exv10w10



 



EXHIBIT 10.10


OFFICE LEASE



BETWEEN



1899 L STREET LLC

a Delaware limited liability company

“LANDLORD”



and



BLACKBOARD, INC.

a Delaware corporation

“TENANT”



PREMISES



4th and 5th Floors

1899 L Street, NW

Washington, DC



 






 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	SECTION 1:	 	BASIC LEASE PROVISIONS
	 	 	1	 
	 	1.1	 	 	Date and Parties
	 	 	1	 
	 	1.2	 	 	Premises
	 	 	1	 
	 	1.3	 	 	Use
	 	 	1	 
	 	1.4	 	 	Acceptance “As Is”; Improvements
	 	 	1	 
	 	1.5	 	 	Term
	 	 	1	 
	 	1.6	 	 	Option to Extend
	 	 	2	 
	 	1.7	 	 	Option to Terminate
	 	 	2	 
	SECTION 2:	 	RENT AND SECURITY
	 	 	3	 
	 	2.1	 	 	Rent
	 	 	3	 
	 	2.2	 	 	Additional Rent
	 	 	3	 
	 	2.3	 	 	Lease Taxes
	 	 	10	 
	 	2.4	 	 	Personal Property Tax
	 	 	10	 
	 	2.5	 	 	Security Deposit
	 	 	10	 
	SECTION 3:	 	AFFIRMATIVE OBLIGATIONS
	 	 	11	 
	 	3.1	 	 	Compliance with Laws
	 	 	11	 
	 	3.2	 	 	Services and Utilities
	 	 	11	 
	 	3.3	 	 	Repairs and Maintenance
	 	 	14	 
	SECTION 4:	 	NEGATIVE OBLIGATIONS
	 	 	15	 
	 	4.1	 	 	Alterations
	 	 	15	 
	 	4.2	 	 	Assignment and Subleasing
	 	 	16	 
	SECTION 5:	 	INSURANCE AND LIABILITY
	 	 	18	 
	 	5.1	 	 	Insurance
	 	 	18	 
	 	5.2	 	 	Indemnification
	 	 	20	 



 






 




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	5.3	 	 	Limitation of Landlord’s Liability
	 	 	20	 
	SECTION 6:	 	LOSS OF PREMISES
	 	 	21	 
	 	6.1	 	 	Damages
	 	 	21	 
	 	6.2	 	 	Condemnation
	 	 	22	 
	SECTION 7:	 	DEFAULT
	 	 	23	 
	 	7.1	 	 	Tenant’s Default
	 	 	23	 
	 	7.2	 	 	Landlord’s Remedies
	 	 	24	 
	 	7.3	 	 	Landlord’s Default
	 	 	26	 
	 	7.4	 	 	Survival
	 	 	26	 
	SECTION 8:	 	NONDISTURBANCE
	 	 	26	 
	 	8.1	 	 	Subordination
	 	 	26	 
	 	8.2	 	 	Estoppel Certificate
	 	 	27	 
	 	8.3	 	 	Quiet Enjoyment
	 	 	27	 
	SECTION 9:	 	LANDLORD’S RIGHTS
	 	 	28	 
	 	9.1	 	 	Rules
	 	 	28	 
	 	9.2	 	 	Mechanics’ Liens
	 	 	28	 
	 	9.3	 	 	Right to Enter
	 	 	28	 
	 	9.4	 	 	Holdover
	 	 	29	 
	 	9.5	 	 	Signs
	 	 	29	 
	SECTION 10:	 	DISPUTES
	 	 	30	 
	 	10.1	 	 	Arbitration
	 	 	30	 
	SECTION 11:	 	MISCELLANEOUS
	 	 	31	 
	 	11.1	 	 	Broker’s Warranty
	 	 	31	 
	 	11.2	 	 	Parking Areas
	 	 	31	 



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	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	11.3	 	 	Attorneys’ Fees
	 	 	31	 
	 	11.4	 	 	Notices
	 	 	32	 
	 	11.5	 	 	Partial Invalidity
	 	 	32	 
	 	11.6	 	 	Waiver
	 	 	32	 
	 	11.7	 	 	Time of the Essence
	 	 	32	 
	 	11.8	 	 	Binding on Successors
	 	 	33	 
	 	11.9	 	 	Governing Law
	 	 	33	 
	 	11.10	 	 	Insurance Increase
	 	 	33	 
	 	11.11	 	 	Lease not an Offer
	 	 	33	 
	 	11.12	 	 	Recording
	 	 	33	 
	 	11.13	 	 	Survival of Remedies
	 	 	33	 
	 	11.14	 	 	Authority of Parties
	 	 	33	 
	 	11.15	 	 	Business Days
	 	 	33	 
	 	11.16	 	 	Entire Agreement
	 	 	33	 
	 	11.17	 	 	Waiver of Jury Trial
	 	 	33	 
	 	11.18	 	 	Definition of Lease
	 	 	33	 



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SECTION 1:

BASIC LEASE PROVISIONS



     1.1     Date and Parties. This Office Lease (this “Lease”) is made the 22nd
day of November, 1999 between 1899 L STREET LLC, a Delaware limited liability
company (“Landlord”) and BLACKBOARD, Inc., a Delaware corporation (“Tenant”).


     1.2     Premises. Landlord hereby leases to Tenant the entire fourth and
fifth floors (the “Premises”) in the building (the “Building”) located at 1899
L Street, NW, Washington, DC; the Premises are shown on the floor plans
attached to this Lease as Exhibits A and A-1. The parties hereto agree that
for the purposes of this Lease the Building contains 131,395 rentable square
feet and the Premises contains 23,540 rentable square feet, both measurements
in accordance with the Washington, D.C. Board of Realtors Standard Method of
Measurement in effect on the date of execution of this Lease.


     Tenant and its agents, employees, and invitees shall have the
non-exclusive right with others designated by Landlord to the use of the common
areas in the Building and of the land (the “Land”) on which the Building and
related facilities are located (which Land is legally described in Exhibit B
attached to this Lease) for the common areas’ intended and normal purpose.
Common areas include elevators, sidewalks, parking facilities (subject to
paragraph 11.2), driveways, hallways, stairways, bathrooms (other than those
bathrooms, if any, that are within a tenant’s premises and that were not shown
on the original plans for the Building), common entrances, lobby, and other
similar public areas and access ways. Landlord may change the common areas if
the changes do not materially or unreasonably interfere with Tenant’s access to
or use of the Premises.


     1.3     Use. Tenant shall use the Premises for general office purposes only.
Tenant shall not create a nuisance or use the Premises for any immoral or
illegal purpose or in a manner not in keeping with the general character of the
Building or with the Building’s operation as a first-class office facility.


     1.4     Acceptance “As Is”; Improvements. Except as set forth herein and in
the following sentence, Tenant agrees to accept the Premises in their current
“as is” condition, but shall be permitted to improve the Premises to suit the
particular needs of Tenant in accordance with the Work Letter attached hereto
as Exhibit C (the “Tenant Improvements”). Landlord shall renovate the men’s
and women’s restrooms on the fourth and fifth floors, commencing work by
February 29, 2000 in accordance with a mutually agreeable scope of work not to
exceed $5,000 per restroom or $20,000 in the aggregate.


     1.5     Term. The term of this Lease (the “Term”) begins (the “Commencement
Date”) on the date of this Lease and, subject to Paragraphs 1.6 and 1.7 below,
ends (the “Expiration Date”) on March 31, 2005, unless terminated earlier under
this Lease. Tenant shall have the right to occupy the Premises from and after
the Commencement Date, so long as Tenant shall have obtained any and all
permits and approvals, such as a certificate of occupancy, necessary to permit
Tenant to legally occupy the Premises.


 






 


     1.6     Option to Extend. Tenant, at its option, may extend the Term of this
Lease for one further period (“Extended Term”) of five (5) years, commencing on
April 1, 2005 and expiring on March 31, 2010. The option for such extension
may be exercised by Tenant by giving written notice thereof to Landlord not
earlier than October 1, 2003, nor later than March 31, 2004, provided that at
the time of such notice and on the Expiration Date, Tenant shall not be in
Default (as defined in Section 7.1) in the performance of any of the terms and
provisions of this Lease beyond any applicable grace periods. The Extended
Term shall be on like terms, covenants, agreements, provisions, conditions and
limitations as are contained herein, except for the provisions hereof that are
by their terms applicable exclusively during the original Term (including this
extension option) and except further that the rental payable by Tenant during
the Extended Term shall be equal to the fair market rental of the Premises as
of the date of Tenant’s exercise of the extension option. Landlord and Tenant
shall negotiate in good faith to agree upon such fair market rental, but if the
parties are not able to agree within 30 days after Tenant’s exercise of the
extension option (the “Negotiation Period”), the fair market rental of the
Premises shall be conclusively determined as follows: Within ten (10) business
days after the end of the Negotiation Period, Landlord and Tenant shall each,
by written notice to the other party, (1) designate a licensed real estate
broker, having substantial experience during the prior five years in leasing
office space in Washington D.C. (a “Qualified Broker”) and (2) set forth such
party’s opinion (the “Landlord’s Opinion” or the “Tenant’s Opinion”) as to the
fair market rental of the Premises. If either party fails to timely designate
a Qualified Broker, the one Qualified Broker who has been designated shall
select either the Landlord’s Opinion or the Tenant’s Opinion as the fair market
rental of the Premises. If two Qualified Brokers have been timely designated,
those two Qualified Brokers shall, within ten (10) days after the designation
of the later of the two, designate a third Qualified Broker, and thereafter the
three Qualified Brokers shall, by majority vote, select either the Landlord’s
Opinion or the Tenant’s Opinion as the fair market rental of the Premises (with
no right to make any other determination). The fair market rental of the
Premises determined pursuant to this Section 1.6 shall be binding upon both
Landlord and Tenant.


     1.7     Option to Terminate. Tenant, at its option, may terminate this Lease
as of March 31, 2003 (“Termination Date”) by giving written notice of such
termination (a “Termination Notice”) to Landlord not earlier than February 1,
2002, nor later than March 31, 2002, which notice must be accompanied by a
Termination Fee equal to (a) Four Hundred Forty Thousand Dollars ($440,000.00),
plus (b) an amount equivalent to five (5) months of Rent (including Additional
Rent), at the rate then payable by Tenant, for all Expansion Space and First
Refusal Space that Tenant shall have committed to lease prior to giving such
Termination Notice. If Tenant timely provides the Termination Notice,
accompanied by the Termination Fee, Tenant shall have no further rights to
lease any additional Expansion Space or First Refusal Space, and all of
Tenant’s rights under this Lease shall cease and terminate on the Termination
Date. If Tenant fails to give a Termination Notice, accompanied by the
Termination Fee, on or before March 31, 2002, Tenant shall have no further
rights to terminate this Lease pursuant to this Paragraph 1.7.


2






 


SECTION 2:

RENT AND SECURITY



     2.1     Rent. No Rent shall be payable hereunder for the period from the
Commencement Date to March 31, 2000 (the “Rent Commencement Date”). Beginning
on April 1, 2000, Tenant shall pay to Landlord Rent as provided in the attached
Schedule of Rents. The Rent shall be paid: (i) without advance notice, demand,
offset, or deduction; (ii) by the first day of each month during the Term; and
(iii) to Landlord c/o Spaulding & Slye/Colliers International, P. O. Box 4904,
Boston, MA 02211, or as Landlord may otherwise specify in writing to Tenant.


     If Tenant fails to pay part or all of the Rent or Additional Rent
(paragraph 2.2(d)) within five (5) days after the date same was due, Tenant
shall also pay a late charge equal to five percent (5%) of the unpaid Rent or
Additional Rent; provided, however, that no late charge shall be imposed the
first time during each calendar year when part or all of the Rent or Additional
Rent is not paid within five (5) days after the date same was due if such late
Rent or Additional Rent is paid within five (5) days after Tenant receives
written notice of such late payment from Landlord.



	 	2.2	 	Additional Rent.
	 
	 	(a)	 	Definitions.




	 	(i)	 	Base Operating Expenses: means Operating Expenses
for the 2000 calendar year (the “Base Year”), as adjusted
under paragraph 2.2(b).
	 
	 	(ii)	 	Base Real Estate Taxes: means the amount of Real
Estate Taxes incurred with respect to the Property as defined
in paragraph 2.2(a)(iv) for the 2000 calendar year.
	 
	 	(iii)	 	Tenant’s pro rata share: means the percentage
obtained by dividing the rentable square footage of the
Premises, as specified in paragraph 1.2 (numerator), by the
rentable square footage of the Building, as specified in
paragraph 1.2 (denominator), and expressing the fraction as a
percentage, rounded up to the nearest one-hundredth (1/100th)
of one percent (0.01%). Subject to any expansion of the
Premises or recalculation of rentable square footage pursuant
to paragraph 1.2, Tenant’s pro rata share shall be 17.85%.
	 
	 	(iv)	 	Property: means the Building, including for
purposes of this definition parking and all other
improvements, fixtures and facilities appurtenant thereto, the
Building’s equipment and systems, and the Land.
	 
	 	(v)	 	Real Estate Taxes: means (1) real property taxes
and currently due installments of assessments, special or
otherwise, imposed upon the Property and paid or payable
(provided that Tenant shall have no obligation to pay its
share of any Real Estate Taxes more than thirty (30) days
before the same are payable by Landlord) by Landlord, and (2)



3






 







	 	 	 	reasonable legal and other fees, costs and disbursements
incurred for proceedings to contest, determine or reduce Real
Estate Taxes. Notwithstanding the foregoing, Real Estate
Taxes exclude: (1) federal, state or local income taxes, (2)
franchise, gift, transfer, excise, capital stock, estate,
succession or inheritance taxes, and (3) penalties or
interest for late payment of Real Estate Taxes.
	 
	 	(vi)	 	Operating Expenses:




	 	(A)	 	means Landlord’s reasonable expenses
that are attributable to the operation, maintenance,
management, and repair of the Property, including, but
not limited to:




	 	(1)	 	salaries, bonuses, and
other compensation (including, but not limited to,
payroll taxes, vacation, holiday, and other paid
absences, welfare, retirement, and other fringe
benefits) that is paid to employees, independent
contractors, or agents of Landlord or its agents
engaged in the operation, repair, management, or
maintenance of the Property;
	 
	 	(2)	 	the purchase, cleaning,
replacement, and pressing of uniforms of employees
described in paragraph 2.2(a)(vi)(A)(1);
	 
	 	(3)	 	repairs and maintenance
of the Property and the cost of supplies, tools,
materials, and equipment for Property repairs and
maintenance that, under generally accepted
accounting principles consistently applied, would
not be capitalized;
	 
	 	(4)	 	premiums and other
charges incurred by Landlord for insurance on or
in respect to the Property (including, without
limitation, that which is described in paragraph
5.1) and for employees described in paragraph
2.2(a)(vi)(A)(1);
	 
	 	(5)	 	costs incurred for
inspection and servicing, including all outside
maintenance contracts necessary or proper for the
maintenance of the Property, such as janitorial
and window cleaning, rubbish removal, snow
removal, exterminating, water treatment, elevator,
electrical, plumbing and mechanical equipment, and
the cost of materials, tools, supplies and
equipment used for inspection and servicing;
	 
	 	(6)	 	costs incurred for
electricity, water, gas, fuel or other utilities;



4






 







	 	(7)	 	payroll taxes, federal
taxes, state and local unemployment taxes and
social security taxes paid for the employees
described in paragraph 2.2(a)(vi)(A)(1);
	 
	 	(8)	 	sales, use and excise
taxes on goods and services purchased by Landlord;
	 
	 	(9)	 	personal property taxes
imposed upon Landlord with respect to the personal
property used in connection with the Property or
its operation, excluding the personal property
taxes payable by Tenant under paragraph 2.3;
	 
	 	(10)	 	license, permit and
inspection fees;
	 
	 	(11)	 	auditor’s fees for public
accounting;
	 
	 	(12)	 	legal fees, costs and
disbursements but excluding those (a) relating to
disputes with tenants, (b)based upon Landlord’s
negligence or other tortious conduct, (c) relating
to enforcing any leases except for enforcing lease
provisions for the benefit of the Building tenants
generally, or (d) relating to the defense of
Landlord’s title to, or interest in, the Property;
	 
	 	(13)	 	management fees, at a
rate not to exceed that charged in other
comparable buildings;
	 
	 	(14)	 	the annual amortization
over its useful life on a straight-line basis of
the costs of any capital improvements made by
Landlord that are required by laws, rules,
regulations or directives of any governmental
authorities;
	 
	 	(15)	 	the annual amortization
over its useful life on a straight-line basis of
the costs of any equipment or capital improvements
made by Landlord as a labor-saving measure or to
accomplish other savings in operating, repairing,
managing or maintaining the Property; and
	 
	 	(16)	 	other costs reasonably
necessary to operate, repair, manage and maintain
the Property in a first class manner and
condition.




