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EXHIBIT 10.6
ONE MCKINLEY SQUARE FIFTH FLOOR LEASE
THIS LEASE dated the 31ST day of December, 2005 by and between Paul
J. Kingston,
Trustee of M.P.A. Realty Trust under Declaration of Trust dated
June 28, 1979
(hereinafter called the "Landlord") and Technest Holdings, Inc.
(hereinafter
called the "Tenant").
WITNESSETH:
Section 1. The Premises.
Landlord hereby lets to Tenant, and Tenant leases from Landlord,
upon the
subject to the terms and provisions of this Lease, "as is", that
north facing
portion of Unit 5 (hereinafter called the "Leased Premises") in the
condominium
known as McKinley Square Condominium (the "Condominium") situated
at 177 State
Street, Boston, Massachusetts, ("the Building"). Landlord hereby
represents to
Tenant that the Leased Premises contain approximately 2,079
rentable square
feet.
The Leased Premises are leased with the benefit of and subject to
all terms and
provisions of the Master Deed creating the McKinley Square
Condominium
Association, as any of the same may be amended from time to time
(the
"Condominium Documents"). In accordance therewith, Tenant shall
have the right
to use for its customers, employees, and visitors, in common with
other entitled
thereto, the common areas and facilities of the Condominium (the
"Common
Elements"), including, without limitation, entrances, elevators,
lobbies, egress
corridors and stairways, and restrooms.
Landlord agrees, at its sole cost and expense, to paint the
premises, one coat,
a color to be mutually agreed upon.
Section 2. Term.
TO HAVE AND TO HOLD for an initial term of three (3) years
commencing January 1,
2006 (the "Commencement Date") and terminating on December 31, 2009
unless
sooner terminated or extended as hereinafter provided.
Section 3. Annual Rent.
(A) Tenant covenants and agrees to pay to Landlord, without setoff
or deduction,
except as provided herein, minimum monthly rental during each month
of the term
of this Lease according to the following rent schedule:
RENT SCHEDULE
Annually
Monthly
Per Square Foot
$54,054.00.
$4,504.50
$26.00
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Rent shall be due and payable in advance on or before the first day
of each
calendar month in each successive month of the term and shall be
sent to
Landlord at 282 Highland Street, Milton, Massachusetts 02186.
(B) Partial Months. Payments for partial months within the term
shall be
prorated in the same ratio that the number of days during which
Tenant occupies
the Leased Premises in any such month bears to the number of days
in said month,
without allowance for weekends or holidays. Tenant's obligations to
pay rent or
to make any other payments or to fulfill any other obligations
under this Lease
shall terminate on the day following the date on which tenant if
not in default
vacates the Leased Premises at the expiration or earlier
termination of the
term, and all monetary obligations created this Lease shall be
prorated through
the date on which the Tenant shall have so vacated the Leased
Premises.
Section 4. Additional Rent.
Tenant shall pay, as additional rent during the term and any
extensions, within
thirty (30) days of billing by Landlord, Landlord's expenses for
operating
expenses, property taxes and condominium fees and charges as set
forth in this
section, except that property taxes shall be paid as set forth in
Section 4(B).
(A) Operating Costs, Condominium Fees and Charges.
Tenant's proportionate share is equal to the ratio of the area of
the leased
premises to the entire area of Unit 5 as follows: 2,079 to 4532, or
45.87%.
For the purposes
of this Section 4(A), the following definitions shall apply:
(1) The term "Base Year" shall mean the calendar year ending
October 31, 2005.
(2) The term "Operating Costs, Condominium Fees and Charges" shall
mean any and
all expenses incurred by Landlord in connection with ownership and
maintenance
of the Leased Premises and Unit 5 (excluding interest and
amortization of
mortgage debt incurred to purchase, own or maintain the Unit,
expenses for
repair or other work occasioned by fire or other casualty covered
by a standard
fire insurance policy with extended coverage, interest or late
charges by reason
of the failure to pay timely any Operating Costs, Condominium Fees
or Charges,
and penalties imposed by the McKinley Square Condominium
Association on Landlord
not caused by any act or omission of Tenant), but including,
without limitation,
insurance maintained on the Unit, heating, ventilating and air
conditioning
expenses, charges for water, gas and other utilities, fuel oil,
cleaning and
maintenance services, management fees, condominium fees and charges
and
assessments made by the McKinley Square Condominium
Association.
