LEASE

AGREEMENT

SMALLWOOD VILLAGE ASSOCIATES

LANDLORD

and

INTERSTATE GENERAL COMPANY LP

TENANT

for

SUITE 211A

 

 

 

 

 

 

 

 

 

 

INDEX

Article

 

Title

Page

 

1

 

Demised Premises

1

 

2

 

Ingress and Parking

1

 

3

 

Tenant Pans

1

 

4

 

Lease Term

1

 

5

 

Fixed Minimum Rent

1

 

6

 

Percentage Rent

1

 

7

 

Deposit

2

 

8

 

Gross Sales Report

2

 

9

 

Audit

2

 

10

 

Definition of Gross Sales

2

 

11

 

Taxes and Assessments

2

 

12

 

Laws and Ordinances

3

 

13

 

Furniture and Fixtures

4

 

14

 

Repairs

4

 

15

 

Alterations

4

 

16

 

Damage

4

 

17

 

Eminent Domain

5

 

18

 

Roof Rights

5

 

19

 

Store Purpose

5

 

20

 

Signs

6

 

21

 

Hours of Lighting

6

 

22

 

Parking and Common Use Areas

6

 

23

 

Utilities: General

7

 

24

 

Utilities: Separate Meter

7

 

25

 

Trash

7

 

26

 

Keep Clean

8

 

27

 

Hold Harmless

8

 

28

 

Property at Tenant's Risk

8

 

29

 

Insurance Risk

8

 

30

 

Landlord Access

8

 

31

 

Bankruptcy

8

 

32

 

Repossession

9

 

33

 

Reletting

10

 

34

 

Hold-Over

11

 

35

 

Rental Sign

11

 

36

 

Subordination

11

 

37

 

Notices

11

 

38

 

Assigns and Successors

11

 

39

 

Subletting and Assignment

11

 

40

 

Not Partners

12

 

41

 

Promotional Service

12

 

42

 

Continuous Occupancy

12

 

43

 

Maintenance and Operation of Common Areas

13

 

44

 

Cost of Maintenance and Operation of Common Areas

13

 

45

 

Insurance

13

 

46

 

Additional Rent

14

 

47

 

Quiet Enjoyment

14

 

48

 

Transfer of Landlord's Interest

14

 

49

 

No Waiver

14

 

50

 

Partial Invalidity

14

 

51

 

Rules and Regulations

14

 

52

 

Applicable Law

15

 

53

 

Captions and Headings

15

 

54

 

Joint and Several Liability

15

 

55

 

Modification

15

 

56

 

No Discrimination

15

 

57

 

Delay

15

 

58

 

Store Front

15

 

59

 

Estoppel Certificates

15

 

60

 

Outparcel

15

 

61

 

Waiver of Jury Trial

15

 

62

 

No Option

16

 

63

 

Security Deposit

16

 

64

 

Broker's Commission

16

 

65

 

Master Lease/Addenda

16

 

66

 

Landlord's Right to Change or Alter Stores or Shopping Center

16

 

67

 

Late Charges

16

 

68

 

Subordination

16

 

69

 

Right of First Offer

17

 

70

 

Right to Terminate Lease

17

 

 

LEASE

THIS LEASE, made this 24th day of October, 2000, by and between, Smallwood
Village Associates, LP a Maryland Limited Partnership, 222 Smallwood Village
Center, St. Charles, Maryland 20602, hereinafter designated "Landlord," and
Interstate General Company, LP, hereinafter designated "Tenant".

WITNESSETH:

DEMISED PREMISES.

1. In consideration of all Tenant's undertakings hereinafter set forth,

including payment of rent as hereinafter specified. Landlord hereby leases to
Tenant the building area located in a shopping center development known as 211A
Smallwood Village Center, St. Charles, Maryland containing approximately 2,123
square feet (including storage area)(see attached rent calculation marked
Exhibit A).

   

INGRESS & PARKING

2. Together with the building herein demised. The Landlord grants to

the Tenant a right of ingress and egress and free parking of vehicles of the
Tenant's invitees in the parking areas, and including a right for ingress and
egress to and from the adjoining public streets, highways and/or service area.

   

FIT UP REQUIREMENTS

3. The premises are taken as is.

   

LEASE TERM

4a. The term of this Lease shall commence on the date hereof and

shall end five (5) years after the "Rent Commencement Date", as hereafter
defined. The "Rent Commencement Date" shall be the first day of September 2000.

   

FIXED MINIMUM RENT

5. Commencing with the Rent Commencement Date, Tenant shall

pay as fixed minimum annual rental for the premises the sum of Fifteen thousand
nine hundred nine and 50/100 dollars ($15,909.50) per annum, payable in equal
monthly installments of One thousand three hundred twenty five and 79/100
dollars ($1,325.79) each. All such monthly installments of the fixed minimum
rental shall be payable to Landlord, in addition, without previous notice or
demand herefore, and without diminution, counterclaim, deduction or set-off
whatsoever, with the first monthly installment to be due and payable upon
execution hereof, and each subsequent monthly installment to be due and payable
on the first day of each and every month following the Rent Commencement Date
during the term hereof. If the Rent Commencement Date is a date other than the
first day of a month, rent for the period commencing with and including the Rent
Commencement Date until the first day of the following month shall be prorated
at the rate of one-thirtieth (1/30th) of the fixed monthly rental.

   

PERCENTAGE RENT

6(a). Intentionally left blank.

     

6(b). Intentionally left blank.

     

6(c). Intentionally left blank.

     

6(d). Intentionally left blank.

     

6(e). At the expiration of said lease year, the Fixed Minimum Annual

Rental herein provided for shall be adjusted by the Consumer Price Index as
defined in Article 6(f). Any such adjustment shall be accomplished by
multiplying the Fixed Minimum Annual Rental then in effect by a fraction, the
numerator of which shall be the Consumer Price Index as of the most recent date
prior to the date of such adjustment, and the denominator of which shall be the
Consumer Price Index as of the date nearest the beginning of such lease year
(but in no event shall the Fixed Minimum Annual Rent be reduced as a result of
any such adjustment below the Fixed Minimum Annual Rent specified in Article 5
hereof), and the increased Fixed Minimum Annual Rental thereby established shall
continue in effect as the Fixed Minimum Annual Rental until again adjusted as
herein provided. The term "sufficient percentage rental" as used herein is
defined as such Percentage Rent for any lease year, whether or not actually paid
or payable, which, when added to the Fixed Minimum Annual Rental set forth in
Article 5 would equal or exceed such Fixed Minimum Annual Rental if adjusted to
the Consumer Price Index (applied as aforesaid) at the end of such lease year to
reflect changes therein since the beginning of such lease year. For example, if
the Consumer Price Index increases by 4% in the first lease year, then
"sufficient percentage rental" for that lease year would be an amount equal to
or in excess of 4% of the Fixed Minimum Annual Rental. If the Fixed Minimum
Annual Rental set forth in Article 5, or otherwise in this lease shall provide
for different fixed sums to be paid during certain lease years, or portions
thereof (other than as may result from the application of this Section 6(e)
hereof), then in each and every instance that the Fixed Minimum Annual Rental
shall be adjusted pursuant to this Section 6(e), all other fixed sums payable as
Fixed Minimum Annual Rental at some future time thereafter shall likewise be
adjusted in the same proportion.

     

6(f). For all purposes of the Lease Agreement, the "Consumer Price

Index" is hereby defined to be the index for the Washington,
D.C.-Maryland-Virginia area, now known as the United States Bureau of Labor
Statistics, Consumer Price Index, for Urban Wage Earners and Clerical Workers
(revised) - U.S. City Average, and selected areas (1982/84 =100) all items; and
if the Consumer Price Index shall be discontinued or altered, then any successor
Consumer Price Index of the United States Bureau of Labor Statistics or
successor agency thereto, for the Washington, D.C. Metropolitan area, shall be
used, and if there is no such successor Consumer Price Index, Landlord and
Tenant shall attempt to agree upon a substitute index or formula, and if said
parties are not able to agree upon such substitute, the matter shall be referred
to binding arbitration in accordance with the rules of the American Arbitration
Association in the State of Maryland then prevailing.

     

6(g). No payment by Tenant or receipt by Landlord of a lesser

amount than the monthly installment of rent or other charges herein stipulated
shall be deemed to be other than on account of the earliest stipulated rent or
other charges, nor shall any endorsement or statement of any check or any letter
accompanying any check or payment as rent be deemed an accord and satisfaction,
and Landlord may accept such check for payment without prejudice to Landlord's
right to recover the balance of such rent or pursue any other remedy in this
lease provided.

     

6(h). The Tenant also agrees to pay and the Landlord agrees to accept

as additional rental for each lease year of the term the Tenant's proportionate
share of any real estate or other taxes as defined in Article 11 and the
Tenant's proportionate share of the cost of maintenance and operation of common
areas as defined in Article 44.

 

DEPOSIT

7. Landlord hereby acknowledges receipt from Tenant of the sum of

N/A

which shall constitute prepayment of the first months' rental.  

