estate
Taxes incurred during the preceding
calendar year exceeded the Real Estate
Taxes Base Amount, and (2) the aggregate
amount of Tenant's estimated payments made
during such year. If such statement
indicates that the aggregate amount of such
estimated payments exceeds Tenant's
actual liability, then Landlord shall
credit the net overpayment toward Tenant's
next payment(s) due under this Lease, 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 such statement indicates that
Tenant's actual liability exceeds
the aggregate amount of such estimated
payments, then Tenant shall pay the
amount of such excess as additional rent.
Each party's obligation under the
preceding two sentences shall survive
expiration or termination of this Lease.
5.5 If the Lease
Term commences or expires on a day other than the first
day or the last day of a calendar year,
respectively, then Tenant's liabilities
pursuant to this Article for such calendar
year shall be apportioned by
multiplying the respective 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 three hundred
sixty-five (365).
ARTICLE VI
USE OF PREMISES
6.1 Tenant shall
use and occupy the Premises solely for general
(non-medical) office purposes compatible
with first class office buildings in
the jurisdiction in which the Building is
located, 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 violate
nonresidential use permit occupancy for the
Premises or the Building or that will
constitute waste, nuisance or unreasonable
annoyance to Landlord or any other tenant
or user of the Building, or in any
manner that will increase the number of
parking spaces required for the Building
or its full occupancy as required by law.
Tenant shall comply with all present
and future laws (including, without
limitation, the Americans with Disabilities
Act (the "ADA") and the regulations
promulgated thereunder, as the same may be
amended from time to time), ordinances
(including without limitation, zoning
ordinances and land use requirements),
regulations, orders and recommendations
(including, without limitation, those made
by any public or private agency
having authority over insurance rates)
(collectively, "Laws") concerning the
use, occupancy and condition of the
Premises and all machinery, equipment,
furnishings, fixtures and improvements
therein, all of which shall be complied
with in a timely manner at Tenant's sole
expense. If any such Law 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 de-liver a copy thereof
to Landlord. Use of the Premises is subject
to all covenants, conditions and
restrictions of record. Tenant shall not
use any space in the Building for the
sale of goods to the public at large or for
the sale at auction of goods or
property of any kind. Tenant shall not
con-duct any operations, sales,
promotions, advertising or special events
outside the Premises.
6.2 Tenant shall
pay before delinquency any business, rent or other taxes
or fees that are now or hereafter levied,
assessed or imposed upon Tenant's use
or occupancy of the Premises, the conduct
of Tenant's business at the Premises,
or Tenant's equipment, fixtures,
furnishings, inventory or personal property. If
any such tax or fee is enacted or altered
so that such tax or fee is levied
against Landlord or so that Landlord is
responsible for collection or payment
thereof, then Tenant shall pay as
additional rent the amount of such tax
<PAGE>
or fee.
6.3 Tenant shall
not cause or permit any Hazardous Materials to be
generated, used, released, stored or
disposed of in or about the Building or the
Land, provided that Tenant may use and
store in accordance with all 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
except that Tenant shall have no
obligation to remove Hazardous Materials
that were not brought onto the Premises
by Tenant or its Invitees, or cure any
violations of Environmental Laws that
were not caused by the acts or omissions of
Tenant or its Invitees. "Hazardous
Materials" means any of the following
present in levels that exceed the level
permissible under applicable Environmental
Laws (a) asbestos and any asbestos
containing material and any sub-stance 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," "pollutant,"
"contaminant" or any other formulation
intended to define, list, or classify
substances by reason of deleterious
proper-ties such as ignitability,
corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, or
Toxicity Characteristic Leaching Procedure
(TCLP) toxicity, (b) any petroleum
and drilling flu-ids, 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,
poly-chlorinated biphenyls, urea
formaldehyde, radon gas, radioactive
material (including any source, special
nuclear, or by-product 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, ordinance 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. Section 9601 et seq., the
Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 et seq., the
Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801 et seq., the
Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq., the Clean Air
Act, 33 U.S.C. Section 7401 et seq.,
the Toxic Sub-stances Control Act, 15
U.S.C. Section 2601 et seq., the Safe
Drinking Water Act, 42 U.S.C. Section 300f
et seq., the Emergency Planning and
Community Right-To-Know Act, 42 U.S.C.
