exv10w3



 







Exhibit 10.3




LEASE AGREEMENT

(9911 Belward Campus Drive, Rockville, Maryland)




     This Lease Agreement (the “Lease”) is made as of the 24th day of May, 2006, by and
between BMR-Belward Campus Drive LSM LLC, a Maryland limited liability company (the “Landlord”) and
Human Genome Sciences, Inc., a Delaware corporation (the “Tenant”).



ARTICLE 1. DESCRIPTION OF PREMISES




     1.1 Premises. Landlord hereby leases to Tenant and Tenant leases from Landlord,
pursuant to the terms, conditions and uses herein set forth, that certain real property commonly
known as 9911 Belward Campus Drive, Rockville, Maryland and more particularly described in Exhibit
A-1 attached hereto (the “Land”), and a building located on the Land containing approximately
289,912 gross square feet of rentable space (the “Building”) and all property described on Exhibit
A-2 (together with all property installed in substitution for, or in replacement of, such property
described on Exhibit A-3, the “Other Property” and, together with the Land and the Building, the
“Premises”). The Premises is the property of Landlord.



ARTICLE 2. TERM




     2.1 Lease Term. The term of this Lease will be for twenty (20) years commencing on
May 24, 2006 (the “Commencement Date”) and ending on May 31, 2026 (“Lease Term”). Tenant has two
consecutive ten (10) year options to extend the Lease Term, as further described in Article
30.



ARTICLE 3. RENT




     3.1 Base Monthly Rental. Tenant shall pay to Landlord at the address set forth in
Section 31.10, or such other address as Landlord may advise Tenant in writing, without
deduction, offset or prior notice or demand, and Landlord shall accept, as rent for the Premises
the sum of $1,645,833.33 per month ($19,750,000 per year), subject to adjustments pursuant to
Section 3.3 below, in lawful money of the United States payable in advance on the first day
of each month of the term of this Lease. Said monthly installments shall hereinafter be referred
to as the “Base Monthly Rental.” Tenant has delivered to Landlord the Base Monthly Rental for the
first month of the term hereof upon execution and delivery of this Lease. For purposes of this
Lease, “Rent” will mean the Base Monthly Rental plus the Landlord Additional Rent plus the Third
Party Additional Rent plus any other charges due Landlord by Tenant under this Lease.



     3.2 Proration of Rent. For the month in which the Commencement Date occurs, in lieu
of the Base Monthly Rental, Tenant will pay Landlord an amount equal to the $54,109.59 multiplied
by the number of days remaining in the month from, after and including the Commencement Date.
Thereafter, Rent shall be payable in accordance with the terms of Section 3.1. The total
consideration for the term of this Lease shall be increased by the amount of the installment
required by this Section 3.2.



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     3.3 Annual Adjustments. The Base Monthly Rental will be increased (but not decreased)
annually commencing on the first day of the calendar month immediately following the anniversary of
the Commencement Date, and on each anniversary thereafter, by an amount equal to 2.00% of the Base
Monthly Rental for the preceding year.



     3.4 Landlord Additional Rent, Expenses and Costs. Commencing upon the Commencement
Date, Tenant shall pay to Landlord (unless otherwise expressly required hereunder to pay directly
to a third party), as additional rent (“Landlord Additional Rent”), all sums of money of any and
every sort required to be paid by Tenant to Landlord under this Lease, whether or not the same are
designated as Landlord Additional Rent. If such amounts or charges are not paid at the time
provided in this Lease, they shall nevertheless be collectible as Landlord Additional Rent with the
next installment of the Base Monthly Rental thereafter falling due, but nothing herein contained
shall be deemed to suspend or delay the payment of any amount of money or charge at the time the
same becomes due and payable hereunder, or limit any other remedy of Landlord. Tenant acknowledges
that this is an absolute net lease to Landlord. As such, Tenant shall pay, as Landlord Additional
Rent, all costs and expenses relating to the Premises (unless otherwise expressly required
hereunder to be paid directly to a third party).



     3.5 Third Party Additional Rent. Commencing upon the Commencement Date, Tenant shall
pay directly to a third party, as additional rent (“Third Party Additional Rent”), all sums of
money of any and every sort required to be paid by Tenant to a third party under this Lease,
whether or not the same are designated as Third Party Additional Rent.



     3.6 Late Fees. Tenant acknowledges that late payment by Tenant to Landlord of the
Base Monthly Rental or other charges incurred under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such costs being extremely difficult and
impracticable to fix. Such costs include, without limitation, processing, administrative and
accounting charges. If any payment of Base Monthly Rental, Landlord Additional Rent, or other
charges due from Tenant to Landlord is not received by Landlord within 5 business days of when due,
such unpaid amounts shall bear interest at the rate of ten percent (10%) per annum (“Default Rate”)
from the date due to the date of payment. In addition to interest, Tenant shall pay a sum of the
greater of (i) 2% of the overdue amount payable to Landlord or (ii) $50.00 as a late charge (“Late
Charge”). Late Charges shall constitute Landlord Additional Rent. The parties agree that the Late
Charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of
late payment by Tenant. Acceptance of any Late Charge shall not constitute a waiver of Tenant’s
default with respect to the overdue amount, or prevent Landlord from exercising any of the other
rights and remedies available to Landlord hereunder.



     3.7 Security Deposit. Tenant will pay a security deposit of Nineteen Million Seven
Hundred and Fifty Thousand Dollars ($19,750,000) (payable in cash or, as and to the extent set
forth in Section 3.7.1, in the form of a letter of credit reasonably acceptable to
Landlord) (the “Security Deposit”). In the event Landlord receives documentation from Tenant that
demonstrates to Landlord’s reasonable satisfaction that Tenant has achieved a rating of “BBB-” or
better from Standard & Poor’s Corporation, or “Baa3” or better from Moody’s Investors Service, Inc.
(or in each case any successor thereof), Landlord shall return the Security Deposit or the letter
of credit to Tenant; provided, however, in the event Tenant’s rating falls below



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“BBB-”, Tenant shall, within 15 days after written notice thereof, deposit an amount with Landlord
sufficient to restore said Security Deposit to the amount set forth above and Tenant’s failure to
do so shall constitute a breach of this Lease.




          3.7.1 In lieu of depositing cash as the Security Deposit, Tenant shall have the right to
deliver to Landlord an unconditional, irrevocable, standby letter of credit in the amount of the
cash Security Deposit otherwise required hereunder, which letter of credit shall (i) be in a form
reasonably acceptable to Landlord, (ii) be issued by a financial institution selected by Tenant and
reasonably acceptable to Landlord, (iii) be for the benefit of Landlord, but shall be transferable
at Tenant’s sole cost and expense by Landlord to any subsequent purchaser or encumbrancer of the
Building, (iv) be payable by draft sight in a location reasonably acceptable to Landlord upon
presentation of a certification signed by an officer of Landlord which states that an Event of
Default has occurred under this Lease, and (v) be payable in the event such letter of credit is not
renewed on or before the date which is thirty (30) days prior to its expiration. Any amounts of
cash drawn on a letter of credit Security Deposit will thereafter be treated as a cash Security
Deposit hereunder.




          3.7.2 Tenant shall have the right at any time during the Lease Term upon thirty (30) days
prior written notice to Landlord (i) to replace a cash Security Deposit with a letter of credit
which complies with all the terms of Section 3.7.1, or (ii) to replace a letter of credit
Security Deposit with a corresponding amount of cash or another letter of credit which complies
with all the terms of Section 3.7.1.




          3.7.3 If Tenant fails to pay Rent when required or fails to perform any other covenant
contained herein, Landlord may use or retain all or any part of the Security Deposit for the
payment of any sum not so paid, or for the payment of any amount which Landlord may spend or become
obligated to spend by reason of Tenant’s default. If any portion of the Security Deposit is so
applied or used, then Tenant shall, within 5 business days after written notice thereof, deposit an
additional amount with Landlord sufficient to restore said Security Deposit to the amount set forth
above, or replenish the letter of credit to the amount required hereunder, and Tenant’s failure to
do so shall constitute a breach of this Lease.




          3.7.4 If Tenant has performed all of its monetary and other obligations hereunder at the
termination of this Lease, Landlord shall return said Security Deposit or letter of credit to
Tenant within 30 days after termination of this Lease, less any amounts required to restore the
Premises to good condition and repair, reasonable wear and tear and damage caused by casualty and
condemnation excepted, including repairing any damage resulting from the removal by Tenant of its
trade fixtures or equipment, except that in the event the Tenant exercises its rights to purchase
the Premises, the Security Deposit shall be credited to Tenant at the closing of such purchase or
the letter of credit shall be returned to Tenant, as applicable.




          3.7.5 In the event of the sale of the real property of which the Premises constitute a part,
Landlord’s successor in interest shall assume Landlord’s obligations with respect to the sums held
as security or advance rent and notify Tenant in writing setting forth the particularity of such
transfer, including the successor’s name and address. Upon such assumption and written
notification, Tenant shall have no further claim against Landlord with respect to any such Security
Deposit and hereby waives all rights against Landlord in such

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regard. Notwithstanding the foregoing, Landlord will remain personally liable to the extent
Landlord’s successor in interest fails to assume the Landlord’s obligations with respect to the
deposit as specified above.




     3.8 Tenant’s Costs. Within 60 days after the Commencement Date, and within 60 days
after the beginning of each calendar year, Landlord shall give Tenant a written estimate, for such
calendar year, of Tenant’s share of the cost of utilities, if not separately metered, taxes and
insurance provided by Landlord (“Tenant Costs”). Tenant shall pay such estimated amount to Landlord
in equal monthly installments, in advance. Within 90 days after the end of each calendar year,
Landlord shall furnish to Tenant a statement showing in reasonable detail the costs incurred by
Landlord for the operation and maintenance of the Premises during such year (the “Annual
Statement”), and Tenant shall pay to Landlord Tenant’s proportionate share of the cost incurred in
excess of the payments made by Tenant within 10 days of receipt of such statement. In the event
that the payments made by Tenant for the operation and maintenance of the Premises exceed Tenant’s
share of the cost of same, such amount shall be credited by Landlord to the Rent or other charges
next due and owing, provided that, if the Lease term has expired, Landlord shall accompany said
statement with the amount due Tenant. Tenant shall have the right, by giving written notice
thereof to Landlord within sixty (60) days after Tenant’s receipt of each Annual Statement, to
contest all or any item comprising Tenant Costs and in connection therewith audit Landlord’s books
and records relating to Tenant Cost covered by the Annual Statement. Landlord shall promptly
provide Tenant with copies of all bills and records supporting the Tenant Costs or any particular
item of Tenant Costs specified by Tenant in writing. If Tenant fails to deliver a notice of
audit/contest to Landlord within the aforesaid sixty (60) day period, Tenant shall be deemed to
have accepted the Annual Statement for the applicable calendar year.



     3.9 Management Fee. Tenant shall pay to Landlord on the first day of the calendar
month immediately following the Commencement Date, and on each month thereafter, as Landlord
Additional Rent, a monthly fee to cover costs of property management services and related expenses
in an amount equal to Four Thousand One Hundred and Sixty-Six Dollars and 67/100 ($4,166.67) (the
“Management Fee”), whether or not Landlord incurs fees payable to any third party to provide such
services and without regard to the actual costs incurred by Landlord for such services.



     3.10 Absolute Net Lease. This Lease shall be deemed and construed to be an “absolute
net lease” and, except as herein expressly provided, the Landlord shall receive all payments
required to be made by Tenant, free from all charges, assessments, impositions, expenses,
deductions of any and every kind or nature whatsoever. Tenant shall, at Tenant’s sole cost and
expense, maintain the landscaping and parking lot, and make all additional repairs and alterations
as required to maintain the Premises consistent with current practices.



ARTICLE 4. POSSESSION




     4.1 Possession. Tenant hereby acknowledges that immediately prior to the Commencement Date,
its wholly owned subsidiary owned the Premises and that Tenant is in possession of the Premises,
and is familiar with the condition thereof and accepts the Premises in its “as is” condition with
all faults, and Landlord makes no representation or warranty of any



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kind with respect the Premises, and Landlord will have no obligation to improve, alter or
repair the Premises, except as specifically set forth herein. It is understood and agreed that
Landlord is not obligated to install any equipment, or make any repairs, improvements or
alterations to the Premises.