GROSS SALES REPORT

8. Intentionally left blank.

   

AUDIT

9. Intentionally left blank.

   

DEFINITION OF GROSS SALES

10. Intentionally left blank.

   

TAXES AND ASSESSMENTS

11(a). For the purposes of this paragraph, the term "Real Estate

Taxes" means all taxes, rate and assessments, general and special, levied or
imposed with respect to the land, buildings and improvements located or built
within the Shopping Center, including all taxes, rates and assessments, general
and special levied or imposed for school, public betterment, general or local
improvements and operations and taxes imposed in connection with any special
taxing district. If the system of Real Estate Taxation shall be altered or
varied and any new tax or levy shall be levied or imposed on said land,
buildings and improvements, and/or Landlord in substitution for Real Estate
Taxes presently levied or imposed on immovable in the jurisdiction where the
demised premises is located, then any such new tax or levy shall be included
within the term "Real Estate Taxes." Should any governmental taxing authority
acting under any regulation, levy, assess, or impose a tax, excise and/or
assessment, however described (other than an income or franchise tax) upon,
against, on account of, or measured by, in whole or in part, the rent expressly
reserved hereunder, or upon the rent expressly reserved under any other leases
or leasehold interest in the Shopping Center, as a substitute (in whole or in
part) or in addition to any existing Real Estate Taxes on land and buildings and
otherwise, such tax or excise on rents shall be included within the term "Real
Estate Taxes."

     

11(b). The term "Base Year" means the 2000 real estate tax year.

The term "Real Estate Tax Year" means each successive twelve (12) month period
following and corresponding to the Base Year, irrespective of the period or
periods which may from time-to-time in the future be established by competent
authority for the purposes of levying or imposing Real Estate Taxes.

   

11(c). Each Real Estate Tax Year after the Base Year, Tenant shall

pay to Landlord within ten (10) days after demand in writing thereof
(accompanied by a statement showing the computation of same) as additional rent
and in addition to Fixed Minimum Rental, Percentage Rent and all other payments
provided for herein, Tenant's Percentage Share (hereafter defined) of the amount
by which (i) the Real Estate Taxes for such tax year exceed (ii) the Real Estate
Taxes for the Base Year. The term "Tenant's Percentage Share," for all purposes
of this Lease, is hereby defined to be that percentage representing the
proportion that the total gross rentable square feet contained within the leased
premises bears to the total gross rentable square feet contained within the
Shopping Center.

   

11(d). Reasonable expenses, consisting of attorneys' fees, expert

witness fees and similar costs, incurred by Landlord in obtaining or attempting
to obtain a reduction of any Real Estate Taxes shall be added to and included in
the amount of any such Real Estate Taxes. Real Estate Taxes which are being
contested by Landlord shall nevertheless be included for purposes of the
computation of the liability of Tenant under the above paragraph, provided,
however, that in the event that Tenant shall have paid any amount of increased
rent pursuant to this Article 11 and the Landlord shall thereafter receive a
refund of any portion of any Real Estate Taxes on which such payment shall have
been based, Landlord shall pay to Tenant the appropriate portion of such refund.
Landlord shall have no obligation to contest, object or litigate the levying or
imposition of any Real Estate Taxes and may settle, compromise, consent to,
waive or otherwise determine in its discretion to abandon any contest with
respect to the amount of any Real Estate Taxes without consent or approval of
the Tenant.

   

Nothing contained in this section shall be construed at any time to

reduce the monthly installments of rent payable hereunder below the amount
specified in Articles 5 and 6 of this Lease.

   

If the termination date of this Lease shall not coincide with the end

of a Real Estate Tax fiscal year, then in computing the amount payable under
this Article 11 for the period between the commencement of the applicable Real
Estate Tax fiscal year in question and the termination date of this Lease,
Tenant's Percentage Share of the Real Estate Taxes for the applicable Real
Estate Tax fiscal year shall be equitably apportioned (on a per diem basis) so
that Tenant shall pay only such portion of such Real Estate Taxes as is
attributable to the portion of such Real Estate Tax fiscal year occurring during
the term of this Lease. Tenant's obligation to pay Real Estate Taxes under this
Article 11 for the final period of the Lease shall survive the expiration of the
term of this Lease.

   

A tax bill or true copy thereof, together with any explanatory

statement of the area or property covered thereby submitted by Landlord to
Tenant shall be conclusive evidence of the amount of taxes assessed or levied,
as well as of the items taxes. If any real property tax or assessment levied
against the land, building or improvements covered hereby or the rents reserved
therefrom, shall be evidenced by improvement bonds or other bonds, or in any
other form, which may be paid in annual installments, only the amount paid or
payable in any real estate tax fiscal year shall be included as Real Estate
Taxes for that real estate tax year for the purposes of this Article 11.

 

LAWS AND ORDINANCES

12. At the time when Landlord tenders possession, in accordance

with its obligations under this Lease, to Tenant, Landlord shall certify in
writing that said premises and all of the work Landlord has performed therein is
in accordance with all state, county, and municipal building and safety
requirements. From that point forward, Tenant will, at its own costs, promptly
comply with and carry out all orders, requirements or conditions now or
hereafter imposed upon it by the ordinances, laws and/or regulations of the
municipality, county and/or state in which the premises are located, whether
required of the Landlord or otherwise, in the conduct of Tenant's business,
except that Landlord shall comply with any orders affecting structural walls and
columns unless due to Tenant's particular business or use of the premises.
Tenant will indemnify and save Landlord harmless from all penalties, claims, and
demands resulting from Tenant's failure or negligence in this respect.

 

FURNITURE AND FIXTURES

13. Tenant shall have the privilege of installing, subject to the

written approval of the Landlord which shall not be unreasonably withheld, any
furniture, fixtures and machinery necessary to the conduct of its business and
the same shall remain the property of the Tenant, provided they be removed by
the Tenant before the expiration of its tenancy, and further provided that in
the event any damage is done to said premises in the removal of said furniture,
fixtures or machinery, Tenant will promptly reimburse Landlord for the cost of
such repairs as are necessary to restore said premises to their original
condition. In the event of failure of Tenant to remove said furniture, fixtures
and machinery from said premises before expiration of this Lease, it is agreed
that Tenant is abandoning said furniture, fixtures and machinery and same shall
become the property of Landlord, who shall have the right to use, remove or
dispose of said furniture, fixtures and machinery at the Tenant's expense.

 

REPAIRS

14. The Tenant agrees to maintain the premises in good repair

during the term of this Lease, at his own expense, including the floors, walls,
ceiling, inside plumbing, heating, ventilating, air conditioning and other
equipment and fixtures installed by the Landlord. Landlord agrees within a
reasonable time after receipt of written notice from the Tenant to make all
repairs necessary to the structural portion and roof, including gutters and
downspouts of the demised premises. The Tenant also agrees, at his own expense,
to replace all plate glass in the demised premises which shall be damaged or
broken from any cause, except where due to building settlement. The Tenant also
agrees at his own cost and expense to maintain exterior sign face, sign box and
sign lighting. The Tenant also agrees at his own cost and expense to keep in
effect during the term of this Lease and any extension or renewal thereof a full
parts and labor maintenance contract on the heating, ventilating and air
conditioning equipment, servicing the demised premises with a contractor
licensed in this area, approved by the Landlord, which approval shall not be
unreasonably withheld. The Tenant agrees to provide the Landlord with a copy of
this contract upon request.

 

ALTERATIONS

15. Tenant shall not do any construction work or make any

alterations, modifications, or changes to any part of the demised premises
either exterior or interior, without Landlord's written consent which shall not
be unreasonably withheld. Landlord may condition its consent upon Tenant's
delivery to Landlord of a policy or policies of workmen's compensation,
liability and property damage insurance, naming Landlord as additional insured,
in limits and with companies acceptable to the Landlord. In the event of any
such approved work or changes, Tenant shall have all work done at its own
expense. Request for such consent shall be accompanied by plans stating in
detail precisely what is to be done. Tenant and Tenant's contractors (who shall
be licensed) shall comply with the building codes, regulations and laws now or
hereafter to be made or enforced in the municipality, county and/or state in
which said premises are located and which pertain to such work. Any additions,
improvements, alterations and/or installations made by Tenant (except only
movable store and office furniture and fixtures) shall become and remain a part
of the building and be and remain Landlord's property upon the termination of
Tenant's occupancy of said premises; provided, however, that if Landlord gives
written notice to Tenant at the expiration or prior termination of this Lease to
such effect, it may require Tenant to restore said premises to their original
condition. Tenant shall save Landlord harmless from and against all expenses,
liens, claims or damages to either property or person which may or might arise
by reason of the making of any such additions, improvements, alterations and/or
installations.