Section 1101 et seq., the Occupational
Safety and Health Act, 29 U.S.C. Section
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 sub-stances,
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 officers, directors, employees and
agents harmless from and against any
damage, injury, loss, liability, charge,
demand, penalty 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, 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; the storage or use of
Hazardous Material not approved in
writing by Landlord; an environmental
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 super-vise and
approve any actions taken by Tenant to
address the Environmental Default, and, if
Ten-ant fails to immediately address
same to Landlord's reasonable satisfaction,
to perform, at Ten-ant's sole cost
and expense, any lawful action necessary to
address same. If any lender or
governmental agency shall require 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.
<PAGE>
6.4 Landlord at
its expense (subject to reimbursement pursuant to Article V
to the extent permitted thereby) shall take
steps necessary to comply with Laws
to the extent same applies directly to all
or any portion of the common areas of
the Building; provided, however, that to
the extent any non-compliance is a
result of the use or occupancy of the
Premises or any action or inaction of
Tenant or any Invitee, or if any
improvements made by Landlord to comply with
such Laws benefit solely the Premises, then
such compliance shall be at Tenant's
cost. Tenant at its sole cost and expense
shall be solely responsible for taking
any and all measures which are required to
comply with such Laws concerning the
Premises (including means of ingress and
egress thereto) and the business
conducted therein. Any Alterations made or
constructed by Ten-ant for the
purpose of complying with such Laws or
which otherwise require compliance with
such Laws shall be done in accordance with
this Lease; provided, that Landlord's
consent to such Alterations shall not
constitute either Landlord's assumption,
in whole or in part, of Tenant's
responsibility for compliance with such Laws,
or representation or confirmation by
Landlord that such Alterations comply with
the provisions of such Laws.
6.5 Landlord
represents that, except as specified in that certain Phase I
Environmental Assessment prepared by SCS
Engineers dated September 20, 1993 and
that certain Phase II Environmental
Investigation prepared by SCS Engineers
dated October 29, 1993 (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, the "Property")
contain any Hazardous Materials in
violation of any Environmental Law and that
no Hazardous Materials have been used in
the construction or development of the
Property in violation of any Environmental
Law. Copies of the Environmental
Report are available for Tenant's review at
Tenant's request. In the event
Landlord is advised, or it shall come to
Landlord's attention, that Hazardous
Materials exist in the Premises, if
required by any applicable Environmental
Law, Landlord shall take all reasonable
steps necessary to promptly remove, at
Landlord's expense, all such Hazardous
Materials, and in doing so, Landlord
shall use reasonable efforts not to
materially interfere with the conduct of
Tenant's business; provided, however, that
Landlord shall remove any Hazardous
Materials from the Premises which Tenant,
its employees, agents, contractors,
subtenants or invitees shall have
introduced or otherwise brought in, on or
about the Premises at Tenant's expense (or,
at Landlord's sole option, Landlord
may require Tenant to remove such Hazardous
Materials). Notwithstanding anything
herein to the contrary, no holder of any
Mortgage (nor any person or entity
claiming by, through or under any such
holder) shall have any liability under
this Section 6.5 or any responsibility to
perform any of Landlord's obligations
set forth in this Section 6.5. Landlord
shall indemnify and hold Tenant, its
officers, directors and employees harmless
from and against any damage, injury,
loss, liability or claim based on or
arising out of the presence or removal of,
or failure to remove, Hazardous Materials
released by Landlord, its agents or
employees in or about the Building or the
Land as a result of Landlord's gross
negligence or willful misconduct; provided,
however, that (a) in no event shall
Landlord be liable for indirect or
consequential damages and (b) in no event
shall the holder of any Mortgage have any
liability under this sentence.