     4.2 NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IT IS EXPRESSLY UNDERSTOOD AND AGREED
THAT LANDLORD IS LEASING THE PREMISES “AS IS” AND “WHERE IS,” AND WITH ALL FAULTS AND THAT,
LANDLORD IS MAKING NO REPRESENTATIONS AND WARRANTIES WHETHER EXPRESS OR IMPLIED, BY OPERATION OF
LAW OR OTHERWISE, WITH RESPECT TO THE QUALITY OR PHYSICAL CONDITION OF THE PREMISES, THE INCOME OR
EXPENSES FROM OR OF THE PREMISES, OR THE COMPLIANCE OF THE PREMISES WITH APPLICABLE BUILDING OR
FIRE CODES, ENVIRONMENTAL LAWS OR OTHER LAWS, RULES, ORDERS OR REGULATIONS. WITHOUT LIMITING THE
FOREGOING, IT IS UNDERSTOOD AND AGREED THAT LANDLORD MAKES NO WARRANTY WITH RESPECT TO THE
HABITABILITY, SUITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. TENANT AGREES THAT
IT ASSUMES FULL RESPONSIBILITY FOR, AND THAT IT HAS PERFORMED EXAMINATIONS AND INVESTIGATIONS OF
THE PREMISES, INCLUDING SPECIFICALLY, WITHOUT LIMITATION, EXAMINATIONS AND INVESTIGATIONS FOR THE
PRESENCE OF ASBESTOS, PCBS AND OTHER HAZARDOUS SUBSTANCES, MATERIALS AND WASTES (AS THOSE TERMS MAY
BE DEFINED HEREIN OR BY APPLICABLE FEDERAL OR STATE LAWS, RULES OR REGULATIONS) ON OR IN THE
PREMISES. WITHOUT LIMITING THE FOREGOING, TENANT IRREVOCABLY WAIVES ALL CLAIMS AGAINST LANDLORD
WITH RESPECT TO ANY ENVIRONMENTAL CONDITION, INCLUDING CONTRIBUTION AND INDEMNITY CLAIMS, WHETHER
STATUTORY OR OTHERWISE. TENANT ASSUMES FULL RESPONSIBILITY FOR ALL COSTS AND EXPENSES REQUIRED TO
CAUSE THE PREMISES TO COMPLY WITH ALL APPLICABLE BUILDING AND FIRE CODES, MUNICIPAL ORDINANCES,
ENVIRONMENTAL LAWS AND OTHER LAWS, RULES, ORDERS, AND REGULATIONS.



ARTICLE 5. USE




     5.1 Permitted Use of Premises. The Premises shall be used and occupied by Tenant
solely for laboratory, research, related administration, bio-pharmaceutical manufacturing and
related health care uses. The Premises shall not be used for any other purposes without first
obtaining the consent of Landlord, which consent shall not be unreasonably withheld.



     5.2 Compliance with Laws. Tenant, at Tenant’s sole expense, shall promptly comply, or
cause compliance, with all laws, ordinances, zoning restrictions, rules, regulations, orders and
requirements of any duly constituted public authorities now or hereafter affecting the Premises,
including the use, safety, cleanliness and occupation of the Premises; provided,
however, for the avoidance of doubt, Tenant shall not be responsible for the cost of any
modifications that are required as a result of such legal requirements that are triggered by
improvements to the Premises that are made after the expiration of the Lease.



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     5.3 Prohibited Uses. Tenant shall not do, bring or keep anything in or about the
Premises that will cause a cancellation of any insurance covering the Premises or the Building.
Tenant shall not use the Premises in any manner that will constitute waste, nuisance or
unreasonable annoyance to owners or occupants of nearby properties. Tenant shall not do anything
on the Premises that will cause material damage to the Building. Tenant shall place no loads upon
the floors, walls or ceiling of the Building in excess of the maximum designed load specified by
Landlord or which may materially damage the Building.



ARTICLE 6. ALTERATIONS AND ADDITIONS




     6.1 Prohibited Alterations. Tenant shall not make any alterations, improvements or
additions to the Premises, without obtaining Landlord’s prior written consent, except tenant may
make non-structural alterations to the interior of the Premises (excluding the roof) without such
consent but upon notice to Landlord, as long as they are not visible from the outside, and the cost
thereof does not exceed $1,000,000 per occurrence or an aggregate amount of $3,000,000 in any
12-month period. Notwithstanding the foregoing, Tenant will not do anything that could have a
material adverse effect on the Building or life safety systems, without obtaining Landlord’s prior
written consent. For the avoidance of doubt, for purposes of this Section 6.1, a material
adverse effect on the Building shall not include a material adverse effect on the marketability of
the Building. Any such improvements, excepting movable furniture, trade fixtures and equipment,
shall become part of the realty and belong to Landlord. All alterations and improvements shall be
properly permitted and installed at Tenant’s sole cost, by a licensed contractor, in a good and
workmanlike manner, and in conformity with the laws of all applicable duly constituted public
authorities. Any alterations that Tenant shall desire to make and which require the consent of
Landlord shall be presented to Landlord in written form with detailed plans. Tenant shall: (i)
acquire all applicable governmental permits; (ii) furnish Landlord with copies of both the permits
and the plans and specifications before the commencement of the work, and (iii) comply with all
conditions of said permits in a prompt and expeditious manner. Any alterations shall be performed
in a workmanlike manner with good and sufficient materials. Tenant shall promptly upon completion
furnish Landlord with as-built plans and specifications. Tenant also shall have the right to
replace Other Property that is outdated or broken with properly functioning equivalents.



     6.2 Notice of Commencement. At least 20 days prior to commencing any work relating to
any alterations, improvements or additions approved by Landlord, Tenant shall notify Landlord in
writing of the expected date of commencement. Tenant shall pay, when due, all claims for labor or
materials furnished to or for Tenant for use in improving the Premises. Tenant shall not permit
any mechanics’ or materialmen’s liens to be levied against the Premises arising out of work
performed, materials furnished, or obligations to have been performed on the Premises by or at the
request of Tenant. Tenant hereby defends, indemnifies and holds Landlord harmless against loss,
damage, attorneys’ fees and all other expenses on account of claims of lien of laborers or
materialmen or others for work performed or materials or supplies furnished for Tenant or its
contractors, agents or employees. If Tenant fails to discharge or undertake to defend against such
liability, upon receipt of written notice from Landlord of such failure, Tenant shall have fifteen
(15) days (the “Defense Cure Period”) to cure such failure by prosecuting such a defense. If
Tenant fails to do so within the Defense Cure Period, then Landlord may settle the same and
Tenant’s liability to Landlord shall be conclusively established by such settlement



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provided that such settlement is entered into on commercially reasonable terms and conditions,
the amount of such liability to include both the settlement consideration and the costs and
expenses (including attorneys’ fees) incurred by Landlord in effecting such settlement. In the
event any contractor, agent or employee notifies Tenant of its intent to file a mechanics’ or
materialmen’s lien against the Premises, Tenant shall immediately notify Landlord of such intention
to file a lien or a lawsuit with respect to such lien. Landlord should also immediately notify
Tenant if any complaint, lawsuit or other action with respect to a mechanic’s lien is filed or
commenced. Within the time period allotted to answer such action, such complaint or respond to
such lawsuit or other action, Tenant shall either: (a) settle the lawsuit without recourse to
Landlord, at Tenant’s sole cost and expense, or (b) post such bond as may be required under
Maryland law to preclude the granting of a mechanics’ or materialmen’s lien against the Premises.



     6.3 Trade Fixtures. Tenant may install trade fixtures, machinery or other trade
equipment in conformance with the ordinances of all applicable duly constituted public authorities.
Tenant may remove any of such trade fixtures or machinery upon the termination of this Lease. In
the event that Tenant installs improvements, machinery or trade fixtures, or makes any alterations,
Tenant shall, at Landlord’s option, return the Premises on termination of this Lease to
substantially the same condition as existed on the Commencement Date, reasonable wear and tear and
damage caused by casualty and condemnation excepted, including the removal of improvements or
alterations approved by Landlord in Section 6.1; provided, however, if such
improvements or alterations were approved by Landlord, Tenant shall only be required to remove such
improvements or alterations if Landlord’s approval was conditioned upon Tenant’s removal of such
improvements or alterations. In the event Landlord’s approval is not required, Tenant may provide
written notice to Landlord of such improvement or alteration and request confirmation on whether
such improvement or alteration will be required to be removed at the termination of this Lease.
Tenant shall, in any event, repair any damage resulting from the removal of machinery or trade
fixtures of Tenant. Tenant shall have the absolute right before the end of the Term to repair or
remove any Tenant owned equipment or machinery from the Premises. Notwithstanding the foregoing,
in no event shall Tenant remove any Other Property from the Premises.



     6.4 Future Developments. Subject to Section 31.17, in the event Landlord
elects, in its sole discretion, to sell or transfer any right with respect to the future
development of the Land, Landlord may do so in its sole discretion. The Land currently has certain
entitlements that are unnecessary for the operation and use of the Premises and, notwithstanding
anything to the contrary in this Lease or the Option Agreement entered into in connection herewith,
Landlord shall have the right to transfer, terminate or modify these rights, in its sole and
absolute discretion, provided that such adjustments do not have a material adverse effect on the
Tenant’s operation or use of the Land or the use of the Premises.



ARTICLE 7. SURRENDER OF PREMISES




     7.1 Conditions upon Surrender. Upon the expiration, or earlier termination, of this
Lease, Tenant shall surrender the Premises to Landlord in substantially the condition existing as
of the Commencement Date, normal wear and tear, casualty, condemnation, acts of God and



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Landlord approved alterations that Landlord has notified Tenant may remain on the Premises
excepted, with all interior walls in good repair and repainted if marked, all carpets shampooed and
cleaned, the HVAC equipment, plumbing, electrical and other mechanical installations in good
operating order, and all floors cleaned and waxed, all to the reasonable satisfaction of Landlord.
Tenant shall remove from the Premises all of Tenant’s alterations which Landlord requires Tenant to
remove pursuant to Section 6.3 and all Tenant’s personal property, and shall repair any
damage and perform any restoration work caused by such removal. Landlord and Tenant shall each
initial and attach a narrative description or floor plan of the Premises to this Lease, to be
incorporated herein as Exhibit B. Said narrative description or floor plan shall describe, among
other things, those interior improvements which are to remain in the Premises upon expiration, or
earlier termination, of this Lease. All of the Other Property (other than Other Property that has
been replaced in accordance with Section 6.1) and all replacements for such Other Property
shall remain with the Premises, unless Landlord has previously notified Tenant that such Other
Property may be removed from the Premises. It is the intent of the parties that the condition of
the Premises, after Tenant’s removal, be in substantial conformance with the layout reflected in
Exhibit B. If Tenant fails to remove such alterations and Tenant’s personal property (which
excludes all Other Property and replacements for such Other Property) which Tenant is authorized
and obligated to remove pursuant to the above, and such failure continues after the termination of
the Lease, Landlord may retain such property and all rights of Tenant with respect to it shall
cease, or Landlord may place all or any portion of such property in public storage for Tenant’s
account. Tenant shall pay to Landlord upon demand costs of removal of such alterations and Tenant’s
personal property and storage and transportation costs of same, and the cost of repairing and
restoring the Premises, together with attorneys’ fees and interest at the Default Rate on said
amounts, from the date of expenditure by Landlord. If the Premises are not so surrendered at the
termination of this Lease, Landlord may, in its sole discretion, either (a) upon written notice to
Tenant, treat Tenant as a month-to-month tenant at will, subject to all the terms, covenants and
conditions of this Lease, or (b) proceed with an unlawful detainer action and pursue all other
rights and remedies available to Landlord. Notwithstanding the foregoing, Tenant shall not remove
from the Premises any base building electrical, plumbing, HVAC, life safety systems; and attached
laboratory benches, autoclaves, climatized rooms, and gas and liquid distribution systems.



ARTICLE 8. UTILITIES AND SERVICES




     8.1 Utilities. Tenant shall make all arrangements for and pay for all water, sewer,
gas, heat, light, power, telephone service and any other service or utility Tenant requires at the
Premises. Landlord shall not be liable for any failure or interruption of any utility service being
furnished to the Premises, and no such failure or interruption shall entitle Tenant to terminate
this Lease; provided, however, that Tenant will be entitled to Rent abatement in connection with
any such failure or interruption to the extent Landlord receives lost rental income insurance
proceeds.



     8.2 Landlord Service. In the event that any utilities are furnished by Landlord,
Tenant shall pay to Landlord the cost thereof in the manner set forth in Section 3.8.
Tenant’s cost shall be the total cost shown on utility meters servicing the Premises and any
extraordinary use which may be made by Tenant.



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ARTICLE 9. INDEMNIFICATION




     9.1 Indemnity of Landlord. Tenant hereby agrees to indemnify, defend (with attorneys
approved by Landlord), protect, and hold Landlord and Landlord’s agents, employees, directors,
officers, managers, members, partners, affiliates, independent contracts and property managers
(“Landlord’s Agents”), harmless from any and all liabilities, costs, expenses and losses by reason
of injury to person or property (“Losses”), caused by, arising out of, or related to, the condition
of the Premises or the use or occupancy of the Premises by Tenant, its agents, directors, officers,
managers, members, partners, affiliates, independent contractors and property managers, or invitees
(“Tenant’s Agents”), including without limitation, any liability for injury to the person or
property of Tenant or Tenant’s Agents, but excepting any Loss resulting from the willful breach of
the Lease by Landlord or the gross negligence or willful misconduct of Landlord or Landlord’s
Agents. Tenant’s obligations hereunder shall survive the termination of this Lease with respect to
any claims or liability arising in connection with any event occurring prior to such termination.