 

DAMAGE

16. If the demised premises shall be partially or totally damaged or

destroyed by any risk covered by Landlord's insurance as provided for in Article
45(a) of this Lease, then Landlord shall diligently and as soon as practicably
after such damage occurs (taking into account the time necessary to effectuate a
satisfactory settlement with any insurance company, and reasonable delay on
account of "labor troubles" or any other cause beyond Landlord's control) repair
or rebuild the demised premises, provided, however, that in no event shall
Landlord be obligated to expend in such repair or rebuilding any sums in excess
of the amount of insurance proceeds paid to Landlord in connection therewith.
The foregoing notwithstanding, in no event shall Landlord be required to repair,
restore or rebuild any portions of the demised premises constituting a part of
Tenant's leasehold improvements or other tenant work, trade fixtures, equipment
and personal property. If the demised premises are rendered wholly or partially
untenantable by such damage or destruction, and such damage and destruction was
without the fault or neglect of the Tenant, his servants, employees, agents,
visitors or licensees, then the rent payable by Tenant under this Lease during
the period in which the demised premises are so untenantable shall be equitably
abated. Except as set forth in this Article, Landlord shall not be liable for
any damages (including without limitation, business interruption) that may be
suffered by Tenant by reason of any casualty to the demised premises and/or
Landlord's repairing or rebuilding thereof and/or the deprivation of Tenant's
use and possession of the demised premises. All of the foregoing provisions of
this Article 16 notwithstanding, if the demised premises are rendered wholly
untenantable by fire or other cause, and the Landlord shall decide not to
rebuild the same, or if the Shopping Center be so damaged that the Landlord
shall decide to demolish it or not to rebuild it, then, or in any of such
events, the Landlord may, at its option, cancel and terminate this Lease by
giving to the Tenant, within sixty (60) days from the date of such damage,
notice in writing of its intention to cancel this Lease, whereupon the term of
this Lease shall cease and determine upon the tenth day after such notice is
given, and the Tenant shall vacate the demised premises and surrender the same
to the Landlord.

 

EMINENT DOMAIN

17. If the Shopping Center or any part thereof shall be taken by any

governmental or quasi-governmental authority pursuant to the power of eminent
domain or deed in lieu thereof, Tenant agrees to make no claim for compensation
in the proceedings and hereby assigns to Landlord any rights which Tenant may
have to any portion of any award made as a result of such taking, and this Lease
shall terminate as to the portion of the premises taken by the condemning
authority and rental shall be adjusted to such date. The foregoing
notwithstanding, Tenant shall be entitled to claim, prove and receive in the
condemnation proceedings such awards as may be allowed for relocation expenses
and for fixtures and other equipment installed by it which shall not, under the
terms of this Lease, be or become the property of Landlord at the termination
hereof, but only if such awards shall be made by the condemnation court in
addition to and stated separately from the award made by it for the land and the
building or part thereof so taken.

   

If the nature, location or extent of any proposed condemnation

affecting the Shopping Center is such that the Landlord elects in good faith to
demolish all or substantially all of the buildings in the Shopping Center, then
the Landlord may terminate this Lease by giving at least sixty (60) days'
written notice of termination to the Tenant at any time after such condemnation
and this Lease shall terminate on the date specified in such notice.

 

ROOF RIGHTS

18. Landlord shall have the exclusive right to use all or any portion

of the roof of the leased premises for any purposes, and shall have the right to
erect additional stories or other structures over all or any part of said
premises.

 

STORE PURPOSE

19(a). The demised premises shall be used only for the purpose of

office space Tenant shall not use all or any portion of the demised premises for
any other purpose.

   

19(b). Tenant affirmatively agrees and represents that it understands

and accepts the following as terms of this Lease.

   

19(c). The use of the demised premises solely for the above-

mentioned purpose was critical to Landlord's decision to enter into this Lease.
Landlord, in reaching its decision concerning the use of the demised premises,
considered and was influenced by the tenant mix in the Shopping Center and the
socio-economic status of the community in which the demised premises are
located. Such decision by Landlord would not have been made if Tenant intended
to use any portion of the demised premises for any purpose other than that
specified herein.

   

19(d). Landlord is acutely aware of its standing and reputation in the

community, and any use of the demised premises reflects on that standing and
reputation. For this reason also, use of the demised premises was critical to
Landlord's decision to enter into this Lease and to Landlord's continued good
standing and reputation in the community.

   

19(e). No deviation whatsoever from the use specified herein shall

be allowed for any portion of the demised premises without the prior written
consent of Landlord, which consent may be withheld for any reason, or without
reason, in the sole, absolute, and arbitrary discretion of Landlord.

   

19(f). The terms of this Article 19 including, but not limited to, any

questions concerning the use for which all or any portion of the demised
premises are being employed, shall be strictly enforced and any questions
arising hereunder shall be resolved by Landlord in its sole and absolute
discretion.

   

19(g). In addition to the provisions of Article 19(a) and (b) above,

and in no way in limitation thereof, Tenant agrees not to commit waste on the
demised premises and not to use the demised premises for any unlawful purpose,
or in violation of any certificate of occupancy, nor suffer any dangerous
article to be brought on the demised premises unless safeguarded as required by
law. Moreover, no nuisances, public or private, shall be allowed on the demised
premises nor shall any use be allowed which is a source of annoyance or
embarrassment to Landlord or the other Tenants of the Shopping Center, or which
is deemed by Landlord as not in keeping with the character of the neighborhood,
nor shall the demised premises be used for any unlawful, immoral or improper
purpose. Without limiting the generality of the foregoing, in no event shall all
or any portion of the demised premises be used as a so-called "adult bookstore"
selling obscene or pornographic books or magazines, or for the sale of drug
paraphernalia or related items, nor operate in the Demised Premises or in any
part of the Shopping Center any coin or token operated vending machines or
similar device for sale of any merchandise service (including pay lockers, pay
toilets, scales, amusement devices and machines for the sale of beverages,
foods, candy or other commodities) except that one cigarette vending machine may
be installed in the Demised Premises unless otherwise approved by the Landlord
in writing.

   

19(h). In addition to, and not in limitation of, the foregoing

subparagraphs of this Article 19 comply with and observe all restrictive
covenants of record (as outlined in Exhibit "E" attached hereto and hereby made
a part hereof) which affect or are applicable to the Shopping Center and/or the
Demised Premises and/or the common areas, provided the same do not prohibit
Tenant's permitted use of the Demised Premises specified in Section 19 hereof.

 

SIGNS

20. Tenant shall provide one (two in specified locations) signboard,

sign or signs of such size, design and character, and in such location(s) only,
as Landlord shall approve in writing in its sole discretion. Tenant hereby
agrees that such sign shall, unless otherwise expressly permitted, also comply
in all respects with the provisions and requirements of the sign regulations
hereinafter adopted from time to time by Landlord. Tenant shall obtain and pay
for all permits and license's required in connection with such sign and shall be
responsible for the proper installation thereof. It is further understood that
all signs placed by Tenant on the demised premises shall be erected and
maintained in accordance with the County, State and/or other ordinances in force
or effect at the time, and at the sole cost and expense of Tenant. Tenant agrees
to maintain all signs in good condition and repair at all times to the
reasonable satisfaction of Landlord. Except as expressly permitted by Landlord,
no other signs, lights, lettering or other forms of inscription of advertising
of display devices shall be displayed on the exterior of the demised premises or
on or in immediate proximity to the inner or outer face of the show windows,
entrances, doors or transoms nor shall the same be displayed in any other
location within the demised premises from which said signs, lights, or other
forms of inscription or advertising or display devices may readily be seen from
outside the demised premises without prior written approval of Landlord as to
size, material, design and neatness thereof. It is further agreed that Tenant
shall not use sidewalks, parking areas, and alleys for displays, wares, or signs
of any kind. The Landlord shall determine during what hours the Shopping Center
and any signs shall be lit. Any tenant directory provided by Landlord shall be
at the sole cost and expense of Landlord.

 

HOURS OF LIGHTING

21. If requested by Landlord, Tenant shall keep the display

windows in the demised premises well-lighted from dusk until 10:00 p.m., or such
other reasonable time as determined by Landlord, during each and every day.

 

PARKING AND COMMON USE AREAS

22. All automobile parking areas, driveways, and other facilities

furnished by Landlord in or near the Shopping Center, including employee parking
areas, the truckway or truckways, loading docks, package pick-up stations,
pedestrian sidewalks and ramps, landscaped areas, exterior stairways, and other
areas and improvements provided by Landlord for the general use, in common, of
Tenants, their officers, agents, employees, and customers, shall at all times be
subject to the exclusive control and management of the

Landlord, and Landlord shall have the right from time to time to establish,
modify and enforce reasonable rules and regulations with respect to all
facilities and areas, the right to construct, maintain and operate lighting
facilities on all said areas and improvements, the right to change the area,
level, location and arrangement of parking areas and other facilities
hereinabove referred to, and the right to restrict parking by tenants, their
officers, agents and employees to employee parking areas. Landlord shall not,
however, have any duty to police the traffic in the parking areas. However, if a
parking lot attendant be required as determined by the Landlord or by ordinance,
regulation or law, Landlord shall provide same. And the cost of such attendant
shall be considered part of the cost of maintenance and operation of common
areas as provided for in Article 44. The Landlord is obligated to hard surface,
stripe and light the parking areas.

   

Tenant further agrees that its employees will not park their cars or

other vehicles on the streets adjacent to the leased premises, or in the space
provided for public use, but will use such space as Landlord shall designate
from time to time as parking space for the use of Tenants and employees.
Landlord may designate spaces provided for public parking for employee or Tenant
parking at specific times. At Landlord's request, Tenant shall supply Landlord
with the names of all employees assigned to the demised premises, along with the
license number of their respective automobiles or vehicles. In addition, Tenant
agrees to supply Landlord with the license numbers of all vehicles owned or
operated by Tenant.