ARTICLE VII
ASSIGNMENT AND SUBLETTING
7.1 Tenant shall
not assign, transfer or otherwise encumber (collectively,
"assign") this Lease or all or any of
Tenant's rights hereunder or interest
herein, or sublet or permit anyone to use
or occupy (collectively, "sublet") the
Premises or any part thereof, without
obtaining the prior written consent of
Landlord, which consent may be withheld or
granted in Landlord's sole and
absolute discretion. Landlord shall respond
to any request of Tenant to sublease
or assign within twenty-one (21) business
days after Landlord's receipt of the
information required to be delivered by
Tenant to Landlord pursuant to this
Article. Notwithstanding any of the
foregoing to the contrary, provided no Event
of Default exists under this Lease, and
subject to Landlord's rights and
Tenant's obligations pursuant to Sections
7.4 and 7.5 below, Landlord shall not
unreasonably withhold its consent to any
proposed subletting of all or any
portion of the Premises. Without limiting
the generality of the immediately
preceding sentence, it is specifically
agreed that it shall be reasonable for
Landlord to withhold its consent if: (i)
the proposed subtenant is engaged in a
business, or the Premises will be used in a
manner, that is inconsistent with
the first-class image of the Building; or
(ii) Landlord is not satisfied with
the financial condition of the proposed
subtenant; or (iii) the proposed use of
the
<PAGE>
Premises is not in compliance with Article
VI or is not compatible with the
other uses within, and the terms of other
leases with respect to, the Building;
or (iv) the initial Tenant does not remain
fully liable as a primary obligor for
the payment of all rent and other charges
payable by Tenant under this Lease and
for the performance of all other
obligations of Tenant under this Lease; or (v)
the proposed subtenant is a governmental or
quasi-governmental agency; or (vi)
the proposed use of the premises shall
increase the pedestrian traffic in the
Building above the level of traffic
generated by normal and customary office
usage; or (vii) the proposed subtenant is a
current tenant in the Building or a
potential tenant in the Building with whom
Landlord is engaged in active
negotiations. No assignment or right of
occupancy hereunder may be effectuated
by operation of law or otherwise without
the prior written consent of Landlord.
Any assignment or subletting, Landlord's
consent thereto, or Landlord's
collection or acceptance of rent from any
assignee or subtenant shall not be
construed either as waiving or releasing
Tenant from any of its liabilities or
obligations under this Lease as a principal
and not as a guarantor or surety, or
as relieving Tenant or any assignee or
subtenant from the obligation of
obtaining Landlord's prior written consent
to any subsequent assignment or
subletting. As security for this Lease, for
any period during which an Event of
Default exists hereunder, Tenant hereby
assigns to Landlord the rent due from
any assignee or subtenant of Tenant and
Tenant hereby authorizes each such
assignee or subtenant to pay said rent
directly to Landlord upon receipt of
notice from Landlord specifying same.
Landlord's collection of such rent shall
not be construed as an acceptance of such
assignee or subtenant as a tenant.
Tenant shall not mortgage, pledge,
hypothecate or encumber (collectively
"mortgage") this Lease with-out Landlord's
prior written consent, which consent
may be granted or withheld in Landlord's
sole and absolute discretion. Tenant
shall pay to Landlord an administrative fee
equal to five hundred dollars ($500)
plus all other expenses (including
reasonable attorneys' fees and ac-counting
costs) incurred by Landlord in connection
with Tenant's request for Landlord to
give its consent to any assignment,
subletting, or mortgage. Tenant shall notify
Landlord prior to engaging a real estate
broker in connection with any proposed
assignment or sublease. Any sub-lease,
assignment or mortgage shall, at
Landlord's option, be affected on forms
approved by Landlord. Tenant shall
deliver to Landlord a fully-executed copy
of each agreement evidencing a
sublease, assignment or mortgage within ten
(10) days after Tenant's execution
thereof.
