Most Popular

Business Contracts
Forms
Immigration
Mock Trial

General Business Contracts

Distict Of Columbia Lease Agreements

1255 22nd Street District of Columbia Lease 11-21-1998

OFFICE BUILDING LEASE

 

 

 

1255 22ND STREET LIMITED PARTNERSHIP

 

 

and

 

 

CGX COMMUNICATIONS, INC.

 

 

 

 

 

 

 

---------------------------------------------

 

LEASE

-----

<PAGE>

This Lease, made this 21 day of Nov, 1998, between 1255 22ND STREET

-- --- -

ASSOCIATES LIMITED PARTNERSHIP (hereinafter referred to as "Landlord"), and CGX

COMMUNICATIONS, INC., a Delaware Corporation (hereinafter referred to as

"Tenant").

 

Landlord, for and in consideration of the covenants and agreements set

forth hereinafter, leases to Tenant, and Tenant leases from Landlord, the

premises described, for the use set forth and for the term and at the rent

reserved herein.

 

 

 

1. SPECIFIC PROVISIONS

C>

1.1 PREMISES

(a) Rentable Area : Approximately 32,500 square feet (Washington, D.C. Association of Realtors standard floor

area measured as defined in Exhibit G), on floors four (4) and six (6), in their entirety, as shown on

Exhibit "A".

(b) Complex: Not applicable (i.e. there is no Complex under this Lease)

(c) Building: WEST END COURT

(d) Address: 1255 22nd Street, N.W.

Washington, DC 20037

1.2 LEASE DATES

(a) Lease Term The term of this Lease ("Lease Term") shall be ten (10) years, commencing on February 15, 1999,

or if later the date the Construction Improvements (defined below) are substantially completed

("Commencement Date"), and expiring one hundred twenty (120) months after that time. Pursuant to Section 3.2

below, the Commencement Date (for purposes of rent commencement) may be postponed further with respect to

that certain portion of the Premises presently occupied by GSA (Federal Labor Relations Authority).

(b) Base Year: Base Year shall be defined as the period commencing on January 1, 1999, and ending on December

31, 1999.

(c) Fiscal Year: Fiscal Year shall be defined as each annual period or portion thereof, including within the

Lease Term commencing on January 1, and ending on December 31.

(d) Lease Year: The first Lease Year shall commence on the Commencement Date and shall terminate at 11:59 p.m.

on the day before the first anniversary of the Commencement Date. All subsequent Lease Years shall be for

twelve calendar months, except that the last Lease Year shall terminate on the date this Lease expires or is

terminated in accordance with the provisions hereof.

(e) Calendar Year: Calendar Year (sometimes appearing as `calendar year') shall be defined as each annual period

 

from January 1 through the immediately following December 31.

 

1.3 BASE ANNUAL RENT

(a) Initial Base Annual Rent : Eight Hundred Sixty-One Thousand Two Hundred

Fifty Dollars ($861,250.00), payable in equal monthly installments of

Seventy-One Thousand Seven Hundred Seventy and 83/100 Dollars ($71,770.83),

hereinafter referred to as "base monthly rent," for the first Lease Year.

(b) Percentage Factor : Two Percent (2%) (except in year 6).

(c) Mid-Term Increase : The then-escalated Base Rent shall be increased by

$2.00 at the beginning of year 6.

1.4 BASE YEAR COSTS

Not applicable.

1.5 ADDITIONAL RENT

Additional rent shall be payable by Tenant in accordance with Section 2,

commencing January 1, 2000, consisting of each of the following:

<PAGE>

C>

(a) Increases in Real Estate Taxes : Tenant's pro rata share, equal to Thirty

Two and Forty-Hundredths Percent (32.40%), of the amount of Real Estate

Taxes in excess of the Base Year Real Estate Taxes.

(b) Increases in Operating Expenses : Tenant's pro rata share, equal to

Thirty Two and Forty- Hundredths Percent (32.40%), of the amount of

Operating Expenses in excess of the Base Year Operating Expenses.

(c) Calculation of Pro Rata Share : The pro rata share shall be derived by

dividing Tenant's square footage, 32,500, by 100,313, the total rentable

area in the Building.

1.6 CONSTRUCTION OF PREMISES

See Exhibit F

1.7 RENEWAL/EXPANSION

 

Tenant shall have one (1) renewal option for a five (5) year term at ninety-five

percent (95%) of fair market value in the building, including concessions.

Tenant will give Landlord twelve (12) months' written notice of its intent to

exercise its option to renew.

 

Landlord shall grant to Tenant a Right of First Offer on available space that

becomes available in the Building. Landlord shall give Tenant written notice of

the availability of any such space and the terms under which Landlord is

offering the space which shall be the then fair market terms for such space.

Tenant shall then have ten days following receipt of such notice from the

Landlord to accept or decline the offering of such space. In the event that

such ten (10) day period shall expire without Tenant responding, Tenant shall be

deemed to have declined.

 

1.8 PARKING

 

The building has three (3) levels of below grade parking at the prevailing rate

charged by the garage operator. Tenant will be entitled to purchase parking

passes for general access use for self-parking on an non-assigned basis, one (1)

parking space per 1,500 square feet leased. Landlord shall assist Tenant in

obtaining additional parking spaces as required by Tenant from time to time.

Landlord shall also assist Tenant in obtaining for the benefit of Tenant the

right to lease the parking lot immediately behind the Building for parking of

automobiles during the term of this Lease with the understanding that should

Tenant lease the lot, Tenant shall perform all required repairs and maintenance

to the lot needed to operate surface parking thereon and remove as reasonably

necessary snow and ice therefrom. Tenant shall also cause the lot to be included

in its policies of liability insurance with respect to the Premises. Such lot is

presently leased by Landlord to Diplomat Parking Corporation pursuant to a lease

agreement including also the garage. Landlord has provided to Tenant a true and

complete copy of such lease agreement. In the event Tenant is able to obtain the

agreement of Diplomat to surrender such lot, Tenant shall pay to Landlord the

reduction in annual rental presently paid by Diplomat resulting from the release

by Diplomat of its parking rights in such lot (i.e. Landlord shall receive from

Diplomat and Tenant the same amount as Landlord is presently entitled under the

Diplomat agreement notwithstanding the release of the lot from such agreement.)

Subsequent to the termination date of the present Diplomat lease agreement for

the garage (i.e. October 31, 2003), in the event Tenant has previously leased

the lot by reason of the surrender by Diplomat of the lot, Landlord shall be

entitled to re-negotiate the rental paid by Tenant for such lot to reflect 95%

of the then prevailing market rates for surface parking lot use (recognizing a

25 space lot with a location within a comparable area having similar access to

main streets as the particular lot). Further, in the event Tenant is unable to

obtain the agreement of Diplomat to surrender the lot during the term of the

Diplomat Lease, then if either the Diplomat lease is terminated before October

31, 2003, or upon termination of such lease as of October 31, 2003, Tenant shall

also be entitled to lease the lot at 95% of the then prevailing market rates for

surface parking lot use (recognizing a 25 space lot with a location within a

comparable area having similar access to main streets as the particular lot) .

In the event the parties are unable to agree upon market rates for the parking

lot to be payable for the duration of the term hereof, by either (x) December

31, 2003, (in the case of a determination made as of October 31, 2003) or (y)

within ninety (90) days following an earlier termination of the Diplomat Lease,

then in either such instance the three (3) broker method shall be used. For

purposes hereof, the three (3) broker method to be employed by the parties shall

be as follows: A board of three (3) licensed independent and unrelated

commercial real estate brokers, one of whom shall be named by Landlord, one by

Tenant, and the third selected by the two (2) brokers selected by the Landlord

and the Tenant shall be appointed. All of said brokers shall be licensed real

estate brokers in the District of Columbia specializing in commercial leasing in

the central business district having not less than ten (10) years experience and

recognized as ethical and reputable

 

iii

<PAGE>

within their industry. The parties agree to select their respective

designated brokers within ten (10) days after written request from the

other party. The third broker shall be selected within fifteen (15) days

after both of the first two (2) brokers have been selected. Within fifteen

(15) days after the third broker has been selected all of the brokers shall

meet to attempt to agree upon 95% of the then prevailing market rate for

use of the lot as a surface parking lot, (recognizing a 25 space lot with a

location within a comparable area having similar access to main streets as

the particular lot) taking into consideration its "as-is" condition. If

they are unable to reach agreement, they shall within said fifteen (15) day

period submit in writing the prevailing market rate they deem appropriate

and the prevailing market terms shall be the amount which is the mean

between the two (2) closest amounts determined by two (2) of the brokers.

Each of the parties shall pay for the costs of the services of the broker

selected by it and the costs of the third broker shall be divided equally

between the Landlord and Tenant. It is understood and agreed by the parties

that the determination of the brokers shall be binding upon the parties;

unless Tenant elects within thirty (30) days of written notice to Tenant of

such determination to terminate its exercise of its rights hereunder on a

prospective basis, such termination to be effective on the date specified

by Tenant in its notice, but in no event later than ninety (90) days

following the date of Tenant's election.

 

1.85 SECURITY DEPOSIT

 

None

 

1.9 STANDARD BUILDING OPERATING DAYS AND HOURS

 

8:00 a.m. to 6:00 p.m., Monday through Friday

9:00 a.m. to 12:00 p.m., Saturday

 

1.10 USE OF PREMISES

 

General office use in keeping with the quality and nature of

comparable office buildings and/or any lawful use or activity in connection

with the provision of telecommunications and/or internet services which

shall include without limitation the installation, operation, maintenance

and replacement of communications and switch equipment and facilities and

various computer facilities. Such equipment may include an internet server

farm, a telephone tandem switch, and a high-speed Internet POP and a

network operation center (all of which requiring 24 hour operations). The

parties further recognize that the telecommunications and internet business

is constantly evolving, and Landlord shall reasonably cooperate with future

installations which result from technological advances which Tenant

determines are necessary at the Building. At Tenant's sole cost and

expense, and following written approval by Landlord of the plans and

specifications relating thereto, Tenant shall be entitled to install a fire

suppression system to be selected by Tenant and/or to modify the existing

Building sprinkler system servicing the Premises to a dry pipe double

reaction system. In addition, Tenant shall be entitled to install a

battery back-up system within the Premises and an electrical grounding

system, following receipt of prior written approval by Landlord and its

engineer of the plans and specifications for same. In addition, Tenant

shall be entitled to the use without additional charge to Tenant of an area

either within the garage or behind the Building or on the roof of the

Building (the "Additional Area") for the purpose of locating therein a

supplemental HVAC unit, together with an emergency power generator (with

appropriate conduit, wiring and cabling), and other facilities consistent

with Tenant's use of its Premises for continuous uninterrupted

telecommunications services, and/or a diesel generator, to be furnished and

installed at Tenant's sole cost and expense (i.e. Tenant shall bear the

cost of installation, maintenance and operation thereof). Tenant shall

have the right to conduct periodic tests of the emergency power generator

after normal business hours, at periodic intervals (e.g. once per week).

Landlord shall cooperate with Tenant to enable Tenant to utilize or create

additional space in or within the exterior of the Building or the roof of

the Building to accommodate future expansion of Tenant's emergency back-up

generator and/or any supplemental HVAC units (e.g. construction of a

structural platform to support HVAC equipment or provision of enclosures

for an emergency back-up generator). Landlord's prior written approval,

such approval not to be unreasonably withheld, conditioned or delayed, of

the plans and specifications for any such additional space shall be

required. Landlord shall also cooperate in permitting fiber cable to be

brought to the Building (with dual telecommunication entrances to the

Building) in connection with Tenant's operations and shall execute and

deliver the customary license agreements requested by the fiber cable

provider(s). Tenant shall be entitled to access from the main switch gear

room beyond the power distribution presently available to the Premises on

each floor up to 2,000 amps, 480 volt, 3-phase, 4 wire A/C of electric

capacity dedicated to the Premises. Landlord will cooperate with Tenant in

applying at Tenant's sole cost and expense with the local electric utility

to obtain additional power to the Building in the event Tenant shall

require additional power. Tenant is also hereby granted the right to

install telecommunications wiring and cabling (including, without

limitation, supporting structures such as conduits, trenches, backboards,

slots, sleeves, utility spaces, secured cable trays, adequate

telecommunication shielding, interconnecting locations and facilities

(inclusive of connections between portions of the Demised Premises with

other portions), and related service

 

iv

<PAGE>

locations (collectively the "Wiring and Cablings). Tenant may from time to

time install, maintain, repair and replace any or all the Wiring and

Cabling in accordance with plans and specifications from time to time

provided by Tenant to Landlord and approved by Landlord. Tenant's use may

extend up to six (6) four inch (4") conduits in each riser, in addition to

the risers to the rooftop for the rooftop installations. Adequate space in

the risers and utility closets shall be provided by Landlord to Tenant at

no additional cost to permit installation of the conduit required for

standard fiber back-bone installation, with the understanding that the

installation shall be performed in the most direct path available.

Landlord's approval of items under this section 1.10 shall not be

unreasonably withheld, delayed or conditioned, recognizing the need for

prompt response by Landlord to accommodate the move-in requirements of

Tenant. Nothing contained in this section 1.10 requiring particular items

to be at the sole cost or expense of Tenant shall be deemed to preclude use

by Tenant of the Construction Allowance toward such costs, and Landlord

agrees that Tenant shall be entitled to obtain reimbursement for the

supplemental HVAC and/or supplemental sprinkler system from either the

construction component (i.e. $17.625 per square foot) or remaining

component ($7.00 per square foot) portion of such allowance toward the

payment of same. In addition, Tenant shall be entitled to both (1) use up

to $3.00 per square foot of the $17.625 per square foot component of the

allowance towards the cost to furnish and install fiber optic cable to the

Building and Premises and (2) obtain from the $7.00 per square foot

component payment of any of the construction costs not paid from the

$17.625 per square foot component, as well as payment of costs to furnish

and install Wiring and Cabling (as defined in this Lease) and any generator

installed by Tenant. It is recognized that following installation of the

fiber optic cable to the Building, Landlord and its other tenants shall be

free to contract with the fiber cable provider(s) to enable such other

tenants to obtain use of the fiber optic cable brought to the Building.

 

1.11 (a) ADDRESS FOR NOTICES TO TENANT

 

Contact: Mr. Ulysses G. Auger, II

CGX Communications, Inc.

1255 22nd Street, NW, Suite 600

Washington, DC 20037

 

and

 

Contact: Attn: Mr. William M. Caldwell, IV

CGX Communications, Inc.