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Beginning with the month of November, 2006, and thereafter monthly
throughout
the term Tenant shall pay to Landlord, together with other rental
due hereunder,
a sum equal to 1/12 of Tenant's proportionate share of the amount,
if any, by
which Landlord's reasonably estimated Operating Costs, Condominium
Fees and
Charges for the ensuing 12 months (or, if the lease term then in
effect expires
in less than 12 months, for the period ending with the expiration
of the lease
term) will exceed those of the Base Year. Such estimate shall be
based on the
Base Year's Operating Costs, Condominium Fees and Charges, with a
reasonable
amount to cover known increases in Base Year Operating Costs,
Condominium Fees
and Charges for the ensuing year.
Within ninety (90) days of the expiration of each calendar year
Landlord shall
furnish to Tenant a statement setting forth the actual Operating
Costs,
Condominium Fees and Charges for such calendar year. In the event
such statement
discloses that the additional rent paid by Tenant is greater or
less than the
increase actually incurred, either Landlord shall credit Tenant
such amount in
respect of rental payments next becoming due at the time Landlord
delivers such
statements, or Tenant shall pay such amount within twenty (20) days
after
receipt of such statement. If the term of this Lease shall have
expired and such
statement shall indicate that Tenant has paid more than its
proportionate share
(as required to be calculated pursuant to the foregoing) of
increased Operating
Costs, Condominium Fees and Charges, Landlord shall credit the
excess against
any amounts then due and owing to Landlord under this Lease, and
shall pay any
further amounts to Tenant.
(B) Property Taxes. For the purpose of this Section 4(B), the
following
definitions shall apply:
(1) The term "Tax Year" shall mean each twelve (12) month period
commencing on
July 1 during each year of the term hereof.
(2) The term "Taxes" shall mean all taxes, assessments and
betterments levied,
assessed or imposed at any time during the term by any governmental
authority
upon or against Unit 5 or taxes in lieu thereof, expressly
excluding taxes on
any capital improvements made by Landlord or Tenants to portions of
Unit 5 which
are not part of the Leased Premises. If, at any time during the
term of this
Lease, any tax or excise on rents or other taxes, however
described, are levied
or assessed against Landlord with respect to the rent reserved
hereunder, either
wholly or partially in substitution for, or in addition to, real
estate taxes
assessed or levied on Unit 5, such tax or excise on rents shall be
included in
Taxes; however, Taxes shall not include franchise, estate,
inheritance,
succession, capital levy, transfer, income or excess profits taxes
assessed on
Landlord.
(3) The term "Base Taxes" shall mean the taxes for the municipal
tax year
beginning July 1, 2005 and ending June 30, 2006. Base Taxes are to
be calculated
without giving effect to any abatement.
If Taxes assessed for any Tax Year beginning after June 30, 2006
shall exceed
the Base Taxes, whether due to increase in rate or re-assessment of
Unit 5, the
Tenant shall reimburse Landlord for its proportionate share of any
such
increase, said share to be equal to the ratio of the Lease Premises
to the
entire area of Unit 5 as follows: 2,079 to 4532 or 45.87% therefor
of any such
excess (the "Tax Excess"), payment of which shall be made to
Landlord at least
ten (10) days prior to the date or dates within any year during the
term hereof
that the same, or any fractional share thereof, shall be due and
payable to any
governmental authority responsible for collection of same (as
stated in written
notice to Tenant given at least twenty (20) days prior to the date
or dates any
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such payment shall be due, which notice shall set forth the manner
of
computation of any Tax Excess due from Tenant). At Landlord's
election, on the
first day of each calendar month of any Tax Year beginning after
June 30, 2006,
Tenant shall remit to Landlord one-twelfth of the Tax Excess. If
the total of
such monthly remittances is greater than the Tax Excess for the
next succeeding
Tax Year, Landlord shall credit the difference against the next
installment of
rental or other charges due to Landlord hereunder; if the total of
such
remittances is less than the Tax Excess for such next succeeding
Tax Year,
Tenant shall pay the difference to Landlord at the time any Tax
Excess becomes
due and payable as hereinabove provided.
If, after Tenant shall have made any reimbursement to Landlord
pursuant to this
Section 4(B), Landlord shall receive a refund of any portion of
Taxes paid with
respect to any Tax Year during the term hereof as a result of an
abatement of
such Taxes by legal proceedings, settlement or otherwise (without
either party
having any obligation to undertake any such proceedings), Landlord
shall pay or
credit to Tenant the portion of such refund (less the proportional,
pro rata
expenses, including attorneys' fees and appraisers' fees, incurred
in connection
with obtaining any such refund), related to any Tax Excess paid by
Tenant to
Landlord with respect to any Tax Year for which such a refund is
obtained.