     9.2 Waiver of Claims. Tenant, as a material part of the consideration rendered to
Landlord in entering into this Lease, hereby waives all claims against Landlord for damages to
goods, wares, machinery, trade fixtures, or other property of Tenant, Tenant’s Agents or any other
person in or about the Premises, whether such damage or injury is caused by or results from
Landlord’s negligence, fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage results from
conditions arising upon the Premises or upon other portions of the building of which the Premises
are a part, or from other sources or places, but excepting any claims resulting from the gross
negligence or willful misconduct of Landlord or Landlord’s Agents. Notwithstanding Landlord’s
negligence or breach of this Lease, Landlord shall under no circumstances be liable for loss of
profits or special, incidental or consequential damages arising therefrom.



     9.3 Landlord Indemnification. Landlord agrees to indemnify Tenant and hold it
harmless from any and all loss, cost, damage, expense and liability (including without limitation
court costs and reasonable attorneys’ fees) incurred in connection with or arising from any Losses,
caused by the gross negligence or willful misconduct of Landlord and/or any of Landlord’s Agents.
The obligations of Landlord under this Section 9.3 shall survive the termination of this
Lease with respect to any claims or liability arising in connection with any event occurring prior
to such termination.



     9.4 Claims for Indemnification. If any indemnitee under Sections 9.1 or
9.3 above (an “Indemnitee”) shall believe that such Indemnitee is entitled to
indemnification pursuant to this Article 9 in respect of any Losses, such Indemnitee shall give the
appropriate indemnifying party (each, as applicable, an “Indemnifying Party”) prompt written notice
thereof. Any such notice shall set forth in reasonable detail and to the extent then known the
basis for such claim for indemnification. The failure of such Indemnitee to give notice of any
claim for indemnification promptly shall not adversely affect such Indemnitee’s right to indemnity
hereunder except to the extent that such failure adversely affects the right of the Indemnifying
Party to assert any reasonable defense to such claim.



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     9.5 Defense of Claims. In connection with any claim which may give rise to indemnity
under this Article 9 resulting from or arising out of any claim or proceeding against an Indemnitee
by a person that is not a party hereto, the Indemnifying Party shall (unless such Indemnitee elects
not to seek indemnity hereunder for such claim), upon written notice to the relevant Indemnitee,
assume the defense of any such claim or proceeding. The Indemnifying Party shall select counsel
reasonably acceptable to such Indemnitee to conduct the defense of such claim or proceeding, shall
take all steps necessary in the defense or settlement thereof and shall at all times diligently and
promptly perform resolution thereof. Without the prior written consent of the Indemnitee, which
consent shall not be unreasonably withheld, the Indemnifying Party will not enter into any
settlement of, or any claim or proceeding which would lead to liability or create any financial or
other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. Without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, the Indemnitee will not enter into any settlement or
any claim or proceeding which would lead to liability or create any financial or other obligation
on the part of the Indemnifying Party unless the Indemnifying Party has, after written notice,
failed or refused to acknowledge responsibility for or defend such claim or proceeding within a
reasonable period of time after notice is provided pursuant to Section 9.4. If the
Indemnifying Party fails to discharge or undertake to defend against such liability, upon receipt
of written notice from the Indemnitee of such failure, the Indemnifying Party shall have the
Defense Cure Period to cure such failure by prosecuting such a defense. If the Indemnifying Party
fails to do so within the Defense Cure Period, then the Indemnitee may settle the same and the
Indemnifying Party’s liability to the Indemnitee shall be conclusively established by such
settlement provided that such settlement is entered into on commercially reasonable terms and
conditions, the amount of such liability to include both the settlement consideration and the costs
and expenses (including attorneys’ fees) incurred by the Indemnitee in effecting such settlement.



ARTICLE 10. INSURANCE




     10.1 Landlord’s Insurance. Tenant shall maintain, a policy or policies of insurance
protecting Landlord against the following:



          10.1.1 Fire and other perils normally included within the classification of fire and extended
coverage, together with insurance against vandalism and malicious mischief, to the extent of the
full replacement cost of the Premises, including, at Landlord’s option, earthquake and flood
coverage, exclusive of trade fixtures, equipment and improvements insured by Tenant, with agreed
value, full replacement and other endorsements which Landlord may elect to maintain.




          10.1.2 At least thirty-six (36) months of rental loss insurance and to the extent of 100% of
the gross rentals from the Building of which the Premises constitute a part.




          10.1.3 Public liability and property damage insurance for Landlord with respect to common
areas in amounts (i) not less than $1,000,000 for injury or death to any one person in any one
accident or occurrence, (ii) not less than $2,000,000 for injury or death to more than one

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person in any one accident or occurrence, (iii) not less than $4,000,000 of excess umbrella
liability insurance, and, (iv) not less than $200,000 per occurrence for damage to Premises.




          10.1.4 At Landlord’s sole option, environmental liability or environmental
clean-up/remediation insurance in such amounts and with such deductibles and other provisions as
Landlord may determine in its sole and absolute discretion.




     10.2 Payment. Tenant shall pay the cost of insurance required in Section
10.1.



     10.3 Tenant’s Insurance. Tenant shall maintain at its sole cost and expense, in force
a policy or policies of insurance protecting Landlord and Tenant against each of the following:



          10.3.1 Comprehensive general liability insurance with respect to the Premises insuring against
bodily injury or death and property damage in amounts (i) not less than $5,000,000 in the
aggregate, (ii) not less than $3,000,000 per occurrence and (iii) not less than $20,000,000 of
excess umbrella liability insurance. Landlord shall be included as additional insured. The amount
of such public liability insurance shall be increased from time to time as Landlord may reasonably
determine. All such bodily injury and property damage insurance shall specifically insure the
performance by Tenant of the indemnity agreement as to personal injury or property damage contained
in Article 9.




          10.3.2 Insurance covering alterations, additions or improvements permitted under Section
6, trade fixtures and personal property from time to time in or upon the Premises in an amount
not less than 80% of their full replacement cost from time to time during the term of this Lease,
providing protection against any peril included within the classification “fire and extended
coverage,” for the repair or replacement of the property damaged or destroyed unless this Lease
shall terminate pursuant to Section 19 hereof.




          10.3.3 All policies of insurance to be provided by Tenant shall be issued by insurance
companies, with general policy holder’s rating of not less than A and a financial rating of not
less than Class X as rated in the most current available “Best’s” Insurance Reports, and admitted
to do business in the State of Maryland. Such policies shall be issued in the name of Tenant. The
policies provided by Tenant shall be for the mutual and joint benefit and protection of Landlord
and Tenant, and executed copies of such policies of insurance or certificates thereof shall be
delivered to the Landlord within 10 days after the Commencement Date and, thereafter, within 10
days prior to the expiration of the term of each such policy. All public liability and property
damage policies shall contain a provision that the Landlord, although named as an additional
insured in the case of public liability coverage and as an insured in the case of property damage
policies, shall nevertheless be entitled to recover under said policies for any loss occasioned to
it or Landlord’s Agents by reason of the negligence of the Tenant. Upon the expiration or
termination of any such policy, renewal or additional policies shall be procured and maintained by
the Tenant to provide the required coverage. All policies of insurance delivered to Landlord must
contain a provision that the company writing said policy will provide to Landlord 30 days notice in
writing in advance of any cancellation or lapse or the effective date of any reduction in the
amounts of insurance. All public liability, property damage and other casualty

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policies shall be written as primary policies, not contributing with and not in excess of coverage
which Landlord may carry.




          10.3.4 Notwithstanding anything to the contrary, Tenant’s obligation to carry the insurance
described in this Section may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by the Tenant, provided that (i) Landlord will be
named as an additional insured and loss payee thereunder as their interests may appear,
(ii) the coverage afforded Landlord will not be reduced or diminished by reason of the use of such
blanket policy of insurance, and (iii) the requirements set forth herein are otherwise satisfied.
Tenant agrees to permit Landlord at all reasonable times to inspect the policies of insurance of
Tenant covering the Premises for policies which are not required to be delivered to Landlord.




     10.4 Release of Subrogation Rights. Landlord and Tenant hereby mutually release each
other from liability and waive all right to recover against each other for any loss from perils
insured against under their respective insurance policies, including any extended coverage and
special form endorsements to said policies; provided, however, this Section shall be inapplicable
to the extent the waiving and releasing party is unable, notwithstanding its good faith efforts, to
obtain the requisite coverage from its insurer. The parties shall obtain, if available, from their
respective insurance companies, a waiver of any right of subrogation which said insurance company
may have against the Landlord or the Tenant, as the case may be.



     10.5 Failure to Provide Insurance. Tenant acknowledges that any failure on its part
to obtain or maintain the insurance required under Sections 10.1 and 10.3 will
expose Landlord to risk and potentially cause Landlord to incur costs not contemplated by this
Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or
portion thereof the Tenant does not maintain the required insurance and/or does not provide
Landlord with the required binders or certificates evidencing the existence of the required
insurance, the Base Monthly Rental shall be automatically increased, without any requirement for
notice to Tenant, by an amount equal to two percent (2%) of the then existing Base Monthly Rental.
The parties agree that such increase in the Base Monthly Rental represents fair and reasonable
compensation for the additional risk costs that Landlord will incur by reason of Tenant’s failure
to maintain the required insurance. Such increase in Base Monthly Rental shall in no event
constitute a waiver of Tenant’s default or breach with respect of the failure to maintain such
insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor
relieve Tenant of it’s obligations to maintain the insurance specified in this Lease. In the event
Tenant does not maintain the insurance required under this Article 10, Landlord may, in
Landlord’s sole and absolute discretion, obtain such insurance and Tenant shall pay Landlord as
Landlord Additional Rent all costs and expenses in connection with such policy or policies of
insurance.



     10.6 Notice to Landlord. On the Commencement Date, and no later than 10 days before
any insurance required under this Article 10 expires or is cancelled, Tenant shall deliver
to Landlord certificates of insurance evidencing Tenant’s maintenance of all insurance required
under this Article 10, in each case providing coverage for at least one year from the date
delivered. Upon receipt of each policy of insurance evidencing insurance required under this
Article 10, Tenant shall promptly deliver a copy of any such policy of insurance to
Landlord. In



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the event of any dispute regarding Tenant’s compliance with the insurance requirements of this
Lease, Landlord may at Landlord’s option obtain a certificate from Tenant’s insurance broker
confirming such compliance. In addition to the obligations under this Section 10.6, Tenant
shall direct the insurance carrier to give Landlord 10 days’ prior written notice of cancellation
or nonrenewal of any insurance required under this Article 10.



ARTICLE 11. TAXES




     11.1 Personal Property Taxes. Tenant shall pay prior to delinquency all taxes,
assessments, license fees, and other public charges levied, assessed or imposed or which become
payable during the term of this Lease upon any trade fixtures, furnishings, equipment and all other
personal property of Tenant installed or located in the Premises. Whenever possible, Tenant shall
cause said trade fixtures, furnishings, equipment and personal property to be separately assessed.



     11.2 Real Estate Taxes. Landlord shall provide Tenant the real estate tax bills in
its possession at least 45 days before such taxes are due and payable. Tenant shall also pay at
least 20 days before due any and all real estate taxes, as defined in Section 11.3,
assessed or imposed, or which become a lien upon or become chargeable against or payable in
connection with the Premises. Within five business days after such payment, Tenant shall provide
Landlord evidence of such payment in a form reasonably acceptable to Landlord. In the event that
the Premises are not separately assessed, Tenant shall pay an equitable proportion of the real
estate taxes and assessments for all the land and improvements included within the tax parcel(s)
assessed, such proportion shall be determined by Landlord from the respective valuations assigned
in the assessor’s worksheets and such other information as is reasonably available to Landlord,
including the Building and any special improvements constructed for the benefit of Tenant. Real
estate taxes for the last year of the term of this Lease shall be prorated between Landlord and
Tenant as of the expiration date of the term. With respect to any assessments which may be levied
against or upon the Premises, or which under the laws then in force may be evidenced by improvement
or other bonds and may be paid in annual installments, only the amount of such annual installment,
with appropriate proration for any partial year, and interest thereon, shall be included within a
computation of taxes and assessments levied against the Premises. In the event that Tenant incurs
a Late Charge on the payment of the Base Monthly Rental or fails to pay any real estate taxes at
least 20 days before due, Landlord may estimate the current real estate taxes, and require that
such taxes be paid in advance to Landlord by Tenant monthly in advance with the payment of the Base
Monthly Rental. Such monthly payment shall be equal to the amount of the estimated installment of
taxes divided by the number of months remaining before the month in which such installment becomes
delinquent. When the actual amount of the applicable tax bill is known, the amount of such equal
monthly advance payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes. If the amount collected by Landlord is insufficient to pay such real estate
taxes when due, then Tenant shall pay Landlord, upon demand, such additional sum as is necessary.
Advance payments may be intermingled with other moneys of Landlord and shall not bear interest. In
the event of a breach by Tenant in the performance of its obligations under this Lease, then any
such advance payments may be treated by Landlord as an additional security deposit.



