Exhibit 10.12
DEED OF LEASE
BETWEEN
WEST*GROUP PROPERTIES LLC
(Landlord)
AND
NET-TEL CORPORATION
(Tenant)
SHENANDOAH BUILDING
7901 Jones Branch Drive
McLean, Virginia 22102
Date: February ___, 2000
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TABLE OF CONTENTS
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Page
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ARTICLES
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ARTICLE I -- BASIC LEASE INFORMATION AND DEFINITIONS................. 1
ARTICLE II -- DEMISING OF PREMISES................................... 4
ARTICLE III -- PARKING............................................... 4
ARTICLE IV -- IMPROVEMENTS........................................... 4
ARTICLE V -- COMMENCEMENT DATE; DELIVERY OF PREMISES................. 4
ARTICLE VI -- RENT................................................... 4
ARTICLE VII -- DEPOSIT............................................... 4
ARTICLE VIII -- SERVICES OF LANDLORD................................. 4
ARTICLE IX -- OPERATING COSTS........................................ 4
ARTICLE X -- ALTERATIONS............................................. 4
ARTICLE XI -- REPAIRS................................................ 4
ARTICLE XII -- CONDUCT OF BUSINESS BY TENANT......................... 4
ARTICLE XIII -- INSURANCE AND INDEMNITY.............................. 4
ARTICLE XIV -- DESTRUCTION OF PREMISES............................... 4
ARTICLE XV -- CONDEMNATION........................................... 4
ARTICLE XVI -- ASSIGNMENT AND SUBLETTING............................. 4
ARTICLE XVII -- FINANCING AND SUBORDINATION.......................... 4
ARTICLE XVIII -- DEFAULT OF TENANT................................... 4
ARTICLE XIX -- ACCESS BY LANDLORD.................................... 4
ARTICLE XX -- SURRENDER; HOLDING OVER................................ 4
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ARTICLE XXI -- NOTICES............................................... 4
ARTICLE XXII -- HAZARDOUS MATERIALS.................................. 4
ARTICLE XXIII -- MISCELLANEOUS....................................... 4
EXHIBITS
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EXHIBIT A -- PREMISES................................................ 4
EXHIBIT B -- LAND.................................................... 4
EXHIBIT C -- RULES AND REGULATIONS................................... 4
EXHIBIT D -- FORM OF COMMENCEMENT NOTICE............................. 4
EXHIBIT E -- WORK AGREEMENT.......................................... 47
EXHIBIT F -- BASE BUILDING HVAC SPECIFICATIONS....................... 55
EXHIBIT G -- LANDLORD'S SUBORDINATION AND CONSENT.................... 56
RIDERS
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RIDER NO. 1 -- RENEWAL OPTIONS....................................... 4
RIDER NO. 2 -- EXPANSION OPTION...................................... 4
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DEED OF LEASE
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THIS DEED OF LEASE ("Lease") is made and entered into as of the ______ day
of February, 2000, by and between WEST*GROUP PROPERTIES LLC, a Virginia limited
liability company ("Landlord"), and NET-TEL CORPORATION, a Florida corporation
("Tenant").
ARTICLE I
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BASIC LEASE INFORMATION AND DEFINITIONS
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The terms used in this Lease shall have the meanings set forth below.
A. Premises: The entire Rentable Area on the fifth (5/th/) through ninth
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(9/th/) floors of the Building, as shown on Exhibit A attached hereto. In the
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event that the Premises are made available to Tenant in a phased progression,
then the "Premises" shall, at any given time, consist of the aggregate of those
phases which have thus far become available for occupancy pursuant to Section
5.01 hereof.
B. Building: The building located on the Land, commonly known as the
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Shenandoah Building, having an address of 7901 Jones Branch Drive, McLean,
Virginia 22102.
C. Land: That certain parcel of real property located in WEST*PARK
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Office Park, as shown on Exhibit B attached hereto.
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D. Project: The Land, the Building, and all other improvements located
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on the Land.
E. Common Areas: Those areas and facilities of the Project which are
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provided by Landlord for the non-exclusive use by tenants of the Project, and
their employees, clients, customers, licensees and invitees, or for use by the
public.
F. Commencement Date: The date on which the Term shall commence, as
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determined pursuant to Article V hereof, which date is anticipated to be August
1, 2000.
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G. Expiration Date: The last day of the month in which the tenth
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(10/th/) anniversary of the Commencement Date occurs.
H. Term: Approximately ten (10) years, beginning on the Commencement
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Date and ending on the Expiration Date, unless earlier terminated as provided
herein.
I. Rent: Base Rent and Additional Rent.
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J. Base Rent: The initial Base Rent for the entire Premises shall be
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Three Million Four Hundred Sixty-Six Thousand Five Hundred Thirty-Eight and
52/100 Dollars ($3,466,538.52) per annum ($288,878.21 per month), i.e., $30.50
per square foot of Rentable Area of the Premises (the "Square Foot Rental
Rate"), subject to increase pursuant to Article VI hereof.
K. Parking Fees: Fourteen Thousand Four Hundred Twenty and No/100
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Dollars ($14,420.00) per month, calculated by multiplying $35.00 by the number
of parking spaces available to Tenant pursuant to Article III hereof, which
amount shall be due and payable as Additional Rent as and when Base Rent is due
hereunder, and which amount shall be subject to increase as and when Base Rent
is increased pursuant to Article VI hereof.
L. Deposit: Four Million Five Hundred Forty-Six Thousand Two Hundred
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Eighty and No/100 Dollars ($4,546,280.00) (i.e., $40.00 per square foot of
Rentable Area of the Premises), to be held by Landlord in accordance with
Article VII hereof.
M. Rentable Area of the Premises: Approximately one hundred Thirteen
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thousand six hundred fifty-seven (113,657) square feet, as stipulated by the
parties hereto. The Rentable Area of each floor of the Premises is as follows:
5/th/, 6/th/ & 7/th/ floors Twenty-three thousand two hundred forty
(23,240) per floor
8/th/ floor Twenty-two thousand five hundred sixty-four
(22,564)
9/th/ floor Twenty-one thousand three hundred seventy-
three (21,373).
N. Rentable Area of the Building: Approximately one hundred ninety-six
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thousand three hundred thirty-nine (196,339) square feet, as stipulated by the
parties hereto.
O. Tenant's Pro Rata Share: Fifty-Seven and Eighty-Nine one-hundredths
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percent (57.89%), calculated by dividing the Rentable Area of the Premises by
the Rentable Area of the Building. Tenant's
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Pro Rata Share shall be automatically adjusted to reflect any change in the
Rentable Area of the Premises or the Rentable Area of the Building.
P. Permitted Use: General office purposes, and, to the extent permitted
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under the applicable zoning ordinance, a network operations and
telecommunications switch center.
Q. Landlord's Address for Notice:
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WEST*GROUP PROPERTIES LLC
c/o G.T. Halpin
1600 Anderson Road
McLean, VA 22102
with a copy to:
WEST*GROUP MANAGEMENT LLC
ATTN: General Counsel
1600 Anderson Road
McLean, VA 22102
R. Landlord's Address for Payment:
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WEST*GROUP PROPERTIES LLC
c/o WEST*GROUP MANAGEMENT LLC -- Accounting Dept.
1600 Anderson Road
McLean, VA 22102
S. Tenant's Address for Notice:
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Prior to the Commencement Date:
NET-TEL Corporation
1023 31st Street, NW
Washington, DC 20007
On and after the Commencement Date: At the Premises.
T. Broker: Transwestern Carey Winston, L.L.C.
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ARTICLE II
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DEMISING OF PREMISES
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Landlord hereby leases and demises the Premises to Tenant for the Term, and
Tenant hereby leases and rents the Premises from Landlord for the Term, together
with the non-exclusive right to use the Common Areas, subject to the terms,
covenants and conditions contained herein, and also subject to all deeds of
trust, mortgages, easements, covenants, restrictions, agreements, governmental
ordinances and other encumbrances now or hereafter affecting the Project. The
exterior walls, the ceiling, the floor, the area above the ceiling and beneath
the floor of the Premises, and the area within any shafts or other core areas
penetrating the Premises, are not demised hereunder, and the use thereof,
together with the right to install, maintain, use, repair and replace pipes,
ducts, conduits, wires, tunnels, sewers and structural elements leading through
the Premises in locations which will not materially interfere with Tenant's use
thereof and serving other parts of the Project, are hereby reserved to Landlord.
Notwithstanding the foregoing, Tenant shall, during the Term, have the non-
exclusive right, in common with other tenants, to install and maintain, within
certain common area penetrations designated by Landlord, telecommunications
cabling between (i) any floors or portions of floors occupied by Tenant in the
Building, and (ii) any floors or portions of floors occupied by Tenant in the
Building and the antennas on the roof of the Building as such may exist from
time to time as provided for in Section 12.06 herein. Except as otherwise
agreed to in writing by Landlord, the amount of space within the common area
penetrations used by Tenant shall not exceed Tenant's Pro Rata Share of space
available for the installation of telecommunications cabling. Upon the
expiration or termination of this Lease, Tenant shall remove the foregoing
telecommunications cabling at Tenant's sole cost and expense, and shall repair
(in a manner acceptable to Landlord) any damage to the Project caused by the
removal of the telecommunications cabling; and, if Tenant fails to remove the
same, then the telecommunications cabling shall be deemed abandoned, and
Landlord may cause the same to be removed, and the Project to be repaired, at
Tenant's expense, which expense shall be considered Additional Rent. Subject to
the foregoing, and provided that Tenant is not in Default, Tenant shall have
peaceful and quiet enjoyment of the Premises during the Term.
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ARTICLE III
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PARKING
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Tenant, along with Landlord and other tenants of the Project, and all of their
agents, employees, clients, customers, licensees and invitees, shall have a non-
exclusive license to park their vehicles in the parking spaces serving the
Project. Tenant shall have a license to use a total of 3.6 parking spaces for
every 1,000 square feet of Rentable Area being leased by Tenant. Thus, once the
entire Premises are available for occupancy pursuant to Section 5.01 hereof,
Tenant shall have a license to use a total of four hundred twelve (412) parking
spaces. Of the foregoing four hundred twelve (412) parking spaces, fifty (50)
shall be reserved for Tenant's exclusive use (as evidenced by the designation
"Net-Tel Reserved" painted on each of the reserved parking spaces), and the
remainder shall be available for Tenant's use on a non-exclusive basis. At any
time, and from time to time, after Landlord designates which parking spaces are
to be reserved for Tenant's exclusive use pursuant to this Article III, Landlord
shall have the right, in its sole discretion, to revoke such designation and to
designate different parking spaces for Tenant's exclusive use. Landlord agrees
not to allocate to the tenants in the Building more parking spaces, in the
aggregate, than exist on the Land.
ARTICLE IV
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IMPROVEMENTS
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Upon the full execution of this Lease, Landlord shall commence construction
of the Initial Improvements described in, and in accordance with, the "Work
Agreement" attached hereto as Exhibit E, and shall diligently proceed to
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complete the Initial Improvement Work (as defined in the Work Agreement) in a
good and workmanlike manner. Tenant hereby acknowledges that the Initial
Improvements may not be completed until sometime after the date set forth in
paragraph F of Article I hereof.
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ARTICLE V
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COMMENCEMENT DATE; DELIVERY OF PREMISES
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Section 5.01. Commencement Date.
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A. The Commencement Date shall be the date the Premises (or any phase
thereof) become available for occupancy pursuant to Section 5.01.B hereof. The
parties hereto agree that no phase of the Premises shall be delivered in less
than full-floor increments, unless the parties expressly agree otherwise in
writing.
B. The Premises (or phase thereof) shall be deemed available for
occupancy as soon as (i) the Initial Improvements have been substantially
completed (i.e., excluding any punch-list items), and (ii) Landlord has obtained
a non-residential use permit therefor.
Section 5.02. Commencement Notice. When the Commencement Date has been
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determined in accordance with this Article V, Landlord and Tenant shall execute
a Commencement Notice in the form attached hereto as Exhibit D; provided,
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however, that Landlord's failure to prepare and present the Commencement Notice
to Tenant, or Tenant's failure to execute the same, shall not diminish the
effectiveness of this Lease, nor affect either party's liability hereunder.
Section 5.03. Entry by Tenant. Tenant shall not enter the Premises (or phase
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thereof) prior to the date on which the Premises (or phase thereof) shall be
deemed available for occupancy pursuant to this Article V, without Landlord's
express written consent in each instance. If Landlord consents to Tenant's
early entry onto the Premises, such entry shall be subject to all of the terms
of this Lease. Notwithstanding the foregoing, Landlord agrees to permit Tenant
and/or Tenant's contractor to enter the Premises prior to the date on which the
Premises shall be deemed available for occupancy pursuant to this Article V and
prior to the enclosure of the walls therein, for the sole purpose of installing
therein cabling for telecommunications, computer and security systems serving
the Premises, provided that Tenant or Tenant's contractor coordinates its
installation activities with Landlord's contractor to avoid interfering with the
construction activities of Landlord's contractor.
Section 5.04. Occupancy. Occupancy of the Premises, or any phase thereof, by
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Tenant shall be conclusive evidence that Tenant (a) has accepted the Premises
(or phase thereof) as being in a good and satisfactory condition (except for any
punchlist items or latent defects), and (b) has accepted the Common Areas as
being in good and satisfactory condition.
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ARTICLE VI
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RENT
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Section 6.01. Base Rent. Tenant hereby covenants and agrees to pay Landlord
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Base Rent, in equal monthly installments, in advance, on the first day of each
calendar month during the Term. In the event the Premises become available for
occupancy in phases, then the Base Rent shall be an amount equal to the product
of (a) the number of square feet comprising the Rentable Area of the phases
which have become available for occupancy, multiplied by (b) the Square Foot
Rental Rate.
Section 6.02. Base Rent Escalation. On the first (1st) anniversary of the
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Commencement Date and on each anniversary thereafter during the Term (each of
such dates being hereinafter referred to as an "Adjustment Date"), the Base Rent
shall be increased by an amount equal to the product of (i) the Base Rent in
effect immediately prior to the Adjustment Date then at hand (which Base Rent
shall not reflect any rental abatement), and (ii) two and one-half percent (2
1/2%). The Base Rent, as adjusted, shall be due and payable as of such
Adjustment Date and on the first (1st) day of each month thereafter until the
next Adjustment Date or the end of the Term, as applicable.