	 	(B)	 	Notwithstanding paragraph
2.2(a)(vi)(A), Operating Expenses exclude:




	 	(1)	 	Real Estate Taxes as
defined in paragraph 2.2(a)(v);



5






 







	 	(2)	 	leasing commissions,
costs and other expenses (including legal fees)
incurred for leasing, renovating or improving
space for new tenants;
	 
	 	(3)	 	costs (including permit,
license and inspection fees) incurred in
renovating, improving, decorating, painting or
redecorating vacant space or space for new
tenants;
	 
	 	(4)	 	Landlord’s cost of
electricity or other service sold to tenants for
which Landlord is to be reimbursed as a charge
over the Rent and Additional Rent payable under
the lease with that tenant;
	 
	 	(5)	 	costs incurred by
Landlord for capital improvements and alterations
and replacements that are considered capital
improvements under generally accepted accounting
principles consistently applied, except that the
annual amortization of these costs shall be
included to the extent expressly permitted in
paragraphs 2.2(a)(vi)(A)(15) and (16);
	 
	 	(6)	 	depreciation and
amortization on the Building except as may be
expressly permitted elsewhere in the Lease;
	 
	 	(7)	 	overhead and profit paid
to subsidiaries or affiliates of Landlord for
management or other services on or to the Property
or for supplies or other materials, to the extent
that the costs of the services, supplies or
materials exceed the competitive costs of the
services, supplies or materials had they been
provided by someone other than a subsidiary or
affiliate;
	 
	 	(8)	 	interest on debt or
amortization payments on mortgages or deeds of
trust or any other debt for borrowed money;
	 
	 	(9)	 	rentals and other related
expenses incurred in leasing air conditioning
systems, elevators or other equipment ordinarily
considered to be of a capital nature, except
equipment not affixed to the Building that is used
in providing janitorial services;
	 
	 	(10)	 	items and services for
which Tenant reimburses Landlord or pays third
parties;
	 
	 	(11)	 	except for a reasonable
deductible amount (if any), costs of repairs or
other work needed because of fire, windstorm or
other casualty or cause insured against by
Landlord or to the extent Landlord’s Insurance
required under Section 5



6






 







	 	 	 	would have provided insurance, whichever is the
greater coverage;
	 
	 	(12)	 	any fines or penalties
incurred because Landlord violated any law;
	 
	 	(13)	 	costs incurred to test,
survey, cleanup, contain, abate, remove or
otherwise remedy hazardous wastes or
asbestos-containing materials from the Property
unless the wastes or asbestos-containing materials
were in or on the Property because of Tenant’s
negligence or intentional acts;
	 
	 	(14)	 	Legal fees incurred as a
result of disputes with other tenants in the
Building; and
	 
	 	(15)	 	Costs incurred in
connection with the sale, financing, refinancing,
mortgaging, selling or change of ownership of the
Building.




	 	(vii)	 	Adjustment Period: means each calendar year
occurring during the Term beginning with calendar year 2001,
which shall be the first Adjustment Period.




	 	(b)	 	Adjustments. Operating Expenses as defined in paragraph
2.2(a)(vi) shall be adjusted as follows:




	 	(i)	 	Gross-Up. If average occupancy during the Base
Year or any Adjustment Period is less than 95 percent, then
Operating Expenses for that Base Year or Adjustment Period
shall be “grossed up” to that amount of Operating Expenses
that, using reasonable projections, would normally be expected
to have been incurred during the Base Year or Adjustment
Period if the Building was 95 percent occupied during the Base
Year or Adjustment Period, as determined under generally
accepted accounting principles consistently applied. Only
those component expenses that are affected by variations in
occupancy levels shall be grossed up.
	 
	 	(ii)	 	Unused Tenant Services. If Landlord is not
furnishing any particular work or service (the cost of which,
if performed by Landlord, would constitute an Operating
Expense) to a tenant who has undertaken to perform such work
or service in lieu of the performance thereof by Landlord,
Operating Expenses for that Adjustment Period shall be
adjusted to reflect the same assumptions as to level of work
and services as were used in determining Base Operating
Expenses.
	 
	 	(iii)	 	Credits/Reimbursements. Operating Expenses
shall be reduced by reimbursements, credits, discounts,
reductions or other allowances received by Landlord for items
of cost included in Operating Expenses, except reimbursements
to Landlord by tenants under the Additional Rent



7






 







	 	 	 	(Operating Expenses/Taxes) provisions in their leases and
payments for the use of any parking facilities.
	 
	 	(iv)	 	Tax Refund. If Landlord receives a refund of any
portion of Real Estate Taxes that were included in the Real
Estate Taxes paid by Tenant, then Tenant shall receive a
credit against its next Additional Rent(s) due under this
Lease equal to its pro rata share of the refunded taxes, less
any reasonable expenses that Landlord incurred to obtain the
refund.
	 
	 	(v)	 	Substituted Taxes. If any non-Real Estate Taxes
are imposed against Landlord or the Building in substitution
for any Real Estate Taxes, then the substituted tax shall be
considered a Real Estate Tax.




	 	(c)	 	Payment by Landlord. Landlord shall pay the Property’s
Operating Expenses and Real Estate Taxes.
	 
	 	(d)	 	Payment by Tenant. If the combined total of Operating
Expenses and Real Estate Taxes for any Adjustment Period exceeds the
combined total of Base Operating Expenses and Base Real Estate Taxes
(“Operating Expense Increase”), then Tenant agrees to pay Landlord,
as additional rent for such Adjustment Period (“Additional Rent”),
Tenant’s pro rata share of the Operating Expense Increase.
	 
	 	(e)	 	Manner of Payment.




	 	(i)	 	Landlord may give Tenant notice of Landlord’s
estimate of amounts payable under paragraph 2.2(d) for each
Adjustment Period. If Tenant requests, Landlord shall give
Tenant a general breakdown to support Landlord’s estimate.
	 
	 	 	 	On or before the first day of each month during the
Adjustment Period, Tenant shall pay Landlord one-twelfth
(1/12th) of the estimated amount. If, however, the estimate
is not given before the Adjustment Period begins, Tenant
shall continue to pay on the basis of the prior year’s
estimate, if any, until the month after the new estimate is
given.
	 
	 	 	 	If the actual Operating Expenses or Real Estate Taxes being
incurred by Landlord during the Adjustment Period are greater
than the estimated amount, Landlord may deliver to Tenant (no
more than twice a year) a revised estimated amount and Tenant
shall pay Landlord, by the first day of each month which is
at least ten (10) days after such notice, one-twelfth
(1/12th) of the revised estimated amount rather than the
previously estimated amount.
	 
	 	(ii)	 	Within ninety (90) days after each Adjustment
Period ends, or as soon thereafter as is reasonably practical,
Landlord shall give Tenant an itemized statement (the
“Statement”) showing in reasonable detail the:



8






 







	 	(A)	 	actual Operating Expenses for the
Adjustment Period;
	 
	 	(B)	 	Real Estate Taxes for the Adjustment
Period;
	 
	 	(C)	 	Base Operating Expenses and Base Real
Estate Taxes;
	 
	 	(D)	 	the Operating Expense Increase for
the Adjustment Period;
	 
	 	(E)	 	the amount of Tenant’s pro rata share
of the Operating Expense Increase;
	 
	 	(F)	 	the amount, if any, paid by Tenant
during the Adjustment Period towards its share of the
Operating Expense Increase; and
	 
	 	(G)	 	the amount Tenant owes towards its
share of the Operating Expense Increase or the amount
Landlord owes Tenant as a refund.




	 	(iii)	 	If the Statement shows that the actual amount
Tenant owes for the Adjustment Period is less than the
estimated Operating Expenses and Real Estate Taxes paid by
Tenant during the Adjustment Period, Tenant shall receive a
credit for the difference (“Overpayment Amount”) against Rent
and Additional Rent next due under this Lease. If the
Statement shows that the actual amount Tenant owes is more
than the estimated Operating Expenses and Real Estate Taxes
paid by Tenant during the Adjustment Period, Tenant shall pay
the difference (“Underpayment Amount”) to Landlord within
thirty (30) days after the Statement is delivered to Tenant.
The obligation to pay Additional Rent shall survive the
expiration or termination of this Lease; likewise, Landlord’s
obligation to pay to Tenant any Overpayment Amount shall
survive the expiration or termination of this Lease and shall
be paid to Tenant, less any amounts then owed by Tenant to
Landlord pursuant to the terms of this Lease, within thirty
(30) days of its calculation after the expiration or
termination of this Lease.
	 
	 	(iv)	 	During any Adjustment Period during which the
Lease is not in effect for a complete calendar year (unless
this Lease was terminated due to Tenant’s Default) Tenant’s
obligation for Additional Rent shall be determined by
multiplying the Additional Rent for the Adjustment Period by a
fraction expressed as a percentage, the numerator of which is
the number of days of the Adjustment Period included in the
Term and the denominator of which is 365.
	 
	 	(v)	 	Tenant, and its agents and employees, shall have
one hundred twenty (120) days after receiving the Statement to
audit Landlord’s books and records concerning the Statement at
a mutually convenient time at Landlord’s offices in
Washington, D.C. If Tenant disputes the accuracy of
Landlord’s Statement, Tenant shall still pay the amount shown
owing, except that tenant may, within one hundred fifty (150)
days after receiving the Statement, begin arbitration under
paragraph 10.1 to recover that part



9






 







	 	 	 	of the Additional Rent paid because of errors in the
Statement, books or records of Landlord. If Tenant does not
file for arbitration within the 150-day period, then Tenant
accepts as final the amount shown as owing on the Statement.
	 
	 	 	 	If Tenant’s audit of the books and records shows that the
actual Operating Expense Increase was more than five percent
(5%) less than the Operating Expense Increase appearing on
the Statement, and either Landlord concedes to a greater than
five percent (5%) differential or an arbitration panel or
court so rules, then Landlord shall reimburse Tenant for its
reasonable outside costs of conducting the audit and any
arbitration in connection therewith within thirty (30) days.



     2.3     Lease Taxes. Tenant shall pay to Landlord by the first day of each
month during the Term from and after the Rent Commencement Date any applicable
sales, occupancy, transaction or privilege tax imposed upon this Lease, the
leasing of the Premises or sums payable hereunder by any governmental
authority.


     2.4     Personal Property Tax. Before delinquency Tenant shall pay all taxes
assessed during the Term against trade fixtures or personal property placed in
the Premises by or for the use of Tenant. If these taxes are assessed against
the Building, Tenant shall pay its share of the taxes to Landlord within thirty
(30) days after receiving Landlord’s written statement setting forth the amount
of taxes applicable to Tenant’s property and the basis for the charge to
Tenant. Tenant’s failure to pay within the thirty- (30-)day period shall
entitle Landlord to the same remedies it has upon Tenant’s failure to pay Rent.


     2.5     Security Deposit. The Tenant has deposited with Landlord cash (or, in
accordance with Rider 2, a letter of credit) in the amount of Four Hundred
Fifty Thousand Dollars ($450,000.00) (the “Security Deposit”) to secure
Tenant’s timely performance of its Lease obligations. If there shall have been
no breach or default by Tenant under this Lease prior to April 1, 2001,
Landlord shall promptly thereafter refund to Tenant Ninety Thousand Dollars
($90,000.00) of the Security Deposit. If there shall also have been no breach
or default by Tenant under this Lease prior to April 1, 2002, Landlord shall
promptly thereafter refund to Tenant an additional Ninety Thousand Dollars
($90,000.00) of the Security Deposit. If there shall also have been no breach
or default by Tenant under this Lease prior to April 1, 2003, Landlord shall
promptly thereafter refund to Tenant an additional Ninety Thousand Dollars
($90,000.00) of the Security Deposit. If there shall also have been no breach
or default by Tenant under this Lease prior to April 1, 2004, Landlord shall
promptly thereafter refund to Tenant an additional Seventy Thousand Dollars
($70,000.00) of the Security Deposit.


     If Tenant defaults under or breaches any provision of this Lease, Landlord
may, after giving five (5) days advance notice to Tenant, and without prejudice
to Landlord’s other remedies, apply part or all of the Security Deposit to cure
Tenant’s breach or default. If Landlord so uses part or all of the Security
Deposit, then Tenant shall, within ten (10) days after written demand, pay
Landlord the amount necessary to restore the Security Deposit to its amount
immediately prior to such application by Landlord. Landlord shall deposit any
cash Security Deposit in an interest-earning bank account, and all interest
earned thereon shall become a part


10






 


of the Security Deposit. Any part of the Security Deposit not used by
Landlord as permitted by this paragraph shall be returned to Tenant within
thirty (30) days after the Lease expires (or is terminated) and all sums due to
Landlord under or in connection with this Lease are paid. If Landlord sells
the Building then Landlord shall be relieved of any liability for the Security
Deposit if the requirements of paragraph 5.3(a) are met.


SECTION 3:

AFFIRMATIVE OBLIGATIONS



     3.1              Compliance with Laws. Tenant shall comply with all applicable laws,
ordinances, rules and regulations of governmental authorities (“Applicable
Laws”) regarding the physical condition of the Premises or that relate to the
lawful use or occupancy of the Premises, including without limitation all
applicable fire codes and the handicap access requirements of the Americans
With Disabilities Act (“ADA”); provided, however, that Landlord shall remain
responsible for compliance with the ADA by the overall Building and the common
areas within the Building.


     3.2              Services and Utilities.



	 	(a)	 	Services. Landlord shall provide at its expense, subject to
reimbursement under paragraph 2.2:




	 	(i)	 	Heating, ventilation, and air-conditioning
(“HVAC”) for the Premises consistent with comparable quality
office buildings in D.C. during Business Hours to maintain
temperatures for comfortable use and occupancy in light of
Tenant’s space plan (approved by Landlord), subject to
governmental laws, regulations or restrictions pertaining to
the functioning or use of HVAC;
	 
	 	(ii)	 	Automatic passenger elevator service (three
elevators available, but Landlord warrants that at least two
will be operational at all times) to the floors on which the
Premises are located;
	 
	 	(iii)	 	Freight elevator service to the floors on which
the Premises are located as reasonable scheduling permits;
	 
	 	(iv)	 	Janitorial services (after 6:00 p.m.) to the
Premises consistent with comparable quality office buildings
in D.C., as specified in Exhibit D, during normal business
hours, from Monday through Friday, exclusive of legal
holidays;
	 
	 	(v)	 	Hot and cold water (24 hours, 365 days/year)
sufficient for drinking, lavatory, toilet and ordinary
cleaning purposes to be drawn from approved fixtures in the
Premises if shown on Tenant’s approved space plan;
	 
	 	(vi)	 	Electricity to the Premises (24 hours, 365
days/year) that provides electric current in amounts (at least
6 watts per square foot) reasonably necessary for normal
office use, lighting and HVAC;



11






 







	 	(vii)	 	Building access controls, equipment, personnel,
procedures and systems;
	 
	 	(viii)	 	Replacement of Building Standard lighting tubes, lamp
ballasts, and bulbs;
	 
	 	(ix)	 	Snow removal, as required;
	 
	 	(x)	 	Extermination and pest control when necessary;
and
	 
	 	(xi)	 	Maintenance of common areas consistent with
comparable quality office buildings in D.C.; and
	 
	 	(xii)	 	Washing of exterior windows not less than twice
per year.




	 	(b)	 	Business Hours. Business Hours means: (i) Monday through
Friday, 8:00 a.m. through 8:00 p.m., and (ii) Saturday, 9:00 a.m.
through 4:00 p.m., but exclusive of the following holidays or the
days on which the following holidays are designated for observance:
New Year’s Day, Memorial Day, Independence Day (July Fourth), Labor
Day, Thanksgiving Day, Christmas Day, Martin Luther King Jr. Day and
Presidents’ Day.
	 
	 	(c)	 	24 Hour Access. Tenant, its employees, agents and invitees
shall have access to the Building and the Premises twenty-four (24)
hours a day, seven (7) days a week. During non-Business Hours
Landlord may institute reasonable building access restrictions,
including but not limited to, issuance of electronic card keys or
other entry devices or requiring persons to show a badge or
identification card issued by Landlord. Landlord shall not be
liable for denying entry to any person unable to comply with such
reasonable building access restrictions. Landlord may temporarily
close the Building if required because of a life-threatening or
Building-threatening situation. Landlord shall use its best efforts
to close the Building only during non-Business Hours.
	 
	 	(d)	 	Extra Services. If Tenant is using a material amount of
extra services because of either non-Business-Hours use or high
electricity consumption installations, Landlord may, after five (5)
days notice to Tenant of such use of extra services, directly charge
Tenant for the extra services used after the five (5) day notice
period.




	 	(i)	 	Non-Business-Hours Use. HVAC and electricity
required by Tenant during non-Business Hours shall be supplied
upon 24 hours advance written notice (but such notice must be
received by noon on Friday if HVAC is desired on Saturday or
Sunday). The current charge for use of HVAC and electricity
during non-Business Hours is $75 per hour, per floor, but such
charge is subject to change in the future.
	 
	 	(ii)	 	Excess Utility Use. Tenant shall not place or
operate in the Premises any electrically operated equipment or
other machinery, other than typewriters, personal computers,
computer servers, adding machines, reproduction machines and
other machinery and equipment normally used in offices in



12






 







	 	 	 	amounts customary for normal office uses, unless Tenant
receives Landlord’s advance written consent. Landlord shall
not unreasonably withhold or delay its consent, but Landlord
may require payment for the extra use of electricity caused
by operating this equipment or machinery. Landlord may
require that special, high electricity consumption
installations of Tenant such as computer or reproduction
facilities (except personal computers or normal office
photocopy machines) be separately sub-metered for electrical
consumption at Tenant’s cost.
	 
	 	(iii)	 	Payment. Tenant’s charges for the utilities
provided under (i) and (ii) above shall be the actual
out-of-pocket cost to Landlord of providing the services;
there shall be no administration fee. Tenant’s failure to pay
the above charges within thirty (30) days of receiving an
invoice shall entitle Landlord to the same remedies it has
upon Tenant’s failure to pay Rent.




	 	(e)	 	Interruption of Services.




	 	(i)	 	Interruptions. Landlord does not warrant that
any services Landlord supplies will not be interrupted.
Services may be interrupted because of accidents, repairs,
alterations, improvements, or any reason beyond the reasonable
control of Landlord. Except as noted in (ii) below, any
interruption shall not: (A) be considered an eviction or
disturbance of Tenant’s use and possession of the Premises;
(B) make Landlord liable to Tenant for damages; (C) abate Rent
or Additional Rent; unless Landlord shall have insurance for
the same; or (D) relieve Tenant from performing Tenant’s
obligations under this Lease. In any event, Landlord shall use
best efforts to restore any interruption in services.
	 
	 	(ii)	 	Remedy. If any essential services (HVAC,
passenger elevators, electricity or water) supplied by
Landlord are interrupted, and the interruption is the result
of the negligence or willful misconduct of Landlord, its
employees or agents, Tenant shall be entitled to an abatement
of Rent and Additional Rent if (i) the interruption materially
interferes with Tenant’s use and enjoyment of the Premises,
and (ii) the interruption or the continuation of the
interruption is not attributable to or caused (in whole or in
part) by Tenant or its agents, employees, contractors or
invitees. The abatement shall begin on the fifth consecutive
business day of the interruption and shall apply to only that
portion of the Premises which Tenant stops using because of
the interruption. The abatement shall end when the services
are restored or when the elements required for abatement under
this paragraph are no longer met. This Section shall not apply
to interruption caused by fire, the elements or other casualty
or condemnation which is governed by Section 6 of this Lease.