In the event this Lease shall commence, or shall end (by reason of
expiration of
the term or earlier termination pursuant to the provisions hereof),
on any date
other than the first or last day of the Tax Year, or should the Tax
Year or
period of assessment of real estate taxes be changed or be more or
less than one
(1) year, as the case may be, then the amount of Tax Excess which
may be payable
by Tenant as provided in this Section 4(B) shall be appropriately
apportioned
and adjusted.
(C) Electricity and Gas
Tenant shall pay for all electricity and gas charges related to its
use and
occupancy of the Leased Premises. Tenant shall promptly pay
Tenant's
proportionate share of the bills received each month by Landlord
for electricity
and gas for Unit 5. If Landlord determines that Tenant's use of
electricity or
gas is excessive, Tenant shall install a sub-meter(s) at its sole
cost and
expense, and its share of the bills received shall be based upon
the reading(s)
of the sub-meter(s).
Section 5. Use of Leased Premises. The Leased Premises are leased,
and other
rights set forth herein are granted, subject to the Condominium
Documents and to
mortgages and restrictions of record. The Leased Premises are to be
used solely
for general office purposes and not for any other purposes and
without annoyance
to or disruption of other occupants of the Building. Tenant's use
shall not
exceed one (1) person for each two hundred (200) square feet of the
Leased
Premises, or ten (10) persons. Tenant will not permit smoking in
the leased
premises or in any part of the common areas of Unit 5.
Section 6. Tenant's Covenants. Tenant covenants with Landlord,
during the term
and for such further time as Tenant or anyone claiming by, through
or under
Tenant shall hold the Leased Premises or any part thereof:
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(A) To pay promptly the annual rent and additional rent provided
for herein and
any other charges payable by Tenant to Landlord at the address from
time to time
designated for the sending of notices to Landlord at the times and
in the manner
herein set forth; in the event any monthly payment due under the
lease is not
paid within 5 days of the due date, in addition to all other sums
due, a late
payment of 4% of such payment shall be due.
(B) Not to perform any renovation or construction to the Leased
Premises nor to
erect any signs or other additions or structures in the Leased
Premises nor to
make or any other alterations or additions to the Leased Premises
(including,
without limitation, the installation of any signs or draperies in
any windows of
the Leased Premises), except as herein expressly set forth;
provided, however,
Tenant may make minor alterations or leasehold improvements to the
Leased
Premises neither reducing the value of the Building nor impairing
its structural
strength if Landlord's prior written approval is obtained in each
such instance
(not to be unreasonably withheld). Tenant may install equipment
which does not
damage the Leased Premises without first obtaining Landlord's
consent. Any such
alterations, improvements, installations or addition as shall be
made at
Tenant's sole risk and expense. Landlord hereby expressly consents
to Tenant
installing reasonable interior signs with the names of Tenant and
any sublessee
of Tenant. Landlord further agrees that it shall use reasonable
efforts to
install or cause to be installed nameplates in the lobby directory
of the
Condominium with the names of Tenant and Tenant's sublessee, all at
Tenant's
expense.
Tenant may make non-structural alterations which do not reduce the
value of the
Leased Premises, provided that Tenant shall remove such alterations
and, at
Landlord's option, restore the Leased Premises as they were prior
to said
alterations at the expiration or termination of this lease, and
permit no liens
to attach to the Leased Premises on account of such
alterations.
(C) Not to place any load upon any floor of the Leased Premises
which exceeds
the rated capacity of the floor in question, nor to otherwise
overload or deface
the Leased Premises or Building, nor permit any use, alteration or
repair
contrary to law, the Condominium Documents, or any lawful
ordinance, by-law,
regulation or order of any public authority.
(D) To save Landlord harmless and to exonerate and indemnify
Landlord from and
against any and all claims, liabilities or penalties asserted by or
on behalf of
any person, firm, corporation or public authority on account of
injury, death,
damage or loss to person or property in or upon the Leased Premises
or the
building arising out of any act or omission of Tenant or as a
result of any use
or occupancy of, or passage and travel over or upon, the Leased
Premises or the
Building by the Tenant or by any person claiming by, through or
under Tenant
(including, without limitation, all servants, employees, agents,
contractors,
customers, patrons, invitees, licensees or visitors, of Tenant), or
arising out
of any delivery to or service supplied to the Leased Premises, or
on account of
or based upon anything whatsoever done on the Leased Premises,
except if same
was caused by the negligence, fault or misconduct of Landlord, its
agents,
servants, or employees; and, if required by law, to keep all
Tenant's employees
working in or about the Leased premises covered by Workmen's
Compensation
Insurance and upon request of Landlord to deliver certificates
evidencing said
coverage. With respect to all of the foregoing, Tenant shall
indemnify Landlord
from and against all costs, expenses (including reasonable
attorneys' fees), and
liabilities incurred in or in connection with any such claim,
Tenant, upon
notice from Landlord and at Tenant's expense, shall resist or
defend such action
or proceeding and employ counsel therefor reasonably satisfactory
to Landlord.