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     11.3 Definition of Taxes. For purposes of this Lease, “real estate taxes” shall also
include each of the following:



          11.3.1 Any form of assessment, license fee, license tax, bond or improvement bond, business
license tax, commercial rental tax, levy, charge, penalty, or tax, imposed by any authority having
the direct power to tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement or special district thereof, as against any
legal or equitable interest of Landlord in the Premises, personal property or the real property of
which the Premises constitute a part;




          11.3.2 Any assessment, tax, fee, levy or charge in substitution, partially or totally, of any
assessment, tax, fee, levy or charge previously included with the definition of real estate tax. It
is the intention of Tenant and Landlord that all such new and increased assessments, taxes, fees,
levies and charges and all similar assessments, taxes, fees, levies and charges be included within
the definition of real estate tax for purposes of this Lease;




          11.3.3 Any tax allocable to or measured by the area of the Premises or the rental payable
hereunder, including without limitation, any gross income tax or excise tax levied by the State,
any political subdivision thereof, city, or federal government, with respect to the receipt of such
rental, or upon or with respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use of occupancy by Tenant of the Premises, or any portion thereof;




          11.3.4 Any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by
reason of events occurring during the term of this Lease, and (ii) levied or assessed on machinery
or equipment, if any, provided by Landlord to Tenant pursuant to this Lease; and




          11.3.5 “Real estate taxes” shall not include Landlord’s federal or state income, franchise,
inheritance or estate taxes.




     11.4 Contest. Notwithstanding anything to the contrary in this Lease, Tenant shall
have the exclusive right to contest, at its sole cost, by appropriate legal proceedings diligently
conducted in good faith, the amount or validity of any real estate taxes; taxes in connection with
the Other Property; the valuation, assessment, or reassessment (whether proposed, phased, or final)
of the Premises for real estate taxes; and the amount of any such tax (any of the foregoing, a
“Contest”). Tenant may defer payment or performance of the contested obligation pending outcome of
the Contest, provided that Tenant causes the following conditions (collectively, the “Contest
Conditions“) to remain satisfied:



          11.4.1 No Liability. Such deferral or noncompliance creates no material risk of a
lien, charge, or other liability of any kind against the Premises, unless Tenant has given Landlord
a bond, letter of credit, or other security reasonably satisfactory to Landlord equal to the
reasonably estimated amount of such lien, charge, or other liability.




          11.4.2 No Forfeiture. Such deferral or noncompliance will not place the Premises in
material danger of being forfeited or lost.




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          11.4.3 No Cost to Landlord. Such Contest shall be without cost, liability, or expense
to Landlord.




          11.4.4 Prosecution. Tenant shall prosecute such Contest with reasonable diligence and
in good faith.




          11.4.5 Diligence. If required for such Contest, Tenant shall have paid the contested
real estate taxes or other matter.




          11.4.6 Collection of Real Estate Taxes. If such Contest relates to any real estate
tax, then such Contest shall suspend its collection from Landlord and the Land.




          11.4.7 No Tax Deed. If, at any time, payment of any real estate taxes is necessary to
prevent the imminent (i.e., within 30 days) delivery of a tax deed to the Land for nonpayment, then
Tenant shall pay or cause to be paid the sums in sufficient time to prevent delivery of such deed.




          11.4.8 No Event of Default. No Event of Default shall exist under this Lease at the
time of such Contest.




          11.4.9 Named Parties. If Landlord has been named as a party in any action, then
Tenant shall cause Landlord to be removed as such party and Tenant substituted in Landlord’s place,
if permissible under the circumstances.




     11.5 Tax Credits. For the avoidance of doubt, any and all tax credits including but
not limited to tax credits obtained by the Tenant with respect to the Premises from the State of
Maryland and Montgomery County under §9-230 of the Tax-Property Article of the Annotated Code of
Maryland, and Chapter 52, Article X of the Montgomery County Code shall inure solely to the benefit
of the Tenant.



     11.6 Landlord Obligations and Protections. Landlord need not join in any Contest unless
(a) Tenant has complied with the Contest Conditions; and (b) such Contest must be initiated or
prosecuted in Landlord’s name. In such case, Landlord shall cooperate, as Tenant reasonably
requests, to permit the Contest to be prosecuted in Landlord’s name. Landlord shall give Tenant
any documents, deliveries, and information in Landlord’s control and reasonably necessary for
Tenant to prosecute its Contest. Tenant shall pay all reasonable costs and expenses, including
legal costs, of any Contest. Tenant shall, at Landlord’s request, advance (when Landlord incurs
them) such reasonable costs and expenses that Landlord incurs or reasonably anticipates incurring,
for Tenant’s Contest and Landlord’s assistance with such Contest.



     11.7 Miscellaneous. When Tenant concludes Tenant’s Contest of any real
estate taxes, Tenant shall pay the amount of such real estate taxes (if any) as has been finally
determined in such Contest to be due, to the extent attributable to periods within the Lease Term,
and any costs, interest, penalties, or other liabilities in connection with such real estate taxes.
Tenant shall be entitled to any refund of such real estate taxes (if any) attributable to periods
within the Lease



15









 







Term. Except for the last two years of the Term, so long as the Contest Conditions remain
satisfied, Landlord shall enter no objection to any Contest. Except for the last two years of the
Term, Landlord may contest any matter for which Tenant is entitled to (but does not) prosecute a
Contest, but only if: (a) Landlord notifies Tenant of Landlord’s intention to do so; (b) Tenant
fails to commence such Contest within 15 days after receipt of such Notice; and (c) Landlord’s
contest complies with all conditions and covenants that would apply to a Contest by Tenant,
transposing references to the parties and their interests as appropriate.



ARTICLE 12. MAINTENANCE OF PREMISES




     12.1 Care of Premises Generally. Tenant shall, at its sole cost and expense keep the
Premises and exterior and interior portions of windows, doors, and all other glass or plate glass
fixtures in a working, neat, clean, sanitary, safe condition and repair at a standard that is
comparable to the levels on the Commencement Date, and shall keep the Premises free from trash,
rubbish and dirt. Tenant shall make all repairs or replacements thereon or thereto, whether
ordinary or extraordinary, normal wear and tear, and damage caused by casualty and condemnation
excepted. Landlord shall not be required to furnish any services or facilities or to make any
repairs, replacements, or alterations of any kind in or on the Premises. Tenant shall receive all
invoices and bills relative to the Premises and, except as otherwise provided herein, shall pay for
all expenses directly to the person or company submitting a bill without first having to forward
payment for the expenses to Landlord.



     12.2 Maintenance of Equipment. Tenant shall, at its sole cost and expense, keep and
maintain all utilities, fixtures and mechanical equipment used, or available for use, by Tenant
(wherever located) in good working order, condition and repair. Said items shall include, but are
not limited to, all plumbing or sewage facilities in the Premises, doors, locks and closing
devices, windows, including glass, lights, electric systems and equipment, heating and air
conditioning systems and equipment, and all other appliances and equipment of every kind.



     12.3 Roof, Walls, Foundation and Structural. At its cost and expense, Tenant will
keep in good condition and repair the roof, foundation, load bearing walls and structural elements
of the Premises to keep the Premises in substantially the same condition and repair existing as of
the Commencement Date, normal wear and tear, and damage caused by casualty and condemnation
excepted.



     12.4 Maintenance of Exterior Areas. Tenant shall maintain the exterior areas in a
neat, clean and orderly condition, properly lighted and landscaped, including, but not limited to,
general maintenance, repairs, pest control, resurfacing, painting, restriping, cleaning, sweeping
and trash removal; maintenance and repair of sidewalks and curbs; sprinkler systems, planting and
landscaping; lighting, water, music and other utilities; directional signs and other markers and
bumpers; maintenance and repair of any fire protection systems, automatic sprinkler systems,
lighting systems, storm drainage systems and any other utility systems; personnel to implement such
service and to police the common areas; and police and fire protection services. Exterior areas
shall include all areas within the Premises outside the exterior boundaries of the buildings
situated thereon, including, but not limited to, streets, driveways, parking areas, truckways,
delivery passages, loading doors, sidewalks, ramps, open and closed courts and malls,



16









 







landscaped and planted areas, exterior stairways, bus stops, retaining and decorative walls and
planters, and other areas provided for the for the common use of Landlord and Tenant, their
employees and invitees.



     12.5 Service Contracts. Tenant shall, at Tenant’s sole cost and expense, procure and
maintain contracts, with copies to Landlord, in customary form and substance for, and with
contractors specializing and experienced in the maintenance of the following equipment and
improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and
pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke detection,
(iv) landscaping and irrigation system, (v) roof covering and drains, (vi) clarifiers, (vii) basic
utility feed to the perimeter of the Building, and (viii) any other equipment, if reasonably
required by Landlord.



     12.6 Action by Landlord if Tenant Fails to Maintain. If Tenant refuses or neglects to
repair or maintain the Premises as required by Sections 12.1, 12.2, 12.3
and 12.4 to the reasonable satisfaction of Landlord, Landlord, at any time following 10
business days from the date on which Landlord shall make written demand on Tenant to affect such
repair or maintenance, may, but shall not have the obligation to, make such repair and/or
maintenance (without liability to Tenant for any loss or damage which may occur to Tenant’s
merchandise, fixtures or other personal property, or to Tenant’s business by reason thereof) and
upon completion thereof, Tenant shall pay to Landlord as Landlord Additional Rent Landlord’s costs
for making such repairs, plus interest at the Default Rate from the date of expenditure by Landlord
upon demand therefor. Moreover, Tenant’s failure to pay any of the charges in connection with the
performance of its maintenance and repair obligations under this Lease will constitute a material
default under the Lease.



ARTICLE 13. SIGNS AND ADVERTISING




     13.1 Signs. Tenant shall have the right to display each of Tenant’s signs, displays,
or other advertising materials that are located on the Premises on or before the Commencement Date.
Tenant shall keep such signs in good condition and repair. Tenant shall not display or erect any
other signs, displays, or other advertising materials that are visible from the exterior of the
building without Landlord’s written approval. The size, design, and other physical aspects of any
other permitted sign shall be subject to the Landlord’s written approval prior to installation,
which approval will not unreasonably be withheld, any covenants, conditions, or restrictions
encumbering the Premises and, any applicable municipal or other governmental permits and approvals.
The cost of the sign(s), including but not limited to the permitting, installation, maintenance and
removal thereof shall be at Tenant’s sole cost and expense. If Tenant fails to maintain its
sign(s), or if Tenant fails to remove such sign(s) upon termination of the Lease, or fails to
repair any damage caused by such removal (including without limitation, painting the building, if
required by Landlord), Landlord may do so at Tenant’s expense. Tenant shall on demand reimburse
Landlord for all costs incurred by Landlord to effect such removal, which amounts shall be deemed
Landlord Additional Rent and shall include without limitation, all sums disbursed, incurred or
deposited by Landlord, including Landlord’s costs, expenses and actual attorneys’ fees with
interest thereon. By executing this Lease, Landlord hereby approves the signage currently existing
on the Premises.



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ARTICLE 14. ENTRY BY LANDLORD




     14.1 Entry by Landlord. Tenant shall permit Landlord and Landlord’s Agents,
prospective purchasers, lenders, investors and contractors to enter the Premises at all reasonable
times, upon giving Tenant a 72 hour written notice, except in the event of an emergency in which
case the 72 hour written notice is not required: (i) for the purpose of inspecting the same, (ii)
for the purposes of performing any of Tenant’s unperformed obligations under this Lease, or (iii)
for the purpose of posting notices of non-responsibility for alterations, additions, or repairs.



     14.2 Entry to Relet Premises. Landlord may, during reasonable business hours within
18 months prior to the expiration of this Lease, enter the Premises for the purpose of allowing
prospective tenants to view the Premises.



     14.3 No Liability. Landlord shall be permitted to enter the Premises for any of the
purposes stated in and in accordance with Sections 14.1 and 14.2 above without any
liability to Tenant for any loss of occupation of quiet enjoyment of the Premises resulting
therefrom.