          (f)      Storage Space. Landlord shall also lease to Tenant, a Storage Space
area to be demised by Landlord at Landlord’s sole cost and expense on the B-1
level of the Building containing approximately 500 rentable square feet (the
actual square footage to be computed by




13






 





the Landlord’s architect in accordance with the Washington, D.C. Board of
Realtors Standard Method of Measurement in effect on the date of execution of
this Lease). Such Storage Space area shall not be deemed a part of the
Premises. Tenant shall pay rent on the Storage Space area to Landlord in the
amount of $1.50 per rentable square foot per month, which rent shall be deemed
Additional Rent under this Lease. The rent commencement for the Storage Space
shall be as stated in Section 2.1. Tenant shall have the right to terminate
its use of the Storage Space area, and the rent payable therefor, at any time
upon not less than ninety (90) days written notice to Landlord. If Tenant’s
right to occupy the Premises is terminated for any reason, Tenant shall
thereupon have no further right to use or occupy the Storage Space area.



	 	3.3	 	Repairs and Maintenance.
	 
	 	(a)	 	Tenant’s Care of Premises. Tenant shall:




	 	(i)	 	keep the Premises and fixtures in good order;
	 
	 	(ii)	 	make repairs and replacements to the Premises or
Building needed because of Tenant’s misuse or negligence,
except to the extent that the repairs or replacements are
covered by Landlord’s insurance or the insurance Landlord is
required to carry under Section 5, whichever is greater;
	 
	 	(iii)	 	repair and replace special equipment above
Building Standard installed by or at Tenant’s request and that
serve the Premises only, except (A) to the extent the repairs
or replacements are needed because of Landlord’s misuse or
negligence, and are not covered by Tenant’s insurance or the
insurance Tenant is required to carry under Section 5,
whichever is greater; or (B) if the Lease is terminated under
paragraphs 6.1 (Damages), 6.2 (Condemnation) or 7.3
(Landlord’s Default);
	 
	 	(iv)	 	not place or cause to be placed in the Premises
any thing that causes a condition whereby the design load
(live load) of the floor on which the Premises is located is
exceeded without Landlord’s prior written consent; and
	 
	 	(v)	 	not commit waste.




	 	(b)	 	Landlord’s Repairs. Except for repairs and replacements that
Tenant must make under paragraph 3.3(a), Landlord shall make all
other repairs and replacements to the Premises, Building components
serving the Premises and the Common Areas consistent with comparable
quality buildings in Washington D.C. Tenant shall assign to
Landlord any warranties to the extent that any such warranties cover
repairs to be made by Landlord under this paragraph 3.3(b). On
entire floors within the Premises, Landlord shall nevertheless be
responsible for the basic plumbing, electrical, heating,
air-conditioning and ventilation systems installed or furnished by
Landlord and serving the lobbies, restrooms, elevators, life-safety
equipment and janitor and phone closets which are included within
such entire floors of the Premises, except that Tenant shall be
responsible for any separate



14






 







	 	 	 	HVAC systems installed by Tenant within the Premises and except
that Landlord may, at its option, require Tenant to install
separate metering of electrical current to any such separate HVAC
systems.
	 
	 	(c)	 	Time for Repairs. Repairs or replacements required under
paragraphs 3.3(a) or 3.3(b) shall be made within a reasonable time
using commercially reasonable efforts (depending on the nature of
the repair or replacement needed) after Landlord receives written
(or, in the case of an emergency, oral) notice of the need for a
repair or replacement. Landlord shall have no liability in
connection with or arising out of its failure to make any repair or
replacement unless it shall first have received a specific written
request for the repair or replacement from Tenant and have failed to
make the repair within a reasonable period of time given the nature
of the repair.
	 
	 	(d)	 	Surrendering the Premises. Upon the Expiration Date, Tenant
shall surrender the Premises to Landlord in the same broom clean
condition that the Premises were in on the Commencement Date except
for: (i) ordinary wear and tear; (ii) damage by the elements, fire,
or other casualty unless Tenant would be required to repair same
under paragraph 3.3(a); (iii) condemnation; (iv) damage arising from
any cause not required to be repaired or replaced by Tenant; and (v)
alterations permitted by this Lease unless Landlord’s consent was
conditioned upon their removal. Upon surrender Tenant shall remove
from the Premises its personal property, trade fixtures and any
alterations required to be removed under paragraph 4.1 and repair
any damage to the Premises caused by the removal. Any items not
removed by Tenant as required above shall be considered abandoned.
Landlord may dispose of abandoned items as Landlord chooses and bill
Tenant for the cost of theft disposal without credit for any
revenues received by Landlord in connection with their disposal.



SECTION 4:

NEGATIVE OBLIGATIONS




	 	4.1	 	Alterations.
	 
	 	(a)	 	Definitions. “Alterations” means alterations, additions,
substitutions, installations, changes and improvements, but excludes
minor decorations, such as the hanging of pictures of a typical
weight.
	 
	 	(b)	 	Consent. Tenant shall not make Alterations without
Landlord’s advance written consent. Landlord’s consent shall not be
unreasonably withheld or unduly delayed for recarpeting, repainting
and other interior Alterations to the Premises that do not adversely
affect the Building’s appearance, base building systems (plumbing,
electrical, HVAC, fire protection and life safety), value or
structural integrity. If consent is withheld, Landlord shall provide
to Tenant, at Tenant’s request, a written statement explaining why
Landlord’s consent was withheld.



15






 







	 	(c)	 	Conditions of Consent. Landlord may impose reasonable
conditions on its consent in paragraph 4.1(b), which conditions may
include a requirement that the Alterations be removed by Tenant upon
the expiration or termination of this Lease. The provisions of
Section 7 of Exhibit C to this Lease, including without limitation
the insurance requirements of Section 7(e), shall be applicable to
the construction of the Alterations.
	 
	 	(d)	 	Tenant’s Security System. Tenant shall be permitted, at its
sole cost and expense and in compliance with all applicable laws, to
install a security system for the Premises, which may be an
electronic card key system, provided a reasonable number of card
keys shall be provided by Tenant to Landlord to permit emergency
entrance by Landlord into the Premises and provided reasonable
advance written notice is given to Landlord of such installation.
	 
	 	(e)	 	Payment and Ownership of Alterations. Alterations made under
this paragraph 4.1 shall be at Tenant’s expense. The Alterations
shall belong to Landlord when this Lease expires or terminates
except for those Alterations required to be removed by Tenant, if
any, under paragraph 4.1(c). Nevertheless, Tenant may remove its
trade fixtures, furniture, equipment and other personal property if
Tenant promptly repairs any damage caused by their removal.
	 
	 	4.2	 	Assignment and Subleasing.
	 
	 	(a)	 	Consent Required. Tenant shall not transfer, mortgage,
encumber, assign or sublease all or part of the Premises or allow
its use by any third party, without Landlord’s advance written
consent. Landlord’s consent to any assignment or sublease shall not
be unreasonably withheld, conditioned or delayed.
	 
	 	(b)	 	Recapture. Landlord may, as an alternative to giving the
consent required by paragraph 4.2(a), elect to terminate the Lease
effective as of the effective date of the proposed sublease or
assignment if Tenant is proposing to assign this Lease or to
sublease more than 50% of the Premises. If Tenant desires to
sublease more than 50%, but less than all, of the Premises,
Landlord’s option to recapture shall only apply to that part of the
Premises that Tenant desires to sublease. In the event Landlord
chooses this alternative, consent shall not be deemed to have been
unreasonably withheld. Within fifteen (15) business days of
Tenant’s written notice to Landlord of its intent to assign this
Lease or to sublease more than 50% of the Premises, Landlord must
elect whether it will recapture the Premises or the over 50% portion
thereof proposed to be sublet. If Landlord elects this option,
Tenant shall have the right to withdraw its request and reinstate
the Lease by notice to Landlord given within five (5) days of
Landlord’s election to terminate. In the event the Premises or an
over 50% portion thereof is recaptured by Landlord pursuant to this
paragraph 4.2(b), Tenant shall have no further obligations under
this Lease from the date of recapture with respect to the Premises
(or the portion thereof recaptured, if less than all is recaptured).



16






 







	 	(c)	 	Reasonableness. Landlord’s consent shall not be considered
unreasonably withheld, conditioned or delayed if: (i) the proposed
subtenant’s or assignee’s financial responsibility does not meet the
same criteria Landlord uses to select comparable Building tenants;
(ii) the proposed subtenant or assignee is an existing tenant in the
Building or has been contacted by or on behalf of Landlord, within
the six (6) months prior to Tenant’s request for consent, as a
prospective tenant for the Building; (iii) the proposed subtenant’s
or assignee’s business is not suitable for the Building considering
the business of the other tenants and the Building’s prestige; or
(iv) the proposed use is inconsistent with the use permitted by
paragraph 1.3.
	 
	 	(d)	 	Procedure.




	 	(i)	 	Tenant must provide Landlord in writing: (A) the
name and address of the proposed subtenant or assignee; (B)
the nature of the business the proposed subtenant or assignee
will operate in the Premises; (C) the terms of the proposed
sublease or assignment; and (D) reasonable financial
information so that Landlord can evaluate the proposed
subtenant or assignee under paragraph 4.2(c)(i).
	 
	 	(ii)	 	Landlord shall, within fifteen (15) business days
after receiving the information under paragraph 4.2(d)(i),
give notice to Tenant consenting, or denying its consent, to
the proposed sublease or assignment. If Landlord denies
consent, it must explain the reasons for the denial. If
Landlord does not give any notice within the fifteen (15)
business-day period, then Tenant may sublease or assign part
or all of the Premises upon the terms Tenant gave in the
information under paragraph 4.2(d)(i).




	 	(e)	 	Affiliates. Notwithstanding paragraphs 4.2(a), (b), (c) and
(d), Tenant may assign or sublease part or all of the Premises
without Landlord’s consent to: (i) any corporation or partnership
that controls, is controlled by or is under common control with,
Tenant; or (ii) any corporation resulting from the merger or
consolidation with Tenant, as long as the assignee or sublessee is a
bona fide entity and assumes the obligations of Tenant (an
“Affiliate”). Tenant shall provide Landlord with notice of any such
assignment or subletting within thirty (30) days of such assignment
or subletting.
	 
	 	(f)	 	Conditions. Subleases and assignments by Tenant shall be
subject to the terms of this Lease and shall also be subject to the
following: (i) the term of any sublease shall not extend beyond the
Lease Term (or the Extended Term, if Tenant shall have timely
exercised its option under Paragraph 1.6 to extend the Term); (ii)
the original Tenant named in this Lease and each successor Tenant
shall remain liable for all Lease obligations; (iii) consent to one
sublease or assignment does not waive the consent requirement for
future assignments or subleases; and (iv) fifty percent (50%) of the
consideration (the “Excess Consideration”) received by Tenant from
an assignment or sublease that exceeds the amount Tenant must pay
Landlord, which amount is to be prorated where a part of the
Premises is



17






 







	 	 	 	subleased or assigned, shall also be paid to Landlord. Excess
Consideration shall exclude reasonable leasing commissions paid by
Tenant, payments attributable to the amortization of the cost of
improvements made with Landlord’s approval to the Premises at
Tenant’s cost for the assignee or sublessee, any free rent, and
other reasonable, out-of-pocket costs paid by Tenant, such as
attorney’s fees, directly related to Tenant’s obtaining an assignee
or sublessee. Tenant shall pay this Excess Consideration to
Landlord within thirty (30) days after receipt. Each payment shall
be sent with a detailed statement showing: (A) the total
consideration paid by the subtenant or assignee and (B) any
exclusions from the consideration permitted by this paragraph.
Landlord shall have the right to verify the accuracy of the
detailed statement by requesting reasonable evidence thereof which
Tenant shall supply to Landlord within thirty (30) days of
Landlord’s request.



SECTION 5:

INSURANCE AND LIABILITY




	 	5.1	 	Insurance.
	 
	 	(a)	 	Landlord’s Building Insurance. Landlord shall keep the
Property, excluding leasehold improvements (leasehold improvements
includes the Tenant Improvements and all other improvements made by
Tenant to the Premises), insured against damage and destruction in
the manner customary for operators of comparable quality office
buildings in Washington, D.C..
	 
	 	(b)	 	Property Insurance. Each party shall keep its personal
property and trade fixtures in the Premises and Building insured
with “all risks” insurance in an amount to cover one hundred percent
(100%) of the replacement cost of the property and fixtures. Tenant
shall also keep all leasehold improvements within the Premises
insured to the same degree as Tenant’s personal property.
	 
	 	(c)	 	Liability Insurance. Tenant shall maintain contractual and
comprehensive general liability insurance, including public
liability and property damage, with a minimum combined single limit
of liability of two million dollars ($2,000,000) for personal
injuries or deaths of persons occurring in or about the Property and
Premises.
	 
	 	(d)	 	Increases in Insurance Amounts. The amount of insurance
required pursuant to this Section 5 shall be subject to increase to
the extent it is commercially reasonable. If the parties do not
agree on the amount of an increase, then the party requesting the
increase shall submit the dispute to arbitration under paragraph
10.1.
	 
	 	(e)	 	Waiver of Subrogation. Each party waives claims arising in
any manner in its (Injured Party’s) favor and against the other
party for loss or damage to Injured Party’s property located within
or constituting a part or all of the Building or Premises or the
improvements or other property therein. This waiver applies to



18






 







	 	 	 	the extent the loss or damage is covered by: (i) the Injured
Party’s insurance or (ii) the insurance the Injured Party is
required to carry under Section 5, whichever is greater. The
waiver also applies to each party’s constituent partners, as well
as each party’s directors, officers, employees, shareholders and
agents. The waiver does not apply to claims caused by a party’s
willful misconduct.
	 
	 	(f)	 	Insurance Criteria. The insurance policies required to be
carried by Tenant pursuant to this Lease shall:




	 	(i)	 	be issued by insurance companies licensed to do
business within the District of Columbia having a general
policyholder’s ratings of at least A and a financial rating of
at least XI in the most current Best’s Insurance Reports
available on the date such policy is written. If the Best’s
ratings are changed or discontinued, the parties shall agree

to an equivalent method of rating insurance companies. If the
parties cannot agree they shall submit the dispute to
arbitration under paragraph 10.1;
	 
	 	(ii)	 	name Landlord and its managing agent as
additional insureds as their interest may appear;
	 
	 	(iii)	 	provide that the insurance not be canceled or
materially changed in the scope or amount of coverage unless
thirty (30) days’ advance notice is given to Landlord;
	 
	 	(iv)	 	be primary policies — not as contributing with,
or in excess of, the coverage that Landlord may carry;
	 
	 	(v)	 	be permitted to be carried through a “blanket
policy” or “umbrella” coverage provided that the policy limits
apply in a “per location” basis;
	 
	 	(vi)	 	have deductibles not greater than $10,000 unless
otherwise agreed to by Landlord; and
	 
	 	(vii)	 	be maintained during the entire Term.




	 	(g)	 	Evidence of Insurance. By the Commencement Date and upon
each renewal of its insurance policies, Tenant shall give
certificates of insurance to Landlord. The certificate shall
specify amounts, types of coverage, the waiver of subrogation, and
the insurance criteria listed in paragraph 5.1(e). The policies
shall be renewed or replaced and maintained by the Tenant. If
Tenant fails to maintain the insurance required by this Section 5 or
fails to give the required certificate within five (5) days after
notice or demand for it, Landlord may, but shall not be obligated
to, obtain and pay for that insurance and receive from Tenant, upon
demand, reimbursement for all sums paid, plus interest thereon at
the rate of ten percent (10%) per annum from the date of Landlord’s
payment until the date of Tenant’s reimbursement of Landlord.



19






 






     5.2     Indemnification. Tenant agrees to indemnify, defend, and hold
harmless Landlord, its agents (including its managing agent and any mortgagee),
employees, members, affiliates, and their respective officers, directors,
agents and employees, from and against all claims, demands, liabilities,
losses, costs, charges and expenses resulting from damage to property or injury
(including death) of persons,



	 	(i)	 	either (x) occurring in, on, or about the
Premises, or (y) occurring in, on, or about any facilities,
(including, without limitations, common areas, walkways,
elevators, stairways, passageways or hallways) the use of
which Tenant may have in conjunction with other tenants of the
Building, when such injury, death or damage shall be caused in
part or in whole by any act, negligence or willful misconduct
of, or omissions of any duty with respect to the same, by
Tenant, its agents, employees, contractors or licensees;
	 
	 	(ii)	 	arising from any work or act done or benefiting
Tenant in, on, or about the Premises; or
	 
	 	(iii)	 	otherwise arising from any negligent act,
omission or fault of, or negligent omission of any duty of
Tenant, or any of its agents, employees, contractors or
licensees.



          Additionally, Tenant agrees that Tenant shall contractually require all
contractors and sub-contractors doing any work or activity relating to or in
connection with the Premises to indemnify and hold harmless the Landlord and
the other parties set forth above under the terms of the foregoing indemnity in
clause (a) above.




	 	5.3	 	 Limitation of Landlord’s Liability.
	 
	 	(a)	 	Transfer of Premises. If the Building is sold or
transferred, voluntarily or involuntarily, Landlord’s Lease
obligations and liabilities accruing after the transfer shall be the
sole responsibility of the new owner if: (i) the new owner assumes
Landlord’s obligations in writing and (ii) the Tenant’s funds that
the Landlord is holding, such as the Security Deposit (or a credit
in the amount of such Tenant funds), are given to the new owner.
	 
	 	(b)	 	Liability for Money Judgment. If Landlord, its constituent
partners or its or their employees, officers or agents are ordered
to pay Tenant a money judgment because of Landlord’s default,
Tenant’s sole remedy to satisfy the judgment shall be against
Landlord’s interest in the Property.
	 
	 	(c)	 	Security. Notwithstanding any Building security that may be
provided by Landlord, Tenant is solely responsible for maintaining
the security of the Premises and providing any security for its
agents, employees or invitees that it deems necessary or advisable.
Accordingly, Landlord will have no liability for any injury, damage,
theft or other loss to persons or property suffered by Tenant or its
agents, employees or invitees as a result of any tortious or
criminal act of a third party in or about the Premises or other
portion of the Property.