1232 22nd Street, NW

Washington, DC 20037

 

with a copy to:

 

Richard F. Levin, Esquire

Grossberg, Yochelson, Fox & Beyda

2100 Pennsylvania Avenue, N.W.

Suite 770

Washington, D.C. 20037

 

v

<PAGE>

(b) ADDRESS FOR NOTICES TO LANDLORD

 

1255 22nd Street Associates Limited Partnership

c/o TASEA Investment Company

8401 Connecticut Avenue

Suite 1006

Chevy Chase, MD 20815

 

(c) ADDRESS FOR PAYMENT OF RENT

 

1255 22nd Street Associates Limited Partnership

c/o Grubb & Ellis Management Services

8230 Leesburg Pike

Suite 750

Vienna, VA 22182

 

1.12 EXHIBITS TO LEASE

 

Exhibit A - Floor Plan

Exhibit B - Not Applicable

Exhibit C - Building Rules and Regulations

Exhibit D - Cleaning Specifications

Exhibit E - Approved Signage

Exhibit F - Construction of Premises

Exhibit G - Rentable Area Definition

 

IN WITNESS WHEREOF, Landlord has caused this Lease, composed of Specific

Provisions, General Provisions, Special Provisions and Exhibits, to be signed

and sealed by one or more of its Officers, General Partners, Trustees or Agents,

and Tenant has caused this Lease, as described above, to be signed in its legal

name, both with seal and duly witnessed.

 

WITNESS: LANDLORD: 1255 22ND STREET ASSOCIATES

LIMITED PARTNERSHIP

 

By: Tasea Investment Co., General Partner

 

 

/s/ Shirley Lowe By: /s/ [SIGNATURE ILLEGIBLE]

-------------------- -------------------------------------(SEAL)

 

 

 

WITNESS: TENANT: CGX COMMUNICATIONS, INC.

 

 

/s/ Pat Steckler By: /s/ Ulysses G. Auger, II

--------------------- ------------------------------------(SEAL)

Name: Ulysses G. Auger, II

Title: President

 

 

vi

<PAGE>

GENERAL PROVISIONS

 

2. RENT

 

2.1 Base Annual Rent.

-----------------

 

(a) Payment of Base Annual Rent. Tenant shall pay the first monthly

----------------------------

installment of Base Annual Rent specified in Section 1.3 upon execution of this

Lease. After the Commencement Date, Tenant shall pay the remaining monthly

installments of Base Annual Rent in advance without deduction, demand, right of

set-off or recoupment, absent any final unappealable judgment in favor of Tenant

against Landlord, in immediately available funds,on the first day of each and

every calendar month throughout the entire Lease Term specified in Section

1.2(a), to Grubb & Ellis Management Services, ("Landlord's Agent") at the

address specified in Section 1.9(c), or to such other person or at such other

place as Landlord may hereafter designate in writing.

 

(b) Escalation of Base Annual Rent. Commencing on the first anniversary

-------------------------------

date of the Commencement Date, and continuing on each subsequent anniversary

thereof, (with the exception of the fifth anniversary) the Base Annual Rent

shall be increased by the Percentage Factor stipulated in Section 1.3(b) times

the Base Annual Rent payable for the preceding Lease Year (all of which shall be

calculated without giving effect to any waiver of rent or rent credit otherwise

provided to Tenant). The escalated Base Annual Rent so determined shall be the

"Base Annual Rent" for all purposes of this Lease, including the calculation of

the increase in Base Annual Rent for the subsequent Lease Year.

 

2.2 Additional Rent. Commencing on the date set forth in Section 1.5 and

----------------

continuing throughout the Lease Term, Tenant shall pay as Additional Rent

Tenant's pro rata share of any (i) Real Estate Taxes and (ii) Operating

Expenses, in excess of the (i) Real Estate Taxes and (ii) Operating Expenses,

respectively, accruing during the Base Year. Additional Rent shall be

determined as follows:

 

(a) Real Estate Taxes. Tenant shall pay Tenant's pro rata share, as

------------------

defined in Section 1.5(a), of any Real Estate Taxes accruing during each Fiscal

Year falling entirely or partly within the Lease Term, in excess of the amount

of Real Estate Taxes accruing during the Base Year.

 

(i) The term "Real Estate Taxes" shall mean (1) all taxes, assessments

(including all assessments for public improvements or benefits, whether or not

commenced or completed prior to the date hereof and whether or not to be

completed within the Lease Term), water, sewer or other excises, levies, license

fees, permit fees, impact fees, inspection fees, and other authorization fees

and other similar charges, in each case whether general or special, levied or

assessed, ordinary or extraordinary, foreseen or unforeseen, of every character

which at any time during or in respect of the Lease Term, may, by any

governmental or taxing authority, be assessed, levied, confirmed, or imposed on

or in respect of, or be a lien upon, the land and the building improvements of

which the Demised Premises are a part, and on any land and/or improvements now

or hereafter owned by Landlord and/or others that provide the Complex or

locality or the Demised Premises with other services, programs, amenities or

common facilities, together with (2) any other tax imposed on real estate or on

owners of real estate generally, including taxes imposed on leasehold

improvements which are assessed against the Landlord and taxes upon or with

respect to any activity conducted on the land and improvements of which the

Demised Premises are a part, upon this Lease or any rent reserved or payable

hereunder, upon the revenues or receipts from the land and improvements of which

the Demised Premises are a part, or upon the use or occupancy thereof, and (3)

only to the extent the following taxes are in lieu of or a substitute for any

other taxes which are, or would be, payable by Landlord as Real Estate Taxes,

(a) any income, excess profits, or other taxes of Tenant determined on the basis

of its gross income, receipts, or revenues, (b) any gift, capital levy, or

similar tax of Tenant, (c) any franchise, capital stock, or similar taxes of

Landlord and (d) any income, excess profits, or other taxes of Landlord

determined on the basis of its gross income or revenue derived pursuant to this

Lease. However, in no event shall there be included in the amount of Real

Estate Taxes to be passed through hereunder to Tenant any tax computed on

Landlord's net rents or net income. Further, the term Real Estate Taxes shall

specifically exclude any capital levy, franchise, estate, inheritance, transfer

or recordation taxes, as well as any abatements, reductions or credits received

by Landlord. Assessments which may be paid over a period in excess of twelve

months without penalties shall be included with real estate taxes only to the

extent such payments are required to be made within the particular calendar

year. Tenant's obligation to pay Real Estate Taxes shall in no event include

penalties or interest imposed for late payment of Real Estate Taxes.

 

(ii) If Real Estate Taxes paid during the Base Year are subsequently

reduced by any application or proceeding brought by or on behalf of Landlord for

reduction in the amount of Real Estate Taxes payable by Landlord, the Real

Estate Taxes deemed to have been paid during the Base Year shall be decreased

and Landlord may promptly bill Tenant for the Additional Rent not previously

paid by Tenant for any Fiscal Year during the Lease Term, based upon the reduced

amount of Real Estate Taxes deemed paid the Base Year. In the event any contest

or appeal of the Real Estate Taxes for any given year shall result in a refund

of Real Estate Taxes previously paid by Tenant, Tenant will receive its

proportionate share of the amount of the net refund, inclusive of any interest

received by Landlord by reason of the refund of Real Estate Taxes (i.e., the net

amount remaining after paying all costs and expenses of securing the refund,

including reasonable attorney's fees). In no event shall Tenant be liable in

advance of receiving its proportionate share of the net refund for any costs and

expenses of securing a refund unless there shall be a net refund paid to Tenant,

and in such event, any such liability shall be factored into the net refund.

 

(iii) In addition to the pro rata share of any increase in Real Estate Taxes

to be paid by Tenant pursuant to Subsections 2.2(a)(i), (ii) and (iii) above,

Tenant shall reimburse Landlord within fifteen (15) days following written

notice of demand for any and all taxes required to be paid by Landlord upon,

measured

 

i

<PAGE>

by, or reasonably attributable to the cost or value of Tenant's Property or by

the cost or value of any Leasehold Improvements made in or to the Demised

Premises by or for Tenant, regardless of whether title to such Leasehold

Improvements shall be in Tenant or Landlord, and for all taxes required to be

paid by Landlord upon, measured by, or reasonably attributable to or with

respect to the possession, leasing, operation, management, maintenance,

alteration, repair, use or occupancy by Tenant of the Demised Premises or any

portion thereof to the extent such taxes are not included in Real Estate Taxes.

In the event that Tenant shall be liable for any taxes described in this section

2.2(a)(iv), Real Estate Taxes described in section 2.2(a)(i) shall exclude any

similar taxes attributable to any other tenant in the Building.

 

(b) Operating Expenses. Tenant shall pay Tenant's pro rata share, as indicated

-------------------

in Section 1.5(b), of any Operating Expenses paid during each Fiscal Year

falling entirely or partly within the Lease Term, in excess of the Operating

Expenses paid during the Base Year.

 

(i) The term "Operating Expenses" shall mean any and all reasonable expenses

of Landlord in connection with the servicing, insuring, operation, maintenance,

replacement and repair of the Building and related interior and exterior

appurtenances of which the Demised Premises are a part, or for health, welfare

or safety; expenses, if any, of Landlord either alone or in conjunction with

others to maintain common facilities, amenities, programs and services required

or approved by jurisdictional authorities for the Building, the building site,

the Complex or the locality in which the Complex is situated; the cost of any

services to achieve a reduction of, or to minimize the increase in, Operating

Expenses or Real Estate Taxes provided same actually reduce such expenses;

management fees, provided such management fees do not exceed three percent (3%)

of the total gross rents collected for the Building; business license, personal

property and other taxes; capital expenditures and other costs of Landlord for

equipment or systems amortized over their useful life installed to reduce or

minimize increases in Operating Expenses which actually reduce or minimize same

or to comply with any governmental or quasi-governmental ordinance or

requirement resulting from a change in law occurring during the term of the

Lease

 

(ii) The term "Operating Expenses" shall not include any of the following:

(aa) except to the extent that such costs and expenses are specifically included

in Operating Expenses as described in Subsection 2.2(b)(i) above: capital

expenditures and depreciation of the Building; (bb) painting and decorating of

tenant space; (cc) interest and amortization of mortgages or any other debt of

Landlord; (dd) ground rent; (ee) compensation paid to officers or executives of

Landlord; (ff) taxes as measured by the net income of Landlord from the

operation of the Building; (gg) insurance reimbursements of Operating Expenses

to Landlord; (hh) Real Estate Taxes; (ii) brokerage commissions; and (jj)

marketing expenses.

 

Operating Expenses shall also exclude:

 

1. Costs incurred due to violations by Landlord of any of the terms and

conditions of any lease in the Building with respect to leasable space (as

opposed to common areas) in the Building;

 

2. Management fees except as expressly above provided; fees for overhead or

administrative services in view of such management fee; overhead and profit

to subsidiaries or affiliates of the Landlord for management services;

 

c. Costs attributable to enforcing leases against tenants in the Building,

such as attorneys' fees, court costs, adverse judgments and similar

expenses;

 

d. Rentals and other related expenses incurred in leasing equipment ordinarily

considered to be of a capital nature;

 

e. Repairs and other work occasioned by fire, or other casualty that is

reimbursable under customary insurance policies maintained by other similar

landlords;

 

f. Any fines or penalties incurred due to violations by landlord of any

governmental rule or authority and the defense of same;

 

g. Expenses for vacant or vacated space, including utility costs, securing and

renovating;

 

h. Repairs and maintenance performed in any tenant's exclusive space that was

solely for such tenant's exclusive space, and not for common area

maintenance;

 

i. Costs incurred to cause the Building to comply with the Americans with

Disabilities Act, as from time to time amended, or any codes or regulations

promulgated thereunder, or any similar laws of any state, municipality or

other governmental authority;

 

j. Any amounts not actually expended, such as a contingency funds, reserve

funds or sinking funds;

<PAGE>

k. Any costs that are reimbursable to Landlord by other tenants as a result of

provisions contained in the specific leases of said tenants in excess of

the common area or operating costs which are otherwise passed through to

the tenant;

l. All costs of repair or restoration to any portion of the Building due to an

eminent domain taking or conveyance of title in lieu of condemnation

proceedings;

m. All costs hereunder that are otherwise reimbursable by warranties held by

the Landlord;

 

14. Original or renovational construction costs of the Building;

15. Costs relating to maintaining Landlord's existence, either as a

corporation, partnership, or other entity, such as trustee's fees, annual

fees, partnership organization or administration expenses, deed recordation

expenses, legal and accounting fees (other than with respect to Building

operations);

16. Interest or penalties arising by reason of Landlord's failure to timely pay

any Operating Expenses;

17. Landlord's general corporate overhead and general and administrative

expenses;

18. Costs directly resulting from the negligence or willful misconduct of

landlord or its agents, contractors or employees;

19. The cost of any "tap fees" or one time lump sum sewer or water connection

fees for the building;

20. Any costs of defending lawsuits;

21. Any costs of disputes between third parties;

22. cost of expenses associated with leasing space in the Building or the sale

of any interest in the Building, including, without limitation, advertising

and marketing, commissions or any amounts paid for or on behalf of any

tenant such as space planning, moving costs, rental and other tenant

concessions;

23. any amounts paid to any person, firm, or corporation related to or

otherwise affiliated with Landlord or any general partner, officer or

director of Landlord or any of its general partners to the extent they

exceed arms-length competitive prices paid in Washington, D.C. for the

services or goods provided;

24. costs of electricity outside normal business hours sold to tenants of the

Building by Landlord or any other special service provided to other

tenants, or service in excess of that furnished to Tenant whether or not

Landlord receives reimbursement from such tenants as an additional charge;

25. costs of renovating or otherwise improving space for new or existing

tenants or in renovating space vacated by any tenant or any other work

which Landlord performs for any tenant;

26. salaries, wages, or other compensation paid to employees above the grade of

property manager of any property management organization being paid a fee

by Landlord for its services where such services are covered by a

management fee, or in the case of personnel, including accounting or

clerical personnel, providing services at the Building on other than a full

time basis, those salaries, wages, or other compensation to any such

employee allocable to periods spent at other properties of Landlord or its

management company;

<PAGE>

27. costs related to any Building or land not included in the Property,

including any allocation of costs incurred on a shared basis, such as

centralized accounting costs, unless the allocation is made on a reasonable

and consistent basis that fairly reflects the share of any costs actually

attributable to the Property;

28. increased insurance premiums caused by Landlord's or any other tenant's

hazardous acts;

29. improvements to common areas specifically undertaken by Landlord as

inducements or concessions in order to lease space to new or existing

tenants which would not have otherwise been undertaken;

30. costs of selling, syndicating, financing, mortgaging or hypothecating any

part of or interest in the Property; or

31. cost of replacing or retrofitting the HVAC system to comply with laws that

regulate or prohibit the use or release of chloroflurocarbons (CFCs) or

hydrocarbons (HCFCs).

ff. The parties expressly recognize that all references in this Lease to "the

Complex" shall be deleted inasmuch as there is no such Complex applicable

to this Lease. Vault rentals shall be excluded also from the definition of

Operating Expenses.