     14.4 Entry Conditions. Notwithstanding Sections 14,1, 14.2, or
14.3, entry is conditioned on Landlord using reasonable efforts to cause the least
practical interference to Tenant’s business. Landlord shall be liable for any damage caused by the
gross negligence or willful misconduct of Landlord or any of the Landlord Group (as hereinafter
defined) in exercising the rights under this Article 14, and not otherwise covered by
Tenant’s insurance or the insurance Tenant is required to carry under this Lease. Landlord
acknowledges that Tenant’s business operations involve the use of highly sensitive, confidential,
and proprietary information, and that it is imperative that Landlord and its agents, consultants,
contractors or any prospective tenant or broker (collectively, the “Landlord Group”) be accompanied
by an authorized agent of Tenant during any entry onto the Premises by the Landlord Group, except
in an emergency. Because of the sensitive nature of Tenant’s business operations, it may not be
possible to provide ready access to the Landlord Group to every part of the Premises at any given
time. Landlord shall cooperate with all reasonable requests of Tenant in entering the Premises.



ARTICLE 15. ASSIGNMENT AND SUBLETTING




     15.1 Assignment and Subletting. Tenant shall have the right to assign its interest in
this Lease or sublet the Premises without Landlord’s prior written consent, except as follows: (i)
in the event the proposed assignee or subtenant intends to use the Premises in a manner that is not
permitted under Section 5.1, Tenant shall be required to obtain Landlord’s prior written
consent, which consent shall not be unreasonably withheld, conditioned or delayed, and (ii) in the
event the income generated by the proposed assignee or subtenant could jeopardize BioMed Realty
Trust, Inc., a Maryland corporation (“Landlord’s REIT Entity”), status as a real estate investment
trust within the meaning of Sections 856 through 860 of the Internal Revenue Code of 1986 (“REIT
Status”) or cause the Landlord’s REIT Entity to be in receipt of income that does not constitute
“rent from real property” within the meaning of Section 856(d) of the Code, Tenant shall be
required to obtain Landlord’s prior written consent, which consent may be given or denied in
Landlord’s sole and absolute discretion; provided, however, in the event Tenant is
unable to determine whether the proposed assignment or sublease could jeopardize the



18









 







Landlord’s REIT Entity’s REIT Status, Tenant shall have the right to deliver a notice to Landlord,
complying with each of the requirements of Section 15.2, requesting that Landlord make such
determination. Landlord shall notify tenant within five (5) business days after Landlord receives
such notice and such other information as Landlord may reasonably require whether such assignment
or sublease could jeopardize the Landlord’s REIT Entity’s REIT Status. Any purported assignment or
subletting contrary to these provisions shall be void. Consent by Landlord to one or more
assignments of this Lease or to one or more sublettings of the Premises shall not operate to
exhaust Landlord’s rights under this Section.



     15.2 Notice to Landlord. In the event Landlord’s consent is required pursuant to
Section 15.1, Tenant shall first notify Landlord of its desire to assign its interest in this Lease
or sublet the Premises and shall submit in writing to Landlord (the “Transfer Notice”); (i) the
size and location of the space Tenant proposes to assign or sublet; (ii) the name of the proposed
assignee or subtenant; (iii) the date on which the Tenant proposes that the transfer be effective,
which shall not be earlier than the date which is 30 days after the Transfer Notice (iv) the nature
of the proposed assignee’s or subtenant’s business to be carried on in the Premises; (v) the terms
and provisions of the proposed sublease or assignment; (vi) such reasonable financial information
as Landlord may request concerning the proposed assignee or subtenant, and (vii) such other
information as Landlord may reasonably require. Tenant agrees to reimburse Landlord for Landlord’s
actual costs and attorneys’ fees (not to exceed $5000) incurred in conjunction with the processing
and documentation of any such requested assignment, subletting, transfer, change or ownership or
hypothecation of this Lease. Notwithstanding the foregoing, within five (5) days after any
assignment of sublet of Tenant’s interest in the Lease (including any assignment by operation of
law or the transfer of fifty percent (50%) or more of the equity interests in Tenant measured by
voting power or share of Tenant’s profit), Tenant shall provide Landlord a written notice of such
assignment or sublet, which notice shall include the date on which the transfer occurred and each
of the items specified in items (i), (ii), (iv), (v) and (vii) above.



     15.3 No Release of Liability. No subletting or assignment, even with the consent of
Landlord, shall relieve Tenant of its obligation to pay the Rent and perform all the other
obligations to be performed by Tenant hereunder. The acceptance of Rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any assignment or subletting.



ARTICLE 16. DISPOSSESSION




     16.1 No Dispossession. If Tenant shall surrender the Premises, or be dispossesed by
process of law, or otherwise, Landlord may terminate this Lease, retake possession of the Premises,
pursue its remedies provided herein, and any personal property or trade fixtures belonging to
Tenant and left on the Premises shall, at the option of Landlord, be deemed abandoned. In such
case, Landlord may dispose of said personal property in any manner and is hereby relieved of all
liability for doing so.



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ARTICLE 17. BREACH BY TENANT




     17.1 Events of Default. The occurrence of any of the following shall constitute a
breach and material default of this Lease by Tenant (each, an “Event of Default”):



          17.1.1 The failure of Tenant to pay or cause to be paid when due any Base Monthly Rental,
Landlord Additional Rent, Third Party Additional Rent, Rent, the Security Deposit, taxes, monies,
or charges required by this Lease to be paid by Tenant when such failure continues for a period of
5 business days after written notice thereof from Landlord to Tenant;




          17.1.2 The failure of Tenant to perform any term, covenant or condition, other than payment of
Rent, the Security Deposit, taxes, monies or charges, required by this Lease and Tenant shall have
failed to cure such failure within 30 days after written notice from Landlord; provided, however,
that where such failure cannot reasonably be cured within the 30 day period, the Tenant shall not
be in default if it has commenced such cure within the same 30 day period and diligently thereafter
prosecutes the same to completion;




          17.1.3 Subject to the notice and cure provisions of Section 17.1.2 above, Tenant
causing, permitting, or suffering, without the prior written consent of Landlord, any act when this
Lease requires Landlord’s prior written consent or prohibits such act; or




          17.1.4 To the extent permitted by applicable law, any act of bankruptcy caused, suffered or
permitted by Tenant. For purposes of this Lease, “act of bankruptcy” shall include any of the
following:




               17.1.4.1. Any general assignment or general arrangement for the
benefit of creditors;



               17.1.4.2. The filing of any petition by or against Tenant to have Tenant adjudged a bankrupt
or a petition for reorganization or arrangement under any law relating to bankruptcy, unless such
petition is filed against Tenant and same is dismissed within 60 days;



               17.1.4.3. The appointment of a trustee or receiver to take possession of substantially all of
Tenant’s assets located in the Premises or of Tenant’s interest in this Lease; or,



               17.1.4.4. The attachment, execution or other judicial seizure of substantially all of Tenant’s
assets located at the Premises or of Tenant’s interest in this Lease.



          17.1.5 The failure of Tenant to perform any term, obligation, covenant or condition, which
failure has not been cured after ten (10) business days notice to Tenant thereof, under: (i) that
certain Option Agreement dated as of the date hereof, between Tenant and BioMed Realty, L.P.,
relating to the approximately 9.98 acres of land located in Rockville, Maryland as more fully
described therein (the “Pilot Plant Option Agreement”); or (ii) that certain Option Agreement dated
as of the date hereof, between Tenant and BioMed Realty, L.P.




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relating to the approximately 3 acres of land located in Rockville, Maryland as more fully
described therein (the “Q Building Option Agreement”).




     17.2 Five-Day Notice. In the event that Landlord issues a five-day notice, notice of
abandonment or comparable document by reason of Tenant’s breach, and Tenant cures such default,
Tenant agrees to pay to Landlord, the reasonable cost of preparation and delivery of same.



     17.3 No Waiver. The acceptance by Landlord of Rent due hereunder after breach by
Tenant will not constitute a waiver of such breach, unless a written notice to that effect has been
delivered to Tenant.



     17.4 Replacement of Statutory Notice Requirements. To the extent not prohibited by
applicable law, when this Lease requires service of a notice, that notice shall replace rather than
supplement any equivalent or similar statutory notice, including any notices required by applicable
law. To the extent not prohibited by applicable law, when a statute requires service of a notice
in a particular manner, service of that notice (or a similar notice required by this Lease) in the
manner required by Section 31.10 shall replace and satisfy the statutory service-of-notice
procedures.



     17.5 Mortgagee Protection. In the event of any default on the part of Landlord,
Tenant agrees to give notice by registered or certified mail to any beneficiary of a deed of trust
or mortgage covering the Premises whose name and address shall have been furnished to the Tenant
and shall offer such beneficiary or mortgagee a reasonable opportunity to cure such default (such
cure period not to exceed 60 days after receipt of such notice) before Tenant shall attempt to
exercise any other remedy.



ARTICLE 18. REMEDIES UPON BREACH




     18.1 Landlord’s Remedies. If Tenant fails to perform any of its affirmative duties or
obligations, within 10 business days after written notice (or in the case of any facts or
circumstances that create an imminent risk of damage to the Real Property or the Premises or injury
to, or death of, persons, without written notice), Landlord may, at its option, perform such duty
or obligation on Tenant’s behalf, including but not limited to the obtaining of reasonable required
bonds, insurance policies, or governmental licenses, permits or approvals. Tenant shall pay to
Landlord an amount equal to the costs and expenses incurred by Landlord in such performance upon
receipt of an invoice, with interest thereon, at the Default Rate from the date of expenditure. In
the event of any breach or material default by Tenant under Section 17.1, in addition to
other rights or remedies of Landlord at law or in equity, Landlord shall have the following
remedies:



          18.1.1 Landlord may continue the lease in effect after Tenant’s breach and recover Rent as it
becomes due. Accordingly, if Landlord does not elect to terminate this Lease on account of any
default by Tenant, Landlord may enforce all of Landlord’s rights and remedies under this Lease,
including the right to recover all Rent as it becomes due; and



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     18.1.2 Landlord, either as an alternative or subsequent to exercising the remedies set forth
in Section 18.1.1, may terminate Tenant’s right to possession of the Premises by and upon
delivery to Tenant of written notice of termination. Landlord may then immediately reenter the
Premises and take possession thereof pursuant to legal proceedings and remove all persons and
property from the Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant. No notice of termination shall be necessary
in the event that Tenant has abandoned the Premises. In the event that Landlord elects to terminate
Tenant’s right of possession, Landlord may recover the following:



               18.1.2.1. The worth at the time of the award of the unpaid Rent which had been earned at the
time of termination. “Worth at the time of award” shall be computed by allowing interest at the
Default Rate from the first day the breach occurs;



               18.1.2.2. The worth at the time of award of the amount by which the unpaid Rent which would
have been earned after termination until the time of award exceeds the amount of such rental loss
that the Tenant proves could have been reasonably avoided. “Worth at the time of award” shall be
determined by allowing interest at the Default Rate from the first day a breach occurs;



               18.1.2.3. The worth at the time of award of the amount by which the unpaid Rent for the
balance of the term after the time of award exceeds the amount of such rental loss that the Tenant
proves could be reasonably avoided. “Worth at the time of award” shall be computed by discounting
such amount at the discount rate at the Federal Reserve Bank of San Francisco at the time of award
plus 1%; and



               18.1.2.4. Any other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under the Lease or which in the ordinary
course of things would be likely to result therefrom including, but not limited to, commissions and
expenses of reletting, attorneys’ fees, costs of alterations and repairs, recording fees, filing
fees and any other expenses customarily resulting from obtaining possession of leased premises and
re-leasing.



     18.2 Landlord Default. Tenant shall have no right to terminate this Lease for any
default by Landlord.



ARTICLE 19. DAMAGE OR DESTRUCTION




     19.1 Tenant’s Obligation to Rebuild. If the Premises are damaged or destroyed, Tenant
shall immediately provide notice thereof to Landlord, and shall promptly thereafter deliver to
Landlord Tenant’s good faith estimate of the time it will take to repair and rebuild the Premises
(the “Estimated Time For Repair”). Subject to the other provisions of this Article 19, Tenant
shall promptly and diligently repair and rebuild the Premises in accordance with Sections 19.3
and 19.4 unless Landlord or Tenant terminates this Lease in accordance with Section
19.2.