20









 



SECTION 6:

LOSS OF PREMISES




	6.1	 	Damages.
	 
	(a)	 	Definition. “Relevant Space” means: (i) the Premises as
defined in paragraph 1.2, excluding Tenant’s leasehold improvements;
(ii) access to the Premises; and (iii) any part of the Building that
provides essential services to the Premises.
	 
	(b)	 	Repair of Damage. If the Relevant Space is damaged in part
or whole from any cause and the Relevant Space can be substantially
repaired and restored within 180 days from the date of the damage
(as reasonably determined by Landlord’s contractor), Landlord shall
at its expense promptly and diligently repair and restore the
Relevant Space to substantially the same condition as existed before
the damage. This repair and restoration shall be made within 180
days from the date of the damage unless the delay is due to causes
beyond Landlord’s reasonable control.
	 
	 	 	If the Relevant Space cannot be repaired and restored within the
180 day period, then either party may, within ten (10) days after
determining (pursuant to paragraph 6.1(c), if applicable) that the
repairs and restoration cannot be made within 180 days, and
providing written notice to the other party of such determination,
cancel this Lease by giving notice to the other party.
Nevertheless, if the Relevant Space is not repaired and restored
within 180 days from the date of the damage, then Tenant may cancel
the Lease at any time (before notice from Landlord that the
Relevant Space has been repaired and restored) after the 180th day
and before the 200th day following the date of damage. Tenant
shall not be permitted to cancel this Lease if its willful
misconduct causes the damage, unless Landlord is not promptly and
diligently repairing and restoring the Relevant Space.
	 
	(c)	 	Determining the Extent of Damage. If Tenant disputes the
determination of Landlord’s contractor as to the time required for
restoration, then the determination will be submitted to arbitration
under paragraph 10.1.
	 
	(d)	 	Abatement. Unless the damage is caused by Tenant’s willful
misconduct or negligence, the Rent and Additional Rent shall abate
in proportion to that part of the Premises that is unfit for use in
Tenant’s business. The abatement shall consider the nature and
extent of interference to Tenant’s ability to conduct business in
the Premises and the need for access and essential services. The
abatement shall continue from the date the damage occurred until ten
(10) business days after Landlord completes the repairs and
restoration to the Relevant Space or the part rendered unusable and
notice to Tenant that the repairs and restoration are completed, or
until Tenant is actively conducting its business in the Premises or
the part rendered unusable, whichever is first.



21






 







	(e)	 	Tenant’s Property. Notwithstanding anything else in this
Section 6, Landlord is not obligated to repair or restore damage to
Tenant’s trade fixtures, furniture, equipment or other personal
property, or the leasehold improvements, all of which shall be
promptly restored or replaced by Tenant.
	 
	(f)	 	Damage to Building. If: (i) more than twenty-five percent
(25%) of the Building is damaged, (ii) any mortgagee of the Building
will not allow insurance proceeds to be used for repair and
restoration, (iii) the damage is not covered by Landlord’s
insurance, or (iv) the Lease is in the last twelve (12) months of
its Term, then either party may cancel this Lease. To cancel, the
canceling party must give notice to the other within thirty (30)
days after the date of the damage. The notice must specify the
cancellation date, which shall be at least ten (10) days, but not
more than sixty (60) days, after the date notice is given.
	 
	(g)	 	Effect of Cancellation. If either party cancels this Lease
as permitted by this paragraph 6.1, then this Lease shall terminate
on the day specified in the cancellation notice. The Rent,
Additional Rent and other charges shall be payable up to the
cancellation date. Landlord shall promptly refund to Tenant any
prepaid, unaccrued Rent and Additional Rent, accounting for any
abatement, plus Security Deposit, if any, less any sum then owing by
Tenant to Landlord.
	 
	6.2	 	Condemnation.
	 
	(a)	 	Definitions. The terms “eminent domain,” “condemnation,”
“taken” and the like in this paragraph 6.2 include takings for
public or quasi-public use and private purchases in place of
condemnation by any authority authorized to exercise the power of
eminent domain.
	 
	(b)	 	Entire Taking. If the entire Premises or the portions of the
Building required for reasonable access to, or the reasonable use
of, the Premises are taken by eminent domain, this Lease shall
automatically terminate on the earlier of: (i) the date title vests
or (ii) the date Tenant is dispossessed by the condemning authority.
	 
	(c)	 	Partial Taking. If the taking of a part of the Premises
materially interferes with Tenant’s ability to continue its business
operations in substantially the same manner and space, then Tenant
may terminate this Lease on the earlier of: (i) the date when title
vests, (ii) the date Tenant is dispossessed by the condemning
authority, or (iii) sixty (60) days following notice to Tenant of
the date when vesting or dispossession is to occur. If there is a
partial taking and this Lease continues, then the Lease shall
terminate as to the part taken, the Rent and Additional Rent shall
abate in proportion to the part of the Premises taken, and Tenant’s
pro rata share shall be equitably reduced.
	 
	(d)	 	Rent Adjustment. If the Lease is canceled as provided in
paragraphs 6.2(b) or (c), then the Rent, Additional Rent and other
charges shall be payable up to the cancellation date. Landlord,
considering any abatement, shall promptly refund to



22






 







	 	 	Tenant any prepaid, unaccrued Rent and Additional Rent plus
Security Deposit, if any, less any sum then owing by Tenant to
Landlord.
	 
	(e)	 	Repair. If the Lease is not canceled as provided for in
paragraphs 6.2(b) or (c), then Landlord at its expense shall
promptly repair and restore the Premises to the condition that
existed immediately before the taking, except for the part taken, to
render the Premises a complete architectural unit, but only to the
extent of the condemnation award available to Landlord for the
damage.
	 
	(f)	 	Awards and Damages. Landlord reserves all rights to damages
paid because of any partial or entire taking of the Property,
including, without limitation, the Premises and the leasehold
interest created by this Lease. Tenant assigns to Landlord any
right Tenant may have to the damages or award. Further, Tenant shall
not make claims against Landlord or the condemning authority for
damages. Notwithstanding anything else in this paragraph 6.2(f),
Tenant may claim and recover from the condemning authority a
separate award for Tenant’s moving expenses, business dislocation
damages, Tenant’s personal property and fixtures, and the
unamortized costs of leasehold improvements paid for by Tenant,
excluding the Tenant Improvements described in paragraph 1.4 and
Exhibit C, provided that such claim and recovery does not have the
effect of reducing the award payable to Landlord. Each party shall
seek its own award, as limited by this paragraph 6.2(f), at its own
expense, and neither shall have any right to the award made to the
other.
	 
	(g)	 	Temporary Condemnation. If part or all of the Premises are
condemned for a limited period of time (a “Temporary Condemnation”),
this Lease shall remain in full force and effect, except that the
Rent and Additional Rent and Tenant’s obligations for the part of
the Premises taken shall abate during the Temporary Condemnation in
proportion to the part of the Premises that Tenant is unable to use
in its business operations as a result of the Temporary
Condemnation. Landlord shall receive the entire award for any
Temporary Condemnation.



SECTION 7:

DEFAULT




	7.1	 	Tenant’s Default.
	 
	(a)	 	Defaults. Each of the following shall constitute a default
(“Default”):




	 	(i)	 	Tenant’s failure to pay Rent or Additional Rent
within five (5) days after Tenant receives written notice from
Landlord of Tenant’s failure to pay Rent or Additional Rent;
	 
	 	(ii)	 	Tenant’s failure to pay Rent or Additional Rent
by the due date, at any time during a calendar year in which
Tenant had previously received on two separate occasions a
written notice of its failure to pay Rent or Additional Rent
by the due date;



23






 







	 	(iii)	 	Tenant’s failure to maintain the insurance
required by paragraph 5.1 or any failure by Tenant to perform
or observe any other Tenant obligation under this Lease where
such failure materially affects other tenants or the general
character of the Building, if such failure is not cured within
three (3) business days after written notice by Landlord or
(except with respect to maintenance of insurance for which no
extension shall be permitted) within such additional time, if
any, as is reasonably necessary to promptly and diligently
cure the failure;
	 
	 	(iv)	 	Tenant’s failure to perform or observe any other
Tenant obligation under the Lease which is not cured within
fifteen (15) days after it receives written notice from
Landlord setting forth the failure, or within such additional
time, if any, that is reasonably necessary to promptly and
diligently cure the failure;
	 
	 	(v)	 	Tenant’s abandoning the Premises for a period in
excess of ten days without paying Rent; or
	 
	 	(vi)	 	Tenant files a petition in bankruptcy or makes an
assignment for the benefit of creditors or fails to vacate or
stay any of the following within ninety (90) days after they
occur: (A) a petition in bankruptcy is filed against Tenant,
(B) Tenant is adjudicated as bankrupt or insolvent, or (C) a
receiver, trustee or liquidator is appointed for all or a
substantial part of Tenant’s property.




	7.2	 	Landlord’s Remedies.
	 
	(a)	 	Remedies. Landlord, in addition to the remedies given in
this Lease or under the law, may do any one or more of the following
if Tenant commits a Default:




	 	(i)	 	terminate this Lease as of the date notice of
Landlord’s election to terminate this Lease is sent to Tenant,
and Tenant shall then surrender the Premises to Landlord
immediately upon receipt of such notice or a copy thereof;
	 
	 	(ii)	 	enter and take possession of the Premises, either
with or without process of law, and remove Tenant, with or
without having terminated the Lease;
	 
	 	(iii)	 	accelerate and declare the unpaid Rent and
Additional Rent for the remainder of the Term to be
immediately due and payable, and may, at once, take legal
action to recover and collect the same, reduced to its present
value using a discount rate of seven and one-half percent
(7.5%) per annum; and
	 
	 	(iv)	 	cure the Default (without thereby waiving the
Default), and recover from Tenant upon demand all the costs,
expenses and disbursements incurred by Landlord to cure the
Default.



24






 





	 	 	Provided a Default exists, Tenant waives claims for damages by reason of
Landlord’s reentry, repossession or alteration of locks or other entry
devices and for damages by reason of any legal process.
	 
	 	 	(b) No Termination/Waiver. No entry or taking possession of the Premises
by Landlord shall be construed as an election by Landlord to terminate
this Lease, unless a written notice of such intention is given to Tenant.
Pursuit of any remedy provided by this Lease shall not constitute a
forfeiture or waiver of any Rent, Additional Rent or other monies due to
Landlord hereunder or of any damages accruing to Landlord by reason of
any Default. Landlord’s acceptance of Rent or Additional Rent or other
monies following any Default shall not be construed as Landlord’s waiver
of such Default. No forbearance by Landlord of action upon any violation
or breach of any of the terms, provisions and covenants of this Lease
shall be deemed or construed to constitute a waiver of any such term,
provision or covenant. Forbearance by Landlord to enforce one or more of
the remedies provided by this Lease upon a Default shall not be deemed to
constituent a waiver of that or any other Default.
	 
	 	 	(c) Rent. If Landlord terminates this Lease or ends Tenant’s right to
possess the Premises because of a Default, Landlord may hold Tenant
liable for Rent, Additional Rent and other indebtedness accrued to the
date the Lease is terminated or Tenant’s right to possession is ended.
If Landlord does not terminate this Lease but only ends Tenant’s right to
possess the Premises, Tenant shall, in addition to the aforementioned
amount, also be liable for the Rent, Additional Rent and other
indebtedness that otherwise would have been payable by Tenant during the
remainder of the Term had there been no Default, reduced by any sums
Landlord receives by reletting the Premises during the Term pursuant to
paragraph 7.2(d), net of any expenses reasonably incurred pursuant to
paragraph 7.2(e).
	 
	 	 	(d) Reletting. In the event Landlord ends Tenant’s right to possession
of the Premises without also terminating the Lease, Landlord shall use
reasonable efforts to relet the Premises for Tenant’s account in order to
mitigate Landlord’s damages. Such reletting may be for such rent, for
such time or times (which may be for a term extending beyond the Term of
this Lease), in such portions and upon such terms as Landlord in
Landlord’s sole discretion shall determine, and Landlord shall not be
required to accept any tenant offered by Tenant or to observe any
instructions given by Tenant relative to such reletting. Landlord may
give priority over leasing the Premises to any other space Landlord
desires to lease in the Building and shall not be required in any case to
offer rent, length of terms or other terms for the Premises which are or
would be less favorable to Landlord than being offered for comparable
space in the Building. In the event of a reletting, Landlord may recover
from Tenant the difference between (i) the Rent, Additional Rent and
other sums due hereunder and (ii) the rental due under the lease
resulting from the reletting, reduced to present value using a seven and
one-half percent (7.5%) per annum discount rate.
	 
	 	 	(e) Other Expenses. Tenant shall also be liable for the following sums
paid by Landlord and attributable to Tenant’s Default: (i) broker’s fees
incurred by Landlord for reletting part or all of the Premises; (ii) the
cost of removing and storing Tenant’s



25






 





	 	 	property; (iii) the cost of repairs, alterations and remodeling necessary
to put the Premises in a condition acceptable to a new tenant; (iv)
reasonable attorneys’ fees and costs incurred and not recoverable under
paragraph 11.3; and (v) other expenses incurred by Landlord in enforcing
its remedies.



     7.3 Landlord’s Default. Landlord’s failure to perform or observe any of
its Lease obligations after a period of thirty (30) business days, or the
additional time, if any, that is reasonably necessary to diligently cure the
failure, after receiving written notice thereof from Tenant shall be a Default.
The notice shall give in reasonable detail the nature and extent of the
failure and identify the Lease provision(s) containing the obligation(s).
After Tenant receives notice of a Mortgagee’s name and address and request for
notice upon Landlord’s Default, Tenant shall provide the notice required by
this paragraph to the Mortgagee at the same time Tenant gives notice to
Landlord. For purposes of this provision and also paragraph 11.4 below, the
definition of Mortgagee shall be deemed to include any institutional capital
source electing to take an equity position in Landlord rather than make a loan
to Landlord.


     If Landlord commits a Default which materially impairs Tenant’s use and
enjoyment of the Premises, Tenant may, in addition to any remedies given in
this Lease or under the law that shall be available in the event of any default
by Landlord, cure the default and recover from Landlord, upon demand, all
costs, expenses and disbursements reasonably incurred by Tenant to cure the
Default.


     7.4 Survival. The remedies permitted by this Section 7 and the
indemnities in paragraph 5.2 shall survive the termination of this Lease.


SECTION 8:

NONDISTURBANCE




	 	 	8.1 Subordination.
	 
	 	 	(a) Mortgages. Subject to paragraph 8.1(b), this Lease is subordinate to
all existing and subsequent mortgages covering all or a part of the
Property and to all additions, replacements, renewals and modifications
of such mortgages.
	 
	 	 	(b) Non-Disturbance. Landlord represents that there is no current lender
on the Property. Landlord shall use its best efforts to obtain from the
holder of any subsequent mortgage a non-disturbance agreement which
provides that if such mortgage is foreclosed, then: (i) this Lease shall
continue; (ii) Tenant’s quiet enjoyment shall not be disturbed if Tenant
is not in Default; and (iii) Tenant will attorn to and recognize the
mortgagee or purchaser at foreclosure sale (“Successor Landlord”) as
Tenant’s landlord for the remaining Term.
	 
	 	 	(c) Mortgagee Protection. The Successor Landlord shall not be
bound by:




	 	(i)	 	any payment of Rent or Additional Rent made more
than one month in advance of its due date;



26






 







	 	(ii)	 	Landlord’s obligations with respect to the
Security Deposit unless the Security Deposit was delivered to
the Successor Landlord;
	 
	 	(iii)	 	any offsets, claims or defenses which Tenant may
have against a Prior Landlord;
	 
	 	(iv)	 	any amendment, modification or termination of
this Lease without Successor Landlord’s consent after the
Successor Landlord’s name is given to Tenant, unless the
amendment, modification or termination is specifically
authorized by the original Lease and does not require
Landlord’s prior agreement or consent;
	 
	 	(v)	 	any notice given by Tenant to a prior Landlord;
and
	 
	 	(vi)	 	any liability for any breach, act or omission of
a prior Landlord.




	 	 	(d) Self-Operating. This paragraph 8.1 is self-operating. However,
Tenant shall execute and delivery any documents requested to confirm this
arrangement within five (5) business days of any such request.
	 
	 	 	8.2 Estoppel Certificate.
	 
	 	 	(a) Obligation. Either party (the “Answering Party”) shall from time to
time, within ten (10) business days after receiving a written request by
the other party (the “Asking Party”), execute and deliver to the Asking
Party a written statement. This written statement, which may be relied
upon by the Asking Party and any third party with whom the Asking Party
is dealing, shall certify: (i) the existence of the Lease document and
the date and document description of any modifications or amendments
thereto; (ii) the Commencement and Expiration Dates of this Lease; (iii)
that the Lease, as modified by any modifications and amendments
referenced in (i), is in full effect; (iv) whether to the Answering
Party’s knowledge the Asking Party is in default or whether the Answering
Party has any claims or demands against the Asking Party and, if so,
specifying the Default, claim or demand; and (v) to other correct and
reasonably ascertainable facts that are covered by the Lease terms.
	 
	 	 	(b) Remedy. The Answering Party’s failure to comply with its obligation
in paragraph 8.2(a) shall be a Default. Notwithstanding paragraphs
7.1(a)(iii) and 7.3, the cure period for this Default shall be five (5)
business days after the Answering Party receives notice of the Default.



          8.3 Quiet Enjoyment. Landlord warrants that, so long as Tenant is not in
Default, Tenant’s peaceable and quiet enjoyment of the Premises, subject to the
Lease terms, shall not be disturbed.