(iii) If during the Base Year, the Building's occupancy level is less

than ninety-five percent for the entire Base Year, or if the Building's

occupancy level is less than 95% for six (6) months or more during any Fiscal

Year other than the Base Year, or if all land and improvements upon which

Operating Expenses are calculated or may be calculated pursuant to Subsection

2.2(b)(i) above were not fully complete and operational, or if any tenant is

separately paying for services or utilities furnished to its premises or is

provided with fewer services than customarily provided for tenants of general

office space in the Building, then both (x) Operating Expenses accrued during

such Base Year shall be adjusted to reflect the "Gross-Up" (defined below), and

(y) such Operating Expenses accrued during such Fiscal Year or portion thereof

(other than the Base Year) may be adjusted, at Landlord's sole option, to

reflect the Gross-Up. For purposes hereof, the "Gross-Up" shall be defined as

the adjustment to actual Operating Expenses necessary so as to reflect all

additional expenses, as reasonably estimated by Landlord applying standard

accounting procedures, so that both (x) in the case of the Base Year, the

Operating Expenses equal the amount which would have been incurred by Landlord

had the Building been fully used and occupied by tenants in at least 95% of all

rentable area within the Building during the entire Base Year and (y) in the

case of any Fiscal Year, other than the Base Year, the Tenant's share of

Operating Expenses is the amount which would have been incurred by Tenant if the

Building were fully occupied by tenants occupying at least 95% of all rentable

area within the Building and all land and improvements upon which Operating

Expenses are calculated or may be calculated pursuant to Subsection 2.2(b)(i)

above were fully complete and operational during the entire such Fiscal Year

using services and utilities customarily provided for general office use. For

example, if the occupancy rate for the Building during at least six (6) months

of a Fiscal Year is seventy percent (70%), and if the janitorial contractor

charges $1.00 per square foot of occupied rentable area per year, and if the

Building contains 100,000 square feet of rentable area, and if Landlord

estimates that the Operating Expenses that would have been paid if the Building

had been ninety-five percent (95%) occupied by tenants, using such customary

janitorial services during such year, would have been $95,000, then for purposes

of determining the increase in Operating Expenses payable during such Fiscal

Year by Tenant, the Operating Expenses for such Fiscal Year shall be deemed to

equal the actual Operating Expenses incurred by Landlord (without inclusion of

the amount paid for the janitorial contractor charges) plus $95,000.

<PAGE>

2.3 Additional Rent Estimates and Adjustments.

------------------------------------------

 

(a) Initial Additional Rent Adjustments. Landlord at its option may submit

------------------------------------

to Tenant prior to the date set forth in Section 1.5 a statement of Landlord's

reasonable estimate of the increases described in Sections 2.2(a) and (b) above,

together with the amount of Tenant's Additional Rent which is estimated to

result from such increases, in which event Tenant shall pay such estimated

Additional Rent to Landlord in equal monthly installments beginning on the date

set forth in Section 1.5, on the dates and in the manner required for the

payment of Tenant's monthly installments of Base Annual Rent. In the

alternative, as soon as practicable after the end of the calendar year in which

Tenant's obligation to pay Additional Rent pursuant to Sections 2.2(a) and (b)

commences, Landlord may submit a lump sum statement to Tenant of the actual

increases in Real Estate Taxes and/or Operating Expenses, if any, which were

paid during the Fiscal Year which ended during such calendar year over the Real

Estate Taxes and Operating Expenses which were paid during the Base Year, all as

prorated based upon that portion of the Fiscal Year falling within the initial

partial year of the Lease Term, and Tenant shall pay its pro rata share as

Additional Rent on the date and in the manner required for the next monthly

installment of Base Annual Rent due after submission of Landlord's statement.

 

(b) Annual Budget. Subsequent to the calendar year in which Tenant's

--------------

obligation to pay each component of Additional Rent pursuant to Section 2.2

commences, Tenant shall thereafter pay each such component of Additional Rent in

twelve equal monthly installments based upon Landlord's estimates. In order to

provide for the current monthly payment of each component of Additional Rent

described herein, Landlord shall submit to Tenant a statement of Landlord's

reasonable estimate of the increases described in Section 2.2 above, together

with the amount of Tenant's Additional Rent which is estimated to result from

such increases. Tenant agrees to pay each such estimated component of

Additional Rent to Landlord in twelve equal installments beginning on January 1,

on the dates and in the manner required for the payment of Tenant's monthly

installments of Base Annual Rent.

 

(c) Additional Rent Reconciliations. Within one hundred twenty (120) days

--------------------------------

after the end of each calendar year, Landlord will submit to Tenant an financial

statement of the actual increases in Real Estate Taxes and Operating Expenses

paid during the Fiscal Year which ended during such calendar year over the Real

Estate Taxes and Operating Expenses which were paid during the Base Year,

respectively. Such statement shall also indicate the amount of Tenant's excess

payment or underpayment of Additional Rent based on Landlord's estimate

described in Sections 2.3(a) and 2.3(b). If Additional Rent paid by Tenant

during the preceding calendar year shall be in excess of, or less than, the

aggregate of its share of the actual increase in Real Estate Taxes and Operating

Expenses, Landlord and Tenant agree to make the appropriate adjustment following

the submission of Landlord's statement. Tenant shall either pay any Additional

Rent due with the installment of Base Annual Rent due for the month following

submission of Landlord's statement, or pay any Additional Rent due within thirty

(30) days if the Lease Term has expired or has otherwise been terminated.

Tenant shall deduct its excess payment, if any, from the installment of Base

Annual Rent due for the month or months if necessary following submission of

Landlord's statement, or following the expiration or earlier termination of the

Lease Term, Tenant shall be reimbursed within thirty (30) days thereafter for

any excess payments made, less any amounts then due Landlord under this Lease.

 

(d) Verification of Additional Rent. Unless Tenant asserts specific errors

--------------------------------

within six (6) months after Landlord has submitted the financial statement for a

Fiscal Year to Tenant, Tenant shall have no right to contest the amount of

Tenant's pro rata share of Real Estate Taxes and/or Operating Expenses or the

statement submitted by Landlord. No such assertion of error by Tenant shall

extend the time for payments as set forth in Sections 2.2 and 2.3 above. If

Tenant

<PAGE>

has given a timely assertion of error and if it shall be determined by Landlord

there is an error in Landlord's statement, Tenant shall be entitled to a credit

for any overpayment, which shall be applied to any sums then due Landlord under

this Lease and then to the next installment(s) of Additional Rent until fully

credited for the overpayment, or refunded if Tenant has vacated the Demised

Premises, or Tenant shall be billed for any underpayment and shall remit any

amount owing to Landlord within ten (10) business days of Tenant's receipt of

such statement. Tenant shall have the right to inspect Landlord's records of

Operating Expenses and Real Estate Taxes for a given Fiscal Year or the Base

Year, at Landlord's offices during normal business hours, on at least five (5)

days prior written notice. Any overpayment by Tenant of Rent for such year

reflected by such audit shall be promptly corrected. In the event as a result of

such audit it shall be determined that Landlord overcharged Tenant more than

five percent (5%) of the Operating Expenses or Real Estate Taxes, Landlord shall

also reimburse Tenant all reasonable costs incurred by Tenant with respect to

its audit. Tenant agrees that it shall not engage the services of an accountant

or agent which is compensated on a contingency basis for purposes of conducting

the audit.

 

(e) Fiscal Year. Landlord shall have the right to change its Fiscal Year

------------

from time to time. If Landlord changes its Fiscal Year during the Lease Term,

thereby creating a Fiscal Year with fewer than twelve (12) months (hereinafter

"short year"), the Real Estate Taxes and Operating Expenses for the short year

shall be determined on an annualized basis by taking the monthly average of the

actual Real Estate Taxes and Operating Expenses, respectively, and multiplying

each by twelve. The amounts determined by this method shall be used in

determining the increases described in Sections 2.2(a) and 2.2(b) for the short

year.

 

2.4 Rent Adjustment Limit. Notwithstanding any deductions from or

----------------------

adjustments to Base Annual Rent and Additional Rent as provided for above, in no

event shall the total monthly installment of Base Annual Rent and Additional

Rent to be paid by Tenant in any month during the Lease Term or any extension

thereof be less than the monthly installment of Base Annual Rent stipulated in

Section 1.3, except as required as the result of the Landlord's application of a

credit due to Tenant pursuant to Section 2.3(c), or as otherwise expressly

provided herein in the case of rent abatements to which the Tenant may be

entitled arising out of, for example, fire or casualty damage.

 

2.5 Survival of Rent Obligation. The obligation of Tenant with respect to

----------------------------

payment of Base Annual Rent, as defined in Section 2.1, and Additional Rent as

defined in Sections 2.2 and 2.10, together with all other sums due hereunder,

accrued and unpaid during the Lease Term and the survival of Landlord's

obligation to refund any overpayments of Base Annual Rent or Additional Rent and

any other sums which may be overpaid hereunder, shall survive the expiration or

earlier termination of this Lease.

 

2.6 Pro Rata Share. All space measurements shall be determined in

---------------

accordance with GWCAR standard method of measurement. Tenant shall be entitled

to verify the measurement of the Premises no later than the Rent Commencement

Date, and in the event as a result of Tenant's measurement the Premises contain

less than the number of square feet of leasable area set forth in the Lease

(subject to Landlord's rights to independently verify such measurement), then

and in such event both the Tenant's pro-rata share hereunder, as described in

Section 1.5 of this Lease, and the amount of Base Annual Rent during the Lease

Term and any extensions thereto shall be proportionately adjusted using the

corrected measurement.

 

2.7 Prorated Rent. Any Base Annual Rent or Additional Rent payable

--------------

pursuant to Sections 2.1 and 2.2 for one or more full calendar months in a

partial Fiscal Year at the beginning or end of the Lease Term shall be prorated

based upon the number of months in the Fiscal Year. Any Base Annual Rent or

Additional Rent payable pursuant to Sections 2.1 and 2.2 for a portion of a

calendar month shall be prorated based upon the number of days in the applicable

calendar month.

 

2.8 Application of Rent. No payment by Tenant or receipt by Landlord of

--------------------

lesser amounts of Base Annual Rent or Additional Rent than those required by

this Lease shall be deemed to be other than on account of the earliest unpaid

stipulated Base Annual Rent or Additional Rent. No endorsement or statement on

any check or any letter accompanying any check or payment as Base Annual Rent or

Additional Rent shall be deemed an accord and satisfaction, and Landlord may

accept such check or payment without prejudice to Landlord's right to recover

the balance of such Base Annual Rent and Additional Rent or pursue any other

remedy provided in this Lease. Any credit due to Tenant hereunder by reason of

overpayment of Base Annual Rent or Additional Rent shall first be applied to any

Base Annual Rent, Additional Rent or other sums owed to Landlord by Tenant as

set forth elsewhere in this Lease or if Tenant shall be in default when said

credit shall be owed.

<PAGE>

2.9 Late Payment Fee and Interest Charge. Except as expressly set forth in

-------------------------------------

the next sentence, in the event any installment of Base Annual Rent or

Additional Rent due hereunder is not paid within ten (10) calendar days after it

is due, then Tenant shall also pay to Landlord as Additional Rent (a) a late

payment fee equal to five percent (5%) of the payment as liquidated damages for

the additional administrative costs incurred by Landlord as a result of such

late payments, plus (b) an interest charge calculated at the rate of eighteen

percent (18%) per annum on the delinquent payment from the date due until paid.

In no event shall any late penalty or interest be payable by Tenant on any late

payment of Base Annual Rent or Additional Rent to Landlord in the event Tenant

remits to Landlord the late payment within five (5) days following written

notice to Tenant that Landlord has failed to timely receive any payment to which

Landlord is entitled under this Lease. However, in the event Tenant is late

more than two (2) times in any twelve (12) month period, Landlord shall be

entitled to the late charge and/or interest as provided in the Lease, without

the necessity of such written notice, if such payment is not made by Tenant

within five (5) days following the date when due.

 

2.10 Other Tenant Costs and Expenses. All costs and expenses which Tenant

--------------------------------

 

assumes or agrees to pay to Landlord pursuant to this Lease, including without

 

limitation costs of construction and alterations, shall be deemed Additional

 

Rent, whether or not the same is specifically designated herein as Additional

 

Rent, and, in the event of nonpayment thereof, Landlord shall have all the

 

rights and remedies herein provided for the nonpayment of Base Annual Rent and

 

Additional Rent payable pursuant to Sections 2.1 and 2.2, including assessment

 

of late payment fees and interest charges.

 

3. CONSTRUCTION OF PREMISES AND OCCUPANCY

 

3.1 Tenant Plans, Construction and Rent Liability. Exhibit F, attached to

----------------------------------------------

this Lease, describes the obligations of Landlord and Tenant, and the respective

time periods for performance thereof, for the preparation and approval of

construction plans, cost estimates, working drawings and completion of

improvements and fixturing for occupancy. The improvements to be constructed by

Landlord in the Demised Premises are hereinafter referred to as the

"Construction Improvements". Said time periods shall apply irrespective of

whether Tenant uses the architect, engineer and/or general contractor selected

by Landlord, or firms of Tenant's own selection. The Tenant shall deliver to

Landlord, by the dates specified on Exhibit F, a preliminary plan approved in

writing by the Tenant showing Tenant's partition, electrical and telephone

requirements, planned occupancy numbers and distribution within the Demised

Premises and all other requirements set forth in the Tenant Plans Guidelines,

attached hereto and made a part hereof as Exhibit E, or otherwise deemed

necessary by the Landlord for the preparation of the working drawings and cost

estimate.

 

(a) Preparation of Tenant Plans.

----------------------------

 

(i) Intentionally Deleted.

 

(iii) Tenant's preliminary plan, whether prepared by an architect or

engineer selected by Landlord or by Tenant's architect or engineer, shall

provide sufficient information to permit Landlord to have working drawings and

cost estimate prepared. Tenant's preliminary plan shall be certified by the

architect or engineer preparing same to be in compliance with applicable

building and fire codes, and with The Americans with Disabilities Act and all

amendments, modifications, extensions, replacements, regulations, orders and

directives in connection therewith (the "ADA"). If the Demised Premises as

reflected on Tenant's plans are not in compliance with applicable building and

fire codes, or do not comply with all requirements of the ADA, then Tenant's

plans shall not be, nor shall they be deemed to be, acceptable to Landlord.

Landlord's approval of Tenant's plans or work does not constitute certification

by Landlord that said plans or work meet the applicable requirements of any

building or fire codes, laws or regulations, or the ADA, nor shall it impose any

liability whatsoever upon Landlord. If Tenant's preliminary plans are

acceptable to Landlord, Landlord shall have working drawings prepared within the

time period set forth on Exhibit F, and when the working drawings are completed

by the architect and engineer, the Tenant shall approve in writing both the

working drawings and Landlord's final cost estimate within the number of working

days stipulated on Exhibit F. Tenant's failure to approve or disapprove any

estimates or plans within the time periods set forth on Exhibit F shall be

deemed to constitute approval for purposes of this Section.

 

(b) Extension of Construction Timetable. Nothing contained in this Section

------------------------------------

3.1, nor any delay in completing the Demised Premises, shall in any manner

affect the Commencement Date set forth in Section 1.2 or Tenant's liability for

payment of Base Annual Rent and Additional Rent from such Commencement Date,

except as follows. If Landlord requires longer than the number of working days

stipulated on Exhibit F, to prepare working drawings and prepare the cost

estimate following receipt of Tenant's approved preliminary plan, or if Landlord

requires longer than the number of working days stipulated on Exhibit F , to

substantially complete Construction Improvements in the Demised Premises after

the final working drawings and cost estimate have been approved by the Tenant in

writing, then the Commencement Date shall be postponed by one day for each

extra day Landlord requires for the foregoing preparation of working drawings

and cost estimate and/or substantial completion of Construction Improvements, as

the case may be, which postponement shall be Tenant's sole and exclusive remedy.