7.2 If Tenant is
a partnership, then any event (whether voluntary,
concurrent or related) resulting in a
dissolution of Tenant, any withdrawal or
change (whether voluntary, involuntary, or
by operation of law) of partners
owning a controlling interest in Tenant
(including each general partner), or any
structural or other change having the
effect of limiting the liability of the
partners shall be deemed a voluntary
assignment of this Lease subject to the
provisions of this Article. If Tenant is a
corporation (or a partnership with a
corporate general partner), then any event
(whether voluntary, concurrent or
related) resulting in a dissolution,
merger, consolidation or other
reorganization of Tenant (or such corporate
general partner), or the sale or
transfer or relinquishment of the interest
of shareholders who, as of the date
of this Lease, own a controlling interest
of the capital stock of Tenant (or
such corporate general partner), shall be
deemed a voluntary assignment of this
Lease subject to the provisions of this
Article; provided, however, that the
foregoing portion of this sentence shall
not apply to corporations whose stock
is traded through a national or regional
exchange or over-the-counter market.
Notwithstanding anything contained in this
Article VII to the contrary, provided
no Event of Default exists hereunder,
Ten-ant may, upon at least twenty-one (21)
days prior written notice to Landlord but
without Land-lord's prior written
consent and without being subject to
Landlord's rights and Tenant's obligations
set forth in Sections 7.4 and 7.5 below,
assign or transfer its entire interest
in this Lease or sublease the entire
Premises: (a) to a corporation or other
business entity (herein sometimes referred
to as a "successor corporation") into
or with which Tenant shall be merged or
consolidated, or to which substantially
all of the assets of Tenant may be
transferred, provided that such successor
corporation shall have a net worth and
liquidity factor at least equal to the
net worth and liquidity factor of Tenant as
of the Lease Commencement Date, and
provided that the successor corporation
shall assume in writing all of the
obligations and liabilities of Tenant under
this Lease; or (b) to a corporation
or other business entity (herein sometimes
referred to as a "related
corporation") which shall control, be
controlled by or be under common control
with Tenant. In the event of any such
assignment or subletting, Tenant shall
remain fully liable as a primary obligor
for the payment of all rent and other
charges required hereunder and for the
performance of all obligations to be
performed by Tenant hereunder. For purposes
of clause (b) above, "control" shall
be deemed to be ownership of more than
fifty percent (50%) of the stock or other
voting interest of the controlled
corporation or other business entity. Together
with Ten-ant's notice to Landlord pursuant
to this Section, Tenant shall submit
to Landlord sufficient information
regarding the transaction as is reasonably
necessary for Landlord to confirm that the
transaction meets the qualifications
set forth in this Section.
<PAGE>
7.3 If at any
time during the Lease Term Tenant desires to assign, sublet
or mortgage all or part of this Lease or
the Premises, then in connection with
Tenant's request to Landlord for Landlord's
consent thereto, Tenant shall give
notice to Landlord in writing ("Tenant's
Request Notice") containing: the
identity of the proposed assignee,
subtenant or other party and a description of
its business; the terms of the proposed
assignment, subletting or other
transaction; the commencement date of the
proposed assignment, subletting or
other transaction (the "Pro-posed Sublease
Commencement Date"); the area
proposed to be assigned, sublet or
otherwise encumbered (the "Proposed Sublet
Space"); the most recent financial
statement or other evidence of financial
responsibility of such proposed assignee,
subtenant or other party; and a
certification executed by Tenant and such
party stating whether or not any
premium or other consideration is being
paid for the assignment, sublease or
other transaction.