27






 





SECTION 9:

LANDLORD’S RIGHTS



          9.1 Rules. Tenant, its employees and invitees, shall comply with: (i) the
Building Rules attached as Exhibit E; and (ii) reasonable modifications and
additions to the Building Rules adopted by Landlord that: (A) Tenant is given
thirty (30) days advance notice of, (B) do not unreasonably and materially
interfere with Tenant’s conduct of its business or Tenant’s use and enjoyment
of the Premises, (C) are non-discriminatory, and (D) are uniformly applied to
all tenants in the-Building. If a Building Rule conflicts with or is
inconsistent with any Lease provision, the Lease provision controls. Landlord
is not responsible for any other tenant’s failure to observe the Building
Rules.




	 	 	9.2 Mechanics’ Liens.
	 
	 	 	(a) Tenant to Discharge Liens. Tenant shall, within thirty (30) days
after receiving notice of any mechanics’ lien for material or work
claimed to have been furnished to the Premises on Tenant’s behalf or at
Tenant’s request (except for work contracted by Landlord): (i) discharge
the lien or (ii) furnish a lien transfer bond or other security
reasonably satisfactory to Landlord.
	 
	 	 	(b) Landlord’s Discharge. If Tenant does not discharge the lien or
provide security within the twenty (20) day period, Landlord may pay any
amounts, including interest and legal fees, to discharge the lien.
Tenant shall then be liable to Landlord for the amounts paid by Landlord
plus interest thereon at the rate of ten percent (10%) per annum from the
date of Landlord’s payment until the date of Tenant’s reimbursement of
Landlord.
	 
	 	 	(c) No Consent. This paragraph 9.2 is not a consent to subjecting
Landlord’s property to liens. Landlord’s interest in the Property shall
not be subject to liens for improvements made by or on behalf of Tenant.
Tenant shall notify any contractor making any such improvements of the
provisions of this paragraph 9.2(c).
	 
	 	 	9.3 Right to Enter.
	 
	 	 	(a) Permitted Entries. Landlord and its agents, servants and employees
may enter the Premises at reasonable times, and at any time in an
emergency, without charge, liability or abatement of Rent, to: (i)
examine the Premises; (ii) make repairs, alterations, improvements and
additions either required by the Lease or advisable to preserve the
integrity, safety and good order of part or all of the Premises or
Building; (iii) provide janitorial and other services required by the
Lease; (iv) comply with Applicable Laws under paragraph 3.1; (v) show the
Premises to prospective lenders or purchasers and, during the ninety (90)
days immediately before this Lease expires, to prospective tenants,
accompanied, if requested by Tenant, by a Tenant representative; and (vi)
remove any Alterations made by Tenant in violation of paragraph 4.1.
	 
	 	 	(b) Entry Conditions. Notwithstanding paragraph 9.3(a), entry (except in
an emergency or in accordance with paragraph 9.3(a)(iii)) is conditioned
upon Landlord: (i) giving Tenant at least twenty-four (24) hours advance
notice (which may be oral to Tenant’s local manager); (ii) promptly
finishing any work for which it entered; (iii)



28






 



	 	 	causing the least practical interference to Tenant’s business; and (iv)
permitting a representative designated by Tenant to accompany Landlord’s
representative.
	 
	 	 	9.4 Holdover.
	 
	 	 	(a) Holdover Status. If Tenant continues occupying the Premises after
the expiration or termination of this Lease (“Holdover”) then:




	 	(i)	 	if the Holdover is with Landlord’s written
consent, it shall be a month-to-month tenancy, terminable on
thirty (30) days advance notice by either party. Tenant shall
pay at the beginning of each month Rent and Additional Rent
that is 125% of the amount due in the last full month
immediately preceding the Holdover period, including any
Additional Rent, unless Landlord specifies a lower or higher
Rent or Additional Rent in the written consent;
	 
	 	(ii)	 	if the Holdover is without Landlord’s written
consent, then Tenant shall be a tenant-at-sufferance. Tenant
shall be liable to Landlord for 150% of the amount of Rent and
Additional Rent due in the last full month immediately
preceding the Holdover period and shall, in the event that
Tenant’s holdover is for more than thirty (30) days, in
addition be liable for any damages suffered by Landlord
because of Tenant’s Holdover arising after such thirty (30)
day period, and Landlord’s obligation to Tenant for services
and repairs (paragraphs 3.2 and 3.3) shall end. Landlord shall
retain its remedies against Tenant if it holds over without
written consent.




	 	 	(b) Holdover Terms. Any Holdover shall, subject to the provisions of
paragraph 9.4(a)(ii), be on the same terms and conditions of this Lease
except: (i) the Term (paragraph 1.4); (ii) Rent and Additional Rent
(paragraphs 2.1 and 2.2); (iii) the Quiet Possession provision (paragraph
8.3) is deleted; (iv) consent to an assignment or sublease may be
unreasonably withheld and delayed (paragraph 4.2); (v) the provision on
Landlord’s Default is deleted (paragraph 7.3); and (vi) the Defaulting
Party may be Tenant only (paragraphs 7.3 and 7.5).
	 
	 	 	9.5 Signs.
	 
	 	 	(a) Suite Entrance Signage. Landlord shall install, at its expense,
Building Standard signage, displaying Tenant’s name at the entrance(s) to
the Premises and displaying Tenant’s name on the directory of tenants in
the Building lobby. Subject to Landlord’s design approval, Tenant may
install, at its sole cost and expense, above-standard signage at the
entrance to the Premises.
	 
	 	 	(b) Building Entrance Sign. So long as Tenant occupies more rentable
square footage in the Building than any other tenant, Tenant shall have
the right, at its sole cost and expense, to place its corporate name and
logo on the south and the west sides of the column to the right (closest
to 18th Street) of the entrance of the Building, and Tenant’s logo shall
be subject to Landlord’s reasonable approval, which approval shall not be



29






 



	 	 	unreasonably withheld, conditioned or delayed. Landlord shall have the
right to permanently remove Tenant’s sign from the west side of the above
stated column in the event that Landlord makes Building entrance
improvements which necessitate such removal. Any such sign shall conform
to the Building Standard Sign Specifications. Tenant shall be
responsible to obtain any appropriate permits or approval as required by
the District of Columbia. At such time, if any, when Tenant no longer
occupies more rentable square footage in the Building than any other
tenant, Landlord shall have the right, at Tenant’s cost and expense, to
remove such building entrance sign and to repair any damage to the
Building caused thereby.
	 
	 	 	(c) Nonpermitted Signs. Other than the signs and listings permitted in
paragraphs 9.5(a) and (b), Tenant shall not place or have placed any
other signs, listings, advertisements or other notices anywhere else in
the Building.



SECTION 10:

DISPUTES


     10.1 Arbitration.



	 	 	(a) Procedure. For disputes subject to arbitration under paragraph
10.1(c) that are not resolved by the parties within ten (10) days after
either party gives notice to the other of its desire to arbitrate the
dispute, the dispute shall be settled by binding arbitration by the
American Arbitration Association in accord with its then-prevailing
rules, except where inconsistent with the express provisions of this
paragraph 10.1(a). Unless otherwise agreed, each party shall prepare a
Statement of Resolution to the dispute, and the arbitration panel shall
choose between them. Evidence before the arbitration panel shall be
limited to the appropriateness of each Statement of Resolution. Judgment
upon any arbitration award may be entered in any court having
jurisdiction. The arbitrators shall have no power to change the Lease
provisions or make any decision other than to choose one of the
Statements of Resolution as the decision of the arbitration panel. The
arbitration panel shall consist of three arbitrators, one of whom must be
an independent real estate attorney actively engaged in the practice of
law for at least the last five (5) years. Both parties shall continue
performing their Lease obligations pending the award in the arbitration
proceeding. The arbitrators shall award the prevailing party reasonable
expenses and costs, including reasonable attorneys’ fees pursuant to
paragraph 11.3, plus interest on the amount due at eighteen percent (18%)
per annum or the maximum then allowed by applicable law, whichever is
less.
	 
	 	 	(b) Payment. The losing party shall pay to the prevailing party the
amount of the final arbitration award. If payment is not made within ten
(10) business days after the date the arbitration award is no longer
appealable, then in addition to any remedies under the law: (i) if
Landlord is the prevailing party, it shall have the same remedies for
failure to pay the arbitration award as it has for Tenant’s failure to
pay the Rent; and (ii) if Tenant is the prevailing party, it may deduct
any remaining unpaid award from its monthly payment of Rent or Additional
Rent.



30






 





	 	 	(c) Arbitration. The following disputes are subject to
arbitration:




	 	(i)	 	any dispute that is expressly made subject to
arbitration pursuant to other provisions of this Lease;
	 
	 	(ii)	 	any disputes that the parties agree to submit to
arbitration;
	 
	 	(iii)	 	the amount of any abatement of Rent and
Additional Rent because of casualty, loss or condemnation; and
	 
	 	(iv)	 	whether Landlord’s withholding of consent is
unreasonable or unduly delayed under paragraphs 4.2(a) and
(c).



SECTION 11:

MISCELLANEOUS



          11.1 Broker’s Warranty. The parties warrant that Spaulding & Slye
Services Limited Partnership, which represents Landlord, and Julien J. Studley
Inc., which represents Tenant, are the only brokers they have dealt with on
this Lease. The party who breaches this warranty shall defend, hold harmless
and indemnify the nonbreaching party from any claims or liability arising from
the breach. Landlord is solely responsible for paying the commission of said
named brokers.



          11.2 Parking Areas. Landlord shall keep and maintain in good condition
any parking facilities that may be provided. Landlord reserves the right to
control the method, manner and time of parking in parking spaces. Subject to
compliance with such rules and regulations as Landlord may impose from time to
time and timely payments of Landlord’s parking charges in effect from time to
time (which shall be at prevailing market rates), Landlord will make available
to Tenant or its employees, upon not less than one full calendar month’s
notice, up to twenty-three (23) unreserved parking spaces; provided that
failure to make available any such spaces for reasons beyond the reasonable
control of Landlord shall not constitute a default by Landlord hereunder. If
Tenant does not, prior to the Rent Commencement Date, give written notice to
Landlord of Tenant’s intent to utilize the parking spaces available for Tenant
or its employees and make the first monthly payments for use of such spaces,
Tenant’s right to the parking spaces not so paid for shall be deemed to have
been waived, and Tenant will have no further rights to such parking spaces
under this paragraph 11.2. Tenant’s employees who pay for monthly parking
shall have access to the parking garage 24 hours a day, 365 days/year.



          11.3 Attorneys’ Fees. In any litigation or arbitration between the
parties regarding this Lease, the losing party shall pay to the prevailing
party all reasonable expenses and court costs including attorneys’ fees
incurred by the prevailing party. A party shall be considered the prevailing
party if: (i) it initiated the litigation and substantially obtains the relief
it sought, either through a judgment or the losing party’s voluntary action
before arbitration (after it is scheduled), trial or judgment; (ii) the other
party withdraws its action without substantially obtaining the relief it
sought; or (iii) it did not initiate the litigation and judgment is entered for
either party, but without substantially granting the relief sought.




31






 


          11.4 Notices. Unless a Lease provision expressly authorizes oral notice,
all notices under this Lease shall be in writing and by personal delivery, by
registered or certified mail or by a nationally recognized overnight carrier,
as follows:




	 	 	 
	To Tenant:	 	
To Landlord:
	 	 	 
	Before Rent Commencement Date:	 	1899 L Street LLC

c/o Fosterlane Management Corp.
	Blackboard, Inc.

1111 19th Street, N.W., Suite 600

Washington, DC 20036

Attention: General Counsel	 	400 Northcreek, Suite 700

3715 Northside Parkway

Atlanta, GA 30327

Attention: Vice President


	 	 	 
	After Rent Commencement Date:	 	With a copy to:
	 	 	 
	Blackboard, Inc.

5th Floor, 1899 L Street, N.W.

Washington, DC 20036

Attention: General Counsel	 	Spaulding & Slye/Colliers International

1025 Thomas Jefferson Street, N.W.

Suite 650

Washington, D.C. 20007

Attention: Mike Renner
	 	 	 
	With a copy to:	 	 
	 	 	 
	Greenberg Traurig

1750 Tysons Boulevard, Suite 1200

McLean, VA 22102

Attention: Jeffrey R. Houle, Esq	 	




          Either party may change these persons or addresses by giving notice as
provided above. Tenant shall also give required notices to Landlord’s Mortgagee
(or capital source as described in paragraph 7.3 above) after receiving notice
from Landlord of the Mortgagee’s name and address. Notice shall be considered
given and received (i) on the day delivered if personally delivered, ii) on the
earlier of (a) the third (3rd) day after being sent or (b) delivery or
attempted delivery date as indicated on the postage receipt(s) if sent by
registered or certified mail or (iii) the next business day after deposit with
a nationally recognized overnight carrier for next business day delivery as
indicated on the receipt retained by the sender.



          11.5 Partial Invalidity. If any Lease provision is invalid or
unenforceable to any extent, then that provision and the remainder of this
Lease shall continue in effect and be enforceable to the fullest extent
permitted by law.



          11.6 Waiver. The failure of either party to exercise any of its rights is
not a waiver of those rights. A party waives only those rights specified in
writing and signed by the party waiving its rights.



          11.7 Time of the Essence. Time is of the essence of this Lease and of
each and all of the provisions hereof.



32






 



          11.8 Binding on Successors. This Lease shall bind the parties’ heirs,
successors, representatives and permitted assigns.



          11.9 Governing Law. This Lease shall be governed by the laws of the
District of Columbia.



          11.10 Insurance Increase. If due to Tenant’s particular use of the
Premises Landlord’s insurance rates are increased, Tenant shall pay the
increase.



          11.11 Lease not an Offer. Landlord gave this Lease to Tenant for review.
It is an offer to lease. This Lease shall not be binding unless signed by both
parties.



          11.12 Recording. Recording of this Lease is prohibited except as allowed
in this paragraph 11.12. At the request of either party, the parties shall
promptly execute and record, at the cost of the requesting party, a short form
memorandum describing the Premises and stating this Lease’s Term (and option to
extend the Term), its Commencement and Expiration Dates, notice of the
provisions of paragraph 9.2, and other information the parties agree to
include.



          11.13 Survival of Remedies. The parties’ remedies shall survive the
termination of this Lease when the termination is caused by the Default of the
other party.



          11.14 Authority of Parties. Each party warrants that it is authorized to
enter into this Lease, that the person signing on its behalf is duly authorized
to execute the Lease, and that no other signatures are necessary.



          11.15 Business Days. Throughout this Lease, wherever “days” are used the
term shall refer to calendar days. Wherever the term “business days” is used
the term shall refer to business days. Business days shall mean Monday through
Friday inclusive, excluding holidays identified in paragraph 3.2(b).



          11.16 Entire Agreement. This Lease contains the entire agreement between
the parties with respect to the Premises and Property. Except for the Rules,
as to which paragraph 9.1(a) controls, this Lease shall be modified only by a
writing signed by the party against whom enforcement of the modification in
sought.



          11.17 Waiver of Jury Trial. The undersigned parties hereby waive trial by
jury in any proceeding based upon or arising out of this Lease or the
landlord-tenant relationship created by this Lease.



          11.18 Definition of Lease. This Lease consists of the following:




	 	(i)	 	Title Page;
	 
	 	(ii)	 	Table of Contents;
	 
	 	(iii)	 	Sections 1 through 11;
	 
	 	(iv)	 	Signature Block or Page;



33






 




	 	(v)	 	Schedule of Rents;
	 
	 	(vi)	 	Exhibits A through H;




	 	(a)	 	Exhibits A and A-1: Floor plans of
5th Floor and 4th Floor Premises
	 
	 	(b)	 	Exhibit B: Legal Description of the
Land
	 
	 	(c)	 	Exhibit C: Work Letter
	 
	 	(d)	 	Exhibit D: Cleaning Specifications
for the Premises
	 
	 	(e)	 	Exhibit E: Building Rules
	 
	 	(f)	 	Exhibit F: Expansion Spaces
	 
	 	(g)	 	Exhibit G: Plan of Storage Space
	 
	 	(h)	 	Exhibit H: Environmental Provisions
	 




	 	(vii)	 	Riders 1 and 2




	 	 	 	 	 
	WITNESSES:	 	LANDLORD:
	 	 	 	 	 
	 	 	1899 L STREET LLC

a Delaware limited liability company
	 	 	 	 	 
	/s/ Carol Austin	 	
By:
	 	/s/ A. Alharoun
	
	 	 	 	

	Name: Carol Austin	 	
Name:
	 	A. Alharoun
	 	 	
Title:
	 	SVP
	/s/ Terri Chesser	 	
Date:
	 	11/24/99
	
	 	 	 	 
	Name: Terri Chesser	 	 	 	 
	 	 	 	 	 
	 	 	TENANT:
	 	 	 	 	 
	 	 	BLACKBOARD,
INC.

a Delaware corporation
	 	 	 	 	 
	/s/ Alan R. Stewart	 	
By:
	 	/s/ Andrew H.
Rosen
	
	 	 	 	

	Name: Alan R. Stewart	 	
Name:
	 	Andrew H. Rosen
	 	 	
Title:
	 	Vice President and General
Counsel
	/s/ Steven A. London	 	
Date:
	 	11/23/99
	
	 	 	 	 
	Name: Steven A.
London	 	 	 	 



34






 


SCHEDULE OF RENTS



To Office Lease dated November ___, 1999,

between

1899 L STREET LLC,

“Landlord”

and

BLACKBOARD, INC.

“Tenant”

(the “Lease”)



     The Rent to be paid by Tenant to Landlord pursuant to paragraph 2.1 of the
Lease shall be in accordance with the following Schedule:



	 	 	 	 	 	 	 	 	 
	 	 	Annual Rate of Rent	 	Amount Due by
	 	 	per Square Foot of	 	the First day
	 	 	Rentable Area in	 	of Each Month
	Applicable Period	 	the Premises	 	During the Term
	
	 	
	 	

	April 1, 2000 to March 31, 2001
	 	$	28.00	 	 	$	54,926.67	 
	April 1, 2001 to March 31, 2002
	 	$	28.70	 	 	$	56,299.83	 
	April 1, 2002 to March 31, 2003
	 	$	29.42	 	 	$	57,707.33	 
	April 1, 2003 to March 31, 2004
	 	$	30.15	 	 	$	59,150.01	 
	April 1, 2004 to March 31, 2005
	 	$	30.91	 	 	$	60,628.76	 



35






 



RIDER NO. 1



To Office Lease dated November 22, 1999,

between

1899 L STREET LLC,

“Landlord”

and

BLACKBOARD, INC.