Section 6.03. Definitions and Payments. All sums of money required to be paid
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by Tenant under this Lease other than Base Rent shall be deemed "Additional
Rent", and all remedies applicable to the non-payment of Base Rent shall apply
thereto. All Rent shall be paid without prior notice or demand therefor, and
without any counterclaim, set-off, deduction, recoupment, credit or defense, it
being understood and agreed that Tenant's covenant to pay the Rent is
independent of the obligations of Landlord hereunder. Any Additional Rent due
as a result of a default by Tenant shall be deemed payable on the first day of
the month next following such default, except as otherwise provided in this
Lease. Any partial payment by Tenant of an outstanding obligation hereunder
shall be credited against the earliest due installment of such obligation. No
endorsement or statement on any check or letter or other communication
accompanying a check for payment of any Rent shall be deemed an accord and
satisfaction, unless otherwise expressly agreed to in writing by Landlord. No
receipt or acceptance by Landlord of any sums shall be deemed a waiver of any
Tenant default. If the Term begins on a day other than the first day of a
calendar month or ends on a day other than the last day of a calendar month,
then the Rent for such month(s) shall be prorated
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accordingly. Tenant's obligation to pay Rent during the Term shall survive the
expiration of this Lease.
Section 6.04. Late Payment Charges and Interest. Tenant shall pay a late
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charge of Five Thousand and No/100 Dollars ($5,000.00) if Tenant's monthly
installment of Rent is not paid within five (5) days after the due date. In
addition to the foregoing late charge, any payment of Rent not paid within five
(5) days after the due date shall incur interest from the due date until paid at
the rate ("Interest Rate") of four percent (4%) above the highest prime rate of
interest quoted from time to time in The Wall Street Journal (or, if The Wall
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Street Journal is no longer being published or no longer publishes a prime rate,
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by a comparable financial publication selected by Landlord); provided, however,
that the Interest Rate shall not exceed the maximum rate permitted under
applicable state or federal laws.
Section 6.05. Rental Abatement. Provided Tenant is not in Default hereunder,
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Landlord shall abate Base Rent for the first seven (7) days after the Premises
(or phase thereof) are available for occupancy pursuant to Section 5.01 hereof,
for the purpose of providing Tenant time to install systems furniture in the
Premises.
ARTICLE VII
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DEPOSIT
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Tenant shall pay the Deposit (which may be in the form of a letter of credit or
surety bond) to Landlord upon execution of this Lease as security for the
faithful performance by Tenant of the terms of this Lease. The Deposit shall
not constitute Rent for any period. Landlord shall have the right to commingle
the Deposit with other funds held by Landlord. The Deposit, without interest,
shall be returned to Tenant after the termination of this Lease, provided Tenant
shall have made all payments and performed all obligations required hereunder.
Landlord may apply all or part of the Deposit on account of a Tenant Default,
whereupon Tenant shall be required to restore the resulting deficiency in the
Deposit within five (5) days after Landlord notifies Tenant of the application
thereof. In the event Tenant elects to pay the Deposit by means of a letter of
credit or surety bond, the letter of credit or surety bond, as applicable, shall
be in a form acceptable to Landlord, in its sole discretion, and the creditor or
surety, as applicable, shall be acceptable to Landlord. Provided that Tenant
has not committed a Default under the Lease, the amount of the Deposit which
Tenant is required to provide hereunder (i) shall be reduced by $909,256.00
after Landlord ascertains (based on Landlord's review of the three
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(3) most recent annual reports provided to Landlord) that Tenant has had
positive earnings before interest, taxes, depreciation and amortization
("EBITDA") (taking into consideration any restatements of EBITDA reflected in
the subject annual reports) for three (3) consecutive fiscal years, and (ii)
shall be reduced by $909,256.00 each subsequent year that Landlord ascertains,
as aforesaid, that Tenant has had positive EBITDA for three (3) consecutive
fiscal years; provided, however, that in no event shall the amount of the
Deposit be reduced to an amount which is less than Tenant's then current monthly
installment of Base Rent.
ARTICLE VIII
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SERVICES OF LANDLORD
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Section 8.01. Services. Landlord agrees to operate and manage the Building in
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a manner typical of the operation and management of other first class office
buildings in the Tysons Corner real estate market. Landlord shall furnish
Tenant with the following services and facilities during the Term: (i) elevator
service twenty-four (24) hours a day, seven (7) days a week; (ii) heat or air
conditioning (as applicable) from 8:00 a.m. to 7:00 p.m. Monday through Friday,
and 8:00 a.m. to Noon on Saturdays, except Holidays; (iii) electricity, water,
public lavatory facilities and supplies; and (iv) janitorial services, Monday
through Friday, except Holidays. The heating, air conditioning and fresh air
specifications for the Building are as set forth on Exhibit F attached hereto.
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For purposes hereof, "Holidays" shall refer to federal legal holidays. If
Tenant requires air-conditioning, heating or other services (such as cleaning
services) routinely supplied by Landlord for hours or days in addition to the
hours and days specified herein, Landlord shall make reasonable efforts to
provide such additional service after receiving written request therefor from
Tenant, and Tenant shall reimburse Landlord for the cost of providing such
additional service in accordance with Landlord's schedule of rates in effect at
that time, which rates shall be based upon and limited to the costs (including
but not limited to administrative costs) incurred by Landlord to provide such
services. If Tenant's requirements for, or consumption of, electricity exceeds
what is customarily required to operate office space having the same size as the
Premises, Landlord shall, at Tenant's expense, make reasonable efforts to supply
such service through the then-existing feeders and risers serving the Premises,
and shall separately meter (via submeter) such additional service, and shall
bill Tenant periodically therefor.
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Section 8.02. Utility Suppliers. Landlord's obligation to furnish utility
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services pursuant to this Article VIII shall be subject to the rules and
regulations of the supplier of such utility services and the rules and
regulations of any governmental authority regulating suppliers of such utility
services.
Section 8.03. Discontinuation of Utility Services. No failure to furnish, nor
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any stoppage of, the services referred to in this Article VIII resulting from
any cause shall make Landlord liable in any respect for damages to any person,
property or business, or be construed as an eviction of Tenant, or entitle
Tenant to any relief from any of Tenant's obligations under this Lease.
Notwithstanding the foregoing, if the electric or base-building HVAC service to
the Premises is discontinued for more than five (5) consecutive business days
for reasons solely within Landlord's control, and if, as a result thereof,
Tenant is unable to conduct its business in the Premises, then Landlord shall
abate Rent every day thereafter until such service is restored. Landlord shall
use commercially reasonable efforts (to the extent within Landlord's control) to
remedy (in a commercially reasonable expedited manner) any discontinuation of
utility services which Landlord is obligated to provide hereunder as soon as
Landlord is apprised of the situation.
Section 8.04. Controlled Access Key Cards. Landlord agrees to provide Tenant
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with key cards providing access to the main lobby of the Building. The number
of key cards to be provided to Tenant at Landlord's expense shall be equal to
the number of parking spaces which Tenant has the right to use pursuant to
Article III hereof. Landlord shall provide any additional cards requested by
Tenant at Tenant's expense.
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ARTICLE IX
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OPERATING COSTS
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Section 9.01. Tenant's Operating Costs Payment. Commencing on the first (1/st/)
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anniversary of the Commencement Date, Tenant shall pay, as Additional Rent, the
amount ("Tenant's Operating Costs Payment") by which Tenant's Pro Rata Share of
Operating Costs (hereinafter defined) exceeds the Base Operating Costs
(hereinafter defined), such amount to be calculated and paid as follows:
A. On or before April 1 of the 2001 calendar year and each calendar year
thereafter, Landlord shall furnish Tenant with an estimate ("Estimate") of
Tenant's Operating Costs Payment for the then current calendar year. On the
first day of each month during such year, Tenant shall pay to Landlord one-
twelfth (1/12th) of Tenant's Operating Costs Payment, as shown on the Estimate.
For the period extending from the beginning of the calendar year to the date
Landlord delivers the Estimate to Tenant, Tenant shall continue to pay Tenant's
Operating Costs Payment payable for the previous year. After receiving the
Estimate, Tenant shall promptly pay to Landlord the difference (if any) between
the amount due for the current calendar year (as set forth in the Estimate), and
the amount Tenant had actually paid for such year. If Landlord determines, in
its reasonable discretion, that an Estimate for the current year is inaccurate,
Landlord shall have the right to adjust such Estimate.
B. Within ninety (90) days after the end of each calendar year during
which Tenant's Operating Costs Payment is due, Landlord shall furnish Tenant
with a statement of the actual Operating Costs for such calendar year. Within
thirty (30) days after Landlord's delivery of such statement, Tenant shall make
a lump sum payment to Landlord in the amount (if any) by which Tenant's
Operating Costs Payment for the subject calendar year, as shown on Landlord's
statement, exceeds the aggregate of the monthly installments of Tenant's
Operating Costs Payments paid during such calendar year. If Tenant's Pro Rata
Share of Operating Costs is less than the aggregate of the monthly installments
paid by Tenant during such calendar year, then Landlord shall apply such amount
to the next installment(s) of Rent due hereunder until fully credited to Tenant.
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Section 9.02. Operating Costs; Taxes.
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A. (i) The term "Operating Costs" shall refer to all expenses, costs and
disbursements which Landlord pays or incurs in connection with the operation,
management, repair and maintenance of the Project. All Operating Costs shall be
determined according to generally accepted accounting principles which shall be
consistently applied. Operating Costs shall include, but not be limited to, the
following: (a) Wages, salaries, benefits and fees of personnel or entities
engaged in the operation, repair, maintenance or security of the Project; (b)
Cost of all service agreements for maintenance, janitorial services, access
control, alarm service, window cleaning, elevator maintenance and landscaping
for the Project; (c) All utilities for the Project, including water, sewer,
electricity and gas; (d) Cost of all insurance for the Project which Landlord
may carry from time to time, together with all appraisal and consultants' fees
in connection with such insurance; (e) All Taxes (hereinafter defined); (f)
Legal and accounting costs incurred by Landlord or paid by Landlord to third
parties (other than legal fees with respect to disputes with individual tenants,
negotiations of tenant leases, or operating the entity which constitutes the
Landlord); (g) Cost of non-capitalized repairs and general maintenance of the
Project; (h) Project management office rent or rental value; (i) A management
fee (in an amount not to exceed the greater of (x) five percent (5%) of rents
and other revenues collected by Landlord or (y) the then current customary rate
being charged in the Tysons Corner real estate market) and all items
reimbursable to the Project manager, if any, pursuant to any management contract
for the Project; and (j) Cost of capital improvements (amortized on a straight-
line basis over the useful life of the capital improvement) which are (1) for
the purpose of reducing Operating Costs, (2) required by any governmental
authority, or (3) considered to be operating costs (notwithstanding their
capital nature) under generally accepted accounting principles. If any amounts
comprising Operating Costs are incurred not just with respect to the Project,
but also with respect to one or more other buildings outside the Project, then
Landlord shall reasonably allocate such amounts between the Project and such
other buildings or areas. There shall be no duplication of costs or
reimbursement.
(ii) "Operating Costs" shall not include (a) expenses for which Landlord
is reimbursed by an insurer, condemnor, warrantor or tenant; (b) expenses
incurred in leasing or procuring tenants for the Project (including lease
commissions, advertising expenses and expenses of renovating space for tenants);
(c) interest or amortization payments on any mortgages or debts; (d) costs of
any services sold or provided to tenants other than Tenant; (e) costs
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or fees relating to the defense of Landlord's title or interest in the Land; (f)
the cost of capital improvements other than those expressly permitted in the
preceding paragraph; (g) administrative costs of operating the entity which
constitutes the Landlord; or (h) compensation paid to officers of Landlord or
officers of the management agent who do not perform property management related
activities.
B. The term "Taxes" shall mean (i) all taxes, assessments, and other
governmental charges applicable to or assessed against the Project, or any
portion thereof, or applicable to or assessed against Landlord's personal
property used in connection therewith, whether federal, state, county or
municipal, and whether assessed by taxing districts or authorities presently
taxing the Project, or by other taxing authorities subsequently created, (ii)
all taxes, assessments, and other governmental charges which the applicable
taxing authority has abated, but which would have otherwise been levied against
the Project, or portion thereof, absent the abatement, (iii) any expenses
incurred by Landlord in contesting any taxes or the assessed valuation of all or
any part of the Project, and (iv) any charge which is based upon rents from the
Project (such as a gross receipts tax), or the transactions represented by
leases or the occupancy or use of the Project. Taxes shall not include: (1)
income or net profits taxes, unless the same are substituted for real estate
taxes, (2) transfer taxes assessed against Landlord or the Project, (3)
penalties or interest on any late payments of Taxes by Landlord, and (4)
personal property taxes of tenants in the Project.
C. The term "Base Operating Costs" shall refer to all Operating Costs
accruing during the 2000 calendar year ("Base Year").
Section 9.03. Gross-Up of Certain Operating Costs. If the Building is not
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fully occupied during any full or fractional year of the Term, the Operating
Costs for services which vary based upon the level of occupancy in the Building
(e.g., water service, management fees) shall be adjusted for such year
(including the Base Year) to an amount which Landlord reasonably estimates would
have been incurred if the Building had been fully occupied.
Section 9.04. Tenant's Right to Audit. Tenant shall have the right to audit
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Landlord's statement of Operating Costs. Tenant must complete its audit by the
date which is the later of (a) one hundred eighty (180) days after receipt of
the statement or (b) the end of the calendar year immediately following the year
to which the statement pertains. The cost of any such audit shall be paid by
Tenant, except that, if it is determined on the basis of such audit (or if, in
accordance with the following provisions, it is
13
otherwise ultimately determined) that the amount of Tenant's obligations for
Operating Costs for any calendar year was overstated by more than five percent
(5%), then the reasonable cost of the audit (in an amount not to exceed
$2,500.00) shall be paid by Landlord. Landlord shall refund to Tenant any
overpayment for the calendar year in question within thirty (30) days after the
amount of the overpayment has been established by the audit or as otherwise
provided in this Section 9.04. If Tenant fails to timely exercise its right of
audit pursuant to this Section 9.04, then the amount of Tenant's obligations for
Operating Costs shall be conclusively established as the amount set forth in the
statement. If, however, Tenant timely exercises its right of audit, the amount
of Tenant's obligations for Operating Costs shall be conclusively established as
the amount determined by such audit unless, within ninety (90) days after
receipt of a report of the same from Tenant's auditors, Landlord, at its
expense, shall contest the amount thereof, in which event Tenant shall be
entitled to pursue any legal remedies it may have to finally ascertain the
amount thereof and, if appropriate, a refund on account thereof.