     19.2 Termination.



          19.2.1 Landlord’s Right to Terminate.




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               (a) Landlord shall have the right to terminate this Lease following damage to or destruction
of all or a substantial portion of the Premises if any of the following occurs (each, a
“Termination Condition”): (i) insurance proceeds, together with additional amounts Tenant agrees to
contribute under Section 19.4.4, are not confirmed to be available to Landlord, within 90
days following the date of damage, to pay 100% of the cost to fully repair the damaged Premises,
excluding the deductible for which Tenant shall also be responsible; (ii) based upon the Estimated
Time For Repair, the Premises cannot, with reasonable diligence, be fully repaired by Tenant within
18 months after the date of the damage or destruction; (iii) the Premises cannot be safely repaired
because of the presence of hazardous factors, including, but not limited to, earthquake faults,
radiation, chemical waste and other similar dangers; (iv) subject to the terms and conditions of
Section 19.2.1(a) hereof, all or a substantial portion of the Premises are destroyed or
damaged during the last 24 months of the Lease Term; or (v) Tenant is in material default under the
terms of this Lease at the time of such damage or destruction past any period of notice and cure as
elsewhere provided in this Lease. For purposes of this Section 19.2, a “substantial
portion” of the Premises shall be deemed to be damaged or destroyed if the Premises is rendered
unsuitable for the continued use and occupancy of Tenant’s business substantially in the same
manner conducted prior to the event causing the damage or destruction.



               (b) If all or a substantial portion of the Premises are destroyed or damaged within the first
36 months of the Lease Term or the last 24 months of the initial Lease Term, or within the last 24
months of the first option period under this Lease, and Landlord desires to terminate this Lease
under Section 19.2.1(a) hereof, Landlord shall give Tenant written notice of Landlord’s
intent to terminate the Lease under Section 19.2.1(a) (“Section 19.2.1(a)
Termination Notice”) and Tenant shall have a period of 30 days after receipt of the Section
19.2.1(a) Termination Notice (“Tenant’s Early Option Period”) to (i) if damage has occurred
during the first 36 months of the Lease Term, exercise its option to purchase the Premises or (ii)
if damage has occurred during the last 24 months of the Lease Term or first option period, exercise
its option to extend the initial Lease Term or the first option period, as applicable, by providing
Landlord with written notice of Tenant’s exercise of its respective option prior to the expiration
of Tenant’s Early Option Period. If Tenant exercises its option rights under the immediately
preceding sentence, the Section 19.2.1(a) Termination Notice shall be deemed rescinded and
Tenant shall proceed to repair and rebuild the Premises in accordance with the other provisions of
this Article 19. If Tenant fails to deliver such written notice to Landlord prior to the end of
Tenant’s Early Option Period, then Tenant shall be deemed to have waived its option to purchase the
Premises or to extend the Lease Term, as the case may be, and the last day of Tenant’s Early Option
Period shall be deemed to be the date of the occurrence of the Termination Condition under
Section 19.2.1(a).



          19.2.2 Tenant’s Right to Terminate. Tenant shall have the right to terminate this
Lease following damage to or destruction of all or a substantial portion of the Premises if any of
the following occurs (each a “Termination Condition”): (i) the Premises cannot, with reasonable
diligence, be fully repaired by Tenant within 36 months (not including any time necessary for FDA
approval) after the date of the damage or destruction based upon the Estimated Time for Repair,
which Estimate Time for Repair shall have been reasonably agreed




23









 







to by Landlord; or (ii) the Premises are destroyed or damaged during the last 24 months of the
Term.




          19.2.3 Exercise of Termination Right. If a party elects to terminate this Lease and
has the right to so terminate, such party will give the other party written notice of its election
to terminate (“Termination Notice”) within 30 days after the occurrence of the applicable
Termination Condition, and this Lease will terminate 15 days after receipt of such Termination
Notice, except in the case of a termination by Landlord under Section 19.2.1(a), in which
case this Lease will terminate 15 days after expiration of the Tenant Early Option Period if Tenant
timely fails to exercise timely Tenant’s option to extend the Lease Term. If this Lease is
terminated pursuant to Section 19.2, Landlord shall, subject to the rights of its
lender(s), be entitled to receive and retain all the insurance proceeds resulting from such damage,
including rental loss insurance, except for those proceeds payable under policies obtained by
Tenant which specifically insure Tenant’s personal property, trade fixtures and machinery. For
purposes of clarity, Tenant shall continue to maintain and pay the rental loss insurance premiums
after this Lease terminates to the extent necessary for Landlord to receive insurance proceeds
sufficient to cover 36 months of Rent under this Lease.




     19.3 Tenant’s Obligation to Repair. If Tenant is required to repair or rebuild any
damage or destruction of the Premises under Section 19.1, then Tenant shall (a) submit its
plans to repair such damage and reconstruct the Premises to Landlord for review and approval, which
approval shall not be unreasonably withheld, conditioned or delayed; (b) diligently repair and
rebuild the Premises in the same or better condition and with the same or better quality of
materials as the condition of the Premises as of the Commencement Date, and in a manner that is
consistent with the plans and specifications approved by Landlord; (c) obtain all permits and
governmental approvals necessary to repair or reconstruct the Premises (which permits shall not
contain any conditions that are materially more restrictive than the permits in existence on the
date hereof); (d) cause all work to be performed only by qualified contractors that are reasonably
approved by Landlord; (e) allow Landlord and its consultants and agents to enter the Premises at
all reasonable times to inspect the Premises and Tenant’s ongoing work and cooperate reasonably in
good faith with their effort to ensure that the work is proceeding in a manner that is consistent
with this Lease; (f) comply with all applicable laws and permits in connection with the performance
of such work; (g) timely pay all of its consultants, suppliers and other contractors in connection
with the performance of such work; (h) notify Landlord if Tenant receives any notice of any default
or any violation of any applicable law or any permit or similar notice in connection with such
work; (i) deliver as-built plans for the Premises within thirty (30) days after the completion of
such repair and restoration; (j) ensure that Landlord has fee simple title to the Premises during
such work without any claim by any contractor or other party; (k) maintain such insurance as
Landlord may reasonably require (including insurance in the nature of builders’ risk insurance) and
(l) comply with such other conditions as Landlord may reasonably require. In addition, Tenant
shall, at its expense, replace or fully repair all Tenant’s personal property and any alterations
installed by Tenant existing at the time of such damage or destruction. Notwithstanding the
foregoing, Tenant’s right to repair and rebuild the Building pursuant to this Section 19.3
shall not apply if Tenant has assigned this Lease to a third party, other than an affiliate;
provided, however, Landlord shall have the right to require such third party to
repair and rebuild the Building in accordance with this Section 19.3. To the fullest
extent permitted by



24









 







law, Tenant shall indemnify, protect, defend and hold Landlord (and its employees and agents)
harmless from and against any and all claims, costs, expenses, suits, judgments, actions,
investigations, proceedings and liabilities arising out of or in connection with Tenant’s
obligations under this Article 19, including, without limitation, any acts, omissions or
negligence in the making or performance of any such repairs or replacements. In the event Tenant
does not repair and rebuild the Premises pursuant to this Article 19, Tenant shall be in
breach, and Landlord shall have the right to retain all casualty insurance proceeds and
condemnation proceeds.



     19.4 Application of Insurance Proceeds for Repair and Rebuilding. Landlord shall
cause the insurance proceeds on account of such damage or destruction to be held in a separate
interest bearing account (the “Restoration Fund”) which shall be held and disbursed as follows:



          19.4.1 Minor Restorations. If the estimated cost of restoration is less than
$1,000,000, and if prior to commencement of restoration, no Event of Default or event which would
constitute an Event of Default pursuant to which Landlord is taking action to take possession of
the Premises or to terminate this Lease shall exist and no mechanics’ or materialmen’s liens shall
have been filed and remain undischarged, and if the architects, contracts, contractors, plans and
specifications for the restoration shall have been approved by Landlord (which approval shall not
be unreasonably withheld or delayed), and Landlord shall be provided with reasonable assurance
against mechanics’ liens, accrued or incurred, as Landlord or its lenders may reasonably require
and such other documents and instruments as Landlord or its lenders may reasonably require, and
Tenant shall have procured acceptable performance and payment bonds reasonably acceptable to
Landlord in an amount and form, and from a surety, reasonably acceptable to Landlord, and naming
Landlord as an additional obligee; then the Restoration Fund shall be made available to Tenant for
application to pay the costs of restoration incurred by Tenant and Tenant shall promptly complete
such restoration.




          19.4.2 Other Than Minor Restorations. If the estimated cost of restoration is equal
to or exceeds $1,000,000, and if Tenant provides evidence satisfactory to Landlord that sufficient
funds are available to restore the Premises, Landlord shall make disbursements from the Restoration
Fund from time to time in an amount not exceeding the cost of the work completed since the date
covered by the last disbursement, upon receipt of (a) satisfactory evidence, including architect’s
certificates, of the stage of completion, of the estimated cost of completion and of performance of
the work to date in a good and workmanlike manner in accordance with the contracts, plans and
specifications, (b) reasonable assurance against mechanics’ or materialmen’s liens, accrued or
incurred, as Landlord or its lenders may reasonably require, (c) contractors’ and subcontractors’
sworn statements, (d) a satisfactory bring-to-date of title insurance, (e) performance and payment
bonds reasonably acceptable to Landlord in an amount and form, and from a surety, reasonably
acceptable to Landlord, and naming Landlord as an additional obligee, (f) such other documents and
instruments as Landlord or its lenders may reasonably require, and (g) other evidence of cost and
payment so that Landlord can verify that the amounts disbursed




25









 







from time to time are represented by work that is completed, in place and free and clear of
mechanics’ lien claims.




          19.4.3 Requests for Disbursements. Requests for disbursement shall be made no more
frequently than monthly and shall be accompanied by a certificate of Tenant describing in detail
the work for which payment is requested, stating the cost incurred in connection therewith and
stating that Tenant has not previously received payment for such work; the certificate to be
delivered by Tenant upon completion of the work shall, in addition, state that the work has been
completed and complies with the applicable requirements of this Lease. Landlord may retain 10% of
each requisition in the Restoration Fund until the restoration is fully completed. In addition,
Landlord may withhold from amounts otherwise to be paid to Tenant, any amount that is necessary in
Landlord’s reasonable judgment to protect Landlord from any potential loss due to work that is
improperly performed or claims by Tenant’s contractors and consultants.




          19.4.4 Costs in Excess of Restoration Fund. In addition, prior to commencement of
restoration and at any time during restoration, if the estimated cost of restoration, as determined
by the evaluation of an independent engineer acceptable to Landlord and Tenant, exceeds the amount
of the Restoration Fund, Tenant will provide evidence satisfactory to Landlord that the amount of
such excess will be available to restore the Premises. Any sum which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant up to the amount of Tenant’s
payments pursuant to the immediately preceding sentence. If no such refund is required, any sum
remaining in the Restoration Fund upon completion of restoration shall be paid to Landlord. In the
event Landlord and Tenant cannot agree on an independent engineer, an independent engineer
designated by Tenant and an independent engineer designated by Landlord shall within five (5)
business days select an independent engineer licensed to practice in Maryland who shall resolve
such dispute within ten (10) business days after being retained by Landlord. All fees, costs and
expenses of such third engineer so selected shall be shared equally by Landlord and Tenant.




     19.5 Transfer of Restoration Fund Upon Closing Under Any Tenant Purchase Option. In
the event the Tenant timely exercises and closes under any option it may have to purchase the
Premises and the restoration shall not have been completed, notwithstanding anything herein
provided to the contrary, the Landlord shall transfer to the Tenant the unexpended Restoration
Fund.



     19.6 Abatement of Rent. Rent shall be temporarily abated in proportion to the degree
to which Tenant’s use of the Premises is impaired and only to the extent of any proceeds received
by Landlord from the rental abatement insurance described in Section 10.1 hereof, during
any period when, by reason of such damage or destruction, Landlord and Tenant reasonably determines
that there is substantial interference with Tenant’s use of the Building. Such abatement shall
commence upon such damage or destruction and end upon substantial completion by Landlord of the
repair or reconstruction which Landlord is obligated or undertakes to do. Tenant shall not be
entitled to any compensation or damages from Landlord for loss of the use of the Premises, damage
to Tenant’s personal property or any inconvenience occasioned by such damage, repair or
restoration.



26









 





     19.7 Replacement Cost. The determination in good faith by Landlord of the estimated
cost of repair of any damage, of the replacement cost, or of the time period required for repair
shall be conclusive for purposes of this Section 19.7.



ARTICLE 20. CONDEMNATION




     20.1 Total Taking – Termination. If title to all of the Premises or so much thereof
is taken for any public or quasi-public use under any statute or by right of eminent domain so that
reconstruction of the Premises will not result in the Premises being reasonably suitable (as
reasonably determined by Landlord and Tenant) for Tenant’s continued occupancy for the uses and
purposes permitted by this Lease, this Lease shall terminate as of the date possession of the
Premises or part thereof be taken.