Tenant's obligation to save Landlord harmless and exonerate and
indemnify
Landlord is limited to those claims, liabilities or penalties due
to acts or
omissions of Tenant, its agents, servants, employees, or
contractors.
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Landlord shall save Tenant and its partners, stockholders (if any),
directors,
officers, and employees harmless and exonerate and indemnify them
from and
against any and all claims, liabilities or penalties asserted by or
on behalf of
any person, (including but not limited to Tenant and such persons)
firm,
corporation or public authority on account of injury, death, damage
or loss to
person or property in or about the Leased Premises arising out of
any act or
omission of Landlord, its partners, stockholders, agents, employees
and
contractors. In case of any action or proceeding brought against
Tenant or its
partners, directors, officers, or employees, Landlord, on notice
from Tenant and
at Landlord's expense, shall resist or defend such action or
proceeding and
employ counsel reasonably satisfactory to Tenant.
(E) To carry and maintain, throughout the term hereof, at its own
cost and
expense, public liability insurance (containing standard extended
coverage
endorsements, so-called covering the Leased Premises (and the
Building, insofar
as used by customers, employees, servants or invitees of the
Tenant), naming
Tenant and Landlord as insured parties, in such companies as are
reasonably
satisfactory to the Landlord, in amounts not less than $1,000,000
for injury or
death to any one person, and an aggregate amount of not less than
$2,000,000 for
any one accident, and $500,000 for damage to property, which
insurance shall
provide that such insurance may not be cancelled or terminated
without at least
twenty (20) days' prior notice to Landlord. Certificates evidencing
such
insurance coverage shall, upon Landlord's request, be promptly
delivered to
Landlord.
(F) That any and all property of Tenant of any kind that may be in
the Leased
Premises or the Building shall be at the sole risk of Tenant or
those claiming
through or under Tenant, and that in no case whatsoever shall
Landlord (or those
having estate in the Unit) be liable to Tenant, or any other
person, for any
injury, death, loss or damage to any person or property in the
Building or the
Leased Premises except if caused by the gross or willful negligence
or
misconduct of Landlord or Landlord's agents or employees.
(G) Not to mortgage, pledge or encumber this Lease. Not to sublet
or assign any
part of the Leased Premises without, on each occasion, obtaining
the prior
written consent of Landlord, which consent Landlord agrees not to
unreasonably
withhold or delay, expressly providing that Tenant may sublease
individual
office areas within the Leased Premises not exceeding 40% of the
Leased Premises
nor to more than two unaffiliated entities. (As used herein, the
term "assign"
or "assignment" shall be deemed to include any transfer of Tenant's
interest in
the Lease by operation of law, the merger or consolidation of
Tenant with or
into any other firm or corporation, or the transfer or sale of a
controlling
interest in Tenant.) The consent by Landlord to any such assignment
or
subletting shall not constitute a waiver for the necessity of such
consent with
respect to any subsequent assignment or subletting. in the event of
any
assignment or subletting by Tenant, Tenant shall remain liable for
the payment
of any and all rents and other payments and charges which may
become due
hereunder and for the performance of all other covenants,
agreements, and
conditions on the part of Tenant to be performed hereunder. No such
assignment
shall be valid or effective unless and until the assignee shall
covenant in
writing with Landlord, to the satisfaction of Landlord, to be bound
directly to
Landlord for the performance of all Tenant covenants herein
contained.
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(H) Not to permit anything to be done in or upon the Leased
Premises or the
Building, or to bring or keep anything therein or thereof
(including, without
limitation, all furnishings, carpeting and wall coverings), except
as now or
hereafter permitted by the Condominium Documents, applicable
building, fire,
health, sanitary or safety codes, ordinances, or by-laws, or by any
public
authority (including, without limitation, the Boston Fire
Department, Board of
Fire Underwriters, or by any fire insurance rating organization or
other
authority having jurisdiction of the Property); Tenant shall not
use the Leased
Premises in a manner which shall increase the rate of fire,
casualty or extended
coverage insurance maintained on the Leased Premises or on property
located
therein by the Landlord over the rate in effect as of the
Commencement Date; and
Tenant shall, upon request of Landlord and at Tenant's expense,
carry "contents
and improvements" casualty insurance. If, by use of the Leased
Premises or by
reason of failure of Tenant to comply with the provisions of this
Section 6(H),
the fire,