ARTICLE X
---------
ALTERATIONS
-----------
Section 10.01. Alterations. Tenant shall not make any alterations, repairs or
- ------------- -----------
improvements in or to the structural components of the Building, or any building
systems serving the Premises which also serve areas of the Building beyond the
boundaries of the Premises, without Landlord's prior written consent, which
Landlord may withhold, condition or delay in Landlord's sole and absolute
discretion. Tenant shall not make any other types of alterations, repairs or
improvements in or to the Premises without Landlord's prior written consent,
which Landlord shall not unreasonably withhold, condition or delay.
Notwithstanding the foregoing, Tenant shall have the right to make decorative
alterations or to rearrange trade fixtures without obtaining Landlord's prior
consent.
Section 10.02. Mechanic's Liens. If a mechanic's lien is filed against the
- ------------- ----------------
Premises or the Project, or any interest therein, as a result of any services,
labor or materials provided (or claimed to have been provided) on Tenant's
behalf (other than by the General Contractor for the construction of the Initial
Improvements), Tenant shall (i) immediately notify Landlord of such lien, and
(ii) within ten (10) business days after receiving notice (from Landlord or any
other source) of the filing of any such lien, discharge and
14
cancel such lien by payment or bonding, in accordance with the laws of the
Commonwealth, at Tenant's sole cost and expense.
Section 10.03. Removal. All leasehold improvements and alterations made to
- ------------- -------
the Premises shall be Landlord's property (except for Tenant's moveable trade
fixtures, which shall be Tenant's property), and shall not be removed from the
Premises during the Term. Upon the expiration of the Term, Tenant shall, at
Tenant's expense, remove from the Premises (i) any leasehold improvements and
alterations which Landlord directed Tenant to remove at the time Landlord
approved the same (other than those Initial Improvements constituting items
which are generally considered building standard items, or which otherwise
conform to the minimum standards attached to the Work Agreement as Exhibit E-1),
-----------
and (ii) all of Tenant's decorative alterations and moveable trade fixtures.
Tenant shall promptly repair, or reimburse Landlord for the cost of repairing,
any damage to the Premises caused by such removal.
ARTICLE XI
----------
REPAIRS
-------
Section 11.01. By Landlord. Except as expressly otherwise set forth herein,
- ------------- -----------
Landlord shall perform all maintenance and shall make all repairs and
replacements to the Premises. In addition to Tenant's obligation to reimburse
Landlord for maintenance, repairs and replacements pursuant to Article IX
hereof, Tenant shall reimburse Landlord for the cost of (a) all repairs and
replacements to the Premises performed by Landlord at the request of Tenant
which are outside the scope of Landlord's responsibilities under Article IX
hereof (unless the subject items are among the Initial Improvements and the cost
to repair or replace such items are still covered under warranty), and (b) all
repairs and replacements to the Project which are necessitated as a result of
the acts or omissions of Tenant, or its agents, employees, contractors,
licensees or invitees. Amounts payable by Tenant pursuant to this Section 11.01
shall be due and payable within thirty (30) days after receipt of an invoice
(plus reasonable back-up documentation) therefor from Landlord. Landlord has no
obligation and has made no promise to maintain, alter, remodel, improve, repair,
decorate or paint the Premises, except as expressly set forth in this Lease. In
no event shall Landlord have any obligation to maintain, repair or replace any
fixtures or personal property of Tenant.
Section 11.02. By Tenant. Tenant shall keep the Premises in good order, and in
- ------------- ---------
a safe, neat and clean condition. Unless expressly
15
authorized elsewhere in this Lease, Tenant shall not perform any maintenance or
repair work or make any replacement in or to the Premises, but rather shall
promptly notify Landlord of the need for such maintenance, repair or replacement
so that Landlord may proceed to perform the same. Notwithstanding the foregoing,
Tenant shall be solely responsible for maintaining and repairing any
supplemental HVAC, electrical and telecommunications systems which exclusively
serve the Premises, or any portion thereof. (However, the parties shall have the
right - but not the obligation - to enter into a separate contract, containing
mutually agreeable terms, for the maintenance of any such supplemental HVAC
systems.) Nothing in this Section 11.02 shall be deemed to prevent Tenant from
performing cosmetic work in the Premises (e.g., painting and recarpeting).
----
ARTICLE XII
-----------
CONDUCT OF BUSINESS BY TENANT
-----------------------------
Section 12.01. Use of Premises. Tenant (and any sublessee or assignee of
- ------------- ---------------
Tenant) shall use and occupy the Premises during the Term solely for the
Permitted Use set forth in Article I hereof and for no other purpose. The
Premises shall not be used for the storage of personal property (other than as
may be incidental to the conduct of Tenant's business) unless expressly
permitted by the terms of this Lease. Tenant shall procure and maintain, at
Tenant's expense, any governmental licenses or permits which may be required for
the proper and lawful conduct of Tenant's business in the Building (other than
the non-residential use permit, which shall be obtained by Landlord at
Landlord's expense).
Section 12.02. Operation of Business. Tenant covenants and agrees that, in the
- ------------- ---------------------
operation of its business within the Premises, Tenant shall (a) pay before
delinquency all taxes, assessments and public charges levied, assessed or
imposed upon Tenant's business, Tenant's leasehold interest, or Tenant's
fixtures, furnishings or equipment in the Premises, and pay when due all such
license fees, permit fees and similar charges for Tenant's conduct of business
in the Premises; (b) observe the Rules and Regulations attached hereto as
Exhibit C, and all other reasonable rules and regulations established by
- ---------
Landlord from time to time, as provided in paragraph 7 of said Exhibit C,
---------
provided Tenant shall be given written notice thereof (the delivery of which
need not conform to the requirements of Article XXI hereof); and (c) not use any
space outside the Premises for storage or any other undertaking.
16
Section 12.03. Care of Premises. Tenant shall not move any safe, heavy
- ------------- ----------------
machinery, heavy equipment or fixtures into or out of the Premises without
Landlord's prior written consent. Tenant agrees that it will not place a load
on the floor which exceeds 100 pounds per square foot live load (including
partitions), and will not install, operate or maintain in the Premises any heavy
equipment, except in such manner as to achieve a proper distribution of weight.
Section 12.04. Signage.
- ------------- -------
A. If the Building has a directory in the main lobby, Landlord shall
allocate to the Tenant, at Landlord's expense, Tenant's Pro Rata Share of
directory strips. Tenant shall also have the right to place a sign, at Tenant's
expense, on the entry door(s) to the Premises on each floor (or the elevator
lobby of each full floor leased by Tenant), the design, color, location and size
of which shall be subject to Landlord's prior written approval, which Landlord
shall not unreasonably withhold, condition or delay.
B. Subject to applicable legal requirements, Tenant shall have the right
to install signage on a panel of the monument sign to be located on the Land,
the design, color and size of which shall be subject to Landlord's prior written
approval. In addition, to the extent legally permitted, Tenant shall have the
right to install a backlit sign at or near the top of the facade of the Building
facing Jones Branch Drive, the design, color, size and location of which shall
be subject to Landlord's prior written approval. Tenant shall install the sign
in a manner acceptable to Landlord. The installation of the sign shall be
completed in a workmanlike manner and in accordance with all applicable laws and
regulations. Tenant shall be solely responsible for obtaining any permits or
licenses necessary to install the sign. Tenant shall be solely responsible for
paying all costs and expenses related the installation of the sign, and shall
indemnify Landlord for any costs which Landlord might incur due to Tenant's
installation of the sign. Tenant shall cause its general liability and casualty
policies to cover the sign. Upon the expiration or termination of this Lease,
or if Tenant is in Default as a result of Tenant's failure to pay Rent when due,
or if Tenant (or an affiliate of Tenant) ceases to lease and occupy (subject to
Section 16.01.D hereof) at least fifty percent (50%) of the Building, then, in
such event, Landlord shall have the right to require Tenant to remove the sign
at Tenant's sole cost and expense, and to restore the Building to its condition
prior to the installation of the sign; and, if Tenant fails to remove the same,
then the sign shall be deemed abandoned, and Landlord may cause the same to be
removed, and the Building to be restored, at Tenant's expense, which expense
17
shall be considered Additional Rent. Notwithstanding the terms of this
paragraph, Landlord makes no representations as to whether a sign is presently
permitted under the current zoning ordinance affecting the Project.
C. Except as expressly set forth in this Section 12.04, Tenant shall not
install or maintain any sign on the Building or the Project without the prior
written consent of Landlord, which Landlord shall have the right to withhold in
its sole and absolute discretion.
Section 12.05. Legal Requirements. Tenant shall, at its own expense, comply
- ------------- ------------------
with all laws, orders, ordinances and regulations of federal, state and local
authorities, and with all rules, recommendations, requirements and regulations
of the Board of Fire Underwriters, Landlord's insurance companies, and any other
organization establishing insurance rates in the geographical area where the
Project is located.
Section 12.06. Roof Rights. To the extent legally permitted, Tenant shall have
- ------------- -----------
a non-exclusive license (which shall not be assignable except in conjunction
with an assignment of this Lease) to install Tenant's communications equipment
and supplementary HVAC equipment (the "Roof Equipment") on the roof of the
Building, in locations acceptable to Landlord, subject to Landlord's prior
approval of the size and type of such equipment. Tenant shall perform the
installation in a manner acceptable to Landlord. The installation of the Roof
Equipment shall be completed in a workmanlike manner, in accordance with all
applicable laws and regulations, in a manner which does not adversely affect the
roof warranty, and in compliance with all roof and floor load limitations.
Tenant shall be required to screen the Roof Equipment, at Tenant's expense, in a
manner acceptable to Landlord, unless otherwise agreed to in writing by
Landlord. Except as otherwise agreed to in writing by Landlord, the amount of
space taken by Tenant's Roof Equipment shall not exceed Tenant's Pro Rata Share
of roof space available for the installation of such equipment. Tenant shall be
solely responsible for obtaining any permits or licenses necessary to install
the Roof Equipment. Tenant shall be solely responsible for paying all costs and
expenses related to the installation of the Roof Equipment, and shall indemnify
Landlord for any costs which Landlord might incur due to Tenant's installation
of the Roof Equipment. Tenant shall cause its general liability and casualty
policies to cover the Roof Equipment. Upon the expiration or termination of
this Lease, Tenant shall, unless otherwise expressly directed in writing by
Landlord, remove the Roof Equipment at Tenant's sole cost and expense, and shall
restore the integrity of the roof and repair (in a manner acceptable to
Landlord) any damage to the Project caused
18
by the removal of the Roof Equipment; and, if Tenant fails to remove the same,
then the Roof Equipment shall be deemed abandoned, and Landlord may cause the
same to be removed, and the Project to be repaired, at Tenant's expense, which
expense shall be considered Additional Rent. If the real estate taxes or
insurance premiums for the Buildings are increased as a result of the
installation of the Roof Equipment, then Tenant shall pay its share of any such
increase directly attributable to such installation upon receipt of adequate
documentation. Notwithstanding the terms of this Section 12.06, Landlord makes
no representations as to whether any such Roof Equipment is presently permitted
under the current zoning ordinance to which the Project is subject.
Section 12.07. Emergency Generator. To the extent legally permitted, Tenant
- ------------- -------------------
shall have a non-exclusive license (which shall not be assignable except in
conjunction with an assignment of this Lease) to install in the parking garage
serving the Project, in a location identified on the Landlord-approved Tenant's
plans, one emergency generator (with a power rating not exceeding 250 kilowatts)
and one above-ground diesel fuel storage tank (with a capacity not exceeding 465
gallons), along with the lines and conduits reasonably necessary to connect the
generator to the Premises (collectively, the "Generator Equipment"). Tenant
shall perform the installation in accordance with Landlord's guidelines. The
installation of the Generator Equipment shall be completed in a workmanlike
manner and in accordance with all applicable laws and regulations. Tenant shall
be required to screen the Generator Equipment, at Tenant's expense, in a manner
acceptable to Landlord, unless otherwise agreed to in writing by Landlord.
Tenant shall be solely responsible for paying all costs and expenses related to
the installation of the Generator Equipment, and shall indemnify Landlord for
any costs which Landlord might incur due to Tenant's installation of the
Generator Equipment. Tenant shall cause its general liability and casualty
policies to cover the Generator Equipment. Upon the expiration or termination
of this Lease, Tenant shall remove the Generator Equipment at Tenant's sole cost
and expense, and shall restore the integrity of the parking garage and repair
(in a manner acceptable to Landlord) any damage to the Project caused by the
removal of the Generator Equipment; and, if Tenant fails to remove the same,
then the Generator Equipment shall be deemed abandoned, and Landlord may cause
the same to be removed, and the Project to be repaired, at Tenant's expense,
which expense shall be considered Additional Rent. If the real estate taxes or
insurance premiums for the Building are increased as a result of the
installation of the Generator Equipment, then Tenant shall pay its share of any
such increase directly attributable to such installation upon receipt of
adequate documentation. Notwithstanding the terms of this Section 12.07,
Landlord makes no representations as to whether any such Generator Equipment is
19
presently permitted under the current zoning ordinance to which the Project is
subject.
Section 12.08. Telecommunications Providers. Tenant shall have the right to
- ------------- ----------------------------
connect to the telecommunications provider of its choice, subject to Landlord's
prior written approval of the plans for installing such service. Except as
otherwise agreed to in writing by Landlord, the amount of space in the telephone
closet(s) serving the Building shall not exceed Tenant's Pro Rata Share of space
available for the installation of such service.