   

The parties agree that damages will accrue from the breach of the

covenant relating to parking, and that the amount of such damage will be
difficult to establish, and that by reason thereof liquidated damages in the
amount of $10.00 per day, per vehicle, parked in violation of said covenant may
be recovered by Landlord from Tenant, following written notification to Tenant
naming the vehicles in violation.

   

Tenant agrees to prohibit the loading or unloading of delivery vans,

trucks, carts, or vehicles of any sort by, through, into, or from the front door
or doors or the demised premises after 10:00 a.m., during each seven (7) days of
the week; except that retail customers may load or unload into or from the front
door or doors of the demised premises purchases made by said retail customers.

   

The parties agree that damages will accrue from the breach of the

covenant relating to loading or unloading of deliveries and that the amount of
such damage will be difficult to establish; that by reason thereof liquidated
damages in the amount $10.00 per day, per vehicle, loaded or unloaded in
violation of said covenant may be recovered by Landlord from Tenant, following
written notification to Tenant naming the supplier violating this covenant.

 

UTILITIES: GENERAL

23. Tenant shall, at its sole cost and expense, pay all charges when

due for water, sewer, gas, electricity, heat, air-conditioning and any other
utility or energy charges and taxes incurred by Tenant in the use of the demised
premises.

 

UTILITIES: SEPARATE METER

24(a). Tenant shall pay to Landlord, within 10 days after rendition

of a bill herefore by Landlord of the Charles County Department of Public Works,
or successor, in addition to all other charges provided herein and as additional
rent, a sum equal to the amount (or Tenant's pro rata share, as reasonably
determined by Landlord) of any water or sewer rent or charge, or any other tax,
rent, fee, levy or charge, imposed in connection with Tenant's use, consumption
of supply of water, or Tenant's water system, or Tenant's sewerage connection or
system.

   

24(b). If Landlord, in its sole discretion, determines at the inception

of or during the term of this Lease that Tenant is a heavy water user, then
Landlord will install at Tenant's expense, a submeter for the demised premises.
Tenant shall keep such meter and any installation equipment in good order and
repair; repay Landlord on receipt of a bill for its' installation and Tenant
shall pay for all water consumed as shown on the meter together with the
concomitant sewer charge within ten (10) days after rendition of a bill
therefore.

   

24(c). The total charges for all Tenants in the Shopping Center

coming within the purview of Article 24(b) shall be deducted from the charges
pertaining to Tenants referred to in Article 24(a).

 

TRASH

25. Tenant will keep the premises in a clean, orderly and sanitary

condition and free of insects, rodents, vermin, other pests, trash and dirt
accumulations and shall furnish adequate and proper receptacles for trash and
garbage in location designated by the Landlord. Landlord shall maintain and keep
in good repair the parking lot, pedestrian walkways and driveways, keeping them
clean, free of snow and ice, orderly, properly lighted and marked. Landlord will
provide garbage and trash collection service for the demised premises. Tenant
shall cooperate with Landlord in the scheduling of such collection service and
Tenant shall not use any other garbage or trash collection service at the
premises. The cost of any such service shall be included in the Landlord's
common area costs or shall be billed monthly to Tenant, based on the ratio of
the floor area of the demised premises to the aggregate floor area of all
tenants to whom Landlord furnishes such service. Landlord may at any time change
such collection methods, and will give reasonable notice to Tenant.

 

KEEP CLEAN

26. The Tenant agrees to keep the sidewalks abutting the demised

premises in a clean and orderly fashion, and agrees not to use any space, other
than within the walls of the demised premises, for the sale or storage of
merchandise or for service of any kind.

 

HOLD HARMLESS

27. Tenant agrees that it will indemnify and save the Landlord

harmless from any and all liabilities, damages, causes of action, suits, claims,
judgments, costs and expenses of any kind (including attorneys' fees) (i)
relating to or arising from or in connection with the possession, use,
occupation, management, repair, maintenance or control of the demised premises,
or any portion thereof, or (ii) arising from or in connection with any act or
omission of Tenant or Tenant's agents, employees or invitees, or (iii) resulting
from any default, violation or nonperformance of this Lease by Tenant, or (iv)
resulting in injury to person or property or loss of life sustained in or about
the demised premises. To assure such indemnity, Tenant shall carry and keep in
full force and effect at all times during the term of this Lease for the
protection of the Landlord and Tenant herein, public liability insurance with
limits of at least One Million Dollars ($1,000,000.00) for each accident and
Five Hundred Thousand Dollars ($500,000.00) for each separate injury, and
property damage insurance In the amount of Fifty Thousand Dollars ($50,000,00),
with an approved insurance company and to deliver to Landlord a copy of said
policy or a certificate showing the same to be in force and effect. In the event
Tenant shall fail to maintain such policy of insurance then Landlord may, after
three (3) days' written notice to Tenant obtain such policy and pay the premium
thereon and the amount so paid shall be added to the next installment of rent.

 

PROPERTY AT TENANT'S RISK

28. It is understood and agreed that all personal property, goods,

wares and merchandise in said premises shall be and remain at the Tenant's sole
risk and the Landlord shall not be liable for any damage to or loss of such
personal property, goods and merchandise arising from the bursting, overflowing
or leaking of the roof or of water, sewer, or steam pipes, or from wires or
fixtures or from any other cause whatsoever, unless said damages are caused
through the negligence of the Landlord, its servants, employees and contractors.

 

INSURANCE RISK

29. The Tenant shall not keep gasoline or other inflammable

material or any other explosive in the demised premises or use the demised
premises in any manner which will increase the rate of fire insurance on the
Shopping Center or any part thereof beyond the ordinary risk established for the
type of business hereinabove provided to be conducted therein, and any such
increase in the insurance rate shall be borne by the Tenant. Tenant shall not do
any act or thing upon the premises or in or about the Shopping Center or any
part thereof which may make void or voidable any insurance on the demised
premises or Shopping Center, and the Tenant expressly agrees to conform to all
rules and regulations from time to time established by the Maryland Insurance
Rating Bureau.

 

LANDLORD ACCESS

30. The Landlord and its Agent shall have access to the demised

premises at any and all reasonable times for the purpose of protecting said
premises against fire, for the prevention of damage and injury to the leased
premises, or for the purpose of inspecting the same.

 

BANKRUPTCY

31(a). In the event the Tenant shall be adjudicated bankrupt or

adjudged to be insolvent, or if Tenant shall file or acquiesce in a petition in
any court in any bankruptcy, reorganization, composition, extension, arrangement
or insolvency proceedings, or if Tenant shall make an assignment or other
conveyance in trust for the benefit of its creditors, or if any execution or
attachment shall be issued against Tenant or Tenant's property whereupon the
demised premises shall be taken or occupied or attempted to be taken or occupied
by someone other than Tenant and such execution or attachment shall not be
dismissed, vacated, discharged or bonded within sixty (60) days' after issuance
of same, or if a receiver of Trustee shall be appointed for the property and
assets of the Tenant and such receivership be not discharged within twenty (20)
days from the date of such appointment, then upon the happening of any of said
events, the term hereby demised shall, at the option of the Landlord, cease and
determine, it being expressly agreed that the covenant hereinafter contained
against the assignment of this Lease shall cover the case of the assignment of
this Lease by operation of law as well as the assignment of this Lease by a
voluntary act of the Tenant.

   

31(b). If this Lease shall be so canceled and terminated, neither

Tenant nor any person claiming through or under Tenant by virtue of any statute
or order of any court shall be entitled to remain in possession of the demised
premises but shall forthwith quit and surrender the demised premises. In no
event, without the written approval of Landlord which approval may be granted or
withheld at its sole discretion, shall this Lease be or be considered an asset
of Tenant's estate in bankruptcy, or insolvency, or receiver or trustee
(hereafter referred to as a "Trustee") with respect thereto.

   

31(c). To the extent that Landlord's right to cancel this Lease in

accordance with the provisions of subsections (a) and (b) of this Article 31 is
invalid or enforceable under the Bankruptcy Reform Act of 1978 (the "Act") or
any other statute or rule of law, then the following provisions shall apply, to
the extent valid and enforceable.

   

31(d). If there has been a Default by Tenant under any provision of

this Lease (other than this Article 31), the Trustee may not assume this Lease,
unless, at the time of assumption of this Lease, the Trustee:

   

31(d).i cures, or provides adequate assurance (to Landlord's

reasonable satisfaction) that the Trustee will promptly cure such default; and

   

31(d).ii provides adequate assurance (to Landlord's reasonable

satisfaction) of future performance under the Lease, which shall include,
without limitation, adequate assurance:

   

31(d).iii of the source of rent and other consideration due under

such Lease;

   

31(d).iv that the Percentage Rent will not decline substantially;

     

31(d).v that assumption or assignment of such Lease will not

breach substantially any provision, such as a radius, location, use, or
exclusivity provision, In any other lease, financing agreement, or master
agreement relating to the Shopping Center; and

   

31(d)vi that assumption or assignment of this Lease will not disrupt

substantially any tenant mix or balance in the Shopping Center.

   

31(e) If there has been a default by Tenant, the Trustee may not

require the Landlord to provide services or supplies incidental to this Lease
before assumption of this Lease unless the Landlord is compensated under the
terms of this Lease for any services and supplies provided under this Lease
before assumption of this Lease.