7.4 If the
Proposed Sublet Space, when taken together with all other space
subleased by Tenant constitutes fifty
percent (50%) of the entire Premises, then
Landlord shall have the right in its sole
and absolute discretion to terminate
this Lease with respect to the Proposed
Sub-let Space by sending Tenant written
notice of such termination within
twenty-one (21) days after Landlord's receipt
of Tenant's Request Notice. If the Proposed
Sublet Space does not constitute the
entire Premises and Landlord exercises its
option to terminate this Lease with
respect to the Proposed Sublet Space, then
(a) Tenant shall tender the Proposed
Sublet Space to Landlord on the Proposed
Sublease Commencement Date and such
space shall thereafter be deleted from the
Premises, and (b) as to that portion
of the Premises which is not part of the
Proposed Sublet Space, this Lease shall
remain in full force and effect except that
Base Rent and additional rent shall
be reduced pro rata. All costs of any
construction required to permit the
operation of the Proposed Sublet Space
separate from the balance of the Premises
shall be paid by Tenant to Landlord as
additional rent hereunder. If the
Proposed Sublet Space constitutes the
entire Premises and Landlord elects to
terminate this Lease, then Tenant shall
tender the Proposed Sublet Space to
Landlord, and this Lease shall terminate,
on the Proposed Sublease Commencement
Date. Notwithstanding the foregoing,
Landlord's rights under this Section 7.4
shall not apply with respect to subleasing
all or any portion of the Premises to
a successor corporation or a related
corporation (each, as defined in Section
7.2 above).
7.5 If any
sublease or assignment (whether by operation of law or
otherwise, including without limitation an
assignment pursuant to the provisions
of the Bankruptcy Code or any other
Insolvency Law) provides that the subtenant
or assignee thereunder is to pay any amount
in excess of the sum of (a) the
rental and other charges due under this
Lease, plus (b) the reason-able,
out-of-pocket expenses incurred by Tenant
for brokerage commissions, reasonable
attorneys fees, any free rent granted to
such subtenant during such subtenant's
occupancy of the Pro-posed Sublet Space and
the cost of tenant improvements in
connection with the procurement of such
sublease, assignment or other transfer,
then whether such excess be in the form of
an increased monthly or annual
rental, a lump sum payment, payment for the
sale, transfer or lease of Tenant's
fixtures, leasehold improvements, furniture
and other personal property, or any
other form (and if the subleased or
assigned space does not constitute the
entire Premises, the existence of such
excess shall be determined on a pro-rata
basis), Tenant shall pay to Landlord fifty
percent (50%) of any such excess or
other premium applicable to the sublease or
assignment, which amount shall be
paid by Tenant to Landlord as additional
rent upon such terms as shall be
specified by Landlord and in no event later
than ten (10) days after any receipt
thereof by Tenant. Acceptance by Landlord
of any payments due under this Section
shall not be deemed to constitute approval
by Landlord of any sublease or
assignment, nor shall such acceptance waive
any rights of Landlord hereunder.
Landlord shall have the right to inspect
and audit Tenant's books and re-cords
relating to any sublease or assignment.
7.6 All
restrictions and obligations imposed pursuant to this Lease on
Tenant shall be deemed to extend to any
subtenant, assignee, licensee,
concessionaire or other occupant or
transferee of Tenant and Tenant shall cause
such person to comply with such
restrictions and obligations. Any assignee shall
be deemed to have assumed obligations as if
such assignee had originally
executed this Lease and at Landlord's
request shall execute promptly a document
confirming such assumption. Each sublease
is subject to the condition that if
the Lease Term is terminated or Landlord
succeeds to Tenant's interest in the
Premises by voluntary surrender or
otherwise, at Landlord's option the subtenant
shall be bound to Landlord for the balance
of the term of such sublease and
shall attorn to and recognize Landlord as
its landlord under the then executory
terms of such sublease.
<PAGE>
7.7 Landlord
acknowledges that Tenant is leasing more space than it
originally needs and that Tenant intends to
sublease in accordance with this
Lease up to thirty percent (30%) of the
Premises.
ARTICLE VIII
MAINTENANCE AND REPAIRS
8.1 Tenant, at
Tenant's sole cost and expense, shall promptly make all
repairs, per-form all maintenance, and make
all replacements in and to the
Premises that are necessary or desirable to
keep the Premises in first class
condition and repair, in a clean, safe and
tenantable condition, and otherwise
in accordance with all Laws and the
requirements of this Lease. Tenant shall
maintain all fixtures, furnishings and
equipment located in, or exclusively
serving, the Premises in clean, safe and
sanitary condition, shall take good
care thereof and make all required repairs
and replacements thereto. Tenant
shall g