Section 12.09. Secured Access to Premises. Tenant shall be allowed to install,
- ------------- --------------------------
as part of the Initial Improvements, a card access system which restricts access
to the Premises, subject to Landlord's prior written approval of the type of
system, and method of installation, proposed by Tenant. Tenant agrees to
provide Landlord with security cards to allow Landlord access to the Premises
(or to program the system to permit access by Landlord's cards), and
acknowledges that the installation of the access system shall not in any manner
restrict Landlord's right to access the Premises in accordance with the
provisions of this Lease.
ARTICLE XIII
------------
INSURANCE AND INDEMNITY
-----------------------
Section 13.01. Insurance to be Procured by Landlord. Landlord shall obtain,
- ------------- ------------------------------------
and maintain in effect throughout the Term the following coverage: (a) casualty
insurance covering the replacement cost of the Building, and (b) commercial
general liability insurance containing contractual liability coverage of at
least Five Million and NO/100 Dollars ($5,000,000.00), combined single limit,
written on an occurrence basis. Such insurance shall be issued by an insurance
company licensed to do business in the Commonwealth.
Section 13.02. Insurance to be Procured by Tenant. Tenant, at Tenant's sole
- ------------- ----------------------------------
cost and expense, shall obtain, and maintain in effect throughout the Term,
policies providing for the following coverage:
A. Commercial general liability insurance protecting against liability
occasioned by any occurrence in the Premises and on the Project, and containing
contractual liability coverage of at least Five Million and NO/100 Dollars
($5,000,000.00), combined single limit, written on an occurrence basis. If it
becomes customary for a significant number of tenants of commercial office
buildings in the area to be required to provide insurance policies to their
20
landlords with additional coverages or coverage limits higher than the foregoing
limits, then Tenant shall be required, at Landlord's request, to obtain
insurance policies having limits which are commensurate with the then customary
limits.
B. Casualty insurance covering Tenant's fixtures, equipment, furnishings,
merchandise and other contents located in the Premises, insuring against
vandalism, malicious mischief and sprinkler damage, and all perils included
under the classification "Fire and Extended Coverage".
C. Tenant's worker's compensation insurance affording statutory coverage
and containing statutory limits required under the Commonwealth's worker's
compensation statutes.
Section 13.03. General Provisions. The insurance policies required under
- ------------- ------------------
Section 13.02 hereof shall (i) be issued by insurance companies licensed to do
business in the Commonwealth which have a Best's Rating of A:XII or better; (ii)
be written as primary policy coverage and not contributing with or in excess of
any coverage which Landlord may carry; and (iii) name Landlord and any mortgagee
of the Project as additional insureds. Neither the issuance of any insurance
policy required hereunder, nor the minimum limits specified herein with respect
to Tenant's insurance coverage, shall be deemed to limit or restrict Tenant's
liability arising hereunder. Tenant shall deliver to Landlord, on or before the
Commencement Date, a certificate of insurance for each policy which Tenant is
required to procure pursuant to this Article XIII. Tenant shall also deliver to
Landlord, on or before the expiration or cancellation of a policy, a certificate
of insurance evidencing an extension of such policy or the issuance of a
replacement policy. Each insurance policy which Tenant is required to procure
shall provide (and any certificate evidencing the existence of each such
insurance policy shall certify) that the insurance carrier shall not cancel,
fail to renew, or make material changes to, such insurance policy, without in
each instance providing Landlord with at least thirty (30) days prior written
notice thereof. If Tenant shall fail to obtain any insurance coverage which
Tenant is required to procure hereunder for a period of two (2) business days
after receiving notice thereof, then Landlord shall have the right to obtain the
same and pay the premium therefor for a period not exceeding one (1) year, and
the premium so paid by Landlord together with an administrative fee of ten
percent (10%) of such premium shall be immediately payable by Tenant to Landlord
as Additional Rent.
Section 13.04. Insurance Requirements. Tenant shall promptly comply with all
- ------------- ----------------------
rules, orders, regulations, or requirements of the insurance services office
having jurisdiction. Tenant shall not do
21
or permit to be done any act or thing upon the Premises that will invalidate or
be in conflict with any insurance policies covering the Project, or which shall
increase the rate of any insurance covering the Project, or any property located
therein. If, as a result of Tenant's failure to comply with the provisions of
this Section, the rates of any insurance covering the Project shall increase,
then Tenant shall reimburse Landlord on demand as Additional Rent for that part
of the premium charged as a result of such violation by Tenant.
Section 13.05. Indemnification.
- ------------- ---------------
A. Tenant hereby waives all claims against Landlord for damage to any
property, or injury to or death of any person, in or upon the Premises or the
Project, arising at any time and from any cause other than the negligence or
willful misconduct of Landlord, its agents or employees. Tenant shall indemnify
and hold Landlord harmless from any damage to any property, or injury to or
death of any person, arising from the use of the Project, or the use, condition
or occupancy of the Premises, by Tenant, its agents, employees, contractors,
licensees or invitees, unless such damage is caused by the negligence or willful
misconduct of Landlord or the General Contractor, their agents or employees.
Tenant's foregoing indemnity shall include attorneys' fees, investigation costs,
and all other reasonable costs and expenses incurred by Landlord in connection
therewith.
B. Landlord shall indemnify and hold Tenant harmless from any damage to
any property, or injury to or death of any person, arising from the use or
occupancy of the Common Areas, unless such damage is caused by the negligence or
willful misconduct of Tenant, its agents, employees, contractors, licensees or
invitees. In addition, Landlord shall indemnify and hold Tenant harmless from
any damage to any property, or injury to or death of any person, caused by the
negligence or willful misconduct of Landlord, its agents or employees.
Landlord's foregoing indemnity shall include attorneys' fees, investigation
costs, and all other reasonable costs and expenses incurred by Tenant in
connection therewith.
C. The provisions of this Section 13.05 shall survive the termination of
this Lease with respect to any occurrence prior to such termination.
Section 13.06. Mutual Waiver of Claims. Tenant and Landlord each hereby
- ------------- -----------------------
release and relieve each other, and waive their entire right to recovery against
the other, for loss or damage insured by the casualty policies required herein
or any other casualty policies actually held by either Tenant or Landlord,
whether due to the negligence, respectively, of Landlord or Tenant, or their
agents,
22
employees, contractors, licensees or invitees. Tenant and Landlord shall cause
their respective casualty policies to contain a provision allowing the foregoing
waiver of claims.
ARTICLE XIV
-----------
DESTRUCTION OF PREMISES
-----------------------
Section 14.01. Destruction of Premises. Tenant shall give prompt notice to
- ------------- -----------------------
Landlord of any fire or other damage to the Premises or the Building of which
Tenant becomes aware. If (i) any damage to the Premises or Building cannot
reasonably be repaired within one (1) year after the damage occurred, or (ii)
any mortgagee of the Premises shall require that the insurance proceeds under
the policies referred to in Section 13.01 hereof be used to pay down the
mortgage, or (iii) the Premises or Building shall be damaged as a result of a
risk which is not covered by Landlord's insurance, then Landlord may terminate
this Lease by notice given within ninety (90) days after the date of such
damage. In addition, Landlord shall notify Tenant, in writing, within ninety
(90) days after the date the damage occurred, if Landlord has reasonably
determined that it will take more than one (1) year from the date the damage
occurred to rebuild the Premises, whereupon Tenant shall have the right to
terminate this Lease upon written notice to Landlord delivered not more than
thirty (30) days after Landlord delivers said notice to Tenant. Any termination
under this Section 14.01 shall be effective as of the date of the casualty, or
such later date of actual vacation, with appropriate proration if Tenant
continues to occupy and use the undamaged portion of the Premises after the
casualty.
Section 14.02. Obligation to Rebuild. If the Premises are damaged by fire or
- ------------- ---------------------
other casualty and this Lease is not terminated pursuant to Section 14.01, then
all insurance proceeds under the policies referred to in Article XIII hereof
that are recovered on account of any such damage shall be made available to pay
for the cost of repairing such damage, and, as soon as practicable after such
damage occurs, Landlord shall repair or rebuild the Premises to a condition
substantially similar to their condition immediately prior to such occurrence to
the extent the cost therefor is fully funded by insurance proceeds. However, in
no event shall Landlord be obligated to repair or replace Tenant's trade
fixtures, equipment or personalty.
Section 14.03. Rent Abatement. In the event of any repair or rebuilding
- ------------- --------------
pursuant to Section 14.02 hereof, then an equitable portion of the Rent shall be
abated during the existence of such
23
damage, based upon the portion of the Premises which is rendered untenantable
and the duration thereof. Except as expressly set forth in this Article XIV,
Landlord shall not be liable or obligated to Tenant if the Premises are damaged
by fire or other casualty. Tenant hereby waives any and all rights to terminate
this Lease that it may have, by reason of damage to the Premises by fire or
other casualty, pursuant to any presently existing or hereafter enacted law.
24
ARTICLE XV
----------
CONDEMNATION
------------
Section 15.01. Condemnation of Premises or Project. If all or substantially
- ------------- -----------------------------------
all of the Premises or the Project is taken or condemned by condemnation or
conveyance in lieu thereof (such taking, condemnation or conveyance in lieu
thereof being hereinafter referred to as "Condemnation"), this Lease shall
terminate on the earlier of the date the condemning authority takes possession
or the date title vests in the condemning authority. Landlord hereby represents
that it has not received any notice from any governmental authority that a
portion of the Project is subject to a pending condemnation proceeding.
Section 15.02. Partial Taking of Project. If any portion of the Project shall
- ------------- -------------------------
be taken by Condemnation (whether or not such taking includes any portion of the
Premises) and (i) such taking, in Landlord's reasonable business judgment,
results in a condition where the Project cannot be restored in an economically
feasible manner for use substantially as originally designed, or (ii) Landlord's
mortgagee requires Landlord to use the proceeds thereof to pay down the
mortgage, then Landlord shall have the right, at Landlord's option, to terminate
this Lease effective as of the date specified by Landlord in a written notice of
termination to Tenant.
Section 15.03. Partial Taking of Premises. If a portion, but less than
- ------------- --------------------------
substantially all, of the Premises shall be taken by Condemnation, then this
Lease shall be terminated as of the date of Condemnation as to the portion of
the Premises so taken, unless Tenant reasonably determines that it shall no
longer be able to conduct its business in the remainder of the Premises,
whereupon Tenant shall have the right to terminate this Lease effective as of a
date not later than sixty (60) days after the date of Condemnation, as specified
by Tenant in a written notice of termination delivered to Landlord within ten
(10) days after the date of Condemnation.
Section 15.04. Condemnation Award. All compensation awarded or paid upon a
- ------------- ------------------
Condemnation of any portion of the Project shall belong to and be the property
of Landlord, without participation by Tenant. Notwithstanding the foregoing,
Tenant shall have the right to prosecute any claim directly against the
condemning authority for loss of business, loss of goodwill, moving expenses,
and damage to and cost of removal of trade fixtures, furniture and other
personal property belonging to Tenant, so long as Tenant's claim
25
shall not diminish or adversely affect any award claimed or recovered by
Landlord.
ARTICLE XVI
-----------
ASSIGNMENT AND SUBLETTING
-------------------------
Section 16.01. Assignment or Sublease by Tenant.
- ------------- --------------------------------
A. Tenant shall not sublet the Premises (or any portion thereof) or
assign this Lease (or any interest herein), nor shall any assignment or
sublease, without the prior written consent of Landlord, which Landlord shall
not unreasonably withhold, condition or delay. Notwithstanding the foregoing, as
an alternative to granting consent to a proposed sublease or assignment,
Landlord shall have the right, in its sole discretion, to elect: (i) to sublet
from Tenant the portion of the Premises proposed by Tenant to be sublet upon the
same terms as the proposed sublet (except that if the rental rate thereunder is
greater than the rental rate hereunder, then the rental rate shall be adjusted
pursuant to paragraph B hereof); or (ii) if Tenant desires to assign this Lease,
to terminate this Lease as of the proposed effective date of the assignment.
Landlord agrees to make the foregoing election within ten (10) business days
after receiving written notice from Tenant outlining the terms of the proposed
sublease or assignment, and requesting Landlord's consent thereto. In no event
shall Tenant be permitted to sublease the Premises or assign this Lease if
Tenant is then in Default under this Lease. In the event of any assignment or
sublease pursuant to the terms of this Article XVI, Tenant shall remain liable
for all of its obligations under this Lease, including but not limited to
payment of Rent. Landlord's consent to a particular assignment or sublease
pursuant to this Article XVI shall not constitute consent to any other
assignment or sublease.
B. If Tenant should desire to assign this Lease or sublet the Premises,
Tenant shall give Landlord written notice thereof specifying: (i) the name,
current address and business of the proposed assignee or sublessee, (ii) the
amount and location of the space within the Premises proposed to be so
subleased, (iii) the proposed effective date and duration of the assignment or
sublease, (iv) the proposed rent and other consideration to be paid to Tenant by
such assignee or sublessee, and (v) all other information reasonably required by
Landlord to evaluate the proposed assignment or sublease. If Landlord consents
to such assignment or sublease, Tenant shall deliver to Landlord copies of all
documents executed in connection therewith, which documents shall be in form and
26
substance reasonably satisfactory to Landlord, and which documents shall require
such assignee or sublessee to comply with all terms of this Lease on Tenant's
part to be performed. No acceptance by Landlord of any rent or any other sum of
money from any sublessee or assignee shall be deemed to constitute Landlord's
consent to any assignment or sublease. If Landlord permits Tenant to sublet the
Premises or assign this Lease, and the rental rate thereunder exceeds the rental
rate hereunder, Tenant shall remit to Landlord as Additional Rent, as and when
Rent hereunder becomes due, fifty percent (50%) of the difference between the
rent due under the sublease or assignment and the Rent due hereunder, less
commercially reasonable expenses incurred by Tenant in subleasing the space or
assigning this Lease (amortized on a straight-line basis over the term of the
sublease or assignment).
C. Notwithstanding the foregoing provisions of this Section 16.01, Tenant
shall have the right, upon prior written notice to Landlord, but without
Landlord's consent, and provided Tenant is not then in Default, to assign this
Lease, or to sublet all or any part of the Premises (without Landlord having any
of its termination, recapture or revenue sharing rights pursuant to this Section
16.01), to (i) any entity resulting from a merger or consolidation with Tenant,
(ii) any corporation succeeding to all the business and assets of Tenant, or
(iii) any affiliate of Tenant; provided, however, that the net worth of the
surviving or successor entity or the affiliate is at least equal to the net
worth of Tenant as of the date of this Lease; and provided, further, that Tenant
shall remain unconditionally liable for Tenant's obligations under this Lease.