In the event Tenant delays approval of either the preliminary plan, the working

drawings and/or the final cost estimate or makes changes in the work after

approval of working drawings and the final cost estimate, or Tenant's

contractors interfere with Landlord's work, thereby delaying substantial

completion and Landlord's tender of possession of the Demised Premises to

Tenant, Tenant shall nevertheless remain liable for the payment of Base Annual

Rent and Additional Rent from the Commencement Date specified in Section 1.2.

Time is of the essence as to the Tenant's performance within the time periods

specified for approval of plans and cost estimates set forth on Exhibit F

pursuant to this Section 3.1.

<PAGE>

(c) Substantial Completion. For the purposes of this Section 3.1,

-----------------------

"substantial completion" of the Construction Improvements shall mean when all

work to be performed by Landlord pursuant to the approved working drawings and

final cost estimate has been completed, except for minor items of work and minor

adjustments of equipment and fixtures that can be completed after occupancy of

the Demised Premises without causing material interference with Tenant's

reasonable use of the Demised Premises (i.e., "punch-list" items) in accordance

with the "use of the premises" as defined in Section 1.8. In the event Tenant's

plans specify any Construction Improvements that are not building standard, or

are not immediately available in the metropolitan Washington, D.C., area within

the time period for construction set forth on Exhibit F, the delivery and

installation of which precludes Landlord from substantially completing the

Construction Improvements in the Demised Premises by the Commencement Date

specified in Section 1.2, Tenant shall nevertheless remain liable for the

payment of Base Annual Rent and Additional Rent from such Commencement Date.

 

(d) Punchlist Items. Upon Tenant's request made not later than fifteen

---------------

(15) days after the date Tenant commences business operations within the

Premises, Landlord and Tenant shall jointly prepare and agree upon a punchlist

of incomplete elements of Construction Improvements ("Punchlist"). Landlord

shall commence work on the Punchlist within seven (7) days after the date of the

Punchlist and shall continue and diligently attempt to complete all items on the

Punchlist within thirty (30) days thereafter, but in any event not later than

necessary to prevent material delay or interference with Tenant's use and

occupancy of the Leased Premises. If Landlord and Tenant disagree whether an

element of Construction Improvements should be included in the Punchlist or is

properly completed, Landlord and Tenant shall submit the matter to review by an

independent architect, and the decision of such architect shall bind both

parties. Additionally, if there are any defects in material or workmanship in

Construction Improvements which are not ascertainable from a careful physical

inspection of the Premises by a qualified construction representative, Landlord

shall correct such defects promptly.

 

3.2 Possession. If Landlord shall be unable to tender possession of the

-----------

Demised Premises on the Commencement Date set forth in Section 1.2 by reason

of: (a) the fact that the Demised Premises are located in a building being

constructed and which has not been sufficiently completed to make the Demised

Premises ready for occupancy; (b) the holding over or retention of possession of

any tenant or occupant; (c) the Construction Improvements have not been

substantially completed; or (d) for any other reason beyond the control of

Landlord, Landlord shall not be subject to any liability for the failure to

tender possession on said date. Under such circumstances the Base Annual Rent

and Additional Rent reserved and covenanted to be paid herein shall not commence

until possession of the Demised Premises is tendered to Tenant. No such

failure to tender possession on the Commencement Date set forth in Section 1.2

shall in any other respect affect the validity of this Lease or the obligations

of Tenant hereunder, nor shall same be construed to extend the termination date

of this Lease set forth in Section 1.2. In the event the Commencement Date

does not occur within six (6) months of the date this Lease is fully executed

and delivered by Landlord and Tenant, then Landlord , without further liability,

shall have the right to terminate this Lease upon thirty (30) days prior written

notice to the Tenant. If permission is given to Tenant to enter into possession

of the Demised Premises prior to the date specified as the Commencement Date,

Tenant covenants and agrees that such occupancy shall be deemed to be subject to

all of the terms, covenants, conditions and provisions of this Lease, and that

Tenant shall be responsible for payment of Base Annual Rent, in advance, at the

rate of 1/30th of the base monthly rent set forth in Section 1.3 for each day of

such occupancy prior to the Commencement Date, and Additional Rent set forth in

Section 1.5 shall begin to accrue on such date of possession.

 

Notwithstanding any provision in this Lease to the contrary, Landlord and

Tenant expressly recognize that a portion of the Premises is presently being

occupied by GSA (the Federal Labor Relations Authority) as a hold-over tenant.

Such portion is located on the fourth floor of the Building and contains

approximately 5,000 square feet of rentable area. Landlord agrees to use all

reasonable efforts to promptly tender such portion to Tenant, and in no event

shall Landlord acquiesce to any extension of the holdover occupancy by GSA.

Inasmuch as Tenant will not be afforded access to such portion concurrent with

the remainder of the Premises to perform the Construction Improvements, the

parties agree that notwithstanding the occurrence of the Commencement Date (as

to the remainder of the Premises), no rent or other charges shall be payable by

Tenant pertaining to such portion (pro-rated based upon a fraction 5,000/32,500)

until such time as the Construction Improvements have been completed within such

portion, and in the event delivery of such portion does not occur by December

15, 1998, to the extent that the costs of construction of the Construction

Improvements is increased to Tenant by reason of the inability to perform the

required work concurrent with the balance of the Premises, such increase in cost

shall be borne solely by Landlord and not by Tenant.

 

3.3 Permits. Tenant shall be responsible for obtaining at its sole cost

--------

and expense the construction and occupancy permits for the Demised Premises.

Tenant shall be responsible for obtaining any other permits or licenses

necessary for its lawful occupancy of the Demised Premises. Tenant shall

provide Landlord with a copy of all such permits and licenses.

 

3.4 Intentionally Deleted.

----------------------

4. SUBLETTING AND ASSIGNMENT

 

4.1 Consent. Without the prior written consent of Landlord, not to be

--------

unreasonably withheld, conditioned or delayed in accordance with Section 4.5,

Tenant will not sublet the Demised Premises or any part thereof or transfer

possession or occupancy thereof to any person, firm or entity, or transfer or

assign this Lease, and no subletting or assignment hereof shall be effected by

operation of law or in any other manner, such as the transfer of all or

substantially all of Tenant's assets or voting control of Tenant's stock,

partnership interest or other equity, without such prior written consent of

Landlord. All permitted sublettings and assignments of the Demised Premises and

this Lease shall be subject to the provisions of this Lease, including but not

limited to Section 4.3. No assignment shall be made except for the entire

Demised Premises and Tenant further agrees that any permitted assignment of this

Lease or subletting of the Demised Premises may be conditioned upon payment by

Tenant of consideration and the

<PAGE>

delivery of such additional guarantees, collateral and/or other security as

determined by Landlord. Any subletting or assignment consented to by Landlord,

to be effective, shall be evidenced in writing in a form acceptable to Landlord.

Consent by Landlord to any assignment or subletting by Tenant shall not operate

as a waiver of the necessity for obtaining Landlord's consent in writing to any

subsequent assignment or subletting. The collection or acceptance of rent from

any such assignee, subtenant or other occupant shall not constitute a waiver of

or release of Tenant from any covenant or obligation contained in this Lease,

nor shall such acceptance of rent be deemed to create any right to the Demised

Premises in such assignee, subtenant or other occupant, nor any legal or other

relationship between the Landlord and any such assignee, subtenant or other

occupant. Landlord's acceptance of any name for listing on the Building

directory shall not be deemed, nor will it substitute for, Landlord's consent as

required by this Lease, to each sublease, assignment and any other occupancy of

the Demised Premises. In the event that Tenant defaults under this Lease in the

payment of Base Annual Rent or Additional Rent following expiration of any

applicable cure period, Tenant hereby assigns to Landlord the rent and other

sums due from any subtenant, assignee or other occupant and hereby authorizes

each such subtenant, assignee and other occupant to pay said rent and other sums

directly to Landlord upon demand. Any transfer of this Lease or the Demised

Premises, or any transfer of any interest in Tenant restricted pursuant to this

Section 4.1, without the prior written consent of Landlord pursuant to this

Section 4.1 shall be void. By taking a transfer of this Lease by assignment,

transfer of interest in Tenant, or by any other manner described in this Section

4.1, or otherwise with Landlord's consent to the transfer, the transferee shall

be bound by all provisions of this Lease, which shall be binding upon the

transferee as if the transferee had signed this Lease in lieu of the original

Tenant named herein.

 

4.2 Recapture of Premises. In the event Tenant desires to sublet the

----------------------

Demised Premises or assign this Lease or effect the transfer of any interest in

this Lease or in Tenant restricted pursuant to Section 4.1, Tenant shall give to

Landlord written notice of Tenant's intended subtenant, assignee or transferee

in order to secure Landlord's written consent in accordance with Section 4.1.

Within thirty (30) days of receipt of said notice, Landlord shall have the

right, at its option to terminate this Lease by giving Tenant not less than

thirty (30) days notice if Tenant's notice states the Tenant's desire to sublet

more than fifty percent (50%) of the Demised Premises or effect a restricted

transfer of an interest in this Lease. If Landlord exercises its right to

terminate this Lease pursuant to the above provisions, Tenant agrees that

Landlord shall have access to all or any portion of the Demised Premises as soon

as Tenant has vacated the Premises.. Tenant and Landlord shall promptly execute

such lease amendments and other documents as Landlord may require to effectuate

the terms and intent of this Section 4.2.

 

4.3 Excess Rent and Other Consideration. Any rent and other consideration

------------------------------------

accruing to Tenant as a result of any sublease or any assignment of this Lease,

which is in excess of the pro rata share of Base Annual Rent and Additional Rent

then being paid by Tenant for all or a portion of the Demised Premises being

sublet or assigned, shall be paid by Tenant to Landlord monthly as Additional

Rent after recovery by Tenant of all of the costs and expenses incurred by

Tenant with respect to the subletting or assignment. Any consideration accruing

to Tenant as the result of any transfer of interest in this Lease restricted

pursuant to Section 4.1, which is paid or deemed paid in regard to the value of

this Lease (as opposed to any equipment or furnishings of Tenant located at the

Building) and which is in excess of the pro rata share of the Base Annual Rent

and Additional Rent which would have been paid by Tenant during the Lease Term

for such space, shall be paid by Tenant to Landlord promptly as Additional Rent

after recovery by Tenant of all of the costs and expenses incurred by Tenant

with respect to the transfer of the interest in this Lease.

 

4.4 Tenant Liability. In the event of any subletting of the Demised

-----------------

Premises or assignment of this Lease by Tenant or transfer of an interest in

this Lease or in Tenant, Tenant shall remain liable to Landlord for payment of

the Base Annual Rent and Additional Rent stipulated herein and all other

covenants and conditions contained herein. No subletting of the Demised

Premises or assignment of this Lease or transfer of an interest in this Lease or

in Tenant shall operate to release, discharge or otherwise affect the liability

of any guarantors, co-signers or other parties liable to Landlord pursuant to

the terms of any guaranty or otherwise for the obligations of Tenant under this

Lease.

 

4.5 Reasonable Standards of Consent. Tenant acknowledges that Landlord, in

--------------------------------

considering whether to grant or withhold consent required of Landlord pursuant

to this Section 4, shall be entitled to apply any or all of the following

criteria:

 

(a) The financial strength of proposed subtenant/assignee/ transferee must

be acceptable to Landlord in Landlord's reasonable discretion based on adequate

current and historical financial information given by Tenant. Landlord shall be

entitled to receive, and Tenant shall deliver or cause others to deliver, such

guarantees, collateral and other security as Landlord shall request in

conjunction with any prospective sublease, assignment or other transfer.

Failure to provide such financial information, guarantees, collateral and other

security shall be grounds for Landlord to withhold or deny consent;

 

(b) The proposed subtenant/assignee/transferee must have a good reputation

in the business community and must be credit-worthy;

 

(c) Use of the Demised Premises by the proposed

subtenant/assignee/transferee must be identical to the use permitted by this

Lease;

 

(d) Use of the Demised Premises by the proposed

subtenant/assignee/transferee shall not violate or create any potential

violation of any laws and must be in keeping with the character of the Building

and the Complex;

 

(e) Use of the Demised Premises by the proposed

subtenant/assignee/transferee shall not violate, or cause Landlord to violate,

any other leases, agreements or mortgages affecting (i) the Demised Premises,

the Building, the Complex or the land related to such improvements, or (ii) the

Landlord, Landlord's Agent or other tenants, whether such leases, agreements or

mortgages were entered into prior or subsequent to this Lease;

<PAGE>

(f) The proposed use shall compatible with all other uses within the

Building or Complex and the proposed use or user shall not cause a diminution in

the reputation of the Building, the Complex, Landlord, Landlord's Agent or other

tenants;

 

(g) In the event Tenant is in default, consent may be conditioned by

Landlord that such default be cured. .

 

4.6 Other Transfers. Notwithstanding anything herein to the contrary,

----------------

Tenant shall not pledge, assign, transfer, encumber or otherwise convey its

interest in the Demised Premises conditionally or as security for any

obligations of Tenant to any third party, or otherwise. Any such transfer in

violation of this provision shall be void.

 

4.7 Rights on Default. In the event Tenant defaults under this Lease after

------------------

notice and expiration of the applicable cure period, in addition to the rights

and remedies of Landlord outlined in Section 12, Landlord, at its option, may

elect to recognize any sublease between Tenant and any subtenant, or any

agreement by which Tenant has granted any leasehold estate or interest in the

Demised Premises, as a direct lease or agreement between Landlord and such

subtenant or other grantee, upon written notice to Tenant and such subtenant or

other grantee, without releasing or affecting the liability of Tenant to

Landlord under this Lease, and Tenant shall be deemed to have assigned its

interest in such sublease or other agreement to Landlord (without the need for

executing any further documentation evidencing same) and such subtenant or other

grantee shall attorn to and recognize the rights of Landlord under such sublease

or other agreement, as the case may be. Notwithstanding Tenant's consent or

acquiescence in the termination of this Lease and/or Tenant's voluntary

surrender of the Demised Premises (or any portion thereof), Landlord may

consider any sublease or other agreement transferring a leasehold estate or

interest in the Demised Premises, and/or any right to use or possess the Demised

Premises (or any portion thereof) by any subtenant or other grantee, terminated

as of the date Landlord terminates this Lease and/or Tenant's right to

possession of the Demised Premises, it being the intention of the parties that

any leasehold estate or other interest in the Demised Premises shall be subject

to the terms and conditions of this Lease, including all rights and remedies of

Landlord outlined herein, notwithstanding anything to the contrary contained in

such sublease or other agreement.