   

31(f) If this Lease is terminated under the provisions of this Article

31, or by reason of rejection by the Trustee, Landlord shall be entitled to the
recovery of damages, and such other remedies, as are provided for in Article 33.
The foregoing sentence shall not, however, limit or prejudice the right of
Landlord to petition for and obtain as liquidated damages in any bankruptcy,
insolvency, receivership, reorganization, or arrangement proceeding an amount
equal to the maximum allowed by the Act or any other statute or rule of law
governing such proceedings and in effect at the time when such damages are to be
proved, whether or not such amount be greater, equal to or less than the amount
of the excess referred to in the preceding sentence.

 

REPOSSESSION

32. This Lease is subject to the limitation that if at any time either of

the following events (herein called a "Default") shall occur:

   

32 (a). If Tenant shall fail to pay any installment of rent or any

other charge required to be paid by Tenant hereunder, when the same shall become
due and payable (it being specifically understood and agreed that the term rent
includes the minimum rental, the Percentage Rent, the share of real estate or
other taxes and the share of cost of maintenance and operation of common areas,
as referred to in this Lease or any other consideration under the Lease that is
identified as rent in this Lease), and such failure shall continue for five (5)
days; or

   

32 (b). If Tenant shall fail to perform or observe any other term,

provision, covenant, condition or requirement of this Lease on the part of
Tenant to be performed or observed, and such failure shall continue for ten (10)
days after written notice from Landlord;

   

32 (c). then upon the happening of either of the aforementioned

defaults, this Lease shall, at Landlord's option, cease and determine and shall
operate as a Notice to Quit, any written Notice to Quit being hereby expressly
waived. Landlord may proceed to recover possession of said premises by virtue of
any legal process as may at the time be in operation and force in like cases
relative to proceedings between Landlord and Tenant, and Tenant shall pay for
any court costs relative to such proceedings and a reasonable attorneys' fee, or
Landlord may at its option re-enter and re-rent the demised premises for the
account of the Tenant, and in such event, Tenant shall remain liable to Landlord
for any and all deficiencies in the rent under this Lease.

 

RELETTING

33. Should Landlord elect to re-enter, as herein provided, or should

it take possession pursuant to legal proceedings or pursuant to any notice
provided by law, it may either terminate this Lease or it may from time to time
without terminating this Lease, make such reasonable alterations and reasonable
repairs as may be necessary in order to relet the premises, and relet said
premises or any part thereof for such term or terms (which may be for a term of
less than as extending beyond the term of this Lease) and at such rental or
rentals and upon other terms and conditions as Landlord in its discretion may
deem advisable; upon each such reletting all rentals received by the Landlord
from such reletting shall be applied first, to the payment of any indebtedness
other than rent due hereunder from Tenant to Landlord; second, to the payment of
any costs and expenses of such reletting, including brokerage fees and
attorneys' fees and of costs of such reasonable alterations and reasonable
repairs; third, to the payment of rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment of future rent
as the same may become due and payable hereunder. If such rentals received from
such reletting during any month be less than that to be paid during that month
by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such re-entry or taking
possession of said premises by Landlord shall be construed as an election on its
part to terminate this Lease unless a written notice of such intention be given
to Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for any such previous
breach. Should Landlord at any time terminate this Lease for any breach, in
addition to any other remedies it may have, it may recover from Tenant damages
it may incur by reason of such breach, including any unpaid rent (or other
amounts due under this Lease) which is due and owing at the time of termination,
repairing and redecorating the premises to a condition sufficient for reletting
same. In addition, in the event of termination by Landlord as aforesaid, if
Landlord at its sole option so elects, Tenant shall pay to Landlord, on demand,
as liquidated, agreed final damages, the following:

   

33 (a). The difference between: (i) the rent and all other charges

which would have been payable from the date of such demand to the date when this
Lease would have expired if it had not been terminated as aforesaid, and (ii)
the fair rental value of the demised premises for the same period, with said
difference being discounted at the rate of six percent (6%) per annum to present
worth, and

 

33 (b). Commissions, advertising, cost of repairs and other

expenses incidental to the reletting of the demised premises.

   

For purposes of the foregoing sentence, the term rent shall include

fixed minimum rental, Percentage Rent, additional rent, and all other charges
and pass-through provided herein. For the purpose of computing Percentage Rent
after a Default, the monthly percentage rent shall be deemed to be equal to the
average monthly Percentage Rent paid hereunder for the twenty-four (24) months
during the term preceding such termination the entire preceding portion of the
term if less than twenty-four months).

 

HOLDOVER

34. If the Tenant shall not immediately surrender said premises on

the day after the end of the term hereby created, then the Tenant shall, by
virtue of this agreement, become Tenant by the month at twice the rental agreed
by the said Tenant to be paid as aforesaid, commencing said monthly tenancy with
the first day next after the end of the term above demised; and said Tenant as
monthly Tenant, shall be subject to all of the conditions and covenants of this
Lease as though the same had originally been a monthly tenant, and the said
Tenant shall give to the Landlord at least thirty (30) days' written notice to
quit said premises, except in the event of non-payment of minimum rent in
advance or of Percentage Rent when due or of the other additional rents, as
provided for in Article 6 hereof, when due, or of the breach of any other
covenant by the said Tenant, in which event the said Tenant shall not be
entitled to any notice to quit, the usual thirty (30) days' notice to quit being
expressly waived; provided, however, that in the event that the Tenant shall
hold over after the expiration of the term hereby created, and if the said
Landlord shall desire to regain possession of said premises promptly at the
expiration of the term aforesaid, then at any time prior to the acceptance of
the minimum rent by the Landlord from the Tenant, as monthly tenant hereunder,
the Landlord, at its election or option, may re-enter and take possession of
said premises forthwith, without process, or by any legal action or process in
force in the State of Maryland.

 

RENTAL SIGN

35. The Tenant agrees to give Landlord permission to place a "For

Rent" sign in the window sixty (60) days before termination of the lease term.

 

SUBORDINATION

36. Intentionally left blank.

 

NOTICES

37. All notices, demands. Requests, approval, consents or other

instruments required or desired to be given hereunder by either party to the
other shall be given by certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:

 

 

If to Landlord:

Smallwood Village Associates LP

222 Smallwood Village Center

Waldorf, MD 20602

If to Tenant:

Interstate General Company LP

Attn: Paul Dillon

222 Smallwood Village Center

Waldorf, MD 20602

 

ASSIGNS AND SUCCESSORS

38. Feminine or neuter pronouns shall be substituted for those of

the masculine form, and the plural may be substituted for the singular number,
in any place or places herein in which the context may require such substitution
or substitutions; and the covenants and agreements herein contained shall,
wherever appropriate, be binding upon the heirs, administrators, executors,
personal representatives, successors and assigns of the parties hereto.

 

SUBLETTING AND ASSIGNMENT

39. Tenant will not sublet demised premises or any part thereof, or

transfer possession or occupancy thereof to any person (including but not by way
of limitation, concessionaires or licensees of Tenant) firm or corporation or
transfer, assign mortgage or encumber this Lease without the prior written
consent of Landlord in each instance, nor shall any subletting or assignment
hereof be effected by merger, liquidation or otherwise by operation of law or
otherwise than by the prior written consent of the Landlord. Any attempted
transfer, assignment, subletting, license or concession agreement or
hypothecation shall be void and confer no rights upon any third party. If
Landlord shall refuse to consent to any request of Tenant for the proposed
assignment, sale, or other transfer of Tenant's interest in and to this Lease
and/or the demised premises, Landlord may, if it so elects, but only with the
consent of Tenant, terminate this Lease as of a mutually agreeable termination
date, in which event (i) this Lease shall expire and come to an end with the
same force and effect as if said date were originally set forth in this Lease
for expiration of the Term, (ii) Tenant agrees Landlord shall have the absolute
right, with no consent required from Tenant, to relet the demised premises for
its own account to Tenant's prospective assignee at such rentals and upon such
other terms and conditions as Landlord shall desire If, without Landlord's prior
written consent, there shall be an attempted assignment or subletting or if the
demised premises shall be occupied by anybody other than Tenant, whether as a
result of act or omission by Tenant, or by operation of law, or otherwise,
Landlord, may. In addition to, and not in diminution of or substitution for, any
other rights and remedies under this Lease or pursuant to law to which Landlord
may be entitled as a result thereof, collect rent from the proposed assignee,
subtenant or occupant and apply the net amount collected to the rent herein
reserved, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of this covenant or the acceptance of the assignee, subtenant,
or occupant as a tenant, or a release of Tenant hereunder from the further
performance by Tenant of the covenants on the part of Tenant herein contained.

 

If Landlord shall consent to any requested transfer, assignment,

mortgage, hypothecation, encumbrance, subletting, license and/or concession,
such consent shall be deemed consent to that particular transaction only and
shall not be deemed consent to any other or future transfer, assignment,
mortgage, hypothecation, encumbrance, subletting, license and/or concession, as
the case may be. Any permitted transfer, assignment, mortgage, hypothecation,
encumbrance, subletting, license and/or concession shall be expressly subject to
each and every term, covenant and condition of this Lease, unless otherwise
specifically provided in writing, and Tenant shall remain fully liable and
obligated under all of such terms, covenants and conditions.