“Tenant”

(the “Lease”)



     1.     Incorporation. This Rider is one of two Rider(s) to the Lease and is
by this reference incorporated into and made a part of the Lease.


     2.     Definitions. The terms used in this Rider without definition that are
defined in the Lease shall have the same meaning in this Rider as in the Lease.


     3.     Conflict. In the event of any conflict between the terms of this Rider
and the terms of the Lease, this Rider shall govern.


     4.     Expansion Rights.



		
	 	     4.1. Grant of Expansion Rights. Landlord hereby grants to Tenant
the right, in accordance with the terms of this Rider, to lease each
portion of the Building which is identified as Expansion Space on Exhibit
“F” to the Lease (the “Expansion Space”).
	 
	 	     4.2.
12th Floor Expansion Space. Tenant shall have no right to
lease the 12th Floor Expansion Space (consisting of approximately 10,199
rentable square feet on the 12th floor (the entire floor), measured in
accordance with the D.C. Board of Realtors Standard Method of
Measurement) unless it shall have notified Landlord in writing, no
earlier than twelve (12) months and not later than ten (10) months prior
to June 1, 2001 (the “12th Floor Availability Date”), that Tenant desires
to lease such space (a “12th Floor Exercise Notice”). If Tenant shall
provide a timely 12th Floor Exercise Notice, Landlord shall lease the
12th Floor Expansion Space to Tenant, and Tenant shall take such space
from Landlord, on the 12th Floor Availability Date and on the terms and
conditions set forth in this Rider. Notwithstanding the above, if
Landlord shall notify Tenant in writing of an earlier date on which the
12th Floor Expansion Space will be available for lease (the “Accelerated
12th Floor Availability Date”), Tenant shall have no further rights to
lease the 12th Floor Expansion Space pursuant to this Paragraph 4.2
unless, within thirty (30) days after receipt of such notice, Tenant
shall notify Landlord that Tenant agrees to lease the 12th Floor
Expansion Space on the Accelerated 12th Floor Availability Date and on
the terms and conditions set forth in this Rider.
	 
	 	     4.3.8th and 9th Floor Expansion Space. Tenant shall have no right
to lease the 8th and 9th Floor Expansion Space (consisting of
approximately 11,770 rentable square feet on the 9th floor (the entire
floor), and approximately 4,026 rentable square feet on a portion of the
8th floor, each measured in accordance with the D.C. Board of
Realtors Standard Method of Measurement) unless it shall have
notified Landlord in



 






 



		
	 	writing, no earlier than twelve (12) months and not
later than ten (10) months prior to March 1, 2002 (the
“8th and 9th Floor
Availability Date”), that Tenant desires to lease such space
(a “8th and
9th Floor Exercise Notice”). If Tenant shall
provide a timely 8th and
9th Floor Exercise Notice, Landlord shall lease the
8th and 9th Floor
Expansion Space to Tenant, and Tenant shall take such space from
Landlord, on the 8th and 9th Floor Availability Date and on the terms and
conditions set forth in this Rider. Notwithstanding the above, if
Landlord shall notify Tenant in writing of an earlier date on which the
8th and 9th Floor Expansion Space will be available for lease (the
“Accelerated 8th and 9th Floor Availability Date”), Tenant shall have no
further rights to lease the 8th and 9th Floor Expansion Space pursuant to
this Paragraph 4.3 unless, within thirty (30) days after receipt of such
notice, Tenant shall notify Landlord that Tenant agrees to lease the 8th
and 9th Floor Expansion Space on the Accelerated
9th Floor Availability
Date and on the terms and conditions set forth in this Rider.
	 
	 	     4.4. 7th Floor Expansion Space. Tenant shall have no right to lease
the 7th Floor Expansion Space (consisting of approximately 5,059 rentable
square feet on a portion of the 7th floor, measured in accordance with
the D.C. Board of Realtors Standard Method of Measurement) unless it
shall have notified Landlord in writing, no earlier than twelve (12)
months and not later than ten (10) months prior to March 1, 2002 (the
“7th Floor Availability Date”), that Tenant desires to lease such space
(a “7th Floor Exercise Notice”). If
Tenant shall provide a timely 7th
Floor Exercise Notice, Landlord shall lease the 7th Floor Expansion Space
to Tenant, and Tenant shall take such space from Landlord, on the 7th
Floor Availability Date and on the teens and conditions set forth in this
Rider, provided the current tenant shall not have exercised its existing
renewal option. Notwithstanding the above, if after receipt of a timely
7th Floor Exercise Notice, but at least thirty (30) days prior to the 7th
Floor Availability Date, Landlord shall notify Tenant in writing that the
existing occupant has signed a new lease covering the 7th Floor Expansion
Space or has renewed or extended its lease covering such space, Tenant
shall have no further rights to lease the 7th Floor Expansion Space if
Landlord shall notify Tenant in writing of an earlier date on which the
7th Floor Expansion Space will be available for lease (the “Accelerated
7th Floor Availability Date”), Tenant shall have no further rights to
lease the 7th Floor Expansion Space pursuant to this Paragraph 4.4
unless, within thirty (30) days after receipt of such notice, Tenant
shall notify Landlord that Tenant agrees to lease the 7th Floor Expansion
Space on the Accelerated 7th Floor Availability Date and on the terms and
conditions set forth in this Rider.
	 
	 	     4.5. Conditions of Exercise. Tenant may only exercise a right to
lease Expansion Space, and an exercise thereof shall only be effective,
if at the time of Tenant’s exercise of the right and on the relevant
Availability Date (or Accelerated Availability Date) the Lease is in full
force and effect, Tenant is not in Default under the Lease beyond any
applicable grace period and Tenant has not sublet more than ten percent
(10%) of the Premises or Expansion Space. All time periods specified in
Paragraphs 4.2, 4.3 and 4.4 above shall be deemed of the essence.
	 
	 	     4.6. Rent and Additional Rent. The Rent per square foot of rentable
area for any portion of the Expansion Space shall be equal to the then
prevailing market rent
(including then-current market concessions, if any) for a lease of
comparable space for a



2






 



		
	 	term equal to the then remaining initial Term of
the Lease. If Landlord and Tenant are unable to agree upon such Rent,
the Rent for the relevant Expansion Space shall be decided by designated
brokers in the manner set forth in paragraph 1.6 of the Lease.
Additional Rent shall also be payable as provided in the Lease after
adjustment to the size of the Premises (but with the Base Year adjusted
to the then current year with respect to the Expansion Space) and
Tenant’s pro rata share as provided for in this Rider.
	 
	 	     4.7. Premises Expanded. Provided Tenant has validly exercised its
right to lease a portion of the Expansion Space, then effective as of the
Availability Date (or Accelerated Availability Date) for such space such
portion of the Expansion Space shall be included in the Premises and the
rentable area of the Premises shall be increased by the rentable area of
the applicable Expansion Space. In connection with the increase of the
rentable area of the Premises, Tenant’s pro rata share shall recalculated
according to the method prescribed in Lease paragraph 2.2(a)(iii). Being
part of the Premises, any Expansion Space shall be subject to all of the
terms, conditions and provisions of the Lease.
	 
	 	     4.8.
Acceptance “As Is”. Subject to any improvement allowances or
other concessions that may be determined to be a component of the then
prevailing market rent for the Expansion Space, any Expansion Space shall
be accepted by Tenant in its “as is” condition.
	 
	 	     4.9. Amendment to Lease. In the event Tenant validly exercises its
right to lease a portion of the Expansion Space, then, within five (5)
business days after request by either party hereto, Landlord and Tenant
shall enter into a written amendment to the Lease confirming the terms,
conditions and provisions applicable to such portion of the Expansion
Space as determined in accordance with this Rider.
	 
	 	     4.10. Failure to Deliver Expansion Space. Landlord shall use all
reasonable efforts to deliver possession of the portion of the Expansion
Space as to which Tenant has exercised its right to lease on the relevant
Availability Date (or Accelerated Availability Date), but Landlord shall
not be subject to any liability for failure to deliver timely possession
of such space due, in whole or in part, to events beyond Landlord’s
reasonable control. Such failure to deliver timely possession shall not
affect the validity of the Lease, the obligations of either Landlord or
Tenant thereunder, or the terms and conditions of the Lease, which shall
remain unchanged and in full force and effect; provided, however, that
Rent for the Expansion Space shall not commence until delivery of the
Expansion Space to Tenant.



     5.     Right of First Refusal.



		
	 	     5.1. Grant of Right of First Refusal. Landlord hereby grants to
Tenant the right, in accordance with the terms of this Rider, to lease
that portion of the 7th floor of the Building shown on Exhibit F-3 to the
Lease, containing approximately 6,578 rentable square feet (the “First
Refusal Space”) should such First Refusal Space become
available for leasing during the Term of this Lease and should
Landlord be otherwise prepared to offer to lease to a bona fide
arms-length prospect (a “Bona Fide Prospect”).



3






 



		
	 	     5.2. Prospect Notice. Prior to accepting an offer from any Bona
Fide Prospect to lease the First Refusal Space, Landlord shall provide to
Tenant a copy of the offer setting forth the terms and conditions upon
which said Bona Fide Prospect proposes to lease the First Refusal
Space(the “Prospect Offer”).
	 
	 	     5.3. Exercise of Right of First Refusal. Tenant’s right to lease
the First Refusal Space upon the terms and conditions described in the
Prospect Offer shall be exercisable by written notice from Tenant to
Landlord of Tenant’s election to exercise such right given within five
(5) business days after receipt by Tenant of the Prospect Offer, time
being of the essence. If the right is not timely exercised, Tenant’s
right of first refusal shall terminate, and Landlord may thereafter lease
the First Refusal Space in accordance with the Prospect Offer without
further notice to Tenant, and free of any rights of Tenant.
	 
	 	     5.4. Conditions of Exercise. Tenant may only exercise its right to
lease the First Refusal Space, and an exercise thereof shall only be
effective, if at the time of Tenant’s exercise of the right and on the
first date on which Tenant would have a right to occupy the First Refusal
Space the Lease is in full force and effect and Tenant is not in Default
under the Lease.
	 
	 	     5.5. Amendment to Lease. In the event Tenant validly exercises its
right to lease the First Refusal Space, then, within ten (10) days after
request by either party hereto, Landlord and Tenant shall enter into a
written amendment to the Lease confirming the terms, conditions and
provisions applicable to the First Refusal Space as determined in
accordance with the Prospect Offer.



     6.     Parking. In the event the Premises are expanded in accordance with
this Rider, Tenant shall have the option to increase the number of unreserved
parking spaces, if any, available to Tenant pursuant to Lease paragraph 11.2 by
one (1) parking space for each 1,300 square feet of rentable area added to the
Premises. This option shall be exercisable by delivery of written notice to
Landlord within ninety (90) days after the first date such added space is
occupied by Tenant.


     7.     Assignment and Subleasing. In the event of an assignment or sublease
(other than to an Affiliate), all then unexercised Expansion Rights and First
Refusal Rights granted by this Rider shall terminate.


     8.     Modification Limited. Except to the extent expressly provided by this
Rider, the Lease shall remain in full force and effect without modification.


     9.     No Conflict. Landlord hereby represents and warrants to Tenant that,
except for certain extension options held by the current tenant of the 7th
Floor Expansion Space, Landlord has not granted any other expansion rights or
options or any other rights of first offer, negotiation or refusal or any other
similar rights with respect to the Expansion Space or the First Refusal Space.
Landlord covenants that it will not hereafter grant any expansion rights or
options or any rights of first offer, negotiation or refusal or any other similar rights with respect to the


4






 


Expansion Space or the First Refusal Space that would be
prior or senior to the rights of Tenant under this Rider 1.


     10.     Notification. Landlord shall use reasonable efforts to notify Tenant
promptly when additional space becomes available in the Building. In the event
that additional space becomes available in the Building, and Tenant desires to
lease such additional space from Landlord, Landlord and Tenant shall, in good
faith, attempt to negotiate a lease for such additional space, but Landlord
shall not be prohibited from also soliciting offers from, or negotiating with,
other prospective tenants for such additional space.


     The parties have through their authorized representatives entered into
this Rider as of the date of the Lease.



	 	 	 	 	 
	WITNESSES:	 	LANDLORD:
	 	 	 	 	 
	 	 	1899 L STREET LLC

a Delaware limited liability company
	 	 	 	 	 
	/s/ Carol Austin	 	
By:	 	/s/ A. Alharoun
	
	 	 	 	

	Name: Carol Austin	 	
Name:
	 	A. Alharoun
	 	 	
Title:
	 	SVP
	/s/ Terri Chesser	 	
Date:
	 	11/24/99
	
	 	
 
	 	 
	Name: Terri Chesser	 	 	 	 
	 	 	 	 	 
	 	 	TENANT:
	 	 	 	 	 
	 	 	BLACKBOARD,
INC.

a Delaware corporation
	 	 	 	 	 
	/s/ Alan R. Stewart	 	
By:
	 	/s/ Andrew H. Rosen
	
	 	 	 	

	Name: Alan R. Stewart	 	
Name:
	 	Andrew H. Rosen
	 	 	
Title:
	 	Vice President and General Counsel
	/s/ Steven A. London	 	
Date:
	 	11/23/99

	
	 	 	 	 
	Name: Steven A.
London	 	 	 	 
	 	 	 	 	 
	 	 	 	 	(Seal)




5










 



RIDER NO. 2

To Office Lease dated November 22, 1999,

between

1899 L STREET LLC,

“Landlord”

and

BLACKBOARD, INC.

“Tenant”

(the “Lease”)



     1.     Incorporation. This Rider is one of two Rider(s) to the Lease and is
by this reference incorporated into and made a part of the Lease.


     2.     Definitions. The terms used in this Rider without definition that are
defined in the Lease shall have the same meaning in this Rider as in the Lease.


     3.     Conflict. In the event of any conflict between the terms of this Rider
and the terms of the Lease, this Rider shall govern.


     4.     Irrevocable Letter of Credit. Tenant may post the Security Deposit
required by paragraph 2.5 of the Lease by way of an irrevocable, unconditional
letter of credit, issued by a bank acceptable to Landlord in its sole
discretion, which shall be renewed annually or when applicable and made payable
upon sight to Landlord in the amount set out in paragraph 2.5 for the Security
Deposit. Landlord agrees to accept such an initial letter of credit from
Silicon Valley Bank, but Tenant shall replace such initial letter of credit
with a comparable letter of credit from Bank of American N.A. within 20 days
after the Commencement Date of this Lease. If Tenant is entitled pursuant to
paragraph 2.5 to a reduction in the amount of the Security Deposit, the then
existing letter of credit shall be returned to Tenant if and when Tenant posts
with Landlord a substitute letter of credit meeting the above requirements in
the amount of the reduced Security Deposit. No letter of credit provided
pursuant to paragraph 2.5 shall have an expiration date that is within sixty
(60) days prior to or within sixty (60) days subsequent to the then expiration
date of the term of this Lease. The letter of credit shall be drawable by
delivery to the issuing bank of a certification by Landlord or its managing
agent that a Default has occurred under the Lease or that the letter of credit
is due to expire within the ensuing 30-day period and has not been replaced.
Sums drawn pursuant to the letter of credit shall be held and disbursed in the
manner described in the Lease for the Security Deposit. Unless a cash Security
Deposit is substituted therefor, the letter of credit or a substitute letter of
credit meeting the requirements of this Rider shall be maintained in effect
during the entire Term of the Lease (unless the Lease is earlier terminated).
The letter of credit shall be returned to Tenant at such time as Tenant has
fulfilled all of its obligations under the Lease and the Term of the Lease has
expired (or been earlier terminated). In the event of a sale of the Building
of which the Premises are a part, Landlord shall have the right to transfer the
letter of credit to the transferee of the Building, and thereafter Landlord
shall be released of all liability for the return of the letter of credit. In
such instance, Tenant agrees to look solely to said transferee for the return
of the letter of credit.


 






 


     5.     Modification Limited. Except to the extent expressly provided by this
Rider, the Lease shall remain in full force and effect without modification.


     The parties have through their authorized representatives entered into
this Rider as of the date of the Lease.



	 	 	 	 	 
	WITNESSES:	 	LANDLORD:
	 	 	 	 	 
	 	 	1899 L STREET LLC

a Delaware limited liability company
	 	 	 	 	 
	/s/ Carol Austin	 	
By:
	 	/s/ A. Alharoun
	
	 	 	 	

	Name: Carol Austin	 	
Name:
	 	A. Alharoun
	/s/ Terri Chesser	 	
Title:
	 	SVP
	
	 	
Date:
	 	11/24/99
	Name: Terri Chesser	 	 	 	 
	 	 	TENANT:
	 	 	 	 	 
	 	 	BLACKBOARD, INC.

a Delaware corporation
	 	 	 	 	 
	/s/ Alan R. Stewart	 	
By:
	 	/s/ Andrew H. Rosen
	
	 	 	 	

	Name: Alan R. Stewart	 	
Name:
	 	Andrew H. Rosen
	/s/ Steven A. London	 	
Title:
	 	Vice President and General Counsel
	
	 	 	 	 
	Name: Steven A.
London	 	
Date:
	 	11/23/99
	 	 	 	 	 
	 	 	 	 	(Seal)



2






 



AMENDMENT TO LEASE AGREEMENT



     This AMENDMENT TO LEASE AGREEMENT (this “Amendment”) is dated February
16th, 2000 between 1899 L Street LLC, a Delaware limited liability company
(“Landlord”), and Blackboard, Inc., a Delaware corporation (“Tenant”), and with
reference to the following facts and circumstances:


RECITALS



     A.     Landlord and Tenant entered into that certain Lease Agreement, dated
November 22, 1999 (the “Lease”), covering an aggregate of approximately 23,540
rentable square feet on the 4th and 5th floors (the “Original Premises”) of the
office building known as the 1899 L Street Building situated in the District of
Columbia (the “Building”), as more particularly set forth in the Lease.