 

4.8 Notwithstanding the provisions set forth in section 4.1 hereinabove, in

no event shall any sale or assignment of any of Tenant's stock be deemed to

require Landlord's consent under this Lease. Further, Tenant shall have the

right to transfer this Lease and/or sublet all or any part of the Leased

Premises without obtaining Landlord's consent to any of the following: (1) any

entity which at the time of such transfer is the record holder of all of the

voting stock of Tenant; (2) any entity which at the time of such transfer is a

wholly owned subsidiary of Tenant or an entity which is the then record holder

of all of the voting stock of Tenant and into which Tenant has been

consolidated; (3) any entity which shall result from a merger of the Tenant with

one or more entities; or (4) any entity to whom Tenant or its shareholders shall

have sold all or substantially all of Tenant's assets or the stock of Tenant.

Tenant will agree to provide Landlord with copies of the Agreement executed by

the assignee of this Lease evidencing the assumption by such assignee of all of

the obligations and liabilities imposed upon Tenant under the Lease. Further,

Tenant will acknowledge that it shall remain liable on the Lease,

notwithstanding any such permitted transfer. If Landlord shall not respond to

Tenant's request to assign or sublet within thirty (30) days of its presentment,

such request shall be deemed approved by Landlord.

 

5. SERVICES AND UTILITIES

 

5.1 Building Standard Services and Utilities. Subject to the limitations

-----------------------------------------

set forth in Section 5.3 below, Landlord shall furnish sufficient electric

current for lighting and office equipment such as typewriters, calculators,

small copiers, desktop personal computers and word processors and similar items.

Landlord shall also furnish water for lavatory and drinking purposes, lavatory

supplies, fluorescent tube replacements, automatically operated elevator service

and nightly cleaning service in accordance with Landlord's prevailing practices

(as set forth in Exhibit D attached hereto), as they may be modified from time

to time, except that Landlord shall not be responsible for cleaning Tenant's

kitchens, private bathrooms, rugs, carpeting (except vacuuming) and drapes. Char

and cleaning service together with the other building services shall be

conducted at a level commensurate with such services provided in other

comparableoffice buildings in the downtown D.C. area. Landlord shall have no

liability for and expressly disclaims any responsibility for the engineering,

design, installation, provision of or maintenance of Tenant's telecommunications

and data transmission systems and the inside wire associated therewith.

Landlord further agrees to furnish heating and cooling during the appropriate

seasons of the year, between the hours and on the days set forth in Section 1.7

(exclusive of legal public holidays as defined in section 6103(a) and (c) of

Title 5 of the United States Code, as it may hereafter be amended, with holidays

falling on Saturday observed on the preceding Friday and holidays falling on

Sunday observed on the following Monday). All of the aforesaid services shall

be provided without cost to Tenant except as such expenses may be included in

calculating Additional Rent pursuant to the provisions of Sections 2.2 and 2.3.

Landlord shall not be liable for failure to furnish, or for suspension or delay

in furnishing, any of such services if such failure, suspension or delay is

caused by breakdown, maintenance or repair work, strike, riot, civil commotion,

governmental regulations, emergency periods due to weather or any other cause or

reason whatever beyond the reasonable control of Landlord. Failure, suspension,

delay or interruption of services shall not result in any abatement of Base

Annual Rent or Additional Rent, be deemed an eviction or breach of this Lease

(including any express or implied covenant of quiet enjoyment), or relieve

Tenant of performance of Tenant's obligations under this Lease unless the

Premises are rendered untenantable by such failure, suspension,

<PAGE>

delay or interruption of services due to the negligence or willful misconduct of

Landlord, provided same continues for a period in excess of five (5) days

following notice to Landlord of such failure, suspension, delay or interruption.

In the event of any such failure, suspension, delay or interruption continuing

as aforesaid, Tenant shall be entitled to abate paying all rents due hereunder

with respect to the portion of the Premises (including also all of the Premises

if applicable) which is affected by reason of the cessation of such service from

the commencement of such loss of service until such service is restored.

Landlord agrees to use its best efforts to restore any cessation in services,

recognizing that Tenant's communication business requires twenty-four hour

service, 365 days a year.

 

5.2 Overtime Services. Should Tenant require heating and cooling services

------------------

beyond the hours and/or days stipulated in Section 1.9, upon receipt of at least

48 hours prior written notice from Tenant, Landlord will furnish such additional

service at the then-prevailing hourly rates (except as below provided) for both

utility services and personnel as established by Landlord from time to time;

provided, further, that there will be a minimum charge of four (4) hours each

time overtime services are required on any Sundays or federal holidays, and a

minimum charge of one and one-half (1.5) hours each time overtime services are

required on any other day so long as such services are requested to be provided

during a time period occurring immediately after the Building standard hours for

such day (i.e. after 6:00 p.m. on weekdays or noon on Saturdays).

Notwithstanding the foregoing, Landlord agrees that to the extent Tenant

designates particular portions of the Premises as 24 hour zones, Landlord shall

provide at its direct cost (i.e. no profit, administrative charge, overhead or

markup) utilities necessary to permit Tenant to operate on a 24 hours a day,

seven days a week basis, either the building standard system servicing such zone

(if feasible) or Tenant's supplemental unit servicing such zone. Tenant shall

be entitled from time to time during the term to revise those portions of the

Premises designated as 24 hour zones. Landlord shall cooperate with Tenant in

the provision of chiller water, and other utilities recognizing that Tenant's

business operations require the conduct of business round-the-clock within

certain areas.

 

5.3 Excessive Usage.

----------------

 

(a) Equipment Restrictions. Tenant will not install or operate in the

-----------------------

Demised Premises any heavy duty electrical equipment or machinery or any other

equipment which consumes excess gas (where applicable), excess water, excess

sewer services or excess electricity as defined in Section 5.3(b) below, without

first obtaining prior written consent of Landlord which approval shall not be

unreasonably withheld, delayed or conditioned. Landlord may, among other things,

require as a condition to its consent for the installation of such equipment or

machinery that Tenant pay as Additional Rent the costs for excess consumption of

such utilities that may be occasioned by the operation of said equipment or

machinery. Landlord may make periodic inspections of the Demised Premises at

reasonable times and upon reasonable advance notice to determine that Tenant's

equipment and machinery comply with the provisions of this Section and Section

5.4.

 

(b) Excess Electrical Usage. The consumption of electricity, including

------------------------

lighting, in excess of five (5) watts per square foot for any portion of the

Demised Premises shall be deemed excessive. Additionally, any individual piece

of electrically operated machinery or equipment having a name plate rating in

excess of two (2) kilowatts shall also be deemed as requiring excess electric

current.

 

(c) Additional Utility Costs. Landlord shall have the right to either

-------------------------

require that one or more separate meters be installed to record the consumption

or use of electricity or other utilities, or cause a reputable independent

engineer to survey and determine the quantity of such utilities consumed by such

excessive use. In the event that excess consumption is determined, the cost of

any such survey and meters and of installation, maintenance and repair thereof

shall be paid for by Tenant. Tenant agrees to pay Landlord (or the utility

company, if direct service is provided by the utility company), promptly upon

demand therefor, for all such consumption and demand as shown by said meters, or

a flat monthly charge determined by the survey, as applicable, at the rates

charged for such service by the local public utility company. If Tenant's cost

of such utilities based on meter readings is to be paid to Landlord, Tenant

shall pay a service charge related thereto in an amount Landlord shall

reasonably determine. In no event shall Tenant be liable for more than the

actual cost of the utilities consumed by Tenant.

 

5.4 Excessive Heat Generation. Landlord shall not be liable for its

--------------------------

failure to maintain comfortable atmospheric conditions in all or any portion of

the Demised Premises due to heat generated by over-occupancy of the Demised

Premises or by any equipment, machinery or additional lighting installed by

Tenant (with or without Landlord's consent) that exceeds design capabilities for

the Building. Over-occupancy shall mean any occupancy of the Demised Premises

in excess of the planned occupancy disclosed by Tenant to Landlord pursuant to

Section 3.1. If Tenant desires additional cooling to offset excessive heat

generated by such over-occupancy, equipment, machinery or additional lighting,

Tenant shall pay for auxiliary cooling equipment and the operating, maintenance,

repair and replacement costs of such equipment, including without limitation

electricity, gas, oil and water. If Tenant does not desire such auxiliary

cooling equipment, Tenant shall pay for excess electrical consumption by the

existing cooling system.

 

5.5 Building Security. Any security system or other security measures

------------------

(collectively, the "Security System") that Landlord may undertake for protection

of the Demised Premises, the Building and/or Complex (including any parking

garages or areas) are for the protection of the physical structures only and

shall not be relied upon by Tenant, its agents, employees or invitees to protect

Tenant, Tenant's Property and Leasehold Improvements or Tenant's employees,

invitees or their property. Tenant shall not do anything to circumvent or allow

others to circumvent any Security System. Landlord shall not be liable for any

failure of any Security System to operate or for any breach or circumvention of

the Security System by others, and Landlord makes no representations or

warranties concerning the installation, performance and monitoring of any

Security System, or that it will detect or avert the occurrences which any such

Security System is intended or expected to detect or avert. In addition, a

centrally monitored proximity card system shall control after-hours access to

the Building and the garage

<PAGE>

5.6 Roof and Auxiliary Spaces. Tenant shall not use the roof, roof utility

--------------------------

closets or other auxiliary spaces in the Building for antennas, condenser

coolers, telecommunications and/or data transmission equipment or any other type

of equipment or for any other purpose without the prior written consent of

Landlord, which consent shall not be unreasonably delayed or withheld, but which

may be conditioned upon the terms of a separate written agreement and the

payment by Tenant of of a reasonable hourly supervisory fee to Landlord with

respect to the coordination of any installations or perforations performed by

Tenant's contractors on the roof. Landlord recognizes that Tenant shall be

entitled to place one or more antennae, dishes or future similar equipment,

together with associated wiring and cabling, on the roof, and that such use is

necessary in connection with Tenant's telecommunication business. Tenant shall

be entitled to retain access to, and the right to use such portion of the roof-

top area as may be reasonably necessary to accomplish the foregoing. Landlord

and Tenant agree that Tenant's communication equipment will require Tenant to

use the Building shafts, risers, chases, utility entrances, equipment rooms and

distribution areas or conduits between the Premises and other parts of the

Building (including the roof), and Tenant shall be afforded the right to use or

construct conduits to connect Tenant's telecommunications systems and services

to the roof. It is further agreed that Landlord shall be provided prior to

installation by Tenant with a copy of the plans describing what is to be

installed on the roof and the manner of installation. Upon expiration of the

term of this Lease, Tenant shall be required to remove all of its roof-top

installations and to restore any damage caused thereby to the roof. To secure

the obligation of Tenant to remove and restore as aforesaid, Landlord shall be

entitled to require a roof-top security deposit from Tenant in the amount of Two

Thousand Dollars, which sum shall be payable at Landlord's demand and, if

demanded as a condition to the installation by Landlord, prior to the

installation by Tenant of any roof-top installation.

 

5.7 Trash Removal. Tenant covenants and agrees, at its sole cost and

--------------

expense, to comply with all present and future laws, orders and regulations of

the federal, state, county, municipal and local governments, departments,

commissions, agencies and boards regarding the collection, sorting, separation

and recycling of trash. Upon request by Landlord, Tenant shall sort and separate

its trash into such categories as are provided by law. Each separately sorted

category of trash shall be placed in separate receptacles as directed by

Landlord. Landlord reserves the right to refuse to collect or accept from Tenant

any trash that is not separated and sorted as required by law and directed by

Landlord, and to require Tenant to arrange for such collection at Tenant's sole

cost and expense, utilizing a contractor reasonably satisfactory to Landlord.

Tenant shall pay all costs, expenses, fines, penalties and damages that may be

imposed on Landlord or Tenant by reason of Tenant's failure to comply with the

provisions of this Section, and Tenant, at Tenant's sole cost and expense, shall

indemnify, defend and hold Landlord harmless from and against any actions,

claims and suits (including reasonable legal fees and expenses) arising from

such noncompliance, utilizing counsel reasonably satisfactory to Landlord.

 

6. USE AND UPKEEP OF PREMISES

6.1 Use. Tenant shall use and occupy the Demised Premises only for the

----

purposes specified in Section 1.10 and for no other purpose whatsoever, and

shall comply, and cause its employees, agents, contractors to comply, and shall

use reasonable efforts to cause its invitees and other users of the Demised

Premises to comply, with applicable zoning and other municipal regulations,

including but not limited to smoking regulations. Any variation or deviation

from the specific use expressly set forth in Section 1.10 shall be deemed a

default of this Lease. Tenant shall pay before delinquency any business, rent

and other tax and fee that is now or hereafter assessed or imposed upon Tenant's

use or occupancy of the Demised Premises, the conduct of Tenant's business in

the Demised Premises or Tenant's Property. If any such tax or fee is enacted or

altered so that such tax or fee is imposed upon Landlord so that Landlord is

responsible for collection or payment thereof, then Tenant shall promptly pay

the amount of such tax or fee directly to the taxing authority, or if previously

paid by Landlord, to Landlord upon demand provided that evidence of such tax is

disclosed to Tenant. Tenant shall not be liable for any penalties or interest

caused by Landlord's failure to timely pay such taxes.

 

6.2 Illegal and Prohibited Uses. Tenant will not use or permit the Demised

----------------------------

Premises or any part thereof to be used for any disorderly, unlawful or extra

hazardous purpose and will not manufacture anything therein. Tenant will not use

or permit the Demised Premises to be used for any purposes that interfere with

the use and enjoyment by other tenants of the Building or Complex or, in

Landlord's reasonable opinion, impair the reputation or character of the

Building, Complex, Landlord or Landlord's Agent. Tenant shall immediately

refrain from and discontinue such use after receipt of written notice from

Landlord.

 

6.3 Insurance Rating. Tenant will not do or permit anything to be done in

-----------------

the Demised Premises, the Building or the Complex or bring or keep anything

therein which shall in any way increase the rate of fire or other insurance on

said Building or the Complex, or on the property kept therein, or conflict (or

permit any condition to exist which would conflict) with applicable fire laws or

regulations, or with any insurance policy upon said Building or Complex or any

part thereof, or with any statute, rules or regulations enacted or established

by any appropriate governmental authority. Tenant shall be responsible for any

increase in insurance costs with respect to the Building or Complex if the

increases were caused by its actions or failure to act absent the actions or

failure to act by Landlord, its contractors, agents or employees or the action

or failure to act of other tenants.