For purposes hereof, an affiliate of Tenant is any entity which controls, is
controlled by, or is under common control with Tenant.
D. Notwithstanding any provision to the contrary, during the first four
(4) years of the Term, Tenant shall have the right, subject to Landlord's prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed, and provided Tenant is not then in Default, to sublet two (2) of the
floors comprising the Premises to one or more unrelated third-parties, without
Landlord having any of its recapture rights pursuant to Section 16.01.A hereof.
However, all other terms of paragraphs A and B of this Section 16.01 shall apply
to any sublease entered into pursuant to this paragraph D. Notwithstanding
anything to the contrary set forth in Section 12.04.B hereof, Landlord may not
exercise its right to require Tenant to remove the sign from the facade of the
Building, if Landlord's sole reason for exercising such right is that Tenant
happens to occupy less than fifty percent (50%) of the Building as a result of
having entered into one or more subleases pursuant to this paragraph D.
27
Section 16.02. Assignment Under Bankruptcy Code. Any person or entity to which
- ------------- --------------------------------
this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall
be deemed, without further act or deed, to have assumed and be subject to all of
the obligations, conditions and provisions under this Lease as of the date of
such assignment. Notwithstanding the foregoing, to the extent allowed by law,
this Lease shall not be assignable by voluntary or involuntary bankruptcy,
insolvency or reorganization proceedings, nor shall this Lease, or any rights or
privileges hereunder, be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings.
Section 16.03. Assignment by Landlord. The term "Landlord" shall be limited to
- ------------- ----------------------
mean only the owner or owners, at the time in question, of the fee title to, or
a lessee's interest in a ground lease of, the Project. In the event of any
transfer, assignment or conveyance of any such title or interest, the Landlord-
transferor shall be automatically freed and relieved, from and after the date of
such transfer, assignment or conveyance, of all obligations of Landlord
hereunder, and the Landlord-transferee of such title or interest shall be deemed
to have assumed, from and after the date of such transfer, assignment or
conveyance, all obligations of Landlord hereunder. Tenant hereby acknowledges
that Landlord may transfer its interest in the Lease or the Project without the
consent of Tenant.
ARTICLE XVII
------------
FINANCING AND SUBORDINATION
---------------------------
Section 17.01. Subordination; Attornment.
- ------------- -------------------------
A. This Lease is subject and subordinate to all current and future ground
leases, deeds of trust, mortgages or other security instruments covering any
portion of the Project, or any interest of Landlord therein, as the same may be
amended from time to time. This provision shall be self-operative, and no
further instrument shall be required to effect such subordination of this Lease.
Upon demand, however, Tenant shall execute, acknowledge and deliver to Landlord
any further instruments evidencing such subordination as Landlord, and any
mortgagee or lessor of Landlord, shall reasonably require. Notwithstanding the
foregoing, any mortgagee or lessor of Landlord shall have the right at any time
to subordinate any such deed of trust or mortgage or underlying lease to this
Lease, on such terms and subject to such conditions as such mortgagee or lessor
of Landlord may deem appropriate.
28
B. Upon any transfer of Landlord's interest in the Project, Tenant shall,
upon request of such transferee ("successor landlord"), automatically attorn to
and become the Tenant of the successor landlord, without change in the terms of
this Lease. This agreement of Tenant to attorn to a successor landlord shall
survive any foreclosure sale, trustee's sale, conveyance in lieu thereof or
termination of any underlying lease. Tenant shall, upon demand at any time,
before or after any such foreclosure or termination, execute, acknowledge and
deliver to the successor landlord any written instruments evidencing such
attornment as such successor landlord may reasonably require.
C. Notwithstanding the terms of this Article XVII, Landlord shall obtain
from the current mortgagee of the Building a fully-executed (having been first
signed by Tenant) subordination, nondisturbance and attornment agreement, and
shall deliver the same to Tenant. In addition, Landlord shall obtain from any
future mortgagee of the Building a fully-executed (having been first signed by
Tenant) subordination, nondisturbance and attornment agreement on such
mortgagee's standard form of agreement, and shall deliver the same to Tenant,
provided that Landlord is reimbursed by Tenant for any cost incurred by Landlord
in obtaining the same from such future mortgagee.
Section 17.02. Mortgagee's Right to Cure. In the event of any default by
- ------------- -------------------------
Landlord hereunder, Tenant shall, prior to taking any action to remedy such
default or to cancel this Lease, send to Guaranty Federal Bank, F.S.B., 8333
Douglas Avenue, Dallas, Texas 75225, Attn: Commercial Real Estate Lending
Division, or to any subsequent mortgagee of which Tenant has notice, by
certified mail, return receipt requested, a notice specifying the default by
Landlord, whereupon such mortgagee shall have a right to cure such default on
behalf of Landlord in accordance with the terms of the nondisturbance agreement
provided to Tenant pursuant to Section 17.01.C hereof. Tenant shall have no
right to take any other action as a result of Landlord's default unless and
until Tenant complies with the provisions of this paragraph.
ARTICLE XVIII
-------------
DEFAULT OF TENANT
-----------------
Section 18.01. Defaults. Each of the following occurrences shall constitute a
- ------------- --------
"Default" by Tenant:
29
A. If Tenant fails to pay any installment of Rent when the same shall
become due and payable, and such failure shall continue for five (5) business
days after written notice thereof.
B. Intentionally deleted.
C. If any execution, levy, attachment or other process of law occurs upon
Tenant's interest in the Premises, and Tenant fails to discharge or bond-off the
same within ten (10) business days after receiving notice thereof (from Landlord
or otherwise).
D. If a mechanic's lien is filed against the Premises or the Project as a
result of any services or labor provided, or materials furnished, on Tenant's
behalf, and Tenant fails to timely cause such lien to be discharged, or bond
such lien or post such security, as is required by Section 10.02, and such
failure shall continue for five (5) business days after written notice from
Landlord to Tenant.
E. If Tenant violates the sublease or assignment provisions set forth in
Article XVI hereof.
F. If Tenant fails to maintain in force all policies of insurance required
by this Lease, and such failure shall continue for two (2) business days after
written notice thereof.
G. If Tenant fails to provide Landlord with the financial statements or
the estoppel certificates within the time periods referenced in Sections 23.16
and 23.17 hereof, respectively.
H. Subject to the terms of the Bankruptcy Code, if (i) Tenant, Tenant's
guarantor or any permitted assignee, shall (a) make an assignment for the
benefit of creditors, (b) file or acquiesce in a petition in any court (whether
or not pursuant to any statute of the United States or of any state) in any
bankruptcy, reorganization or insolvency proceedings, or (c) make an application
in any such proceedings for or acquiesce in the appointment of a trustee or
receiver for it or all or any portion of its property; or (ii) any petition
shall be filed against Tenant, Tenant's guarantor or any permitted assignee, in
any bankruptcy, reorganization or insolvency proceedings and (x) Tenant,
Tenant's guarantor or any permitted assignee or sublessee shall thereafter be
adjudicated bankrupt, or (y) such petition shall be approved by any such court,
or (z) such proceedings shall not be dismissed, discontinued or vacated within
sixty (60) days after such petition is filed; or (iii) a receiver or trustee
shall be appointed for Tenant, Tenant's guarantor or a permitted assignee, for
all or any portion of their property, and such
30
receivership or trusteeship shall not be set aside within sixty (60) days after
such appointment.
I. If Tenant fails to perform or observe any other term of this Lease
which is not specifically referred to in this Section 18.01, and such failure
continues for more than thirty (30) days after written notice from Landlord,
except that such thirty (30) day period shall be extended for such additional
period of time as may reasonably be necessary to cure such breach, if such
breach, by its nature, cannot be cured within such thirty (30) day period,
provided that Tenant commences to cure such breach within such thirty (30) day
period and is at all times thereafter in the process of diligently curing the
same, and does in fact cure such breach prior to the time that a failure to cure
could cause the Landlord to be subject to prosecution for violation of any law,
rule, ordinance or regulation or could cause a default under any mortgage, lease
or other agreement applicable to the Project.
J. If Tenant fails to perform any of its obligations under this Lease
three (3) or more times within any twelve (12) month period, and Landlord has
delivered notice of the breach for each such failure, notwithstanding any
subsequent cure of such failure as provided in this Section 18.01.
Section 18.02. Landlord's Remedies. In the event of a Default, Landlord may
- ------------- -------------------
pursue any or all of the following remedies:
A. Landlord shall have the right to terminate this Lease by delivering to
Tenant written notice thereof, whereupon Tenant shall be required to immediately
vacate and surrender the Premises.
B. Landlord shall have the right, without notice, to re-enter the
Premises and dispossess, by summary proceedings, self help or otherwise, Tenant
and any other occupants of the Premises, and Tenant shall have no further claim
or right hereunder.
C. Landlord shall have the right to bring a special proceeding to recover
possession of the Premises from Tenant.
D. If Landlord exercises its rights under paragraphs B or C above,
Landlord may remove all persons from the Premises, and may treat all property as
abandoned and dispose of same in accordance with Section 20.02 of this Lease.
E. Landlord may exercise its rights under paragraphs B or C above with or
without terminating the Lease, and in no event shall any such exercise be
construed as an election to terminate this Lease or operate to release Tenant
from any of its obligations for the remainder of the Term, or give rise to any
claim for trespass.
31
If Landlord exercises its rights under paragraphs B or C above without
terminating the Lease, Landlord may from time to time make such alterations and
repairs as necessary in order to relet the Premises, and may thereafter relet
the Premises or any part thereof for such rent and upon such other terms and
conditions as Landlord may determine advisable in its sole discretion. Upon each
such reletting, all rentals and other sums received by Landlord from such
reletting shall be applied as follows: first, to the payment of any costs and
expenses of such reletting; second, to the payment of any indebtedness other
than Rent due and unpaid hereunder; and third, to the payment of Rent due and
unpaid hereunder. If such rentals and other sums received from such reletting
during any month are less than the amounts due pursuant to the foregoing
schedule for application of proceeds, Tenant shall pay such deficiency to
Landlord; if such rentals and other sums shall be more, Tenant shall have no
right to, and shall receive no credit for, the excess. Such deficiency shall be
calculated and paid monthly. Notwithstanding any such reletting without
termination, Landlord may at any time elect to terminate this Lease for such
previous breach. In the event Landlord re-enters and takes possession of the
Premises pursuant to this Section 18.02, then Landlord shall add the Premises
into its inventory of available space and shall use commercially reasonable
efforts to relet the same; provided, however, that in no event shall Landlord be
required to relet the Premises in preference to other available space in
Landlord's inventory at that time, nor shall Landlord be required to divide the
Premises for the purpose of leasing the portions thereof to more than one
tenant.
F. Landlord may recover its lost Rent and other damages due hereunder (i)
at the time of the re-entry or termination, in a single action or in separate
actions, from time to time, as the lost Rent shall accrue, or (ii) in a single
proceeding deferred until the expiration of the Term (in which event Tenant
hereby agrees that the cause of action shall not be deemed to have accrued until
the date of expiration of the Term). Notwithstanding the foregoing, if Landlord
terminates this Lease as a result of a Tenant Default, Landlord may, as an
alternative to the remedies set forth in the preceding sentence, recover upon
demand the following liquidated damages (which the parties hereto agree shall
not be deemed a penalty) upon written notice thereof to Tenant: The sum of: (i)
all past-due Rent through the termination date of this Lease, plus (ii) the
amount of Landlord's Costs (hereinafter defined) which remains unamortized as of
the termination date of this Lease, plus (iii) the lesser of (a) the amount of
Rent due for the remainder of the Term, or (b) the amount of Rent due for the
twelve (12) month period immediately following the termination date of this
Lease. Landlord and Tenant acknowledge that they have agreed to the foregoing
amount as liquidated damages because of the
32
difficulty of ascertaining in advance the amount of damages Landlord is likely
to incur as a result of Tenant's Default and Landlord's subsequent termination
of this Lease. For purposes hereof, the term "Landlord's Costs" shall refer to
the sum of (i) all real estate brokerage commissions incurred by Landlord in
connection with the Lease, (ii) all costs and expenses incurred by Landlord in
connection with the construction and/or installation of any leasehold
improvements within the Premises, (iii) any rental abatements, (iv) any
allowances granted to Tenant, and (v) any other costs and expenses incurred by
Landlord in connection with the Lease. In addition to any other damages for
which Tenant shall be liable hereunder, Tenant shall be liable for all
reasonable attorneys' fees and court costs incurred by Landlord as a result of
Tenant's Default.
Section 18.03. Waiver of Trial by Jury. Landlord and Tenant hereby waive all
- ------------- -----------------------
right to trial by jury regarding any matter connected with this Lease.
Section 18.04. Injunction. In addition to the other remedies provided in this
- ------------- ----------
Lease, and anything contained herein to the contrary notwithstanding, Landlord
and Tenant shall be entitled to restraint by injunction of any default or
violation, or attempted or threatened default or violation, of any of the terms
of this Lease.
Section 18.05. Landlord's Right to Perform for Account of Tenant. If Tenant
- ------------- -------------------------------------------------
shall Default, Landlord may cure such Default for the account and at the expense
of Tenant. Tenant agrees to pay Landlord, on demand, with interest at the
Interest Rate, the amount so paid, expended or incurred by Landlord, and any and
all expenses, including reasonable attorneys' fees and court costs, incurred by
Landlord as a result of such Default.
Section 18.06. Additional Remedies; Waivers. The rights and remedies of
- ------------- ----------------------------
Landlord set forth in this Article XVIII shall be in addition to any other right
and remedy now or hereafter available at law or in equity, and all such rights
and remedies shall be cumulative rather than exclusive. Landlord may exercise
such rights and remedies at such times, in such order, to such extent, and as
often as Landlord deems advisable, without regard to whether the exercise of one
right or remedy precedes, coincides with or succeeds the exercise of another. A
single or partial exercise of a right or remedy shall not preclude a further
exercise thereof, or the exercise of another right or remedy. No waiver of a
Default shall be effective unless it is expressly agreed to in writing by
Landlord.