     B.     Rider 1 to the Lease grants to Tenant (1) certain rights to lease
additional space in the Building (the “Expansion Space”) and (2) a right to
lease a portion of the 7th floor of the Building, containing approximately
6,578 rentable square feet (the “First Refusal Space”) if Landlord proposes to
lease such First Refusal Space to a third party.


     C.     Landlord has offered to lease the First Refusal Space to Tenant, and
Tenant has accepted such offer, on the terms and conditions herein set forth.


     D.     The parties desire to amend the Lease to reflect the terms and
conditions upon which the First Refusal Space is being leased to Tenant.


     NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) in hand paid by Landlord to Tenant, the covenants and
agreements of the parties hereto, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree that the Lease is hereby
amended as follows:


     1.     Except as otherwise specifically set forth herein, the “Premises” shall
hereafter be deemed to include both the Original Premises and the First Refusal
Space.


     2.     The Rent for the Premises shall be the sum of the Rent for the Original
Premises and the Rent for the First Refusal Space. The Rent for the Original
Premises shall be as set forth in the Schedule of Rents attached to the Lease.
The Rent for the First Refusal Space shall be as follows:



	 	 	 	 	 	 	 	 	 
	 	 	Annual Rate of Rent	 	Amount Due by
	 	 	per Square Foot of	 	the First day
	 	 	Rentable Area in	 	of Each Month
	Applicable Period	 	the Premises	 	During the Term
	
	 	
	 	

	April 1, 2000 to March 31, 2001
	 	$	29.50	 	 	$	16,170.92	 
	April 1, 2001 to March 31, 2002
	 	$	30.24	 	 	$	16,575.19	 
	April 1, 2002 to March 31, 2003
	 	$	30.99	 	 	$	16,989.57	 



3






 




	 	 	 	 	 	 	 	 	 
	 	 	Annual Rate of Rent	 	Amount Due by
	 	 	per Square Foot of	 	the First day
	 	 	Rentable Area in	 	of Each Month
	Applicable Period	 	the Premises	 	During the Term
	
	 	
	 	

	April 1, 2003 to March 31, 2004
	 	$	31.77	 	 	$	17,414.31	 
	April 1, 2004 to March 31, 2005
	 	$	32.56	 	 	$	17,849.67	 



     3.     In the event the Lease is terminated by Tenant as of the Termination
Date pursuant to Paragraph 1.7 of the Lease, the “Termination Fee” shall be
determined in accordance with said Paragraph 1.7.


     4.     Tenant’s initial “pro rata share” referenced in Paragraph 2.2(a)(iii)
of the Lease is hereby changed from “17.85%” to “22.92%.”


     5.     Concurrently with the first annual renewal of the existing Letter of
Credit Tenant shall deposit with Landlord an additional $17,000, either in cash
or in the form of a letter of credit acceptable to Landlord, which shall be
added to the Security Deposit specified in Paragraph 2.5 of the Lease.


     6.     The number of unreserved parking spaces to be made available by
Landlord to Tenant pursuant to Paragraph 11.2 of the Lease is hereby increased
from “twenty-three (23)” to “twenty-eight (28).” This provision satisfies the
requirement of Section 6 of Rider 1 to the Lease with respect to the First
Refusal Space.


     7.     Section 5 of Rider 1 to the Lease shall be of no further force or
effect.


     8.     The “Improvement Allowance” to be paid by Landlord to Tenant pursuant
to Section 6(a) of Rider 2 to the Lease is hereby increased from “$282,480” to
“$361,416.”


     9.     Notwithstanding anything in Paragraph 1.4 of the Lease or in Exhibit C
to the Lease to the contrary, Landlord shall, at its sole cost and expense,
install a sprinkler system, new ceiling grid, ceiling tiles and parabolic light
fixtures, all in accordance with building standards, throughout the First
Refusal Space.


     10.     The parties hereto agree that, except as expressly set forth herein,
there are no rent concessions, tenant allowances, cash inducements or other
considerations or concessions to be made to Tenant in consideration of Tenant’s
entering into this Amendment other than as expressly set forth herein.


     11.     Unless otherwise defined herein, all capitalized terms used in this
Amendment shall have the meanings given to such terms in the Lease.


     12.     Except as expressly amended herein, the Lease is hereby confirmed and
shall remain in full force and effect, without impairment or modification.


     IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed on the day and year first above written.


4






 



	 	 	 	 	 
	 	 	LANDLORD:
	 	 	 	 	 
	 	 	1899 L STREET LLC

a Delaware limited liability company
	 	 	 	 	 
	 	 	
By:
	 	/s/ A. Alharoun
	 	 	 	 	

	 	 	
Name:
	 	A. Alharoun
	 	 	
Title:
	 	SVP
	 	 	
Date:	 	 
	 	 	 	 	

	 
	 	 	
By:
	 	/s/ David G. Howard
	 	 	 	 	

	 	 	
Name:
	 	David G. Howard
	 	 	
Title:
	 	Vice President & Secretary
	 	 	
Date:	 	 
	 	 	 	 	

	 
	 	 	TENANT:
	 	 	 	 	 
	 	 	BLACKBOARD, INC.

a Delaware corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Alan R. Stewart
	 	 	 	 	

	 	 	
Name:
	 	Alan R. Stewart
	 	 	
Title:
	 	Chief Financial Officer
	 	 	
Date:
	 	February 14, 2000



5






 



SECOND AMENDMENT TO LEASE AGREEMENT



     This SECOND AMENDMENT TO LEASE AGREEMENT (this “Amendment”) is dated July
_______, 2000 between 1899 L Street LLC, a Delaware limited liability company
(“Landlord”), and Blackboard, Inc., a Delaware corporation (“Tenant”), and with
reference to the following facts and circumstances:


RECITALS



     A.     Landlord and Tenant entered into that certain Lease Agreement, dated
November 22, 1999 (the “Lease”), covering an aggregate of approximately 23,540
rentable square feet on the 4th and 5th floors (the “Original Premises”) of the
office building known as the 1899 L Street Building situated in the District of
Columbia (the “Building”), as more particularly set forth in the Lease.


     B.     Pursuant to an Amendment to Lease Agreement dated February 16, 2000
(the “First Amendment”), Landlord also leased to Tenant “” a portion of the 7th
floor of the Building, containing approximately 6,578 rentable square feet (the
“Additional Premises” and, together with the Original Premises, the “Existing
Premises”).


     C.     Tenant has requested that Landlord lease to it the 700 sq. ft. of space
on the lower level of the Building shown on Exhibit A hereto (the “Lower Level
Space”), and Landlord is willing to lease the Lower Level Space to Tenant on
the terms and conditions herein set forth.


     D.     The parties desire to further amend the Lease to reflect the terms and
conditions upon which the Lower Level Space is being leased to Tenant.


     NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) in hand paid by Landlord to Tenant, the covenants and
agreements of the parties hereto, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree that the Lease is hereby
amended, effective as of August 1, 2000, as follows:


     1.     Except as otherwise specifically set forth herein, the “Premises” shall
hereafter be deemed to include both the Existing Premises and the Lower Level
Space.


     2.     The Rent for the Premises shall be the sum of the Rent for the Existing
Premises and the Rent for the Lower Level Space. The Rent for the Existing
Premises shall be as set forth in the Schedule of Rents attached to the Lease
and in Paragraph 2 of the First Amendment. The Rent for the Lower Level Space
shall be as follows:



	 	 	 	 	 	 	 	 	 
	 	 	Annual Rate of Rent	 	Amount Due by
	 	 	per Square Foot of	 	the First day
	 	 	Rentable Area in	 	of Each Month
	Applicable Period	 	the Premises	 	During the Term
	
	 	
	 	

	April 1, 2000 to March 31, 2001
	 	$	19.00	 	 	$	1,108.33	 
	April 1, 2001 to March 31, 2002
	 	$	19.48	 	 	$	1,136.44	 
	April 1, 2002 to March 31, 2003
	 	$	19.96	 	 	$	1,164.44	 
	April 1, 2003 to March 31, 2004
	 	$	20.46	 	 	$	1,193.55	 
	April 1, 2004 to March 31, 2005
	 	$	20.97	 	 	$	1,223.39	 



 






 



     3.     The Lower Level Space is designed for storage, and Landlord shall be
required to provide to the Lower Level Space only those utilities and other
services, including HVAC, otherwise required by the Lease to the extent
consistent with storage use. For example, Landlord shall not be required to
provide any janitorial services to the Lower Level Space. Tenant may, however,
use the Lower Level Space for general office uses in addition to any storage
uses.


     4.     In addition to Tenant’s termination rights under Paragraph 1.7 of the
Lease, Tenant shall also have the right to terminate the Lease, with respect to
the Lower Level Space only, as of the end of any calendar month subsequent to
July 2001, by giving written notice of such termination to Landlord not less
than 120 days prior to such termination date.


     5.     The “Termination Fee” referenced in Paragraph 1.7 of the
Lease shall be increased by the amount of $1,330.00 with respect to
this Amendment.

     6.     Tenant’s “pro rata share” referenced in Paragraph 2.2(a)(iii) of the
Lease is hereby changed from “22.92%” to “23.45%.”


     7.     The parties hereto agree that, except as expressly set forth herein,
there are no rent concessions, tenant allowances, cash inducements or other
considerations or concessions to be made to Tenant in consideration of Tenant’s
entering into this Amendment other than as expressly set forth herein.


     8.     Unless otherwise defined herein, all capitalized terms used in this
Amendment shall have the meanings given to such terms in the Lease.


     9.     Except as expressly amended herein, the Lease is hereby confirmed and
shall remain in full force and effect, without impairment or modification.


     IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed on the day and year first above written.



	 	 	 	 	 	 	 
	TENANT:	 	LANDLORD:
	 	 	 	 	 	 	 
	BLACKBOARD, INC.

a Delaware corporation	 	1899 L STREET LLC

a Delaware limited liability company
	 	 	 	 	 	 	 
	By:	 	
/s/ Andrew H. Rosen
	 	By:
	 	/s/ A. Alharoun
	 	 	


	 	 	 	

	Name:	 	
Andrew H. Rosen
	 	Name:
	 	A. Alharoun
	Title:	 	
EVP & General Counsel
	 	Title:
	 	SVP
	Date:	 	
7/31/00
	 	Date:
	 	8/8/00
	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	/s/ David G. Howard
	 	 	 	 	 	 	

	 	 	 	 	Name:
	 	David G. Howard
	 	 	 	 	Title:
	 	Vice President & Secretary
	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	




 






 



THIRD AMENDMENT TO LEASE AGREEMENT



     This THIRD AMENDMENT TO LEASE AGREEMENT (this “Amendment”) is dated as of
January 31, 2001 between 1899 L Street LLC, a Delaware limited liability
company (“Landlord”), and Blackboard Inc., a Delaware corporation (“Tenant”),
and with reference to the following facts and circumstances:


RECITALS



     A.     Landlord and Tenant entered into that certain Lease Agreement, dated
November 22, 1999 (the “Lease”), covering an aggregate of approximately 23,540
rentable square feet on the 4th and 5th floors (the “Original Premises”) of the
office building known as the 1899 L Street Building situated in the District of
Columbia (the “Building”), as more particularly set forth in the Lease.


     B.     Pursuant to an Amendment to Lease Agreement dated February 16, 2000
(the “First Amendment”), Landlord also leased to Tenant a portion of the 7th
floor of the Building, containing approximately 6,578 rentable square feet (the
“7th Floor Premises”).


     C.     Pursuant to a Second Amendment to Lease Agreement dated July _, 2000
(the “Second Amendment”), Landlord also leased to Tenant 700 sq.ft. of space on
the lower level of the Building (the “Lower Level Space” and, together with the
Original Premises and the 7th Floor Premises, the “Existing Premises”).


     D.     Rider 1 to the Lease grants to Tenant the right to add to the Existing
Premises the entire 12th Floor of the Building, containing approximately 10,199
rentable square feet (the “12th Floor Premises”).


     E.     Landlord has offered to lease the 12th Floor Premises to Tenant, and
Tenant has accepted such offer, on the terms and conditions herein set forth.


     F.     The parties desire to amend the Lease to reflect the terms and
conditions upon which the 12th Floor Premises is being leased to Tenant.


     NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) in hand paid by Landlord to Tenant, the covenants and
agreements of the parties hereto, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree that the Lease is hereby
amended as follows:


     1.     Addition of 12th Floor Premises. Except as otherwise specifically set
forth herein, the “Premises” shall be deemed, from and after the Commencement
Date (as hereinafter defined), to include the Existing Premises and the 12th
Floor Premises.

     2.     Commencement Date. The Commencement Date shall be June 1, 2001, except
that Landlord may specify an earlier Commencement Date by written notice to
Tenant, so long as such earlier Commencement Date is not sooner than fifteen
(15) days after such notice is given to Tenant. As soon as practicable after
the Commencement Date, Landlord and Tenant


 






 


shall execute and deliver an amendment to the Lease confirming the actual
Commencement Date under this Third Amendment.


     3.     Rent for 12th Floor Premises. The Rent for the Premises shall be the
sum of (a) the Rent for the Original Premises, as set forth in the Schedule of
Rents attached to the Lease and Paragraph 4 below, (b) the Rent for the 7th
Floor Premises, as set forth in the First Amendment and Paragraph 4 below, (c)
the Rent for the Lower Level Space, as set forth in the Second Amendment and
Paragraph 4 below, and (d) the Rent for the 12th Floor Premises. No rent shall
be due for the 12th Floor Premises for the first 60 days after the Commencement
Date (the “Construction Period”). Thereafter the Rent for the 12th Floor
Premises shall be as follows (each 12 month period ending on an anniversary of
the Commencement Date being referred to herein as a “12th Floor Lease Year”):



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Amount Due by
	 	 	Annual Rate of Rent per	 	the First day
	 	 	Square Foot of Rentable Area	 	of Each Month
	Applicable Period	 	in the 12th Floor Premises	 	During the Term
	
	 	
	 	

	1st 12th Floor Lease Year
(exclusive of the Construction
Period)
	 	$	34.00	 	 	$	28,897.17	 
	2nd 12th Floor Lease Year
	 	$	35.02	 	 	$	29,764.08	 
	3rd 12th Floor Lease Year
	 	$	36.07	 	 	$	30,657.00	 
	4th 12th Floor Lease Year
	 	$	37.15	 	 	$	31,576.71	 
	5th 12th Floor Lease Year
	 	$	38.27	 	 	$	32,524.02	 
	6th 12th Floor Lease Year
	 	$	39.42	 	 	$	33,499.74	 
	7th 12th Floor Lease Year

(through the Expiration Date of the
Term)
	 	$	40.60	 	 	$	34,504.73	 



     4.     Extension of Term. The Expiration Date of the Lease, as set forth in
Paragraph 1.5 thereof, is hereby extended from March 31, 2005 to May 31, 2007.
The monthly Rent during such extension period for each portion of the Premises
other than the 12th Floor Premises shall be as follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Original	 	7th Floor	 	Lower Level
	Applicable Period	 	Premises	 	Premises	 	Space
	
	 	
	 	
	 	

	April 1, 2005 to March 31, 2006
	 	$	62,144.48	 	 	$	18,295.91	 	 	$	1,253.97	 
	April 1, 2006 to March 31, 2007
	 	$	63,698.09	 	 	$	18,753.31	 	 	$	1,285.32	 
	April 1, 2007 to May 31, 2007
	 	$	65,290.54	 	 	$	19,222.14	 	 	$	1,317.46	 



     5.     Modification of Extension Option. Tenant’s option to extend the Term
provided in Paragraph 1.6 of the Lease shall remain in full force and effect,
except that (a) the Extended


 






 


Term shall commence on June 1, 2007 and shall expire on May 31, 2012, and
(b) the period during which the option must be exercised shall be from December
1, 2005 to May 31, 2006.


     6.     Modification of Termination Option. Tenant’s option to terminate the
Lease provided in Paragraph 1.7 of the Lease shall remain in full force and
effect, except that (a) the Termination Date shall be March 31, 2005, (b) the
Termination Notice must be given to Landlord between February 1, 2004 and March
31, 2004, and (c) the Termination Fee shall be equal to the sum of (i)
$440,000.00 plus an amount equal to five (5) months of Rent (including
Additional Rent), at the rate then payable by Tenant for the 7th Floor
Premises, the Lower Level Space, the 12th Floor Premises and any other
Expansion Space that Tenant shall have committed to lease prior to giving the
Termination Notice, (ii) $785.71 (pursuant to Paragraph 5 of the Second
Amendment), and (iii) the unamortized amount (as if amortized over a 72 month
period commencing on the Commencement Date, using a cost of funds of 10% per
annum) of the amounts paid by Landlord in connection with this Third Amendment
for leasing commissions, tenant improvements and preparation (including legal
fees) of this Third Amendment.


     7.     Delivery of 12th Floor Premises. Landlord shall deliver possession of
the 12th Floor Premises to Tenant no later than the Commencement Date. If,
prior to the Commencement Date, Landlord shall have acquired full possessory
rights to one or more portions of the 12th Floor Premises, Tenant shall be
permitted early access to those portions of the 12th Floor Premises for
purposes of demolition work and installation of tenant improvements and
fixtures. Before accessing any portion of the 12th Floor Premises, Tenant
shall provide to Landlord satisfactory evidence of liability insurance covering
the actions of Tenant, its employees, agents and contractors within the
portions of the 12th Floor Premises proposed to be accessed by Tenant prior to
the Commencement Date.


     8.     Adjustment of Additional Rent. As of the first anniversary of the
Commencement Date, Tenant’s “pro rata share” referenced in Paragraph
2.2(a)(iii) of the Lease shall be increased from “23.45%” to “31.22%.” For
purposes of said Paragraph 2.2(a)(iii), the “Base Year” shall continue to be
the 2000 calendar year with respect to the original 23.45%, but the “Base Year”
with respect to the additional 7.77% shall be the 2001 calendar year.