 

6.4 Alterations.

------------

 

(a) Approval Required. Tenant shall not make any alterations,

------------------

installations, changes, replacements, repairs, additions or improvements in or

to (or which interfere with) the structural elements of the Building or the

Demised

<PAGE>

Premises, or the Systems (hereinafter defined), without the prior written

consent of Landlord, which consent shall not be unreasonably delayed, withheld

or conditioned. Tenant shall not make any non-structural, non-System or cosmetic

alterations, changes, replacements, repairs, additions or improvements in or to

the Demised Premises or any part thereof, without the prior written consent of

Landlord, which consent shall not be unreasonably withheld, delayed or

conditioned. All Tenant plans and specifications shall be submitted to Landlord

for prior approval. All Tenant engineering plans and specifications shall be

prepared at Tenant's expense by Landlord's designated engineer. Landlord may,

among other things, condition its consent upon Tenant's agreement that any

construction up-gradings required by any governmental authority as a result of

Tenant's work, either in the Demised Premises or in any other part of the

Building or Complex, will be paid for by Tenant in advance. Tenant shall not

install any equipment of any kind or nature whatsoever which will or may

necessitate any changes, replacements or additions to the water system, plumbing

system, heating system, ventilating system, air-conditioning system, supply,

return or control systems, Landlord's data system(s), or the electrical system

of the Demised Premises or the Building (collectively, the "Systems"), nor

install or use any air-conditioning unit, engine, boiler, generator, machinery,

heating unit, stove, water cooler, ventilator, radiator or any other similar

apparatus, nor modify or interfere with any of the Systems, without the prior

written consent of the Landlord, which consent shall not be unreasonably

withheld, delayed or conditioned, Landlord expressly recognizing that it is

imperative to Tenant's business operations that certain portions of the Premises

be provided with round the clock HVAC services as set forth in section 5.2

above. Any auxiliary air-conditioning equipment which Tenant may desire to

install in the Demised Premises shall be connected to the Building's commercial

condenser water system, if available, and Tenant shall pay to Landlord such

reasonable charges as established by Landlord from time to time for the use of

the Building's commercial condenser water system, subject to the provisions

contained in section 5.2. Tenant shall not modify or interfere with the Systems

without the prior written consent of Landlord, and then only as Landlord may

direct. Landlord may condition its consent upon Tenant's payment of all costs to

make such changes, replacements or modifications. Tenant shall not design,

configure, install, use or arrange for the design, configuration, installation

or use of its telecommunications and data transmission systems or inside wire

associated therewith in any manner that interferes with the existing

telecommunications and/or data transmission systems or inside wire associated

therewith of Landlord or other tenants in the Building. Landlord's consent to

any work by Tenant or approval of Tenant's plans or specifications shall not be

deemed a certification that such work complies with applicable building codes,

laws or regulations, nor shall it impose any liability whatsoever upon Landlord.

 

(b) Alteration Requirements. All of Tenant's approved work shall be done

------------------------

in accordance with Landlord's Supplemental Rules and Regulations for Contractors

(as promulgated and amended by Landlord from time to time) and shall be done by

duly qualified, licensed and bonded contractors in accordance with all

applicable laws, codes, ordinances, rules and regulations, and Tenant shall

obtain (or give) at its cost any required permits, licenses, registrations,

notices, or inspections for performance of its work. Prior to the commencement

of such work Tenant must obtain an executed waiver of lien from each contractor

or vendor that will perform or furnish to Tenant work, labor, services or

materials for any alterations, installations, replacements, additions or

improvements in or to the Demised Premises. Notwithstanding the aforesaid, if

any mechanic's or materialman's lien shall at any time, whether before, during

or after the Lease Term, be filed against any part of the Building or other

property of Landlord by reason of work, labor, services or materials performed

for or furnished to or on behalf of Tenant, Tenant shall forthwith cause the

lien to be released of record by being discharged or bonded off to Landlord's

satisfaction within five (5) days after being notified of the filing thereof.

If Tenant shall fail to cause such lien to be released of record within said

five (5) day period, then, in addition to any other right or remedy of Landlord,

Landlord may bond off or discharge the lien by paying the amount claimed to be

due. Any amount paid by Landlord, whether as bond premium or payment of the

lien amount, and all costs and expenses, including reasonable attorneys' fees

incurred by Landlord in procuring the same and its release from the appropriate

land records, shall be due from Tenant to Landlord as Additional Rent, and shall

be payable on the first day of the next following month, or if the Lease Term

has expired, upon demand.

 

(c) Intentionally Deleted.

 

(d) Compliance with Laws. In the event that during the Lease Term either

---------------------

Landlord or Tenant shall be required by the order or decree of any court, or any

other governmental authority, or by law, code or ordinance (including but not

limited to the ADA), to repair, alter, remove, reconstruct, or improve any part

of the Demised Premises, then Tenant or Landlord agrees, at its sole cost and

expense, to comply with such requirements imposed on the Demised Premises (in

the case of Tenant) or on the Building (in the case of Landlord). Landlord or

Tenant, as the case may be, shall perform, at its expense, or, with respect to

such matters imposed on the Demised Premises, Tenant shall permit Landlord to

perform, at Tenant's expense, such repairs, alterations, removals,

reconstructions, or improvements. Within ten (10) days after receipt, Tenant

shall advise Landlord in writing, and provide the Landlord with copies of (as

applicable), (i) any notices alleging violation of any law, code or ordinance

(including the ADA) relating to any portion of the Demised Premises or the

Building, (ii) any claims made or threatened in writing regarding noncompliance

with any law, code or ordinance and relating to any portion of the Building or

of the Demised Premises, or (iii) any governmental or regulatory actions or

investigations instituted or threatened regarding noncompliance with any law,

code or ordinance and relating to any portion of the Demised Premises. No such

order or decree or the compliance required therewith shall have any effect

whatsoever on the obligations or covenants of Tenant herein contained. Tenant

hereby waives all claims for damages or abatement of Base Annual Rent and

Additional Rent because of such repairing, alteration, removal, reconstruction,

or improvement, unless same arises from the neglect or willful act or omission

of Landlord.

 

(e) Special Provisions. Notwithstanding any provision contained in this

------------------

Lease to the contrary, Tenant shall not be required to comply with any laws,

ordinances or regulations which would either require Tenant to (i) perform any

structural alterations unless caused by Tenant's particular use (as opposed to

general office use), (ii) remove any hazardous material or substance installed

or caused by a party other than Tenant or by an agent, employee or contractor of

Tenant, (iii) perform any alterations or installations if Tenant's use without

same is

<PAGE>

"grandfathered" under existing laws, rules or ordinances, or (iv) correct or

cure any defect or deficiency in the initial Tenant Improvements.

 

6.5 Maintenance by Landlord.

------------------------

 

(a) Landlord Repairs and Maintenance. Except to the extent that Tenant is

---------------------------------

required to maintain and repair pursuant to Sections 5.4, 6.4, 6.7, 6.8, 6.10,

6.11, 9 and 21, Landlord shall maintain and repair all public or common areas

located within the Building, including external landscaping, walkways and

parking areas, and, except to the above extent, Landlord shall make repairs to

structural roofs, walls, standard heating, air conditioning, plumbing, sewage

systems, downspouts, utility lines, pipes, conduits and electrical systems and

equipment. Except as otherwise expressly provided in this Lease, such

maintenance shall be provided without cost to Tenant, except that (i) such

expenses may be included in calculating the Additional Rent pursuant to the

provisions of Sections 2.2 and 2.3 (subject to the limitations therein); and

(ii) if such expenses are incurred by Landlord in making repairs attributable to

acts or omissions of Tenant or Tenant's employees, agents, contractors or

invitees, then Tenant shall reimburse Landlord for all such expenses within ten

(10) days after Landlord submits a bill for such costs to Tenant. Landlord

shall make all repairs with due diligence and due care in a good and workmanlike

manner and in compliance with all applicable local, state and Federal

regulations, ordinances and laws and in making such repairs shall use reasonable

efforts to prevent any interference with Tenant's use of the Leased Premises.

Landlord shall promptly restore any damage to any portion of the Leased Premises

resulting from any act or omission of Landlord, its agents, servants, employees

or contractors. Landlord shall, without expense to Tenant, make any and all

structural or extraordinary alterations (including, but not limited to, the

installation of a sprinkler system at the Leased Premises) required to be made

to the Leased Premises by law, ordinance or regulation of any governmental

authority, board of fire insurance underwriters, Landlord's insurers, or similar

authority. In no event shall Tenant have any responsibility under this Lease

to repair or replace any component or item required as a result of any negligent

or willful act or omission of Landlord, its agents, employees or contractors,

and Landlord shall remain fully responsible therefor.

 

(b) Use of Demised Premises by Landlord. Landlord reserves the right to

------------------------------------

erect, use, maintain, repair and replace all pipes, ducts, conduits, wiring,

fluids, gases, components, and similar materials and structures in and through

the Demised Premises, including any changes, additions or replacements as

Landlord may from time to time make thereto. Landlord may install any and all

materials, equipment, pipes, ducts, conduits, wires, and related fluids, gases,

components and mechanical equipment serving other portions, tenants and

occupants of the Building, in, through the walls, under the floor or above the

ceiling in the Demised Premises that Landlord deems desirable and shall have the

right to locate, both vertically and horizontally, utility lines, wiring, air

ducts, flues, duct shafts, drains, sprinkler mains and valves, and such other

facilities within the Demised Premises as may be deemed necessary by engineering

design and/or code and/or other legal requirements and to repair, alter, replace

or remove these items. These shall be located so as to cause minimum

interference with Tenant's use of the Demised Premises and shall, if possible,

be located above Tenant's suspended ceiling, if any, or as close to the concrete

slab as possible, below the floor, along column lines or in storage areas.

Landlord shall have the right to remove or abate any hazardous materials located

in the Demised Premises and Tenant shall fully cooperate with Landlord in this

regard. Landlord's right to locate facilities within the Demised Premises shall

include facilities required by tenants or occupants in levels above or below the

Demised Premises as well as on the same level as the Demised Premises. None of

the above conduct by Landlord shall be deemed to constitute an interference with

Tenant's quiet enjoyment or an actual or constructive eviction of Tenant.

Tenant shall be entitled to no abatement of Base Annual Rent or Additional Rent

whatsoever on account of such installation, location, construction, use, entry,

removal, repair, maintenance or other conduct as aforesaid.

 

(c) Any actions taken by or on behalf of Landlord by reason of the

provisions contained in this Lease, including but not limited to actions related

to repairs, alterations, improvements, additions or maintenance of the Building,

the Leased Premises, or any fixture or element thereof, shall be performed at

such times and in such manner so as to minimize interference with Tenant's

business operations within the Leased Premises.

 

6.6 Signs and Publications. No sign, advertisement or notice shall be

-----------------------

inscribed, painted or affixed on any part of the outside of the Building, or in

the common areas of the Building, or inside the Demised Premises where it may be

visible from the public areas of the Building, except on the directories and

doors of offices, and then only in such size, color, method of attachment and

style as Landlord shall approve. Landlord shall have the right to prohibit any

signage or publication of Tenant on the Demised Premises which in Landlord's

opinion tends to impair the reputation or character of the Building, Complex,

Landlord or Landlord's Agent. Tenant shall refrain from and discontinue such

signage or publication upon receipt of written notice from Landlord, but in no

event later than one (1) day after receipt of such notice.

 

Notwithstanding any provision contained herein to the contrary Landlord

agrees that Tenant shall be entitled to place a sign on the exterior of the

Building containing Tenant's trade name, which sign shall be backlit and the

maximum size under local law. Landlord shall retain the right to reasonably

approve the color and materials for such sign. Landlord further agrees that no

other telecommunications business (wireless, cellular or other long distance

service) or internet service provider shall be entitled to place signage on the

exterior of the Building during the term of this Lease.

 

Landlord has previously reviewed and approved a photograph depicting the

contemplated exterior signage in the form attached hereto as Exhibit E . At

Tenant's option, such signage may read either CGX Communications or CAIS

Internet. Landlord shall be entitled to a reasonable hourly supervisory fee

during the course of installation by Tenant's contractor of such exterior

signage. Landlord shall also be entitled to require that Tenant remove the

signbox at expiration of the term of this Lease and restore any damage to the

Building caused thereby.

<PAGE>

6.7 Excessive Floor Load. Landlord shall have the right to prescribe the

---------------------

weight and method of installation of safes, computer equipment, and other heavy

fixtures or equipment. Tenant will not install in the Demised Premises any item

of Tenant's Property or fixtures that will place a load upon the floor exceeding

the designed floor load capacity of the floor and the Building. Landlord may

prescribe the placement and positioning of all such objects within the Demised

Premises and/or Building, and, if necessary, such objects shall be placed upon

platforms, plates or footings of such size as Landlord shall prescribe. All

damage done to the Building or the Demised Premises by installing or removing a

safe or any other article of Tenant's Property or fixtures, or due to its being

in the Demised Premises, shall be repaired at the expense of Tenant.

 

6.8 Moving and Deliveries.

----------------------

 

(a) Prohibitions/Notices. Moving in or out of the Building is prohibited

---------------------

on days and hours specified in Section 1.7. Tenant shall only use freight

elevators and loading areas, if provided in the Building, for all moving and

deliveries. Tenant shall provide Landlord with forty-eight (48) hours advance

written notice of any move and obtain Landlord's approval therefor, which

approval shall not be unreasonably withheld, delayed or conditioned, in order to

facilitate scheduling use of freight elevators and loading areas.

 

(b) Coordination with Landlord. No freight, furniture or other bulky

---------------------------

matter of any description shall be received into the Building or carried in the

elevators, except as authorized by Landlord. All moving of furniture, material

and equipment shall be under the direct control and supervision of Landlord, who

shall, however, not be responsible for any damage to or charges for moving same.

Deliveries from lobby and freight areas requiring use of hand carts shall be

restricted to freight elevators. All hand carts shall be equipped with rubber

tires and side guards. Any control exercised by Landlord hereunder shall be

deemed solely for the benefit of Landlord and the Building, and shall not be

deemed to make any of Tenant's employees, agents or contractors the agent or

servant of Landlord. Tenant shall promptly remove from the public areas in or

adjacent to said Building any of Tenant's property delivered or deposited there.

 

(c) Moving Damages. Any and all damage or injury to the Demised Premises

---------------

or the Building caused by moving the property of Tenant into or out of the

Demised Premises shall be repaired at the sole cost of Tenant. In conjunction

with the foregoing, Tenant shall indemnify, defend and hold Landlord harmless

with respect to any and all damages and injuries to the Demised Premises or the

Building, and with respect to any property damage and injury to others. Without

releasing Tenant from any liability hereunder, Tenant shall cooperate with

Landlord to identify delivery contractors and movers causing damage to the

Building or Demised Premises or causing property damage or injury to others.

 

6.9 Rules and Regulations. Tenant shall, and shall ensure that Tenant's

----------------------

agents employees, invitees and guests faithfully keep, observe and perform the

Building Rules and Regulations set forth in Exhibit C, attached hereto and made

a part hereof, and such amendments, modifications and additions thereto as

Landlord may promulgate from time to time, unless waived in writing by Landlord.