   

If Tenant is a corporation, unincorporated association or

partnership,and Tenant shall, without the prior written consent of Landlord,
transfer, assign or hypothecate any stock or interest in such corporation,
association or partnership so as to result in a change in the control thereof by
the person, persons or entities owning a controlling interest therein as of the
date of this Lease, then Landlord shall have the option to terminate this Lease
at any time after actual notice of such change by giving Tenant at least sixty
(60) days' prior written notice and, on the date fixed in such notice for
termination of this Lease, this Lease shall expire and come to end with the same
effect as if said date were originally set forth in this Lease for expiration of
the term. The mere receipt by Landlord of rent from a party other than Tenant
shall not be deemed actual notice of any change in control or ownership of
Tenant. This provision shall not be applicable to the transfer of any stock or
interest in such corporation, association or partnership to a member of the
immediate family of any person(s) now owning a controlling interest therein
(i.e.. the spouse and direct lineal ancestor or descendent of such person or
such person's spouse).

 

NOT PARTNERS

40. The parties hereto by this agreement expressly do not intend as

a matter of fact or law to create or constitute a partnership.

 

PROMOTIONAL SERVICE

41. Intentionally left blank.

   

CONTINUOUS OCCUPANCY

42(a). On the Rent Commencement Date, Tenant shall occupy the

premises and promptly open for business, at which time the premises shall be
fully fixture, fully stocked and fully staffed. Tenant acknowledges that it has
been informed that its obligation to open for business promptly on the Rent
Commencement Date has been and will be relied upon by the Landlord in dealing
with other tenants in the Shopping Center, and failure of Tenant to open for
business as above specified shall constitute a Default under this Lease, and may
cause substantial damages to Landlord. Tenant shall defend, indemnify and save
Landlord harmless from any damages which may be claimed against Landlord and
shall indemnify Landlord for any losses suffered because of Tenant's failure to
comply with its obligations under the first sentence of this Article.

   

42(b). Throughout the term, Tenant shall continuously conduct in

the premises, with a full stock of merchandise and full staff of personnel, the
business permitted under Article 19 (and no other business. Including
specifically any business or use prohibited by the terms of this Lease) on all
business days and during such hours as are kept by a majority of the tenants in
the Shopping Center (excluding the Tenant hereunder) and at least 66 hours per
week (unless fewer hours per week are agreed to by a majority of the tenants in
the Shopping Center (excluding the Tenant hereunder). Regardless of the minimum
number of hours per week Tenant is open for business, and regardless of which
additional hours Tenant is open, Tenant shall in all events remain open for
business during the hours of 8:00 A.M. to 5:00 P.M. Monday through Friday.
Tenant acknowledges that its obligation to continuously and actively conduct
business in the premises in the manner prescribed in this Article is for the
purpose of enhancing the business activity and public patronage of all stores in
the Shopping Center in order to produce for Landlord the maximum possible
percentage rents from all stores in the Shopping Center as well as from the
premises and to enhance the leaseability of floor space in the Shopping Center,
and Tenant acknowledges that failure on its part to comply with the provisions
of this Article shall constitute a Default under this Lease, and would cause
Landlord substantial damages which might be difficult or insusceptible of exact
proof. Accordingly, the parties have agreed that if Tenant fails to comply with
the provisions of this Article, then Landlord shall not be required to prove its
actual damages for breach of this Article, but in lieu thereof Tenant shall pay
Landlord as liquidated damages, and not as a penalty, an additional monthly rent
equal to the monthly minimum rent payable under Article 5 hereof, which
liquidated damage payments shall continue from the date of breach until such
breach is cured or until the end of the then current term of this Lease,
whichever is first. Said liquidated damages shall be paid monthly, concurrently
with the monthly payments of minimum rent reserved under this Lease. Nothing in
this Article shall be construed as a limitation upon Tenants obligations to
continuously conduct business in the manner herein specified or upon Landlord's
remedies under Articles 32 and 33 or upon Landlord's right to recover any other
provable monetary damages. A breach by Tenant of its obligations under
subsection (a) of this Article shall also constitute a breach of this subsection
(b) and entitle Landlord not only to its claims under subsection (a), but also
to liquidated damages under this subsection (b) for so long as the breach of
this subsection continues.

 

MAINTENANCE AND OPERATION OF COMMON AREAS

43. Landlord agrees to keep the parking areas in the Shopping

Center and the other common areas (excepting service areas immediately adjacent
and contiguous to the demised premises, the maintenance of which shall be
Tenant's responsibility) reasonably free of snow, ice and debris and to keep the
same lighted during the business hours of a majority of the tenants in the
Shopping. Landlord further agrees to keep the parking areas in the Shopping
Center and other common areas are in good repair and order.

 

COST OF MAINTENANCE AND OPERATION OF COMMON AREAS

44. Intentionally left blank.

 

INSURANCE

45(a). Landlord shall obtain and maintain in effect during the term

of this Lease a policy or policies of insurance (i) covering the improvements
constituting the Shopping Center (including the common areas, but excluding
Tenant's leasehold improvements, trade fixtures and other property required to
be insured by Tenant) in an amount not less than eighty percent (80%) of the
full replacement cost (exclusive of the cost of excavations, foundations and
footings), providing protection against perils included within the standard
Maryland form of fire and extended coverage insurance policy, together with such
other risks, and with such deductibles, as Landlord may from time to time
determine, and (ii) public liability insurance covering the parking areas and
other common areas in an amount not less than $500,000 for injury to any one
person, $1,000,000 for injuries arising out of one accident, and $50,000 for
property damage coverage. The cost of the premiums for any such policies shall
be included in the Landlord common area maintenance costs. Any such insurance
may be effected by a policy or policies of blanket insurance, covering
additional items or locations or assureds. Tenant shall have no rights in any
policy maintained by Landlord and shall not, by reason of payment by Tenant, as
part of common area maintenance costs, of its pro rata share of Landlord's
premium therefore, be entitled to be a named assured thereunder.

   

45(b). Tenant, at Tenant's sole cost and expense, shall obtain and

maintain in effect at all times during the term of this Lease, policies
providing the following coverage: (i) a

comprehensive policy of general liability insurance, covering the demised
premises and Tenant's use thereof against claims for personal injury or death or
property damage occurring upon, in or about the demised premises, in the limits
stipulated in Article 27; (ii) insurance covering Tenant's leasehold
improvements, trade fixtures, equipment and personal property from time to time
in, on or upon the demised premises, in an amount of not less than eighty
percent (80%) of the full replacement value of said items, providing protection
against perils included within the standard Maryland form of fire and extended
coverage insurance policy, together with insurance against sprinkler damage,
vandalism, and malicious mischief. Any policy proceeds from such insurance, so
long as this Lease shall remain in effect, shall be held in trust by Tenant's
insurance company first for the repair, reconstruction, restoration or
replacement of the property damaged or destroyed, and (iii) plate glass
insurance covering all plate glass in the demised premises. Tenant shall be and
remain liable for the repair and restoration of all such plate glass.

   

45(c). All insurance policies herein required to be procured by

Tenant (i) shall be issued in form acceptable to Landlord by good and solvent
insurance companies qualified to do business in the State of Maryland and
reasonably satisfactory to Landlord, (ii) shall be issued in the names of
Landlord, Tenant and any other parties in interest from time to time designated
in writing by notice from Landlord to Tenant, (iii) shall be written as primary
policy coverage and not contributing with or in excess of any coverage which
Landlord may carry; and (iv) shall contain an express waiver of any right of
subrogation by the insurance company against Landlord. Neither the issuance of
any insurance policy required hereunder, nor the minimum limits specified herein
with respect to Tenant's insurance coverage, shall be deemed to limit or
restrict in any way Tenant's liability arising under or out of this Lease. With
respect to each and every one of the insurance policies herein required to be
procured by Tenant, on or before the Rent Commencement Date and before any such
insurance policy shall expire, Tenant shall delivery to Landlord certificates of
insurance for, certified copies of, or duplicate originals of, each such policy
or renewal thereof, as the case may be, together with evidence of payment of all
applicable premiums. Any insurance required to be carried hereunder may be
carried under a blanket policy covering the demised premises and other locations
of Tenant, and if Tenant includes the demised premises in such blanket coverage
Tenant shall deliver to Landlord, as aforesaid, a duplicate original or
certified copy of each such insurance policy or a certificate evidencing such
insurance. Each and every insurance policy required to be carried hereunder by
or on behalf of Tenant shall provide that, unless Landlord shall first have been
given ten (10) days' prior written notice thereof: (i) such insurance policy
shall not be canceled and shall continue in full force and effect, (ii) the
insurance carrier shall not, for any reason whatsoever, fail to renew such
insurance policy, and (iii) no material change may be made in such insurance
policy. In the event that Tenant shall fail promptly to furnish any insurance
coverage herein required to be procured by Tenant, Landlord, at its sole option,
shall have the right to obtain the same and pay the premium for a period not
exceeding one (1) year in each instance, and the premium so paid by Landlord
shall be immediately payable by Tenant to Landlord as additional rent.