     9.     Increase of Security Deposit. On or before the later of (a) April 1,
2001 or (b) the date when Landlord commences construction of improvements to
the 12th Floor Premises, Tenant shall deposit with Landlord an additional
$353,700.00, either in cash or in the form of a letter of credit acceptable to
Landlord, which shall be added to the Security Deposit specified in . Paragraph
2.5 of the Lease. Each time that a portion of Tenant’s Security Deposit is
refunded to Tenant pursuant to said Paragraph 2.5 commencing on April 1, 2002,
$95,000.00 of such additional Security Deposit shall also be refunded to
Tenant. If Tenant fails to make such additional deposit within 14 days after
the date it is required by the first sentence of this Paragraph 9, in addition
to all other remedies Landlord may have under the Lease, Tenant shall be
obligated to reimburse Landlord for all costs and expenses incurred by Landlord
for improvements to the 12th Floor Premises in order to prepare same for
occupancy by Tenant.


     10.     Parking Spaces. The number of unreserved parking spaces to be made
available by Landlord to Tenant pursuant to Paragraph 11.2 of the Lease is
hereby increased from “twenty-


 






 


eight (28) to “thirty-six (36).” This provision satisfies the requirement
of Section 6 of Rider 1 to the Lease with respect to the 12th Floor Premises.


     11.     Increase in Improvement Allowance. The “Improvement Allowance” to be
paid by Landlord to Tenant pursuant to Section 6(a) of Exhibit C to the Lease
is hereby increased by $152,985 ($15.00 per rentable square foot) from
“$361,416” to “$514,401.” Tenant acknowledges that it has already received the
$361,416 portion of the Improvement Allowance.


     12.     Confirmation of Area. Although the area of the 12th Floor Premises is
believed to be approximately 10,199 rentable square feet, the actual rentable
square footage is being measured by Landlord’s architect in accordance with the
Washington, D.C. Board of Realtors Standard Method of Measurement. To the
extent the actual rentable square footage is determined to be greater than, or
less than, 10,199, appropriate adjustments shall be made to the Rent specified
in Paragraph 3 above, to the “pro rata share” specified in Paragraph 8 above
and to the “Improvement Allowance” specified in Paragraph 11 above. As soon as
practicable after confirmation of such actual rentable square footage, Landlord
and Tenant shall execute and deliver an amendment to the Lease confirming the
actual rentable square footage and the adjusted Rent, “pro rata share” and
“Improvement Allowance.”


     13.     Ceiling Improvements. Notwithstanding anything in Paragraph 1.4 of
the Lease or in Exhibit C to the Lease to the contrary, prior to the
Commencement Date Landlord shall, at its sole cost and expense, remove the
existing ceiling and install a sprinkler system, in accordance with building
standards, throughout the 12th Floor Premises. Thereafter, Tenant shall be
responsible, at its cost, for installation of a building standard ceiling
throughout the 12th Floor Premises.


     14.     No Further Option on 12th Floor Premises. Section 4.2 of Rider 1 to
the Lease shall be of no further force or effect.


     15.     Brokers. Each of the parties warrants to the other the warranty
contained in Paragraph 11.1 of the Lease, but with respect to this Third
Amendment. Landlord shall remain responsible for the payment of commissions
due to the named brokers, but no commissions shall be payable by Landlord prior
to its receipt of the additional Security Deposit required by Paragraph 9
above.


     16.     Miscellaneous Provisions. The parties hereto agree that, except as
expressly set forth herein, there are no rent concessions, tenant allowances,
cash inducements or other considerations or concessions to be made to Tenant in
consideration of Tenant’s entering into this Amendment other than as expressly
set forth herein.


     17.     Defined Terms. Unless otherwise defined herein, all capitalized terms
used in this Amendment shall have the meanings given to such terms in the
Lease.


     18.     No Other Changes. Except as expressly amended herein, the Lease is
hereby confirmed and shall remain in full force and effect, without impairment
or modification.


     IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed on the day and year first above written.


 






 



	 	 	 	 	 
	 	 	LANDLORD:

1899 L STREET LLC

a Delaware limited liability company
	 	 	 	 	 
	 	 	
By:
	 	/s/ A. Alharoun
	 	 	 	 	

	 	 	
Name:
	 	A. Alharoun
	 	 	
Title:
	 	SVP
	 	 	
Date:
	 	2/12/01
	 	 	
By:
	 	/s/ David G. Howard
	 	 	
Name:
	 	David G. Howard
	 	 	
Title:
	 	Vice President & Secretary
	 	 	
Date:	 	 
	 	 	 	 	

	 	 
	 	 	TENANT:
	 	 	 	 	 
	 	 	BLACKBOARD, INC.

a Delaware corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Karl Engkvist
	 	 	 	 	

	 	 	
Name:
	 	Karl Engkvist
	 	 	
Title:
	 	VP Operations
	 	 	
Date:
	 	02/10/01



 






 



Execution Copy


FOURTH AMENDMENT TO LEASE AGREEMENT



     THIS AMENDMENT TO LEASE AGREEMENT (“Amendment”) is made and entered into
as of the 22 day of March, 2002, by and between (i) 1899 L STREET LLC
(“Landlord”) and (ii) BLACKBOARD INC. (“Tenant”).


RECITALS:


     A.     Landlord and Tenant are parties to that certain Lease dated November
22, 1999, as amended by that certain Amendment to Lease Agreement dated
February 16, 2000, that certain Second Amendment to Lease Agreement dated July
______, 2000 (the “Second Amendment”), and that certain Third Amendment to Lease
Agreement dated January 31, 2001 (the “Third Amendment”) (as amended, the
“Lease”), pursuant to which Landlord has leased to Tenant certain space (the
“Existing Space”) located on the fourth (4th), fifth (5th), seventh (7th) and
twelfth (12) floors and on the lower level of the building known as 1899 L
Street, N.W., Washington, D.C. (The “Building”).


     B.     Landlord and Tenant desire to amend the Lease to expand the Premises by
adding thereto approximately five thousand one hundred ninety-two (5,192)
rentable square feet of space on the seventh (7th). floor of the Building, as
shown on the floor plan attached hereto as Exhibit A (the “Additional Seventh
Floor Space”), on the terms and conditions hereinafter set forth.


     NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Lease shall be
amended as follows:


     Section 1.    Inclusion of Additional Seventh Floor Space. Effective as of
the Additional Space Commencement Date (defined below):


     1.01. The Additional Seventh Floor Space shall be added to and constitute
a part of the Premises, subject to all of the terms and conditions of the Lease
(including, but not limited to, Section 5 (“Insurance and Liability”)), except
as provided in this Amendment; and


     1.02. The rentable area of the Premises shall be increased by five
thousand one hundred ninety-two (5,192) square feet, and therefore, effective
on the Additional Space Commencement Date, the total rentable area of the
Premises shall be forty-six thousand two hundred nine (46,209) square feet.


     Section 2.    Occupancy Dates and Term.


     The term of the leasing of the Additional Seventh Floor Space shall
commence on the date (the “Additional Space Commencement Date”) Landlord
tenders possession of the Additional Space to Tenant. Landlord agrees to
tender possession of the Additional Space to Tenant one (1) business day after
the full execution and delivery of this Amendment. Unless


-1-






 


sooner terminated pursuant to the provisions of the Lease, the term of the
leasing of the Additional Space shall be coterminous with the Term of the
Lease.


     Section 3.    Rent for the Additional Seventh Floor Space.


     Commencing on the date (the “Rent Start Date”) that is (i) sixty (60) days
after the full execution and delivery of this Amendment by Landlord and Tenant
the Base Rent set forth in the Lease shall be increased by the Rent for the
Additional Seventh Floor Space, which shall be paid in equal monthly
installments at the same times and in the same manner as the Rent payable with
respect to the Existing Space. The initial annual Base Rent for the Additional
Seventh Floor Space shall equal One Hundred Seventy-Six Thousand Five Hundred
Twenty-Eight and No/100 Dollars ($176,528) (such initial annual Rent being
equal to Thirty-Four and No/100 Dollars ($34.00) multiplied by the rentable
area of the Additional Seventh Floor Space and being exclusive of Tenant’s pro
rata share of increases in Operating Expenses and Real Estate Taxes which shall
be paid by Tenant pursuant to Section 4 below). The first monthly installment
of Rent for the Additional Seventh Floor Space shall be paid by Tenant on the
execution of this Amendment. On March 1, 2003, and on each March 1 thereafter
during the Term, the annual Rent payable for the Additional Seventh Floor Space
shall be increased to one hundred three percent (103%) of the annual Rent then
payable for the Additional Seventh Floor Space. Accordingly, the Rent payable
with respect to the Additional Seventh Floor Space shall be as follows:



	 	 	 	 	 	 	 	 	 
	Time Frame	 	Annual Rent	 	Monthly Rent
	
	 	
	 	

	Rent Start Date - February 28, 2003
	 	$	176,528.00	 	 	$	14,710.67	 
	March 1, 2003 - February 28, 2004
	 	$	181,823.84	 	 	$	15,151.99	 
	March 1, 2004 - February 28, 2005
	 	$	187,278.55	 	 	$	15,606.55	 
	March 1, 2005 - February 28, 2006
	 	$	192,896.90	 	 	$	16,074.74	 
	March 1, 2006 - February 28, 2007
	 	$	198,683.80	 	 	$	16,556.98	 
	March 1, 2007 - May 31, 2007
	 	$	204,644.31	 	 	$	17,053.69	 



     Section 4.    Operating Expenses and Real Estate Taxes; Adjustment of
Additional Rent.


     As of March 1, 2003, Tenant’s “pro rata share” referenced in Paragraph
2.2(a)(iii) of the Lease, as amended, shall be increased from “31.22%” to
“35.17%.” For purposes of Paragraph 2.2(a)(iii) of the Lease, the “Base Year”
shall continue to be the 2000 calendar year with respect to the original
23.45%, and shall continue to be the 2001 calendar year with respect to the
7.77% relating to the 12th Floor Premises added pursuant to the Third
Amendment, but the “Base Year” with respect to the additional 3.95% relating to
the Additional Seventh Floor Premises shall be


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the 2002 calendar year, except that any increases for the months of
January 2003 and February 2003 shall be waived.


     Section 5.    Acceptance of the Additional Seventh Floor Space; Improvement
Allowance.


     5.01. Tenant acknowledges that Tenant has inspected and is fully familiar
with the Additional Seventh Floor Space and, subject to the work to be
performed by Landlord pursuant to Section 6 below, Tenant shall accept the same
in its broom clean, “as is” condition.


     5.02. Tenant shall complete the Tenant Improvements to be constructed by
Tenant in the Additional Seventh Floor Premises substantially in accordance
with the provisions of Exhibit C of the Lease. The “Improvement Allowance” to
be paid by Landlord to Tenant pursuant to Section 6(a) of Exhibit C to the
Lease, as amended, is hereby increased by the sum of (i) $77,880 ($15 per
rentable square foot of the Additional Seventh Floor Premises), (ii) the
Ceiling Credit (defined in Section 6 below), (iii) $5,192 ($1 per rentable
square foot of the Additional Seventh Floor Premises) to defray Tenant’s cost
to install, repair and/or replace ceiling tiles, and (iv) $10,000 to defray
Tenant’s cost to renovate/refurbish the two (2) common area restrooms located
on the seventh (7th) floor. Tenant acknowledges that it has already received
the $514,401 portion of the Improvement Allowance (i.e., the entire Improvement
Allowance other than the portion provided by this Amendment).


     Section 6.    Ceiling Improvements; Ceiling Credit; Restroom Renovations.


     6.01. Notwithstanding anything in Paragraph 1.4 of the Lease or in Exhibit
C to the Lease to the contrary, Landlord shall, at its sole cost and expense,
remove portions of the existing ceiling (as required) and install a sprinkler
system, in accordance with building standards, throughout the Additional
Seventh Floor Premises. Thereafter, Tenant shall be responsible, at its cost,
for installation of a building standard ceiling throughout the Additional
Seventh Floor Premises. Landlord and Tenant shall coordinate with one another
so that Landlord can complete its sprinkler work without interference from
Tenant or its contractors.


     6.02. Landlord shall receive bids from at least three (3) qualified
contractors to perform the sprinkler system work described in the immediately
preceding paragraph, and shall request each contractor submitting a bid to
include in its bid a separate fee/charge for repairing and/or replacing any
ceiling tiles (including affected portions of the ceiling grid) that would need
to be repaired or replaced following such sprinkler system work so that the
ceiling is in good condition and repair. Even though Tenant itself will be
responsible for such repair/replacement work following Landlord’s completion of
the sprinkler system work, the Improvement Allowance described in Section 5
above shall include the amount that the lowest qualified bidder included in its
bid for such ceiling file repair/replacement (the “Ceiling Credit”).


     6.03. No later than March 31, 2003, Tenant shall renovate the two (2)
common area restrooms located on the seventh (7th) floor in substantially the
same fashion as the fifth (5th) floor restrooms. Such work shall be performed
in accordance with Paragraph 4.2 of the Lease entitled “Alterations,” and
Landlord shall provide the portion of the Allowance described in clause (iv) of
Section 5.02 above following the completion of such work and evidence of


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payment and lien waivers reasonably acceptable to Landlord; provided,
however, that Landlord shall not be obligated to advance all or any part of
such $10,000 restroom allowance prior to January, 2003.


     Section 7.    Increase in Security Deposit.


     No later than April 1, 2002, Tenant shall deposit with Landlord an
additional $100,000 in the form of a letter of credit (as described in Rider
No. 2 of the Lease and otherwise acceptable to Landlord). Such letter of
credit (the “$100,000 L/C”) shall secure Tenant’s obligations under the Lease
as provided in Paragraph 2.5 of the Lease and shall be added to and constitute
a part of the Security Deposit currently held by Landlord. Provided there shall
have been no breach or default by Tenant under the Lease, on April 1, 2003, and
on each April 1 thereafter, Tenant may reduce the $100,000 L/C by $25,000 (such
that the $100,000 shall be reduced to $0 as of April 1, 2006). This Security
Deposit increase shall in no way affect the reduction schedule specified in
Paragraph 2.5 of the Lease, as amended by Paragraph 9 of the Third Amendment.


     Section 8.    Modification of Termination Option.


     Tenant’s option to terminate the Lease provided in Paragraph 1.7 of the
Lease, as amended by Paragraph 6 of the Third Amendment, shall remain in full
force and effect, except that the Termination Fee shall equal the sum of (i)
$440,000 plus an amount equal to five (5) months of Rent (including Additional
Rent), at the rate then payable by Tenant for the 7th Floor Premises, the Lower
Level Space, the 12th Floor Premises and the Additional Seventh Floor Premises,
(ii) $785.71 (pursuant to Paragraph 5 of the Second Amendment), (iii) the
unamortized amount (as if amortized over a 72 month period commencing of the
Commencement Date (as defined in the Third Amendment), using a cost of funds of
10% per annum) of the amounts paid by Landlord in connection with the Third
Amendment for leasing commissions, tenant improvements and preparations
(including legal fees) of the Third Amendment, and (iv) the unamortized amount
(as if amortized over a 63 month period commencing March 1, 2002, using a cost
of funds of 10% per annum) of the amounts paid by Landlord in connection with
this Amendment for leasing commissions, tenant improvements and preparations
(including legal fees) of this Amendment.


     Section 9.    Parking Spaces.


     The number of unreserved parking spaces to be made available by Landlord
to Tenant pursuant to Paragraph 11.2 of the Lease is hereby increased from
“thirty-six (36)” to “forty (40).” Tenant’s rights to the four (4) additional
spaces shall terminate if Tenant does not notify Landlord in writing of
Tenant’s exercise of such rights on or before March 31, 2003.


     Section 10.    Brokerage.


     Landlord and Tenant each represents and warrants that it has not entered
into any agreement with, or otherwise had any dealing with, any other broker or
agent in connection with the negotiation or execution of this Amendment (other
than Julien J. Studley, Inc. and Spaulding & Slye/Colliers International, which
will be paid a commission by Landlord pursuant to a separate letter agreement)
which could form the basis of any claim by any such broker or agent for a
brokerage fee or commission, finder’s fee, or any other compensation of any
kind or nature


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in connection herewith. Landlord and Tenant each agrees to indemnify and
hold the other harmless from all reasonable costs (including, but not limited
to, court costs, investigation costs, and attorneys’ fees), expenses, or
liabilities for commissions or other compensation with respect to this
Amendment which may arise out of any agreement or dealings or alleged agreement
or dealings between such party or any such agent or broker.


     Section 11.    Insurance.


     Prior to the Additional Space Commencement Date, Tenant shall provide
Landlord with evidence (which may be in the form of an amended certificate of
insurance) that Tenant’s policy or policies of property (“all risks”) insurance
and general liability insurance shall apply with respect to the Additional
Seventh Floor Space.


     Section 12.    Confirmation of Rent Start Date.


     Within ten (10) days following request by Landlord, Tenant shall execute
and deliver to Landlord a certificate setting forth the Rent Start Date, as
determined pursuant to Section 3 above.


     Section 13.    Authority.


     Landlord and Tenant represent and warrant to each other that the person
signing this Amendment on its behalf has the requisite authority and power to
execute this Amendment and to thereby bind the party on whose behalf it is
being signed.


     Section 14.    Terms.


     Except as otherwise provided in this Amendment, the terms used herein
shall have the same meanings given in the Lease.


     Section 15.    Ratification.


     Except as and only to the extent explicitly modified by the terms and
provisions of this Amendment, all terms and provisions of the Lease are
ratified and confirmed in all respects and shall hereby remain in full force
and effect.


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     IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.



	 	 	 	 	 
	 	 	LANDLORD:
	 	 	 	 	 
	 	 	1899 L STREET LLC

a Delaware limited liability company
	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael S. Lane
	 	 	 	 	

	 	 	
Name:
	 	Michael S. Lane
	 	 	
Title:
	 	Vice President, Treasurer and Secretary
	 	 	 	 	 
	 	 	
By:
	 	/s/ Eric P. Blanchard
	 	 	 	 	

	 	 	
Name:
	 	Eric P. Blanchard
	 	 	
Title:
	 	Assistant Treasurer/Assistant Secretary
	 	 	 	 	 
	 	 	TENANT:
	 	 	 	 	 
	 	 	BLACKBOARD, INC.

a Delaware corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Peter Q. Repetti
	 	 	 	 	

	 	 	
Name:
	 	Peter Q. Repetti
	 	 	
Title:
	 	CFO




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