33
Section 18.07. Landlord's Failure to Perform. In the event Landlord shall fail
- ------------- -----------------------------
to perform any of its obligations hereunder, then Tenant shall be entitled to
pursue its rights and remedies available at law or in equity.
ARTICLE XIX
-----------
ACCESS BY LANDLORD
------------------
Landlord may, at any time, upon prior reasonable notice to Tenant (except
in the case of emergency), enter the Premises for the purpose of: (i) inspecting
the Premises; (ii) making repairs, replacements or alterations; or (iii) during
the final year of the Term, showing the Premises to prospective purchasers or
tenants. No such entry by Landlord shall constitute actual or constructive
eviction of Tenant. During the course of any such entry, Landlord shall use
reasonable efforts to avoid disrupting Tenant's business operations.
34
ARTICLE XX
----------
SURRENDER; HOLDING OVER
-----------------------
Section 20.01. Surrender. Upon the expiration of this Lease, or upon re-entry
- ------------- ---------
by Landlord without terminating this Lease pursuant to Article XVIII hereof,
Tenant shall peacefully vacate and surrender the Premises to Landlord in good
order, broom clean and in the same condition as at the beginning of the Term,
reasonable wear and tear and damage by casualty excepted. Tenant shall also
remove its trade fixtures, furniture and other personal property from the
Premises along with any leasehold improvements or other additions which Tenant
is required to remove pursuant to Section 10.03 hereof.
Section 20.02. Personal Property. The parties hereto agree that Tenant's
- ------------- -----------------
personal property located in the Premises shall be subject to that certain
Consent and Subordination Agreement in the form attached hereto as Exhibit G.
---------
Landlord agrees to subordinate, to the rights of any lender who is providing
financing for any of Tenant's personal property in the Premises, any statutory
or common law right of Landlord to levy its landlord's lien against Tenant's
personal property. Except to the extent provided to the contrary in the
foregoing Consent and Subordination Agreement, if Tenant fails to timely remove
its property in accordance with Section 20.01, Landlord shall have the right, on
the tenth (10th) business day after Landlord's delivery of written notice to
Tenant, to deem such property abandoned by Tenant. Landlord may thereafter
remove or otherwise deal with the abandoned property in a commercially
reasonable manner at Tenant's sole cost and expense, and Landlord shall have no
liability to Tenant with respect to such abandoned property. Tenant specifically
acknowledges and agrees that Landlord shall not be considered a bailee of such
property. Tenant hereby agrees to indemnify Landlord against any loss, cost,
expense, claim or cause of action arising in connection with Landlord's exercise
of its rights under this Section 20.02 including, without limitation, any claim
by a third party for conversion or trespass as to chattels.
Section 20.03. Holding Over. If Tenant shall hold possession of the Premises
- ------------- ------------
after the expiration of this Lease, Landlord shall have the right, in its sole
discretion, to deem Tenant either (i) a trespasser, whereupon Landlord shall be
entitled to the benefit of all laws relating to the speedy recovery of the
possession of the Premises; or (ii) a month-to-month tenant subject to the
provisions and obligations of this Lease (insofar as the same are applicable to
a month-to-month tenancy), except that Tenant shall be required
35
to pay to Landlord a monthly rental equal to two (2) times the amount of Rent
payable during the last month of the Term. Unless Landlord notifies Tenant in
writing to the contrary within thirty (30) days after the expiration of this
Lease, Tenant's tenancy shall automatically become month-to-month. The terms of
this Article XX shall survive the expiration of this Lease.
ARTICLE XXI
-----------
NOTICES
-------
Except as may be expressly provided to the contrary in this Lease, all
notices, consents, demands, requests or other communications (other than payment
of Rent) required or permitted hereunder (collectively, "notices") shall be in
writing, and shall be deemed given when dispatched to the other party by hand
delivery (with signed receipt), or one (1) day after being dispatched to the
other party by air express courier (with signed receipt), or three (3) days
after being deposited in the United States Mail, postage prepaid, certified or
registered, return receipt requested. The addresses of the parties for notices
shall be those set forth in Article I hereof, or any other address subsequently
specified by either party in a notice given pursuant to this Article XXI.
ARTICLE XXII
------------
HAZARDOUS MATERIALS
-------------------
Section 22.01. Environmental Requirements. Tenant's use and occupancy of the
- ------------- --------------------------
Premises shall at all times be in strict compliance with all federal, state and
local laws, rules, regulations, orders, guidelines, ordinances and standards, as
they may now or hereafter exist, relating in any way to the protection of human
health, safety, the environment and natural resources, including but not limited
to the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"); the Resource Conservation and Recovery Act; the Toxic Substances
Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Clean
Air Act; the Federal Water Pollution Control Act; the Occupational Safety and
Health Act; the Safe Drinking Water Act, and their applicable state and local
counterparts or equivalents ("Environmental Laws").
36
Section 22.02. Clean-Up. If Tenant becomes aware of a Release (hereinafter
- ------------- --------
defined), threat of a Release or the presence of any Hazardous Substance
(hereinafter defined) affecting the Premises or surrounding areas, Tenant shall
immediately notify Landlord in writing thereof, and shall take all necessary
steps to ensure that any future activities by Tenant do not exacerbate the
Release, threat of a Release or the presence of Hazardous Substance. If a
Release, threat of a Release or the presence of any Hazardous Substance
affecting the Premises or surrounding areas is caused by the acts or omissions
of Tenant, or its agents, employees, contractors, licensees or invitees, Tenant
shall immediately take all measures necessary to contain, remove and dispose off
the Premises, or surrounding areas, all such materials present or Released (or
threatened to be Released), and shall remedy and mitigate all threats to public
health or the environment relating to such presence or Release, or threat
thereof. If Tenant shall fail to take the measures described above, or shall
fail to comply with the requirements of any Environmental Laws, Landlord may
give such notice and/or cause such work to be performed at the Premises or
surrounding areas, and/or take any and all other actions as Landlord shall deem
necessary to restore the Premises or surrounding areas to the condition in which
they existed as of the date of this Lease. Such actions by Landlord shall not
affect Tenant's obligations under this Lease.
Section 22.03. Indemnification. Tenant shall indemnify, defend and hold
- ------------- ---------------
harmless Landlord from and against any and all claims, liens, suits, actions,
debts, damages, costs, losses (including, without limitation, any loss of value
of, loss of use of, or loss of income from, the Premises or the Project),
liabilities, obligations, judgments and expenses (including, without limitation,
court costs and attorneys' fees), arising from or relating to any of the
following occurrences caused by the acts or omissions of Tenant, its agents,
employees, contractors, licensees or invitees: (i) a failure to comply with any
Environmental Laws, or (ii) a Release, threat of a Release or the presence of
any Hazardous Substance affecting the Premises or surrounding areas. Tenant's
obligations under this Lease shall arise whether or not any governmental
authority or individual has taken or threatened to take any action in connection
with the presence of any Hazardous Substance.
Section 22.04. Definitions. As used herein, the term "Hazardous Substance"
- ------------- -----------
shall mean petroleum or petroleum by-products, and/or any chemicals, substances
or wastes which are defined as or included in the definition of "hazardous
substance", "hazardous waste", "hazardous material", "toxic substance", "toxic
pollutant", or words of similar import, under any Environmental Laws, and shall
include building materials and building components including,
37
without limitation, asbestos or asbestos containing materials. The term
"Release" shall have the meaning set forth in Section 101(22) of CERCLA.
Section 22.05. Operations. Tenant shall not engage in operations which involve
- ------------- ----------
the generation, manufacturing, refining, transportation, treatment, storage,
disposal or handling of any Hazardous Substance, other than office equipment and
cleaning solutions that are customarily found in office buildings, provided that
the use, generation, handling or storage of such equipment and solutions is
reasonably necessary for the operation and maintenance of the Premises as
permitted pursuant to the terms of this Lease, and is in strict compliance with
Environmental Laws.
Section 22.06. Inspection. Tenant agrees to permit Landlord and its authorized
- ------------- ----------
representatives to enter, inspect and assess the Premises at reasonable times
for the purpose of determining Tenant's compliance with the provisions of this
Article XXII. Such inspections and assessments may include obtaining samples
and performing tests of building materials, soil, surface water, groundwater or
other media.
Section 22.07. Survival. This entire Article XXII shall survive the expiration
- ------------- --------
of this Lease.
ARTICLE XXIII
-------------
MISCELLANEOUS
-------------
Section 23.01. Professional Fees. To the extent permitted by law, in any
- ------------- -----------------
action or proceeding brought by either party against the other under this Lease,
the prevailing party shall be entitled to recover from the other party the
reasonable professional fees incurred by the prevailing party, such as
appraisers', accountants' and attorneys' fees, investigation costs, and other
legal expenses and court costs.
Section 23.02. No Partnership. Nothing contained herein shall be deemed to
- ------------- --------------
create a partnership, joint venture, or any other relationship between the
parties hereto except landlord and tenant.
Section 23.03. Brokerage. Landlord and Tenant each warrant and represent to
- ------------- ---------
the other that no broker or agent on Landlord's or Tenant's behalf was involved
in negotiating this Lease or addressing matters concerning the renting of the
Premises, other than Broker and WEST*GROUP MANAGEMENT LLC, whose commissions
shall be paid in full by Landlord in accordance with separate agreements.
38
Landlord and Tenant each agree to indemnify and hold the other harmless against
any claims for brokerage or other commissions arising from a breach by Landlord
or Tenant of the foregoing representation and warranty.
Section 23.04. Interpretation.
- ------------- --------------
A. Every provision of this Lease which imposes an obligation on Tenant
shall be deemed to be a covenant by Tenant.
B. This Lease may be executed in several counterparts which shall
constitute one and the same instrument.
C. Any restriction or requirement imposed upon Tenant hereunder shall be
deemed to extend to Tenant's guarantors, sublessees, assignees, licensees and
invitees, and it shall be Tenant's obligation to cause the foregoing persons to
comply with such restriction or requirement.
D. Any reference to the expiration of this Lease or the Expiration Date
shall include the earlier termination of this Lease.
E. The term "mortgagee" shall also refer to any beneficiary of a deed of
trust, or any other individual or entity having a security interest in the
Project.
F. The term "Commonwealth" shall refer to the Commonwealth of Virginia.
Section 23.05. Recording. Neither this Lease, nor any memorandum hereof, may
- ------------- ---------
be recorded among the land records without the express written consent of
Landlord, which Landlord may condition or withhold in its sole and absolute
discretion.
Section 23.06. Severability. Every agreement contained in this Lease shall be
- ------------- ------------
construed as a separate and independent agreement. If any term of this Lease,
or the application thereof to any person or circumstance, shall be invalid or
unenforceable, the remaining agreements contained in this Lease shall not be
affected.
Section 23.07. Waiver of Redemption. If, as a result of a Tenant Default,
- ------------- --------------------
Landlord terminates this Lease, or obtains possession of the Premises without
terminating this Lease, Tenant hereby expressly waives, to the extent legally
permissible, any right of redemption or right to restore the operation of this
Lease pursuant to Va. Code Section 55-247 or any other present or future law.
39
Section 23.08. Limitation of Landlord's Liability. Anything contained in this
- ------------- ----------------------------------
Lease to the contrary notwithstanding, Tenant agrees to look solely to the
estate and property of Landlord in the Project for the collection of any
judgment or other judicial process requiring the payment of money by Landlord
for any default or breach by Landlord under this Lease, subject, however, to the
prior rights of any mortgagee or lessor of the Project. No other assets of
Landlord, or any partners, shareholders or other principals of Landlord, shall
be subject to levy, execution or other judicial process for the satisfaction of
Tenant's claim.
Section 23.09. Force Majeure. Whenever a period of time is herein prescribed
- ------------- -------------
for action to be taken by Landlord or Tenant (other than payment of rent), such
party shall not be liable or responsible for, and there shall be excluded from
the computation for any such period of time, any delays due to force majeure,
which term shall include strikes, riots, acts of God, shortages of labor or
materials, war, governmental approvals, laws, regulations or restrictions, or
any other cause which is beyond the reasonable control of such party.
Section 23.10. Headings. The article headings contained in this Lease are for
- ------------- --------
convenience only and shall not enlarge or limit the scope or meaning of the
terms hereof. Words in the singular number shall be held to include the plural,
unless the context otherwise requires.
Section 23.11. Successors and Assigns. If there be more than one Tenant, the
- ------------- ----------------------
obligations hereunder imposed upon Tenant shall be joint and several, and all
agreements and covenants herein contained shall be binding upon the respective
heirs, personal representatives, successors and assigns of the parties hereto.
Notwithstanding the foregoing, nothing contained in this Section 23.11 shall be
deemed to override the terms of Article XVI.
Section 23.12. Entire Agreement; Amendments. This Lease, and the exhibits and
- ------------- ----------------------------
riders (if any) attached hereto, set forth the entire agreement between the
parties, and no representations, inducements or agreements, oral or written,
between Landlord and Tenant shall have any force or effect, unless the same are
set forth in this Lease. No amendment or modification of this Lease shall be
binding or valid unless expressed in a document signed by both parties hereto.
Section 23.13. Governing Law. This Lease shall be governed by and construed
- ------------- -------------
under the laws of the Commonwealth, without reference to its conflicts of laws
principles. Tenant hereby consents to jurisdiction in the Circuit Court for
Fairfax County, Virginia, if any suit is brought relating to this Lease. Should
any provision
40
of this Lease require judicial interpretation, Landlord and Tenant hereby agree
and stipulate that the court interpreting or considering same shall not apply
the presumption that the terms hereof should be more strictly construed against
the party who drafted the same, it being agreed that all parties hereto have
participated in the preparation of this Lease, and that each party has had full
opportunity to consult legal counsel of its choice before executing this Lease.
Section 23.14. Time of Essence. Time is of the essence in this Lease.
- ------------- ---------------
Section 23.15. Acceptance by Landlord. The submission of this Lease to Tenant
- ------------- ----------------------
shall not be construed as an offer, and Tenant shall not have any rights with
respect thereto unless and until Landlord executes a copy of this Lease and
delivers the same to Tenant.