Any other such rules and regulations shall not adversely affect nor

substantially interfere with the intended use of the Demised Premises, but

Tenant acknowledges that the Building Rules and Regulations, which, in

Landlord's judgment, are needed for the general well-being, operation and

maintenance of the Demised Premises, the Building and the Complex, together with

their appurtenances, are reasonable. Landlord shall have the right to

specifically enforce all Building Rules and Regulations. In addition to any

other remedy provided for herein, Landlord shall have the right to collect from

Tenant a fine of $200 per incident for each violation of said Building Rules and

Regulations which is not cured within five (5) days after written notice to

Tenant. Nothing contained in this Lease shall be construed to impose upon

Landlord any duty or obligation to enforce such Building Rules and Regulations,

or the terms, conditions or covenants contained in any other lease, as against

any other tenant, and Landlord shall not be liable to Tenant for violation of

the same by any other tenant, its employees, agents, invitees, licensees,

customers, clients, family members or guests. Further, it shall be in

Landlord's reasonable judgment as to whether Tenant is in compliance with the

Building Rules and Regulations. All rules and regulations that may be enforced

by the Landlord against the Tenant shall be reasonable and uniformly enforced

among all of the tenants in the Building. The Landlord shall use its reasonable

efforts to enforce all of the rules and regulations of the Building against

other tenants in the Building whose breach of such rules and regulations

adversely affect the use of the Leased Premises or of the Common Areas by

Tenant, its employees, customers and invitees. Tenant shall be notified in

writing of any alleged breach by the Tenant of the rules and regulations, and

Tenant shall be given five (5) days to cure such breach before any such breach

shall constitute a breach of the terms of the Lease.

 

6.10 Tenant Maintenance and Condition of Demised Premises Upon Surrender.

-------------------------------------------------------------------

At all times during the Lease Term, Tenant will keep the Demised Premises and

the Leasehold Improvements and Tenant's Property therein in good order and

condition, will suffer no waste or injury to the Demised Premises and Leasehold

Improvements, and will, subject to the provisions of Section 6.4(c), at the

expiration or other termination of the Lease Term, surrender and deliver up the

Demised Premises and Leasehold Improvements in like good order and condition as

they shall be at the Commencement Date, ordinary wear and tear and, subject to

the provisions of Section 9, damage by fire or other casualty excepted.

 

6.11 Tenant Property and Leasehold Improvements. Maintenance and repair of

-------------------------------------------

Tenant's Property and any Leasehold Improvements within or related to the

Demised Premises shall be the sole responsibility of Tenant, and Landlord shall

have no obligation in connection therewith. Notwithstanding anything herein to

the contrary, and subject to the provisions of Sections 6.4 and 12.8 pertaining

to removal from the Demised Premises, Tenant shall have no right to remove from

the Demised Premises any of Tenant's Property and/or Leasehold Improvements upon

and during the continuation of any default by Tenant under this Lease.

<PAGE>

6.12 Landlord's Right to Perform Tenant's Duties. In the event that

--------------------------------------------

repairs required to be made by Tenant pursuant to this Lease become necessary by

reason of Tenant's failure to maintain the Demised Premises, Tenant's Property

and Leasehold Improvements in good order and condition and in compliance with

all applicable laws, orders and regulations, Landlord may, but shall not be

obligated to, make repairs at Tenant's expense. Within ten (10) days after

Landlord renders a bill for the cost of said repairs, Tenant shall reimburse

Landlord. Tenant shall only be liable for such repairs in the event Landlord

has taken such action following Tenant's failure to perform same after

expiration of ten days (or more if otherwise provided herein) notice of the

requirement in this Lease for Tenant to perform such work.

 

6.13 Tenant's Right to Cure. If Landlord has not commenced repair or

----------------------

maintenance required to be performed by Landlord hereunder within ten (10) days

after written notice thereof from Tenant, or if so commenced, is not diligently

pursuing same to completion, Tenant shall have the right, but not the

obligation, to make such repairs and Landlord shall reimburse Tenant for the

reasonable cost thereof within ten (10) days after receipt of a bill therefor

from Tenant. In the event of an emergency, Tenant may (but shall not be

obligated to) perform such repairs which would otherwise be Landlord's

obligation hereunder which may be reasonably necessary, after having given

Landlord such notice, if any, as may be practicable under the circumstances.

Notwithstanding anything to the contrary set forth hereinabove, Tenant shall not

be required to perform any repairs which would otherwise be Landlord's

obligation hereunder.

 

7. ACCESS

 

7.1 Landlord's Access. Landlord, Landlord's Agent, and their agents and

------------------

employees, shall have the right to enter the Demised Premises at all reasonable

times and upon reasonable advance written notice to Tenant, except in the event

of emergency when notice shall not be required prior to entry (a) to make

inspections or to make such repairs and maintenance to the Demised Premises or

repairs and maintenance to other premises as Landlord may deem necessary; (b) to

exhibit the Demised Premises to prospective tenants during the last six (6)

months of the Lease Term; and (c) for any purpose whatsoever relating to the

safety, protection or preservation of the persons or property of the other

tenants, the public, the Demised Premises, the Building, the Complex or other

surrounding properties.

 

7.2 Restricted Access. No additional locks, other devices or systems which

------------------

would restrict access to the Demised Premises shall be placed upon any doors

without the prior consent of Landlord. Landlord's consent to installation of

anti-crime warning devices or security systems shall not be unreasonably

withheld delayed or conditioned; provided Landlord shall not be required to give

such consent unless Tenant provides Landlord with a means of access to the

Demised Premises for the purposes outlined in Section 7.1 above. Unless access

to the Demised Premises is provided during the hours when cleaning service is

normally rendered, Landlord shall not be responsible for providing such service

to the Demised Premises or to those portions thereof which are inaccessible

during said hours. Such inability by Landlord to provide cleaning services to

inaccessible areas shall not entitle Tenant to any adjustment in Base Annual

Rent, Additional Rent or other sums due hereunder.

 

7.3 Tenant's Access. Subject to the provisions of Sections 5.2 and 5.5,

----------------

Tenant, its employees and agents shall have access to the Demised Premises

twenty-four (24) hours per day, 365 days per year, and, for the purpose of

access to the Demised Premises only, shall have the right in common with all

other tenants, Landlord and Landlord's agents and employees to use public

corridors, elevators and lobbies. Landlord may at any time and from time to

time during the Lease Term exclude and restrain any person from access, use or

occupancy of any or all mechanical and auxiliary spaces, roofs, public

corridors, elevators and lobbies, excepting, however, Tenant and other tenants

of Landlord and bona fide invitees of either who make use of said public

facilities in accordance with the rules and regulations established by Landlord

from time to time with respect thereto. Landlord may at any time and from time

to time close all or any portion of said public facilities to make repairs or

changes, to prevent a dedication to any person or the public, and to do and

perform such other acts in and to said public facilities as in the exercise of

good business judgment Landlord shall determine to be advisable. It shall be

the duty of Tenant to keep all of said public facilities free and clear of any

obstructions created or permitted by Tenant or resulting from Tenant's

operation. In order to protect the integrity of telephone service in the

Building, Landlord may, at its option, supervise or restrict Tenant's access to

any or all equipment rooms, inside wire space and/or conduits or the demarcation

point.

 

8. LIABILITY

 

8.1 Tenant's Property. All of Tenant's Property, the Leasehold

------------------

Improvements and the personal property of Tenant's employees, agents,

contractors, visitors and invitees in the Demised Premises or in the Building

shall be at their sole risk. Landlord, Landlord's Agent, and their respective

agents and employees shall not be liable for any damage to Tenant's Property,

the Leasehold Improvements or the property of Tenant's employees, agents,

contractors, visitors and invitees unless resulting from acts or omissions of

Landlord, its agents, contractors or employees or any third party, including but

not limited to, cleaning, maintenance, repair and other contractors who do work

in the Building or the Demised Premises or render services to Landlord,

Landlord's Agent, and their

<PAGE>

respective agents and employees or other tenants. Tenant hereby expressly

releases Landlord, Landlord's Agent and their respective agents and employees

from any liability incurred or claimed by reasonable damage to Tenant's Property

and the Leasehold Improvements with respect to any claims for damage or loss to

Tenant's Property and/or the Leasehold Improvements, other than those claims

which result by reason of any negligent or willful act or omission of Landlord,

its agents, contractors or employees (such negligent or willful acts being

herein referred to as the "Excluded Claims"). Tenant hereby indemnifies and

holds harmless Landlord, Landlord's Agents and their respective agents and

employees form any liability or claims by reason of damage to the property of

Tenant's employees, agents, contractors, visitors or invitees with the exception

of the Excluded Claims.

 

8.2 Criminal Acts of Third Parties. Landlord, Landlord's Agent and their

-------------------------------

respective agents and employees shall not be liable in any manner to Tenant, its

agents, employees, invitees or visitors for any injury or damage to Tenant,

Tenant's agents, employees, invitees or visitors, or their property, caused by

the criminal or intentional misconduct of third parties or of Tenant, Tenant's

employees, agents, invitees or visitors on or about the Demised Premises,

Building and/or Complex (including any parking garages and parking areas). With

the exception of the Excluded Claims, all claims against Landlord, Landlord's

Agent and their respective agents and employees for any such damage or injury

are hereby expressly waived by Tenant, and Tenant hereby agrees to hold

harmless, defend and indemnify Landlord, Landlord's Agents, their respective

agents and employee from all such claims (other than the Excluded Claims) and/or

damages and the expenses of defending all claims (other than the Excluded

Claims) made by Tenant's employees, agents, invitees or visitors arising out of

such acts.

 

8.3 Public Liability. With the exception of the Excluded Claims, Landlord,

-----------------

Landlord's Agent and their respective agents and employees assume no liability

or responsibility whatsoever with respect to the conduct and operation of the

business to be conducted upon the Demised Premises. Landlord, Landlord's Agent

and their respective agents and employees shall not be liable for any accident

or injury to any person or persons or property in or about the Demised Premises

which are caused by the conduct and operation of said business or by virtue of

equipment or property of Tenant in said Demised Premises. Tenant agrees to hold

Landlord, Landlord's Agent and their respective agents and employees harmless

against all such claims (other than the Excluded Claims), and indemnify and

defend Landlord, Landlord's Agent and their respective agents and employees from

all injuries and damages and the reasonable expenses of defending such claims

(other than the Excluded Claims).

 

8.4 Construction on Contiguous Property. Landlord, Landlord's Agent and

------------------------------------

their respective agents and employees shall not be liable for damages, nor shall

this Lease or any Base Annual Rent, Additional Rent or other sums due hereunder

be affected, for conditions arising or resulting from construction by third

parties within or around the Demised Premises or Building or on contiguous or

neighboring properties and which affect the Building and/or the Demised

Premises.

 

8.5 Tenant Insurance.

-----------------

 

(a) Liability Insurance. During the Lease Term, Tenant at its sole cost

--------------------

shall maintain public liability and property damage insurance which includes

coverage for personal injury and death, property damage, advertising injury,

completed operations and products coverage, and shall further maintain

comprehensive automobile liability insurance covering automobiles owned by

Tenant, with at least a single combined liability and property damage limit of

$3,000,000.00 insuring against all liability of Tenant and its authorized

representatives arising out of or in connection with Tenant's use or occupancy

of the Demised Premises and the business conducted therein. Landlord and

Landlord's Agent shall be named as additional insureds. All public liability

insurance and property damage insurance shall insure Landlord and Landlord's

Agent with coverage no less in scope than that necessary to meet Tenant's

obligations outlined in Sections 8.1, 8.2 and 8.3 and elsewhere in this Lease.

The policy shall contain an assumed contractual liability endorsement that

refers expressly to this Lease.

 

(b) Fire and Casualty Insurance. During the Lease Term, Tenant at its cost

----------------------------

shall maintain fire and extended coverage insurance on all special or above

building standard work (as defined in Exhibit B, if applicable), all alterations

and all other contents of the Demised Premises, including any Leasehold

Improvements and Tenant's Property, in an amount sufficient so that no

coinsurance penalty will be applied in case of loss.

 

(c) Increases in Coverage. Tenant shall increase its insurance coverage as

----------------------

required if in the reasonable opinion of the mortgagee on the Building, Landlord

or Landlord's insurance agent such insurance coverage at that time is not

adequate.

 

(d) Policy Requirements. All insurance required under this Lease shall be

-------------------

issued by insurance companies authorized to do business in the jurisdiction

where the Building is located. Such companies shall have a policyholder rating

of at least "A" and assigned a financial size category of at least "Class X" as

rated in the most recent edition of "Best's Key Rating Guide" for insurance

companies. If at any time during the Lease Term the rating of any of Tenant's

insurance carriers is reduced below the rating required pursuant to the terms

hereof, Tenant shall promptly replace the insurance coverage(s) maintained with

such carrier with coverage(s) from a carrier whose rating complies with the

foregoing requirements. If the Best's Key Rating Guide is discontinued or

revised without substitution of a comparable rating system, Landlord shall

reasonably determine its satisfaction with the insurance company issuing

Tenant's policies. Each policy shall contain an endorsement requiring thirty

(30) days written notice from the insurance company to Landlord before

cancellation or any change decreasing coverage, scope or amount of such policy

and an endorsement naming Landlord and Landlord's Agent as additional insureds.

Each policy, or a certified copy of the policy, and a certificate showing it is

in effect, together with evidence of payment of premiums, shall be deposited

with Landlord at the commencement of the Lease Term and thereafter upon any

policy changes or substitutions, and renewal certificates and copies of renewal

policies shall be delivered to Landlord at least thirty (30) days prior to the

expiration date of any policy.

<PAGE>

(e) No Limitation of Liability. Notwithstanding the fact that any

---------------------------

liability of Tenant to Landlord may be covered by Tenant's insurance, Tenant's

liability shall in no way be limited by the amount of its insurance recovery or

the amount of insurance in force or required by any provisions of this Lease.

 

(f) Waiver of Subrogation. Notwithstanding anything to the contrary

----------------------

contained herein, Landlord and Tenant hereby mutually waive and release their

respective rights of recovery against each other for any loss of its property

(in excess of a reasonable deductible amount) capable of being insured against

by fire and extended coverage insurance or any insurance policy providing

property damage coverage, whether carried or not. Each party shall apply to its

insurer to obtain said waiver and obtain any special endorsement, if required by

its insurer to evidence compliance with the aforementioned waiver, and shall

bear the cost therefor.

 

(g) Business Interruption. Landlord, Landlord's Agent and their

----------------------

respective agents and employees shall have no liability or responsibility for

any loss, cost, damage or expense arising out of or due to any interruption of

business regardless of the cause therefor), increased or additional cost of

operation of their business or other costs or expenses, whether similar or

dissimilar, which are capable of being insured against under business

interruption insurance, whether or not carried by Tenant.

 

8.6 Incident Reports. Tenant shall promptly report to Landlord's Agent all

-----------------

accidents and incidents actually known by officers of Tenant occurring on or

about the Demised Premises which involve or relate to the security and safety of

persons and/or property. Tenant also agrees that it shall use reasonable

efforts to notify Landlord of any other similar incidents actually known by

Tenant's President affecting portions of the Building beyond the Demised

Premises, but Tenant shall have no liability or responsibility to either

Landlord or any third party by reason of Tenant's failure to notify Landlord of

any such incident.

 

9. DAMAGE

 

9.1 Damages Caused by Tenant. Subject to the provisions of Sections 8.5(f)

-------------------------

and 9.2, in the event of damage to the Demised Premises or other portions of the

Building caused by the acts or omissions of Tenant, its agents or employees,

Landlord may, but shall not be obligated to, repair such damage at the expense

of Tenant, or, at Landlord's option, such damages shall be repaired by Tenant,

at Tenant's expense, with Landlord's approval in accordance with Section 6.4.