     20.2 Partial Taking. If any part of the Premises is taken and the remaining part
after Landlord makes repairs and alterations is reasonably suitable, as reasonably determined by
Landlord and Tenant, for Tenant’s continued occupancy for the purposes and uses permitted by this
Lease, this Lease shall, as to the part so taken terminate as of the date that possession of such
part of the Premises is taken and the Base Monthly Rental shall be reduced in the same proportion
that the floor area of the portion of the Building so taken (less any addition thereto by reason of
any reconstruction) bears to the original floor area of the Building. Tenant shall, at its sole
cost and expense, make all necessary repairs or alterations to the Building so as to make the
portion of the Building not taken a complete architectural unit in accordance with the terms and
provisions of Section 19.4, Landlord shall make available to Tenant any condemnation
proceeds it receives which are allocable to such portion of the Building in accordance with the
terms and provisions of Section 19.4. Base Monthly Rental due and payable hereunder shall
be temporarily abated during such restoration period in proportion to the degree to which Tenant’s
use of Premises is impaired. Notwithstanding the foregoing, if more than twenty-five percent (25%)
of the square footage of the Building is taken or sold under such threat, Landlord may terminate
this Lease as of the date that the condemning authority takes possession by delivery of written
notice of such election within twenty (20) days after Landlord has been notified of the taking or,
in the absence thereof, within twenty (20) days after the condemning authority shall have taken
possession.



     20.3 No Apportionment of Award. Except as provided in Article 19, no award
for any partial or entire taking shall be apportioned, it being agreed and understood that Landlord
shall be entitled to the entire award for any partial or entire taking. Tenant assigns to Landlord
its interest in any award which may be made in such taking or condemnation, together with any and
all rights of Tenant arising in or to the same or any part thereof. Nothing contained herein shall
be deemed to give Landlord any interest in or require Tenant to assign to Landlord any separate
award made to Tenant for the taking of Tenant’s personal property, trade fixtures or machinery for
the interruption of Tenant’s business, or its moving costs, or for the loss of its goodwill. In
addition, Tenant will have the right to make a separate claim in the condemnation proceeding for
(a) the taking of the unamortized or undepreciated value of any leasehold improvements that Tenant
has the right to remove at the end of the Lease Term and that Tenant elects not to remove, (b) loss
of goodwill, and (c) any other amount in addition to the foregoing, so long as any such claim does
not reduce the amount of the award payable to Landlord.



27









 





     20.4 Temporary Taking. No temporary taking of the Premises shall terminate this Lease
or give Tenant any right to any abatement of Rent, except to the extent covered by insurance
proceeds payable to Landlord. Any award made to Tenant by reason of such temporary taking shall
belong entirely to Tenant and Landlord shall not be entitled to share therein. Each party agrees to
execute and deliver to the other all instruments that may be required to effectuate the provisions
of this Section.



     20.5 Sale Under Threat of Condemnation. A sale made in good faith by Landlord to any
authority having the power of eminent domain, either under threat of condemnation or while
condemnation proceedings are pending, shall be deemed a taking under the power of eminent domain
for all purposes of this Section.



ARTICLE 21. SALE OF THE PREMISES BY LANDLORD.




     21.1 Sale of Premises. Notwithstanding any provisions of this Lease to the contrary,
Landlord may assign, in whole or in part, Landlord’s interest in this Lease and may sell all or
part of the real estate of which the Premises are a part (the “Real Property”). Upon the sale of
the Premises, Landlord shall be released of all of its obligations under this Lease, to the extent
such obligations are assumed by such purchaser.



ARTICLE 22. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS




     22.1 Tenant Estoppel Certificate. Tenant shall at any time during the term of this
Lease, within 10 business days of written notice from Landlord, execute and deliver to Landlord a
statement in writing certifying that this Lease is unmodified and in full force and effect or, if
modified, stating the nature of such modification. Tenant’s statement shall include other details
requested by Landlord, such as the date to which Rent and other charges are paid, Tenant’s
knowledge concerning any uncured defaults with respect to Landlord’s obligations under this Lease
and the nature of such defaults if they are claimed, and such other matters as Landlord may
reasonably request. Any such statement may be relied upon conclusively by any purchaser or lender
having an interest in the Premises. Tenant’s failure to deliver such statements within such time
shall be conclusive upon the Tenant that this Lease is in full force and effect, except as and to
the extent any modification has been represented by Landlord, and that there are no uncured
defaults in Landlord’s performance, and that not more than 1 month’s Rent has been paid in advance.



     22.2 Tenant Financial Statements. Within 120 days after the end of each fiscal year,
Tenant shall provide Landlord a copy of the audited financial statements that have been provided to
the SEC or, in the event Tenant is no longer required to deliver such financial statements to the
SEC, year-end financial statements, including balance sheets and income statements, reflecting
Tenant’s current financial condition for such fiscal year that have been audited by a nationally
recognized firm of certified public accountants. Tenant represents and warrants that all financial
statements, records and information furnished by Tenant to Landlord in connection with this Lease
are true, correct and complete in all respects.



28









 





ARTICLE 23. SUBORDINATION AND ATTORNMENT




     23.1 Subordination of Lease. This Lease and Tenant’s rights under this Lease are
subject and subordinate to any Mortgage (as defined below), ground lease, and to all renewals,
modifications, consolidations, replacements, or extensions thereof, now or hereafter affecting the
Premises. The provisions of this Section shall be self-operative, and no further instrument of
subordination shall be required. In confirmation of such subordination, however, Tenant shall
within five business days execute and deliver any instruments that Landlord, the holder of any
Mortgage, or the Landlord of any ground lease may request to evidence such subordination. If Tenant
fails to execute and deliver any such instruments, Tenant irrevocably constitutes and appoints
Landlord as Tenant’s special attorney-in-fact to execute and deliver such instruments.



     23.2 Attornment to Lender. If the holder of any Mortgage, or the Landlord of any
ground lease affecting the Premises, shall hereafter succeed, by foreclosure or otherwise, to the
rights of Landlord under this Lease, Tenant shall attorn to and recognize such successor as
Tenant’s Landlord under this Lease, and shall promptly execute and deliver any instruments that may
be necessary to evidence such attornment, and Tenant hereby irrevocably appoints Landlord as
Tenant’s special attorney in fact to execute and deliver such instruments on behalf of Tenant
should Tenant refuse or fail to do so. Upon such attornment, this Lease shall continue in effect as
a direct lease between such successor Landlord and Tenant upon and subject to all of the provisions
of this Lease. Notwithstanding the foregoing, Tenant’s agreement both to subordinate and to attorn,
as set forth in this Article, is contingent upon Tenant’s receipt of a nondisturbance agreement
from the holder of any encumbrance placed against the Premises, in a recordable, commercially
reasonable form or in the holder’s standard form, providing that in the event of any foreclosure,
sale under a power of sale, ground or master lease termination, or transfer in lieu of any of the
foregoing, or the exercise of any other remedy under any such encumbrance, but subject to such
holder’s form exceptions, or other reasonable exceptions: (i) Tenant’s use, possession, and
enjoyment of the Premises will not be disturbed and this Lease will continue in full force and
effect so long as Tenant is not in default; and (ii) this Lease will automatically become a lease
directly between any successor to Landlord’s interest, as landlord, and Tenant, as if that
successor were the landlord originally named in the lease.



ARTICLE 24. HOLDING OVER




     24.1 Holding Over. If Tenant should remain in possession of the Premises after the
expiration of the term of this Lease without executing a new lease or after Landlord has declared a
forfeiture by reason of a default by Tenant, such holding over shall be construed as a tenancy from
month to month, subject to all the conditions, provisions and obligations of this Lease insofar as
they are applicable to a month to month tenancy, including the provisions of Article 3, except that
the Base Monthly Rental shall be one hundred fifty percent (150%) of the Base Monthly Rental last
due, payable monthly in advance. Notwithstanding the foregoing, if Tenant fails to vacate the
Premises or Tenant fulfills less than all of its obligations hereunder at the end of the Lease
Term, Tenant also shall be liable for all damages incurred by Landlord by reason of the latter’s
inability to deliver possession of the Premises or any portion thereof to any other person.



29









 





ARTICLE 25. EASEMENTS




     25.1. Easements. Landlord reserves the right, from time to time, to grant such
easements, rights and dedications that Landlord deems necessary or desirable, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps
and restrictions do not unreasonably interfere with the use of the Premises by Tenant or Tenant’s
ability to exercise any of its options hereunder. Landlord agrees to consult with Tenant before
granting such easements, rights and dedications. Tenant shall sign any documents or instruments to
accomplish the foregoing upon request of Landlord, and failure to do so shall constitute a material
breach of this Lease. Tenant irrevocably appoints Landlord as Tenant’s special attorney in fact to
execute and deliver such documents or instructions on behalf of Tenant should Tenant refuse or fail
to do so.



ARTICLE 26. RESTRICTIONS




     26.1 Compliance with Covenants, Conditions and Restrictions. In addition to
requirements imposed by law, the care of the Premises and conduct of business thereupon, among
other things, may be restricted or subject to heightened requirements pursuant to one or more
recorded Covenant, Conditions and Restrictions (“CC&R’s”). The terms of all applicable CC&R’s, in
their entirety, are incorporated herein by this reference. Tenant has received a copy of all
applicable CC&R’s prior to the execution of this Lease, and such receipt is acknowledged hereby.



     26.2 Associations. Tenant shall faithfully observe and comply with the provisions of
all applicable CC&R’s, and all modifications and additions which may from time to time be enacted
pursuant to their terms. Tenant shall similarly observe and comply with all requests, demand and
orders otherwise made by any governing associations created under the authority of the CC&R’s (the
“Associations”). Any violation by Tenant of the CC&R’s or rightful orders of the Associations
created thereby after written notice to Tenant shall be a default under this Lease, subject to the
cure provisions of Section 17.1.2. However, Landlord will not be responsible to Tenant for
the nonperformance of any provisions of such CC&R’s by its tenants occupying neighboring
properties, if any.



     26.3 Association Fees. All payments, charge, dues, and assessments imposed under the
authority of the CC&R’s and the Associations (“Association Fees”), if any, shall be the sole
responsibility of Tenant, who shall timely pay such Association Fees to Landlord as Landlord
Additional Rent. Each payment shall be made promptly on demand throughout the term of this Lease
and shall be paid without deduction or offset.



     26.4 Conservation Easement Agreement. The Premises is restricted by the Agreement by
Owners’ Dedication on the plat recorded as Plat No. 20556 pursuant to that certain Conservation
Easement Agreement recorded December 30, 1994 in Liber 13178, Folio 412, by and among Michele
Rosenfeld, Associate General Counsel of the Maryland-National Capital Park and Planning Commission.



ARTICLE
27. HAZARDOUS MATERIALS




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     27.1 Definitions:



          27.1.1 Hazardous Materials Laws. “Hazardous Materials Laws” means any and all
federal, state or local laws, ordinances, rules, decrees, orders, regulations or court decisions
relating to hazardous substances, hazardous materials, hazardous waste, toxic substances,
environmental conditions on, under or about the Premises, or soil and ground water conditions,
including, amendments to and any regulations promulgated pursuant to the foregoing, and any similar
federal, state or local laws, ordinances, rules, decrees, orders or regulations.




          27.1.2 Hazardous Materials. “Hazardous Materials” means any chemical, compound,
substance or other material, including, without limitation, gasoline, diesel, aviation fuels,
lubricating oils, solvents and chemicals, that: (i) is defined as a hazardous substance, hazardous
material, hazardous waste or toxic substance under any Hazardous Material Law; (ii) is controlled
or governed by any Hazardous Materials Law, or gives rise to any reporting, notice or publication
requirements thereunder, or gives rise to any liability, responsibility or duty on the part of
Tenant or County with respect to any third person thereunder; or (iii) is a flammable or explosive
material, asbestos, radioactive material, nuclear medicine material, drug, vaccine, bacterial,
virus, hazardous waste, toxic substance, or related injurious or potentially injurious material (by
itself or in combination with other materials).




     27.2 Tenant’s Obligations



          27.2.1 Compliance with Laws. Tenant shall strictly comply with, and shall maintain
the Premises in compliance with, all Hazardous Materials Laws. Tenant shall obtain and maintain in
full force and effect all permits, licenses and other governmental approvals required for Tenant’s
operations on the Premises under any Hazardous Materials Laws and shall comply with all terms and
conditions thereof. At Landlord’s request, Tenant shall deliver copies of, or allow Landlord to
inspect, all such permits, licenses and approvals.




          27.2.2 Remedial Work. Tenant shall perform any monitoring, investigation, clean-up,
removal, detoxification, preparation of closure or other required plans and any other remedial work
(collectively, “Remedial Work”) required as a result of any use, release or discharge of Hazardous
Materials at or from the Premises or any violation of Hazardous Materials Laws caused by Tenant or
any subtenant of Tenant or their respective agents, contractors, employees, licensees or invitees
(but not by Landlord or Landlord’s Agents). Landlord shall have the right to intervene in any
governmental action or proceeding involving any Remedial Work, and to approve performance of the
work, in order to protect Landlord interests. Tenant shall be solely responsible for paying all
fines, damages and penalties imposed by any governmental agency resulting from Tenant’s violation
of any Hazardous Materials Laws.