Section 23.16. Financial Statements. At any time during the Term, Tenant
- ------------- --------------------
shall, upon ten (10) business days prior written notice from Landlord, provide
Landlord with a current financial statement and financial statements of the two
(2) years prior to the current financial statement year. Such statements shall
be prepared in accordance with generally accepted accounting principles,
consistently applied, and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant. If it is not the normal
practice of Tenant to prepare audited statements, then the unaudited statements
shall be certified by Tenant's chief financial officer.
Section 23.17. Estoppel Certificates. Tenant shall, from time to time, within
- ------------- ---------------------
ten (10) business days after written request from Landlord or its mortgagee,
execute, acknowledge and deliver in recordable form an estoppel certificate
regarding the terms and status of the Lease and the tenancy thereunder, and such
other matters as may be reasonably requested by Landlord or its mortgagee.
Tenant's failure to execute and deliver such statement within the allotted time
shall be conclusive evidence that Tenant acknowledges that the contents of the
proffered estoppel are accurate.
Section 23.18. Authority of Parties. Execution hereof shall constitute a
- ------------- --------------------
representation and warranty by each party hereto that such party has complied
with all applicable laws, rules and governmental regulations relative to that
party's right to do business in the Commonwealth, that such party has the full
right and authority to enter into this Lease, and that all persons signing on
behalf of such party were authorized to do so by all necessary or appropriate
legal actions.
41
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under seal
as of the date first above written.
LANDLORD:
--------
WEST*GROUP PROPERTIES LLC
/s/ G.T. Halpin
By: ________________________ [SEAL]
G.T. Halpin, President
TENANT:
------
NET-TEL CORPORATION
/s/ James K. Dize
By: _______________________ [SEAL]
Name: James K. Dize
Title: General Counsel
-----------------------
42
EXHIBIT A
---------
PREMISES
43
EXHIBIT B
---------
LAND
44
EXHIBIT C
---------
RULES AND REGULATIONS
---------------------
1. Sidewalks, doorways, vestibules, halls, stairways and similar areas shall
not be obstructed by Tenant, or its agents, servants or employees, or used for
any purpose other than ingress and egress to and from the Premises, and for
going from one part of the Building to another part of the Building.
2. Plumbing fixtures and appliances shall be used only for the purpose for
which they were constructed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or placed therein. The cost of repairing any stoppage
or damage to any such fixtures or appliances due to misuse by Tenant, or
Tenant's employees, agents, contractors, licensees or invitees, shall be paid by
Tenant.
3. No signs, posters, advertisements or notices shall be painted or affixed
on any of the windows or doors, or other part of the Building, except in such
places, and of such color, size and style, as shall be first approved in writing
by the Building manager.
4. Tenants shall not do anything, or permit anything to be done, in or about
the Building, or bring or keep anything therein, that will in any way increase
the possibility of fire or other casualty or obstruct or interfere with the
rights of, or otherwise injure or annoy, other tenants.
5. No birds, animals, reptiles or other creatures shall be brought into or
kept in or about the Building.
6. Landlord has the right to evacuate the Building in the event of emergency
or catastrophe.
7. Landlord reserves the right to rescind any of these Rules and Regulations
and make such other rules and regulations not inconsistent with the express
terms of the Lease as, in the judgment of Landlord, shall from time to time be
necessary for the protection, care and cleanliness of the Building, and the
safety of the tenants therein.
45
EXHIBIT D
---------
FORM OF COMMENCEMENT NOTICE
---------------------------
This Commencement Notice is entered into this _____ day of ____________,
2000, by WEST*GROUP PROPERTIES LLC ("Landlord"), and NET-TEL CORPORATION
("Tenant"), pursuant to the provisions of that certain Deed of Lease (the
"Lease") dated _______________, 2000, by and between Landlord and Tenant,
covering certain space in the office building commonly known as the Shenandoah
Building, located in WEST*PARK Office Park. The terms used herein shall have
the meaning set forth in the Lease.
W I T N E S S E T H :
1. The Premises, and any and all improvements required to be constructed
and furnished by Landlord in accordance with the terms of the Lease, have been
satisfactorily completed by Landlord, and have been delivered to and accepted by
Tenant.
2. The Commencement Date of the Lease is the ______ day of ____________,
200__, and the Expiration Date is the ______ day of ____________, 200__.
IN WITNESS WHEREOF, Landlord and Tenant have entered into this Commencement
Notice as of the date first written above.
LANDLORD:
--------
WEST*GROUP PROPERTIES LLC
By: ________________________
G.T. Halpin, President
TENANT:
------
NET-TEL CORPORATION
By: _______________________
Name: _______________________
Title:_______________________
46
EXHIBIT E
---------
WORK AGREEMENT
--------------
1. Initial Improvement Work. Subject to the terms and conditions of this
------------------------
Work Agreement, Landlord shall construct in the Premises those improvements
identified on the Final Construction Drawings (hereinafter defined), or any
clarifications or revisions thereto (such as via change orders or shop drawings)
(the "Initial Improvements"). Landlord and Tenant agree that the Initial
Improvements shall be of a quality equal to or greater than the specifications
set forth in Exhibit E-1 attached hereto. The cost of designing, permitting and
-----------
constructing the Initial Improvements (the "Initial Improvement Costs") shall be
borne solely by Tenant; however, pursuant to Section 4 hereof, Landlord shall
provide Tenant with an Improvement Allowance (hereinafter defined) to defray the
Initial Improvement Costs. All work constituting the Initial Improvements (the
"Initial Improvement Work") shall be subject to Landlord's prior written
approval. The general contractor for the construction of the Initial
Improvements (which shall be performed on an "open book" basis) shall be
WEST*GROUP MANAGEMENT LLC ("General Contractor"), an affiliate of Landlord. The
fee which Landlord shall pay to the General Contractor for project management,
home-office overhead and profit shall be an amount equal to six percent (6%) of
the sum of (i) the "Cost of the Work", as defined in AIA document A111, plus
(ii) permitting costs; except with regard to change order work, which shall be
an amount equal to ten percent (10%) of the sum of (i) the Cost of the Work,
plus (ii) permitting costs. In addition to the foregoing fees, Landlord shall
reimburse the General Contractor for the General Conditions (hereinafter
defined) incurred in performing the Initial Improvement Work. All of the Initial
Improvement Work shall be performed in a good and workmanlike manner and in
accordance with all applicable federal and local laws, regulations and
ordinances. Landlord shall be responsible for obtaining, at Tenant's expense,
all necessary permits and licenses, including the non-residential use permit,
for the Initial Improvement Work. Landlord shall use commercially reasonable
efforts to minimize the cost of the Initial Improvements.
2. Bidding. Landlord shall cause the General Contractor to competitively bid
-------
the Initial Improvement Work, as shown on the Final Construction Drawings, to at
least three (3) qualified subcontractors. Tenant shall be entitled to designate
at least one bidder in each competition, provided that such bidders are provided
to Landlord on or before February 25, 2000 ("Bid Designation Deadline").
Landlord shall have the right to object to any Tenant proposed bidder, provided
such objection is based upon Landlord's
47
good faith belief that such bidder might disrupt the work process, or that such
bidder's work may not be up to Landlord's standards for the Building, or that
such bidder may not otherwise be able to perform. In that event, Tenant may
designate a substitute bidder, which substitute bidder also must be reasonably
acceptable to Landlord. Only licensed contractors may bid to perform the Initial
Improvement Work. The General Contractor shall deliver to Tenant copies of the
bids and bid summaries. Landlord and Tenant will then work together in good
faith to select the bids of the subcontractors to be awarded the trade work.
Tenant agrees to keep all bid information confidential. Landlord agrees to
select the lowest qualified bid, unless Landlord reasonably concludes that such
bidder might disrupt the work process, or that such bidder's work may not be up
to Landlord's standards for the Building, or that such bidder may not otherwise
be able to perform. Promptly following selection of the successful bidders,
Landlord shall enter into appropriate contracts for completion of the Initial
Improvement Work.
3. Construction Budgets. Landlord shall deliver to Tenant, for Tenant's
--------------------
review and approval, all budgets for the Initial Improvement Work. Upon receipt
of each budget, Tenant shall have a period of five (5) business days in which to
approve the same. It shall be a Tenant Delay if Tenant fails to approve a budget
within five (5) business days, as aforesaid, unless such disapproval is due to
an error by Landlord or the General Contractor. Landlord shall share all cost
and budget information with Tenant and permit Tenant at all reasonable times to
inspect all records relating to the performance and expense of the Initial
Improvement Work.
4. Improvement Allowance. Landlord shall provide Tenant with an allowance
---------------------
("Improvement Allowance"), in an amount equal to the product of Thirty and
No/100 Dollars ($30.00) multiplied by the number of square feet comprising the
Rentable Area of the Premises, to be applied toward the Initial Improvement
Costs. Tenant shall have the right to use a portion of the Improvement
Allowance, in an amount not to exceed $2.50 per square foot of Rentable Area in
the Premises, for expenses associated with the installation of
telecommunications equipment and cabling, and (b) moving costs (provided that
such moving costs do not exceed $1.00 per square foot of Rentable Area in the
Premises). If the Initial Improvement Costs exceed the Improvement Allowance,
then Tenant shall bear the entire cost thereof (which amount shall be deemed
Additional Rent), and shall pay Landlord the entire excess amount (less a ten
percent (10%) retention of the General Contractor's fee) within ten (10) days
after Landlord submits to Tenant an invoice therefor. Landlord agrees not to
submit an invoice to Tenant for any such excess amount until the subject Initial
Improvements have been substantially completed. Tenant shall pay Landlord the
ten percent
48
(10%) retention of the General Contractor's fee upon completion of the punchlist
items. To the extent the Improvement Allowance exceeds the Initial Improvement
Costs, then Tenant shall have the right to apply the difference thereof toward
the cost of constructing any alterations desired by Tenant and approved by
Landlord pursuant to Article X of the Lease, or the cost of any signage
installed by Tenant pursuant to Section 12.04.B of the Lease.
5. Appointment of Architect and Engineer. Ai architectural firm (the
-------------------------------------
"Architect") is hereby appointed as the architect, and Meta Engineering, PC (the
"Engineer") is hereby appointed as the engineer, who will prepare any and all
architectural and engineering drawings, plans and specifications necessary for
Landlord to construct the Initial Improvement Work. The contract for the
services to be provided by the Architect shall be between the Architect and the
General Contractor, and the contract for the services to be provided by the
Engineer shall be between the Engineer and the General Contractor. Tenant shall
be responsible for any fees owed to the Architect and Engineer in connection
with the Initial Improvement Work.
6. Architectural Drawings; Engineering Drawings. Tenant shall deliver the
--------------------------------------------
Preliminary Plans (hereinafter defined) to Landlord on or before February 7,
2000, and shall deliver the Schedule of Finishes (hereinafter defined) to
Landlord on or before February 14, 2000, such delivery (of both the Preliminary
Plans and the Schedule of Finishes) to be made in hard copy and electronic
format. For purposes hereof, "Preliminary Plans" shall the refer to the set of
plans which are reasonably necessary for the Architect and the Engineer to
prepare the Final Construction Drawings (hereinafter defined), and shall
include, at a minimum, (a) Tenant's plans for the configuration of the Premises,
including without limitation, space allocation and partition layout; (b)
information with respect to Tenant's requirements pertaining to the electrical,
mechanical, HVAC, telephone, plumbing, lighting and similar systems servicing
the Building, heat generating equipment and power requirements, computer
facilities (equipment, power and heat output) and energy management systems (if
any) subject to further detailing by the Engineer; (c) Tenant's power and
telephone layout, kitchen layout with equipment schedules, reflected ceiling
plans, general lighting plans, receptacle plans and wiring plans; and (d) any
other special requirements of Tenant with respect to the completion of the
Initial Improvements. The Schedule of Finishes shall include a description of
all finish selections (e.g., paint and carpeting colors, wall covering
selections and any elevations necessary to identify finish locations) for the
Premises, and all other information necessary to prepare permitable construction
drawings. Upon Landlord's receipt of both the
49
Preliminary Plans and the Schedule of Finishes (in both hard copy and electronic
format), Landlord shall thereupon submit the same to the Architect and the
Engineer, and shall instruct them to prepare preliminary construction drawings
for the Initial Improvements (the "Preliminary Construction Drawings"). Upon
completion of the Preliminary Construction Drawings, Landlord shall submit the
same to Tenant for its review and approval. Upon receipt of the Preliminary
Construction Drawings, Tenant shall have a period of five (5) business days in
which to approve the same. It shall be a Tenant Delay if Tenant fails to approve
the Preliminary Construction Drawings within five (5) business days, as
aforesaid, or proposes any changes thereto, unless such disapproval or change is
due to the Preliminary Construction Drawings failing to conform to what is
depicted (with reasonable clarity) on, and/or described (with reasonable
clarity) in, the Preliminary Plans. The Architect and the Engineer shall then
promptly modify the Preliminary Construction Drawings to incorporate any changes
agreed upon by Landlord and Tenant (such Preliminary Construction Drawings, as
modified, to be hereinafter referred to as the "Final Construction Drawings").
Upon completion of the Final Construction Drawings, Landlord shall submit the
same to the Contractor for bid.
7. Tenant Delay; Long-Lead Items.
-----------------------------
A. The term "Tenant Delay" shall include any act or omission by Tenant,
its agents, employees, contractors or licensees, which actually delays
Landlord's completion of the Initial Improvements. By way of example, but
without limitation, it shall be a Tenant Delay if Landlord is delayed in
substantially completing the Premises and/or obtaining a certificate to allow
Tenant to occupy the same as a result of (i) any drawings, plans or
specifications not being prepared and/or approved (and/or the information
reasonably necessary to complete the same not being provided) by Tenant or its
agents within the timeframes specified herein, or in any other documentation
associated with the Initial Improvement Work; (ii) Tenant's request for changes,
alterations or additions to any Tenant-approved drawings, plans or
specifications; or (iii) Tenant's request for materials, finishes or
installations constituting "long-lead" items (as that term is commonly used in
the commercial office construction industry). For purposes hereof, the term
"substantial completion" (or "substantially completed") shall mean the
completion by Landlord (or its agents) of the Initial Improvements, exclusive
only of those items, commonly referred to as "punchlist items". If there are
multiple Tenant Delays, of the type described in this paragraph A, which affect
the same date(s), then such Tenant Delays shall be counted as one concurrent
Tenant Delay (rather than multiple, successive Tenant Delays) for the applicable
date(s) affected.