 

ADDITIONAL RENT

46. If Landlord shall incur any charge or expense on behalf of

Tenant under the terms of this Lease, such charge or expense and all other
monetary payments due under this Lease to Landlord shall be considered
additional rent hereunder; in addition to and not in limitation of any other
rights and remedies which Landlord may have in case of the failure by Tenant to
pay such sums when due, such nonpayment shall entitle Landlord to the remedies
available to it hereunder for non-payment of rent. All such charges or expenses
shall be paid to Landlord at its office in St. Charles, Maryland.

 

RENT

47. Landlord covenants that if Tenant pays the rent and all other

charges provided for herein, performs all of its obligations provided for
hereunder, and observes all of the other provisions hereof, Tenant shall at all
times during the term hereof peaceably and quietly have, hold and enjoy the
demised premises, without any interruption or disturbance from Landlord, or
anyone claiming through or under Landlord, subject to the terms hereof.

 

 

TRANSFER OF LANDLORD'S INTEREST

48. Notwithstanding any provision of this Lease to the contrary,

in the event of the sale or other transfer of Landlord's interest in the demised
premises or the Shopping Center, (i) Landlord shall thereupon and without
further act by either party hereto be released and discharged of all covenants
and obligations of Landlord hereunder thereafter accruing, and (ii) it shall be
deemed and construed conclusively, without further agreement between the
parties, that the purchaser or other transferee or assignee has assumed and
agreed to perform the obligations of Landlord thereafter accruing.

 

NO WAIVER

49. That no waiver of any breach of any covenant, condition or

agreement herein contained shall operate as a waiver of the covenant, condition
or agreement itself, or of any subsequent breach thereof.

 

PARTIAL INVALIDITY

50. If any term, covenant or condition of this Lease or the

application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease or the application of such
term, covenant or condition to persons or circumstances other than those s to
which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant and condition of this Lease shall be valid and enforced to
the fullest extent permitted by law.

 

RULES & REGULATIONS

51. Tenant shall at all times comply with the rules and

regulations set forth on Exhibit "D' attached hereto, and with any additions
thereto and modifications thereof adopted from time to time by Landlord, and
each such rule or regulation shall be deemed as a covenant of this Lease to be
performed and observed by Tenant.

 

APPLICABLE LAW

52. This Lease shall be construed under the laws of the State of

Maryland.

     

CAPTIONS AND HEADINGS

53. Captions and headings are for convenience and reference

only.

   

JOINT AND SEVERAL LIABILITY

54. If two or more individuals, corporations, partnerships or

other business associations (or any combination of two or more thereof) shall
sign this Lease as Tenant, the liability of each such individual, corporation,
partnership, or other business association to pay rent and perform all other
obligations hereunder shall be deemed to be joint and several. In like manner,
if the Tenant named in this Lease shall be a partnership or other business
association, the members of which are, by virtue of statute or general law,
subject to personal liability, the liability of each such member shall be joint
and several.

 

NOTIFICATION

55. This writing is intended by the parties as final expression of

their agreement and as a complete and exclusive statement of the terms thereof,
all negotiations, considerations and representations between the parties having
been incorporated herein. No course of prior dealings between the parties or
their affiliates shall be relevant or admissible to supplement, explain, or vary
any of the terms of this Lease. Acceptance of, or acquiescence in, a course of
performance rendered under this or any prior agreement between the parties or
their affiliates shall not be relevant or admissible to determine the meaning of
any of the terms of this Lease. No representations, understandings, or
agreements have been made or relied upon in the making of this Lease other than
those specifically set forth herein. This Lease can only be modified by a
writing signed by all of the parties of their duly authorized agents.

 

NO DISCRIMINATION

56. It is intended that the Shopping Center be developed so that

all prospective tenants and all customers, employees, licensees and invitees of
all tenants shall have the opportunity to obtain all the goods, services,
accommodations, advantages, facilities and privileges of the Shopping Center
without discrimination because of race, creed, color, national origin or
ancestry. To that end, Tenant will not discriminate in the conduct and operation
of its business in the premises against any person or group of persons because
of the race, creed, color, national origin or ancestry of such person or group
of persons.

 

DELAY

57. Intentionally left blank.

   

STORE FRONT

58. The design and construction of the store front for the

demised premises will be subject to the Landlord's approval, which shall not be
unreasonably withheld.

 

ESTOPPEL CERTIFICATE

59. Tenant agrees, at any time and from time to time, upon not

less than five (5) days prior written notice by Landlord, to execute,
acknowledge and deliver to Landlord or to such person(s) as may be designated by
Landlord, a statement in writing (i) certifying that Tenant is in possession of
the demised premises, has unconditionally accepted the same and is currently
paying the rents reserved hereunder, (ii) certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the Lease is in full force and effect as modified and stating the
modifications), (iii) stating the dates to which the rent and other charges
hereunder have been paid by Tenant, (iv) stating whether or not to the best
knowledge of Tenant, Landlord is in default in the performance of any covenant,
agreement or condition contained in this Lease, and, if so, specifying each such
default of which notices to Tenant should be sent. Any such statement delivered
pursuant thereto may be relied upon by any owner of the Shopping Center, any
prospective purchaser of the Shopping Center, any mortgagee or prospective
mortgagee of the Shopping Center or of Landlord's interest, or any prospective
assignee of any such mortgagee.

OUTPARCEL

60. Landlord shall have the right to remove from the Shopping

Center, sell, or separately develop any outparcels whereupon such outparcels
shall, at the option of the Landlord, be removed from the definition of the
Shopping Center.

 

WAIVER OF JURY TRIAL

61. Tenant hereby waives all right to trial by jury in any claim,

action, proceeding or counterclaim by either Landlord or Tenant against the
other or any matters arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant and/or Tenant's use or occupancy of the
demised premises.

 

NO OPTION

62. The submission of this Lease for examination does not

constitute a reservation of or option for the premises, and this Lease becomes
effective only upon execution and delivery thereof by Landlord.

 

SECURITY DEPOSIT

63. Landlord hereby acknowledges receipt from Tenant of a

security deposit in the amount of N/A s security for Tenant's faithful
performance of Tenant's obligations hereunder. If Tenant fails to pay rent or
other charges due hereunder, or otherwise defaults with respect to any
provisions of this Lease. Landlord may use, apply or retain all or any portion
of said deposit for the payment of any rent or other charge in default or for
the payment of any other sum to which Landlord may become entitled by reason of
Tenant's default, or to compensate Landlord for any loss or damage which
Landlord may suffer thereby. If Landlord so uses or applies all or any portion
of said deposit. Tenant shall within ten (10) days after written demand herefore
deposit cash with Landlord in an amount sufficient to restore said deposit in
full to the original amount and Tenant's failure to do so shall be a default
under this Lease. Landlord shall not be required to keep said deposit separate
from its general accounts. If Tenant performs all of Tenant's obligations
hereunder, said deposit or so much thereof as has not therefore been applied by
Landlord shall be returned, without payment of interest or other increment for
its use, to Tenant within forty-five (45) days after the expiration of the term
of this Lease, or after Tenant has vacated the demised premises, whichever is
later.

 

BROKER'S PERMISSION

64. Intentionally left blank.

   

LESSOR'S RIGHT TO SELL OR

MORTGAGE FEE

65. Nothing contained in this lease shall limit or curtail

Landlord's right to sell, mortgage, or otherwise deal with its fee interest in
the leased premises, the ground underlying the leased premises, the shopping
center and the ground underlying the shopping center, or affect Landlord's right
to assign the net rent payable under this Lease either as further collateral
security under a fee mortgage or otherwise. Any such assignment of rent shall be
honored by Tenant.

 

STORES OR SHOPPING CENTER

66. Landlord may from time to time change or alter the size,

configuration, partitions or store designations of all or any of the stores in
the shopping center and may expand the shopping center by adding thereto
additional land and buildings without the consent of, or notice to, Tenant.

 

LATE PAYMENT CHARGES

67. In the event that any installment or payment of minimum

rent,percentage rent, additional rent or any other sum required hereunder to be
paid by Tenant to Landlord is not received by Landlord on or before the fifth
(5th) calendar day after the same is due and payable, then, for each and every
such late payment, in addition to the payment in arrears, Tenant shall
immediately pa y to Landlord as additional rent, a service charge equal to
whichever is the greater of (I) Twenty Dollars ($20.00); or (ii) one half of one
percent (.5%) of such unpaid sum per day for each calendar day after the due
date of such payment that such payment has not been received by Landlord. The
provision herein for late payment service charges shall not be construed to
extend the date for payment of any sums required to be paid by Tenant hereunder
or to relieve Tenant of its obligations to pay all such sums at the time or
times herein stipulated. Notwithstanding the imposition of such service charges
pursuant to this subsection, Tenant shall be in default under this Lease if any
or all payments required to be made by Tenant are not made at the time herein
stipulated, and neither the demand for, nor collection by, Landlord of such late
payment service charges shall be construed as a cure of such default on part of
Tenant.