At Landlord's option, Tenant shall either (a) pay to Landlord the estimated cost

of such repairs and/or maintenance within ten (10) days of Tenant's receipt of

Landlord's estimate, or (b) upon completion of such repairs and/or maintenance

by Landlord, pay to Landlord the actual cost of such repairs and/or maintenance

(or the difference between the actual cost and the estimated costs previously

paid by Tenant) within ten (10) days of receipt of invoice from Landlord.

Landlord's recovery shall not be limited to the diminution in the value of the

Demised Premises or leasehold notwithstanding that such repairs and maintenance

may occur prior to the expiration of the Lease Term. All such costs shall be

deemed Additional Rent. This provision shall be construed as an additional

remedy granted to Landlord and not in limitation of any other rights and

remedies which Landlord has or may have in said circumstances.

 

9.2 Fire or Casualty Damage. In the event of damage or destruction of

------------------------

the Demised Premises or a portion thereof by fire or any other casualty not due

to the acts or omissions of Tenant, its agents, employees, invitees or visitors,

then, except as otherwise provided in Section 9.3, this Lease shall not be

terminated, but structural damage to the Demised Premises, including demising

partitions and doors, shall be promptly and fully repaired and restored as the

case may be by Landlord at its own cost and expense. Due allowance, however,

shall be given for reasonable time required for adjustment and settlement of

insurance claims, for such other delays as may result from government

restrictions and controls on construction, if any, and for strikes, national

emergencies and other conditions beyond the control of Landlord. Restoration

by Landlord shall not include replacement of Tenant's Property but shall include

restoration of the Demised Premises including also all Construction

Improvements. Tenant shall, at its expense, repair, restore and replace Tenant

Property and all elements of the Demised Premises excluded from the scope of

Landlord's duty to restore pursuant to this Section 9.2. Tenant's restoration,

replacement and repair work shall comply with Section 6 hereof and Tenant shall

maintain adequate insurance on all such replacements, restoration and property

pursuant to Section 8.5 hereof. In the event of fire or casualty damage to the

Demised Premises caused by the fault, act or omission or neglect of Tenant, its

agents, employees, invitees or visitors, Landlord may, but shall not be

obligated to, restore all or any portion of the damage described herein (which

may or may not include the Demised Premises). It is agreed that in any of the

aforesaid events, this Lease shall continue in full force and effect.

 

9.3 Untenantability.

----------------

 

(a) Restoration Requirements.

-------------------------

 

(i) If the condition referred to in Section 9.2 is such that the Demised

Premises are partially damaged or destroyed and provided that the condition was

not due to the acts or omissions of Tenant, its agents, employees, invitees or

visitors, then during the period that Tenant is deprived of the use of the

damaged portion of the Demised Premises, Tenant shall be required to pay Base

Annual Rent and Additional Rent covering only that part of the Demised Premises

that Tenant is able to occupy, based on the ratio between the square foot area

remaining that can be occupied for the conduct of business in Tenants'

reasonable discretion and the total square foot area of the entire Demised

Premises covered by this Lease. Any unpaid or prepaid installment of Base

Annual Rent and Additional Rent for the month in which the condition referred to

in Section 9.2 occurs shall be prorated.

<PAGE>

(ii) (1) If the condition referred to in Section 9.2 is such so as to

make the entire Demised Premises untenantable and provided that the condition

was not due to the acts or omissions of Tenant, its agents, employees, invitees

or visitors, then, subject to the rights set forth in Section 9.3(a)(ii)(2)

below, the installment(s) of Base Annual Rent and Additional Rent which Tenant

is obligated to pay hereunder shall abate as of the date of the occurrence until

the first to occur of either (x) expiration of thirty days following the date

that the restoration of the Demised Premises has been substantially completed by

Landlord to the extent of Landlord's obligations as described in Section 9.1 or

(y) commencement by Tenant of beneficial use and occupancy for conduct of

business within the damaged portion. Any unpaid or prepaid installment of Base

Annual Rent and Additional Rent for the month in which the condition referred to

in Section 9.2 occurs shall be prorated.

 

(2) In the event (x) the Demised Premises are substantially or totally

destroyed by fire or other casualty so as to be entirely untenantable, (y) a

substantial portion of the Building is destroyed or damaged to such an extent

that, in the sole judgment of Landlord, the Building cannot be operated as a

functional unit or an economically viable unit, or (z) the damage to the Demised

Premises and/or the Building is due to an uninsured risk or insurance proceeds

are otherwise unavailable to cover the expenses of restoration or repair of the

damage (less any applicable deductible), then Landlord or Tenant shall have the

unconditional right to cancel this Lease in its sole discretion, in which case

Base Annual Rent and Additional Rent shall be apportioned and paid to the date

of said fire or other casualty. If Landlord elects not to cancel this Lease,

then Landlord shall determine and notify Tenant in writing, within sixty (60)

days following the fire or other casualty, provided that Landlord shall also

cancel the Leases of all similarly situated tenants in the Building, of the date

by which the Demised Premises can be restored by Landlord in accordance with the

provisions of Section 9.1. If the date determined by Landlord as aforesaid for

completion of restoration of the Demised Premises is more than one hundred

twenty (120) days after such fire or other casualty, then Tenant shall have the

right, to be exercised by giving written notice to Landlord within ten (10) days

following receipt of such notice from Landlord, to cancel and terminate this

Lease. In the event the date by which Landlord determines it can complete

restoration of the Demised Premises as herein provided is less than 120 days

following such fire or other casualty, or Tenant fails to terminate this Lease

as herein provided following notification from Landlord that completion of

restoration will require more than 120 days, then this Lease shall remain in

full force and effect and Landlord shall commence restoration of the Demised

Premises to the extent of Landlord's obligations as described in Section 9.2.

Due allowance, however, shall be given for reasonable time required for

adjustment and settlement of insurance claims, for Landlord to reasonably be

able to determine the time necessary for completion of the restoration and for

other such delays as may result from government restrictions and controls on

construction, if any, and for strikes, national emergencies and other conditions

beyond the control of Landlord. Any delays as a result of the foregoing shall

operate to postpone Landlord's obligation to complete restoration of the Demised

Premises by one day for each day of any such delay. Tenant shall commence any

restoration to be performed by Tenant as required in Section 9.2 and Tenant

shall reoccupy the Demised Premises when restored.

 

(iii) Except as expressly provided in this Section 9.3, no

compensation, or claim, or diminution of Base Annual Rent or Additional Rent

will be allowed or paid by Landlord, by reason of inconvenience, annoyance, or

injury to business, arising from any fire or other casualty suffered by Tenant

or the necessity of repairing or restoring the Demised Premises or any portion

of the Building.

 

(b) Casualty Near Expiration of Lease Term. In addition to any other right

---------------------------------------

of Landlord or Tenant to terminate this Lease pursuant to the provisions of this

Section 9, in the event the Demised Premises are damaged in whole or in part by

fire or other casualty during the last twelve (12) months of the Lease Term,

then Landlord or Tenant, upon ten (10) days prior written notice to the other

given within sixty (60) days of the date of the fire or casualty, may terminate

this Lease, in which case the Base Annual Rent and Additional Rent shall be

apportioned and paid to the date of said fire or other casualty.

 

10. CONDEMNATION

 

10.1 Landlord's Right to Award. Tenant agrees that if any of the Demised

--------------------------

Premises or the Building shall be taken or condemned for public or quasi-public

use or purpose by any competent authority, Tenant shall have no claim against

Landlord and shall not have any claim or right to any portion of the amount that

may be awarded as damages or paid as a result of any such condemnation. All

rights of Tenant to damages therefor, if any, are hereby assigned by Tenant to

Landlord. Upon such condemnation or taking, the Lease Term shall cease and

terminate from the date of such governmental taking or condemnation. If (a) the

whole or a substantial part of the Demised Premises of the Building is taken or

condemned or if (b) less than a substantial portion of the Building or the

Demised Premises is taken or condemned and the remainder of either in Landlord's

opinion can not be operated as a functional unit or as an economically viable

unit, Landlord shall notify Tenant of the termination of this Lease effective as

of the date of such governmental taking or condemnation. In the event of any

termination of this Lease by reason of any taking or condemnation, Tenant shall

have no claim against Landlord or Landlord's Agent for the value of any

unexpired portion of the Lease Term. If less than a substantial part of the

Demised Premises or of the Building is taken or condemned by any governmental

authority for public or quasi-public use or purpose and the remainder of both,

in Landlord's opinion, can be operated as a functional unit or as an

economically viable unit, the rent shall be equitably adjusted on the date when

title vests in such governmental authority and the Lease shall otherwise

continue in full force and effect. For the purposes of this Section 10, a

substantial part of the Demised Premises shall be considered to have been taken

if more than fifty percent (50%) of the Demised Premises are unusable by Tenant.

 

10.2 Tenant's Right to File Claim. Nothing in Section 10.1 shall preclude

-----------------------------

Tenant from filing a separate claim against the condemning authority for the

value of its Leasehold Improvements not then depreciated (excluding those

<PAGE>

Leasehold Improvements paid for by Landlord) and relocation expenses, provided

that any award to Tenant will not result in a diminution of any award to

Landlord.

 

11. BANKRUPTCY

 

11.1 Events of Bankruptcy. The following shall be Events of Bankruptcy

---------------------

under this Lease:

 

(a) Tenant's becoming insolvent, as that term is defined in Title 11 of the

United States Code, entitled Bankruptcy, 11 U.S.C. Sec. 101 et seq. (the

"Bankruptcy Code"), or under the insolvency laws of any State, District,

Commonwealth or Territory of the United States ("Insolvency Laws");

 

(b) The appointment of a receiver or custodian for any or all of Tenant's

Property or assets, or the institution of a foreclosure action upon any of

Tenant's real or personal property;

 

(c) The filing of a voluntary petition under the provisions of the

Bankruptcy Code or Insolvency Laws;

 

(d) The filing of an involuntary petition against Tenant as the subject

debtor under the Bankruptcy Code or Insolvency Laws, which is either not

dismissed within sixty (60) days of filing, or results in the issuance of an

order for relief against the debtor, whichever is earlier; or

 

(e) Tenant's making or consenting to an assignment for the benefit of

creditors or a common law composition of creditors.

 

11.2 Landlord's Remedies.

--------------------

 

(a) Termination of Lease. Upon occurrence of an Event of Bankruptcy,

---------------------

Landlord shall have the right to terminate this Lease by giving written notice

to Tenant; provided, however, that this right to terminate shall have no effect

while a case in which Tenant is the subject debtor under the Bankruptcy Code is

pending, unless Tenant or its Trustee is unable to comply with the provisions of

Sections 11.2(d) and (e) below. At all other times this Lease shall

automatically cease and terminate, and Tenant shall be immediately obligated to

quit the Demised Premises upon the giving of notice pursuant to this Section

11.2(a). Any other notice to quit, or notice of Landlord's intention to re-

enter is hereby expressly waived. If Landlord elects to terminate this Lease,

everything contained in this Lease on the part of Landlord to be done and

performed shall cease without prejudice, subject, however, to the rights of

Landlord to recover from Tenant all Base Annual Rent and Additional Rent and any

other sums accrued up to the time of termination or recovery of possession by

Landlord, whichever is later, and any other monetary damages sustained by

Landlord.

 

(b) Suit for Possession. Upon termination of this Lease pursuant to

--------------------

Section 11.2(a), Landlord may proceed to recover possession of the Demised

Premises under and by virtue of the provisions of the laws of any applicable

jurisdiction, or by such other proceedings, including reentry and possession, as

may be applicable, or by direct order from any Court having jurisdiction over

Tenant/Debtor, including any Bankruptcy Court.

 

(c) Non-Exclusive Remedies. Without regard to any action by Landlord as

-----------------------

authorized by Sections 11.2(a) and (b) above, Landlord may at its discretion

exercise all the additional provisions set forth below in Section 12.

 

(d) Assumption or Assignment by Trustee. In the event Tenant becomes the

------------------------------------

subject debtor in a case pending under the Bankruptcy Code, Landlord's right to

terminate this Lease pursuant to Section 11.2(a) shall be subject to the rights

of the Trustee in Bankruptcy to assume or assign this Lease. In addition to all

other objections Landlord may raise to assumption and/or assignment, and in

addition to all other requirements of any Bankruptcy Court and the Bankruptcy

Code, the Trustee shall not have the right to assume or assign this Lease unless

the Trustee (i) has timely performed all Lease obligations of the Tenant/Debtor

arising from and after the filing of any voluntary bankruptcy petition by Tenant

or, in the case of an involuntary petition, the date of entry of the Order for

Relief, (ii) promptly cures all defaults under this Lease, (iii) promptly

compensates Landlord for monetary damages incurred as a result of such default,

and (iv) provides adequate assurance of future performance on the part of Tenant

or on the part of the assignee of Tenant or the Trustee.

 

(e) Adequate Assurance of Future Performance. Landlord and Tenant hereby

-----------------------------------------

agree in advance that adequate assurance of future performance, as that term is

used in Section 11.2(d) above, shall mean that all of the following minimum

criteria must be met: (i) Tenant's gross revenues in the ordinary course of

business during the thirty (30) day period immediately preceding the initiation

of the case under the Bankruptcy Code must be at least two (2) times greater

than the next installment of Base Annual Rent and Additional Rent due under this

Lease; (ii) both the average and median of Tenant's gross revenues in the

ordinary course of business during the six (6) month period immediately

preceding the initiation of the case under the Bankruptcy Code must be at least

two (2) times greater than the next six (6) installments of Base Annual Rent and

Additional Rent due under this Lease; (iii) Tenant must pay (and continue to pay

on a timely basis throughout the Lease Term) Base Annual Rent, Additional Rent

and all other sums payable by Tenant hereunder in advance and as a condition

precedent to the performance of Landlord's obligations hereunder; (iv) the

Trustee must agree that Tenant's business shall be conducted in a first class

manner, and that no liquidating sales, auctions, or other non-first class

business operations shall be conducted on or about the Demised Premises,

Building and/or Complex; (v) the Trustee must agree that the use of the Demised

Premises as stated in this Lease will remain unchanged and that no prohibited

use shall be permitted; and

<PAGE>

(vi) the Trustee must agree that the assumption or assignment of this Lease will

not violate or affect the rights of other tenants in the Building and/or

Complex.

 

(f) Failure to Provide Adequate Assurance. In the event the Trustee or

--------------------------------------

Tenant is unable to (i) comply with the requirements of Section 11.2(d) above,

or (ii) meet the criteria and obligations imposed by Section 11.2(e) above,

Tenant agrees in advance that it has not met its burden to provide adequate

assurance of future performance, and this Lease may be terminated by Landlord in

accordance with Section 11.2(a) above.

 

11.3 Guarantors. For purposes of this Section 11, any action or

-----------

adjudication by or on behalf of, or against, or with respect to the property or

affairs of, any guarantor or guarantors (if any) of this Lease, or any of them,

which, if taken by, against or with respect to Tenant, Tenant's Property or

affairs, would entitle Landlord to exercise any remedy specified herein, may be

treated, at Landlord's sole option and discretion, as though it were taken by,

against or with respect to the Tenant.