50
B. The term "Tenant Delay" shall also include (i) each day that Tenant
fails to timely deliver to Landlord any budget approval pursuant to Section 3
hereof, (ii) each day that Tenant fails to timely deliver to Landlord the
Preliminary Plans and/or the Schedule of Finishes pursuant to Section 6 hereof,
(iii) each day that Tenant fails to timely approve the Preliminary Construction
Drawings pursuant to Section 6 hereof and (iv) if Tenant elects to designate
bidders pursuant to Section 2 hereof (which Tenant may decline to do, in its
sole discretion), the number of days between the Bid Designation Deadline and
the date on which Tenant designates a bidder; regardless of whether any failure
described in this paragraph B actually delays Landlord's completion of the
Initial Improvements.
C. Tenant hereby agrees to pay Landlord, as Additional Rent, one (1)
day's worth of Base Rent for each day of Tenant Delay, such amount to be due and
payable within thirty (30) days after the Commencement Date.
D. From time to time after its receipt of the Preliminary Plans, Landlord
shall use commercially reasonable efforts to assist Tenant prior to bidding the
trade work for the Initial Improvements in proactively attempting to ascertain
which, if any, of the materials desired by Tenant (and approved by Landlord)
might constitute a long-lead item. At the latest, Landlord agrees to inform
Tenant within thirty (30) days after the completion of the Final Construction
Drawings which, if any, of the materials desired by Tenant (and approved by
Landlord) would constitute a long-lead item. Tenant hereby acknowledges that,
notwithstanding the efforts of Landlord and Tenant, some long-lead items may not
be identified until after receiving the responses from the bidding
subcontractors. In the event Landlord informs Tenant of any long-lead item after
completion of the Final Construction Drawings, then Tenant shall have two (2)
business days in which to designate a substitute material which Landlord and
Tenant reasonably believe would not constitute a long-lead item; provided,
however, that if such substitute material is in fact a long-lead item, then the
procurement of such material, or the substitution of yet another material,
shall, in and of itself, constitute a long-lead item. If, at any time, Tenant
informs Landlord that it has elected to utilize an item which is identified as a
long-lead item, then Landlord agrees to promptly order that item upon Tenant's
written authorization thereof.
8. Inspections. Only Tenant's authorized inspector shall have the right to
-----------
inspect the Initial Improvement Work during the course of construction, provided
that such inspector shall use reasonable efforts not to disrupt or interfere
with the Initial Improvement Work in the course of such inspections, and
provided further that
51
all such inspections shall be at Tenant's sole risk. Until further notice,
Tenant's authorized inspector shall be James K. Dize, who shall have full
authority to act on behalf of Tenant. Landlord shall have no liability to Tenant
for any injury or damage to Tenant or Tenant's agents, employees or contractors
occurring in the course of such inspections. Any complaints or defects noted in
such inspection shall be noted in writing by Tenant to Landlord's authorized
representative, and not to Landlord's contractor or subcontractors. Until
further notice, Landlord's authorized representative shall be J.C. Ewing.
9. Punchlist. Landlord shall notify Tenant when the Premises will be ready
---------
for a final inspection. Within three (3) business days after such notice the
parties shall jointly inspect the Premises and prepare a "punchlist" of items
which have not been completed in accordance with this Work Agreement. Landlord
shall use commercially reasonable efforts to correct the punchlist items within
thirty (30) days after the substantial completion of the Initial Improvement
Work.
10. Warranties. Landlord will assign to Tenant all of the manufacturers'
----------
warranties (to the extent transferable) for any supplemental mechanical,
electrical, or other types of equipment installed by Landlord or the General
Contractor (or any of their agents or subcontractors) as part of the Initial
Improvements. Landlord agrees to rectify, at Landlord's expense, any latent
defects (i.e., defects which customarily would not be considered punch-list type
items) in the construction of the Initial Improvements and building systems
serving the Premises which are discovered during the first (1st) year of the
Term.
11. General Conditions. For purposes hereof, the term "General Conditions"
------------------
shall refer to the following items: superintendent(s), general superintendent
and costs of the laborer(s) (all with associated labor burden and
transportation); dumpster; telephone hook-up; safety/health devices/office
supplies; safety/barricades; small tools; telephone/fax; small equipment rental;
courier and express mail; blueprinting and miscellaneous.
12. Change Orders. Following delivery of the Final Construction Drawings to
-------------
Landlord, Tenant shall have the right to request changes to the Final
Construction Drawings with regard to the Initial Improvement Work, provided that
Tenant agrees to pay for such work (including reasonable adjustments, if any, to
the cost of the General Conditions) and provided, further, that such change
shall not delay the completion of the Initial Improvement Work. Any such change
shall be initialed by the Architect and approved by Landlord and the General
Contractor (who may not unreasonably withhold or delay approval) as a change
order on American Institute
52
of Architects ("AIA") forms and in accordance with AIA procedures (other than
the requirement to resolve disputes through arbitration). No change shall be
permitted without the prior written consent of Landlord, which consent shall not
be unreasonably withheld, conditioned or delayed. If any change requested by
Tenant pursuant to this Section will delay the completion of the Initial
Improvement Work, then such change shall still be made in accordance with the
procedures herein, but the delay due to such change shall constitute a Tenant
Delay (hereinafter defined), or, alternatively, the change may be made after
substantial completion of the Initial Improvement Work.
53
EXHIBIT E-1
-----------
MINIMUM SPECIFICATIONS/INITIAL IMPROVEMENTS
54
EXHIBIT F
---------
BASE BUILDING HVAC SPECIFICATIONS
---------------------------------
55
EXHIBIT G
---------
LANDLORD'S SUBORDINATION AND CONSENT
------------------------------------
56
RIDER NO. 1
-----------
RENEWAL OPTIONS
---------------
A. Subject to the terms hereof, Tenant shall have the right to renew and
extend the Term for two (2) "Renewal Terms" of five (5) years each by giving
written notice thereof to Landlord no later than twelve (12) months prior to the
expiration of the original Term or the immediately preceding Renewal Term, as
applicable. Each Renewal Term shall commence immediately upon the expiration of
the original Term or subsequent Renewal Term, as applicable, and, upon exercise
of each renewal option, the Expiration Date of the Term shall automatically
become the last day of the applicable Renewal Term. Once Tenant exercises a
renewal option, Tenant may not thereafter revoke such exercise. If Tenant does
not renew the Lease in a timely manner, then Tenant's right to renew the Term
pursuant to this Rider shall expire and be of no further force or effect.
B. Unless otherwise agreed to by Landlord and Tenant, Tenant shall take
the Premises "as-is" for the Renewal Terms, and Landlord shall have no
obligation to make any improvements or alterations thereto.
C. Notwithstanding anything to the contrary set forth in this Rider,
Tenant shall have no right to renew the Term if Tenant is in Default either as
of the date Tenant attempts to exercise its renewal option, or as of the date on
which the Renewal Term then at hand is scheduled to commence.
D. Base Rent for the first year of each Renewal Term shall be the Fair
Market Rental Rate (hereinafter defined) multiplied by the number of square feet
of Rentable Area of the Premises; provided, however, that in no event shall the
Base Rent for the first year of any Renewal Term be less than the Minimum
Renewal Rate (hereinafter defined). Base Rent for each subsequent year of the
Renewal Term shall be subject to increase pursuant to Section 6.02 of the Lease.
For purposes hereof, the "Fair Market Rental Rate" means the fair market rental
rate (taking into consideration any economic concessions and other relevant
factors) per square foot for a comparable lease term commencing at the
appropriate time for a comparable tenant leasing space of comparable size (on an
"as-is" basis pursuant to paragraph B hereof), with comparable parking
accommodations in a comparable building located in the Tysons Corner real estate
market. The Parking Fees then being charged by Landlord shall be in addition to
(but shall be a relevant factor in calculating) the Fair Market Rental Rate
pursuant to the terms hereof. Landlord and Tenant shall endeavor to agree upon
the Fair
57
Market Rental Rate at least ninety (90) days prior to the commencement of the
upcoming Renewal Term (the "Deadline Date"). Neither Landlord nor Tenant shall
have any obligation to accept the other's estimate of the Fair Market Rental
Rate, and shall in no event be deemed to have acted in bad faith for their
failure to have reached an agreement regarding the Fair Market Rental Rate. In
the event that the parties fail to reach an agreement regarding the Fair Market
Rental Rate prior to the Deadline Date, then the Fair Market Rental Rate shall
be determined as follows. Within ten (10) days after the Deadline Date, Landlord
and Tenant shall each select a real estate broker and identify such selected
broker in a written notice to the other. In the event that either Landlord or
Tenant shall fail to notify the other of its selection within such ten (10) day
period, then the broker selected by the other party shall determine the Fair
Market Rental Rate. Otherwise, the two brokers selected by Landlord and Tenant
shall endeavor to agree upon the Fair Market Rental Rate. If the two brokers are
unable to reach an agreement on the Fair Market Rental Rate within fifteen (15)
days after having been requested to do so by Landlord and Tenant, then the two
brokers shall, within ten (10) days after the expiration of the foregoing
fifteen (15) day period, select a third real estate broker and notify both
Landlord and Tenant in writing of such selection. If the two selected brokers
fail to select a third broker within such time period, then the third broker
shall be selected by the President of the Greater Washington Commercial
Association of Realtors. All brokers shall be Virginia-licensed real estate
brokers who have at least ten (10) years experience in commercial office leasing
in the geographical area in which the Project is located and who are recognized
in the industry as being ethical and reputable. Within fifteen (15) days after
all of the brokers have been selected, they shall meet and attempt to agree upon
the Fair Market Rental Rate. If they are unable to reach agreement within such
fifteen (15) day period, then each broker shall submit in writing to Landlord
and Tenant, within fifteen (15) days thereafter, their respective determination
of the Fair Market Rental Rate. The Fair Market Rental Rate shall then be
conclusively determined by taking the average of the two determinations which
are the closest to one another (the third determination being disregarded).
Landlord and Tenant shall each bear the cost of the broker selected by it, and
shall share equally the cost of the third broker. In the event that the Fair
Market Rental Rate is determined to be less than the Minimum Renewal Rate, then
Tenant shall have a period of five (5) days after receiving notice of the
foregoing determination to revoke the exercise of its renewal option, whereupon
Tenant's right to renew the Term pursuant to this Rider No. 1 shall be null and
void and of no further force or effect. For purposes hereof, the "Minimum
Renewal Rate" refers to the Base Rent in effect immediately prior to the
expiration of
58
the original Term or the immediately preceding Renewal Term, as applicable.
E. Tenant shall not be entitled to any rental abatement, additional
renewal options or other concessions contained in the Lease during any Renewal
Term.
F. Except as set forth herein, the leasing of the Premises for the Renewal
Terms shall be upon the same terms and conditions as are applicable for the
original Term.
G. Tenant's rights under this Rider shall be personal to Tenant and shall
not inure to the benefit of any assignee of Tenant, except for an assignee
permitted under Section 16.01.C of the Lease.
59
RIDER NO. 2
EXPANSION OPTION
----------------
1. Subject to the terms hereof, Tenant shall have the right to expand the
Premises by adding thereto all or a portion of the space on the first (1/st/)
through fourth (4/th/) floors of the Building (the "Prospective Expansion
Space") in accordance with the terms hereof.
2. If any portion of the Prospective Expansion Space becomes, or is about to
become, available for lease (the "Subject Expansion Space"), then Landlord shall
inform Tenant in writing of the availability thereof, whereupon Tenant shall
have seven (7) days to inform Landlord in writing whether it desires to lease
the Subject Expansion Space. In the event Tenant notifies Landlord that it does
not wish to lease the Subject Expansion Space, or fails to notify Landlord
within said seven (7) day period that it desires to lease the Subject Expansion
Space, then Landlord shall have the right to lease the Subject Expansion Space
to any other party, and Tenant shall have no further rights hereunder to add the
Subject Expansion Space to the Premises. If Tenant does notify Landlord within
said seven (7) day period that it desires to lease the Subject Expansion Space,
then Landlord and Tenant shall promptly enter into an amendment to the Lease,
whereby the Subject Expansion Space shall be added to the Premises in accordance
with the terms set forth in paragraph 3 hereof.
3. The initial Base Rent for the Subject Expansion Space shall be the Fair
Market Rental Rate (as defined in Rider No. 1 to the Lease) multiplied by the
number of square feet of Rentable Area in the Subject Expansion Space; provided,
however, that in no event shall the initial Base Rent for the Subject Expansion
Space be less than the Minimum Renewal Rate (as defined in Rider No. 1 to the
Lease). The term of the Lease for the Subject Expansion Space shall be as agreed
upon by Landlord and Tenant (but shall reflect what is generally considered
standard in the then current market); provided, however, that in no event shall
the term expire later than the Expiration Date set forth in Article I of the
Lease, nor sooner than the date which is three (3) years after the commencement
date for the Subject Expansion Space. In the event Landlord and Tenant are
unable to agree upon the duration of the term of the lease for the Subject
Expansion Space in light of current market conditions, then, so long as the
Rentable Area of the Subject Expansion Space contains at least 10,000 square
feet of space, the parties shall employ the three (3) broker method described in
Rider No. 1 to the Lease to resolve the impasse. All other terms of the addition
of the Subject Expansion Space to the Premises shall be substantially as set
forth in the Lease.
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4. Neither the Expansion Space, nor any portion thereof, shall be deemed
available for lease if the pre-existing tenant desires to renew the term of its
lease, regardless of whether such lease contains a renewal option.
5. Notwithstanding anything to the contrary set forth in this Rider, Tenant
shall have no right to expand the Premises pursuant to the terms hereof if
Tenant is in Default as of the date on which Tenant attempts to exercise its
expansion option hereunder, or if Tenant is not then leasing and occupying at
least fifty percent (50%) of the Building.
6. Tenant's rights under this Rider shall be personal to Tenant and shall not
inure to the benefit of any assignee of Tenant, except for an assignee permitted
under Section 16.01.C of the Lease.
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