 

SUBORDINATION

68. Tenant agrees that this Lease shall be subject and

subordinate to the lien of any bonafide mortgages or deeds of trust that may now
or at any time hereafter be placed against the demised premises by the Landlord
to secure money borrowed from any bonafide lender. Tenant agrees at any time
hereafter, on demand, to execute any instrument, release, or other documents
that may be required by Landlord for the purpose of subjecting and subordinating
this Lease to the lien of any mortgage or deed of trust, whether original or
substituted. If any person shall succeed to all or any part of Landlord's
interest in the demised premised, whether by purchase, foreclosure, deed in lieu
of foreclosure, power of sale, termination of lease, or otherwise, and if such
successor-in-interest shall request, Tenant shall attorn to such
successor-in-interest and shall execute such agreement in confirmation of such
attornment as such successor-in-interest shall request. Tenant agrees that any
suit, action or other proceeding commenced by any mortgagee in order to realize
upon Landlord's interest in this Lease, the demised premises, or the Shopping
Center of which the demised premises is a part shall not, by operation of law or
otherwise, result in the cancellation or termination of this Lease or of the
obligation of Tenant hereunder.

 

RIGHT OF FIRST OFFER

69. During the term of this lease, Landlord hereby gives tenant a

right of first offer to lease the 517 sq. ft. currently known as 211B (Clares).
Tenant shall have sixty days to respond to offer made pursuant to this right
with an affirmative or negative response.

 

RIGHT TO TERMINATE LEASE

70. After nine (9) months of the initial term of lease, tenant has

the right to terminate the lease providing 90 days notice to vacate premises is
received in written form.

 

 

 

 

 

 

 

 

 

 

(signature page to follow)

IN WITNESS WHEREOF, and intending that this Lease be a sealed instrument,
Landlord and Tenant have executed this Lease under seal on the dates indicated
beneath their respective signatures.

   

Smallwood Village Associates, L.P.

A Maryland Limited Partnership

         

By: Interstate Business Corporation, its General Partner

LANDLORD

                 

/s/

 

/s/ James Michael Wilson

WITNESS

 

James Michael Wilson, President

         

Date of Execution by Landlord: October 24, 2000

                     

Interstate General Company, L.P.

   

TENANT

           

/s/

 

/s/ Paul H. Dillon

WITNESS

 

Paul H. Dillon, Vice President

         

Date of Execution by Tenant: October 24, 2000

State of Maryland

SS:

County of Charles

 

 

Before me, a Notary Public in and for the jurisdiction aforesaid, personally
appeared this date, J. Michael Wilson, personally well known (or satisfactorily
proven) to me to be the President of Interstate Business Corporation, a Delaware
corporation, who, being by me first duly sworn, did acknowledge that he/she, as
the duly authorized officer of said Corporation, executed the foregoing and
annexed Instrument, in the name and on behalf of said Corporation, as its free
act and deed for the uses and purposes therein contained.

 

 

WITNESS my hand and official seal this 24th day of October, 2000:

 

 

 

/s/ Elizabeth L. Clayton

NOTARY PUBLIC

   

My Commission Expires: 11/30/01

 

EXHIBITS

and

ATTACHMENTS

 

 

1. EXHIBIT A

Rent Calculation

2. EXHIBIT B

Rules and Regulations

3. EXHIBIT C

Lease Renewal Clause

 

 

EXHIBIT A

RENT CALCULATION

Square Feet

Rent per
Square Foot

Annual
Minimum Rent

Monthly
Minimum Rent

Total
Monthly Rent

989 sq. ft.

$ 11.50

$ 11,373.50

$ 947.79

$ 947.79

462 sq. ft.*

4.00

1,848.00

154.00

154.00

672 sq. ft.*

4.00

2,688.00

224.00

224.00

*Storage Area

 

 

EXHIBIT B

RULES AND REGULATIONS

Smallwood Village Center

St. Charles, Maryland

 

Tenant shall, at all times during the term of the Lease:

1.

 

Use, maintain and occupy the premises in a careful, safe, proper and lawful
manner, keep the premises and it's appurtenances in a clean and safe condition;

     

2.

 

Keep all glass in the doors and windows of the premises clean and in good
repair;

     

3.

 

Not place, maintain or sell any merchandise in any vestibule or entry to the
premises, on the sidewalks adjacent to the premises, or elsewhere on the outside
of the premises without the prior written consent of Landlord;

     

4.

 

Keep the premises in a clean, orderly and sanitary condition, free of insects,
rodents, vermin and other pests.

     

5.

 

Not permit undue accumulations of garbage, trash, rubbish and other refuse in
the premises, and keep refuse in closed containers within the interior of the
premises until removed.

     

6.

 

Not use, permit or suffer the use of any apparatus or instruments for musical or
other sound reproduction or transmission in such manner that the sound emanating
therefrom or caused thereby shall be audible beyond the interior of the
premises.

     

7.

 

Not deliver or suffer or permit delivery of merchandise to the premises after
10:00 a.m. on any day.

     

8.

 

Light the show windows and exterior signs of the premises to the extent required
in the Lease.

     

9.

 

Keep all mechanical apparatus free of vibration and noise which may be
transmitted beyond the confines of the premises.

     

10.

 

Not cause or permit objectionable odors to emanate or be dispelled from the
premises.

     

11.

 

Not overload the floors or electrical wiring and not install any additional
electrical wiring or plumbing without Landlord's prior written consent.

     

12.

 

Not use show windows in the premises for any purpose other than display of
merchandise for sale in a neat and attractive manner.

     

13.

 

Not conduct, permit or suffer any public or private auction sale to be conducted
on or from the premises; and

     

 

14.

 

Not solicit business in the common areas of the Shopping Center or distribute
handbills or other advertising materials in the common areas, and if this
provision is violated the Tenant shall pay Landlord the cost of collecting same
from the common areas for trash disposal.

     

15.

 

Maintain an attractive display in the show windows; and

     

16.

 

Discourage congregations of people in the common areas and outside the store.

 

EXHIBIT C

 

LEASE RENEWAL CLAUSE

 

 

The following additional provisions are hereby added to the Lease:

(a)

Option to Extend

Subject to the satisfaction of the conditions precedent set forth in Paragraph
(b) below, Tenant shall have the right, at its option, to extend the term of
this Lease for one additional period (the "Extension Period") of three (3)
years. Such extension option shall be exercisable by Tenant giving written
notice to Landlord of the exercise of such option only during the three-month
period that is at least six (6) months, but not more than nine (9) months, prior
to the expiration of the then current term of this Lease; and, upon the exercise
of such extension option, the termination date of this Lease shall automatically
be extended for three (3) years. Such Extension Period shall be upon the same
terms, covenants, and conditions as set forth in this Lease with respect to the
initial term, but subject to the rental adjustment provisions of Paragraph (c)
below. With respect to such extension option, and in the event that (i) Tenant
shall fail to exercise the same strictly within the time period and in the
manner set forth above, and/or (ii) at the time hereinabove specified for the
exercise of such option, all of the conditions precedent set forth in Paragraph
(b) below shall not have been satisfied, then such extension option shall
automatically expire and be absolutely void and of no force or effect.

 

(b)

Conditions Precedent

The extension option granted to Tenant in Paragraph (a) above, shall be void and
of no force and effect unless, at the time above specified for exercising such
option, each and every one of the following conditions precedent shall have been
fully satisfied:

1.

 

This Lease shall be in full force and effect;

     

2.

 

Tenant shall be in possession of the demised premises and shall be regularly
conducting its normal business operation therein; and

     

3.

 

Tenant shall not be in default (beyond any grace period granted in this Lease
for curing the same) in the performance or observance of any of the terms,
provisions, covenants and conditions of this Lease.

 

(c)

Rent Adjustment

Notwithstanding any other provision of this Lease, in the event the term of this
Lease is extended pursuant to the exercise by Tenant of the extension option
hereinabove granted in Paragraph (a) above, then, with respect to such Extension
Period, the rents, other charges and other economic benefits to be derived by
Landlord under this Lease shall be the same as then prevails in the Shopping
Center for new leases executed at that time. The foregoing sentence
notwithstanding, in no event shall the fixed minimum annual rental (and the
monthly installments thereof) payable hereunder during and for the Extension
Period be less than the greater of (i) the fixed minimum annual rental in effect
immediately prior to the Extension Period or (ii) the fixed minimum annual
rental during the Initial term adjusted to the Consumer Price Index (as set
forth in the following sentence). Such adjustment shall be accomplished by
multiplying the average fixed minimum annual rental in effect during the initial
term of this Lease by a fraction, the numerator of which shall be the Consumer
Price Index as of the most recent date prior to the beginning of the Extension
Period, and the denominator of which shall be the Consumer Price Index as of the
most recent date prior to the Rent Commencement Date. If the fixed minimum
annual rental is established by the aforesaid adjustment pursuant to the
preceding sentence, said fixed minimum annual rental shall be effective as of
the beginning of the Extension Period and shall thereafter continue in effect as
the fixed minimum annual rental required to be paid under this Lease during the
entire Extension Period subject to adjustment as described in Article 6E of this
Lease.

 

(d)

Consumer Price Index

For all purposes of the Lease Agreement, the Consumer Price Index is hereby
defined to be the "United States Bureau of Labor Statistics, Consumer Price
Index, for Urban Wage Earners and Clerical Workers (CPl-W)", all items for
Washington, D. C. SMSA (1982/84 = 100); and if the Consumer Price Index shall be
discontinued or altered, Landlord and Tenant shall attempt to agree upon a
substitute index or formula, and if said parties are not able to agree upon such
substitute, the matter shall be referred to binding arbitration in accordance
with the rules of the American Arbitration Association in the State of Maryland
then prevailing.