          27.2.3 Compliance with Insurance Requirements. Tenant shall comply with the
requirements of Tenant’s insurers regarding Hazardous Materials and with such insurers’
recommendations based upon prudent industry practices regarding management of Hazardous Materials.




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          27.2.4 Notice; Reporting. Tenant shall notify Landlord in writing immediately after
any of the following: (a) Tenant has knowledge, or has reasonable cause to believe, that any
Hazardous Material has been released or discharged under or about the Premises, whether or not the
Hazardous Material is in quantities that would require reporting to a public agency; (b) Tenant
receives any order of a governmental agency requiring any Remedial Work pursuant to any Hazardous
Materials Laws; (c) Tenant receives any warning, notice of inspection, notice of violation or
alleged violation, or Tenant receives notice or knowledge of any proceeding, investigation of
enforcement action, pursuant to any Hazardous Materials Laws; or (d) Tenant receives written notice
of any claims made by any third party against Tenant or the Premises relating to any loss or injury
resulting from Hazardous Materials. Tenant shall deliver to Landlord copies of all test results,
reports and business management plans required to be filed with any government agency pursuant to
any Hazardous Materials Laws.




          27.2.5 Entry and Inspection; Cure. Subject to Section 14.4, Landlord and its
agents, employees and contractors, shall have the right to enter the Premises at all reasonable
times to inspect the Premises and Tenant’s compliance with the terms and conditions of this
Section 27, or to conduct investigations and tests. No prior notice to Tenant shall be
required in the event of any emergency, or if Landlord has reasonable cause to believe that
violations by Tenant of this Section 27 have occurred, or if Tenant consents at the time of
entry. In all other cases, Landlord shall give at least 72 hours’ prior written notice to Tenant.
Landlord shall have the right, but not the obligation, to remedy any violation by Tenant of the
provisions of this Section 27, or to perform any Remedial Work necessitated as a result of
any discharge by Tenant of Hazardous Materials on the Premises. Tenant shall pay, upon demand, all
costs incurred by Landlord in remedying such violations or performing all Remedial Work
necessitated by the acts or omissions of Tenant and/or its agents or employees, plus interest
thereon at the Default Rate from the date of demand until the date paid by the Tenant.




          27.2.6 Termination/Expiration. Upon termination or expiration of this Lease, Tenant
shall, at Tenant’s cost, remove any equipment, improvements or storage facilities utilized in
connection with any Hazardous Materials and shall clean up, detoxify, repair and otherwise restore
the Premises to a condition in compliance with applicable laws governing Hazardous Materials, to
the extent such condition is caused by Tenant or any subtenant of Tenant or their respective
agents, contractors, employees, licensees or invitees. Subject to Section 14.4, upon
termination or expiration of this Lease, Tenant shall, at Tenant’s cost, permit Landlord and
Landlord’s Agents to enter the Premises upon giving Tenant a 72 hour written notice for the
purposes of inspecting the environmental condition of the Premises, including an audit of any
Hazardous Materials that are located on the Premises.




          27.2.7 Indemnification. Tenant shall indemnify, protect, defend and hold Landlord
(and its employees and agents) harmless from and against any and all claims, costs, expenses,
suits, judgments, actions, investigations, proceedings and liabilities arising out of or in
connection with any breach of any provision of this Lease to the extent arising out of the use,
generation, storage, release, disposal or transportation of Hazardous Materials by Tenant or any
subtenant, or their respective agents, contractors or employees upon the Premises (but not by
Landlord or Landlord’s Agents), on, under or about the Premises during the Term, including, but not
limited to, all foreseeable consequential damages and the cost of any Remedial Work, but

32









 








excepting any loss or injury resulting from the breach of the Lease by Landlord or the gross
negligence or willful misconduct of Landlord or Landlord’s Agents. Neither the consent by Landlord
to the use, generation, storage, release, disposal or transportation of Hazardous Materials, nor
strict compliance with all Hazardous Materials Laws, shall excuse Tenant from Tenant’s
indemnification obligations pursuant to this Section 27.2.7. The foregoing indemnity shall
be in addition to and not a limitation of the indemnification provisions of Section 9 of
this Lease. Tenant hereby indemnifies and holds Landlord harmless against loss, damage, attorneys’
fees and all other expenses on account of claims of lien of laborers or materialmen or others for
work performed or materials or supplies furnished for Tenant or its contractors, agents or
employees. If Tenant fails to discharge or undertake to defend against such liability, upon
receipt of written notice from Landlord of such failure, Tenant shall have the Defense Cure Period
to cure such failure by prosecuting such a defense. If Tenant fails to do so within the Defense
Cure Period, then Landlord may settle the same and Tenant’s liability to Landlord shall be
conclusively established by such settlement provided that such settlement is entered into on
commercially reasonable terms and conditions, the amount of such liability to include both the
settlement consideration and the costs and expenses (including attorneys’ fees) incurred by
Landlord in effecting such settlement. Tenant’s obligations pursuant to this Section
27.2.7 shall survive the termination or expiration of the Lease. The procedures set forth in
Section 9.4 also will apply to this Section.




          27.2.8 Default. The release or discharge of any Hazardous Material or violation of
any Hazardous Materials Law by Tenant or any subtenant of Tenant shall be a material default by
Tenant under the Lease, subject to the cure provisions set forth in Section 17.1.2. In
addition to or in lieu of the remedies available under the Lease as a result of such default,
Landlord shall have the right, without terminating the Lease, to require Tenant to suspend its
operations and activities on the Premises until Landlord is satisfied that appropriate Remedial
Work has been or is being adequately performed; Landlord’s election of this remedy shall not
constitute a waiver of Landlord’s right thereafter to declare a default and pursue other remedies
set forth in the Lease.




ARTICLE 28. INTENTIONALLY DELETED




ARTICLE 29. RETAINED EQUIPMENT




     29.1 Retained Equipment. Tenant is the owner of all of the tangible property listed
on Schedule 2 attached hereto (collectively, the “Retained Equipment”).



          29.1.1 Tenant shall not directly or indirectly, sell, encumber, transfer, or assign its
interests in any of the Retained Equipment, unless such Retained Equipment is replaced with a
comparable item of equal quality and quantity as existed as of the time of such removal.




          29.1.2 Tenant hereby agrees to maintain the Retained Equipment in good condition and repair,
reasonable wear and tear excepted, and not permit any mechanics’ or materialmen’s lien, mortgage,
deed of trust, lien, pledge, charge, security interest, restrictive covenant or easement or
encumbrance of any kind with respect to such Retained Equipment,




33









 







whether or not filed, recorded or otherwise perfected or effective under applicable law, to be
levied against the Retained Equipment.




          29.1.3 Conditioned upon and effective upon the occurrence of any of the following events,
Tenant assigns, sells, transfers, conveys and sets over to Landlord the Retained Equipment free and
clear of all liens and encumbrances, together with all intellectual property essential to the
maintainence and operation of the Retained Equipment, together with all books, records, documents,
contracts and agreements relating thereto: (a) any default by Tenant under the terms of this Lease
and such default is not cured within fifteen (15) days after receiving written notice from
Landlord, (b) any default by Tenant under the Security Agreement and such default is not cured
within fifteen (15) days after receiving written notice from Landlord, (c) expiration of this Lease
in accordance with its terms; or (d) Tenant attempting to assign, transfer or encumber the Retained
Equipment other than in accordance with Section 29.1.1 hereof.




          29.1.4 Tenant shall execute and deliver such documents as Landlord may request to evidence the
transfer of the Retained Equipment, including a bill of sale. If Tenant fails to execute and
deliver such documents, then Landlord may do so. Tenant hereby appoints Landlord its attorney in
fact for such purpose, which appointment is coupled with an interest and is irrevocable. Tenant
shall pay all transaction costs associated with the sale of the Retained Equipment to Landlord.




          29.1.5 Pursuant to that certain Security Agreement dated as of even date herewith, Tenant
granted to Landlord a valid and perfected first priority security interest in the Retained
Equipment free and clear of all liens and encumbrances. Landlord shall have the right to file
Uniform Commercial Code financing statements for all jurisdictions as may be necessary or desirable
to perfect Landlord’s security interest in the Retained Equipment.




ARTICLE 30. OPTION TO EXTEND




     30.1 Options To Extend. Tenant shall have the option to extend the term of this Lease
for two, ten year periods, subject to the following provisions:



          30.1.1 Tenant shall have no right to exercise an option: (a) during the period commencing with
the giving of any notice of default and continuing until said default is cured, (b) during the
period of time any Rent is due and unpaid, or (c) in the event that Landlord has given three or
more notices of separate monetary or material non-monetary defaults, whether or not the defaults
are cured, during the 12 months immediately preceding the exercise of the option.




          30.1.2 The period of time within which an option may be exercised shall not be extended or
enlarged by reason of Tenant’s inability to exercise an option because of Section 30.1.1.




          30.1.3 An option shall terminate and be of no further force or effect, notwithstanding
Tenant’s due and timely exercise of the option, if, after such exercise and prior to the
commencement of the extended term, (a) Tenant fails to pay Rent for a period of 30 days

34









 








after such Rent becomes due, or (b) if Tenant commits a default under this Lease and such default
is continuing after the expiration of the applicable cure periods set forth in Section
17.1.




          30.1.4 Tenant shall exercise the option by delivery of written notice to Landlord not less
than 12 months prior to the expiration of the initial term and, if exercised, the first option
period, of this Lease. If said notice is not delivered within said time period(s), this option
shall terminate.




     30.2 Rent –Option. The Base Monthly Rental payable by Tenant during the option period
shall be an amount equal to 102% of the Base Monthly Rental payable during the final month of the
Lease Term, and shall be increased annually on each anniversary thereafter, by an amount equal to
2.00% of the Base Monthly Rental for the preceding year.



ARTICLE 31. Miscellaneous




     31.1 Gender. Whenever the singular number is used in this Lease, the same shall
include the plural, and the masculine gender shall include the feminine and neuter genders, and the
word “person” shall include corporation, firm, or association, when required by the context.



     31.2 Headings. The headings or title to the paragraphs of this Lease are for
convenience only and do not in any way define, limit or construe the contents of such paragraphs.



     31.3 Integration. This instrument contains all of the agreements and conditions made
between the parties with respect to the hiring of the Premises and may not be modified orally or in
any other manner other than by a written instrument signed by all the parties to this Lease.



     31.4 Choice of Laws. The laws of the State of Maryland as applied to contracts
entered into between citizens of the State of Maryland and to be performed within the State of
Maryland shall govern the validity, performance and enforcement of this Lease.



     31.5 Severability. If any provision of this Lease is determined to be void by any
court of competent jurisdiction, such determination shall not affect any other provisions of this
Lease and such other provisions shall remain in full force and effect. If any provision of this
Lease is capable of two constructions, one which would render the provision void and one which
would render the provision valid, the provision shall be interpreted in the manner which would
render it valid.



     31.6 Amendment for Financing. Upon written request of Landlord and at no material
expense to Tenant that Landlord does not agree to bear, Tenant agrees to execute any lease
amendments not materially altering the terms of this Lease, if required by the first mortgagee or
beneficiary of a deed of trust encumbering real property of which the Premises constitute a part
(“Mortgage”) incident to the financing of the real property of which the Premises constitute a
part. Any change affecting the amount or timing of the consideration to be paid by Tenant or
modifying the term of this Lease or the permitted use of the Premises or any options shall be
deemed as materially alter the terms hereof.



35









 





     31.7 Payments. Except as may otherwise be expressly stated, each payment required to
be made by Tenant shall be in addition to and not in substitution for other payments to be made by
Tenant.



     31.8 Time of Essence. Time is of the essence in this Lease.



     31.9 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain labor or materials or reasonable substitutes thereof,
governmental restrictions, regulations, or controls, enemy or hostile governmental action, civil
commotion, fire or other casualty, and other causes beyond the reasonable control of the party
obligated to perform, shall excuse the performance by such party for a period equal to that
resulting from such prevention, delay or stoppage, except those obligations of Tenant to make
payment for rental and other charges pursuant to the terms of this Lease.



     31.10. Notices. All notices required or permitted hereunder shall be in writing and
shall be served on the parties at the addresses at the following addresses. Any such notices shall
be either (a) sent by overnight delivery using a nationally recognized overnight courier, in which
case notice shall be deemed delivered one business day after deposit with such courier, (b) sent by
facsimile, in which case notice shall be deemed delivered upon transmission of such notice with
confirmed receipt by the sender’s machine, or (c) sent by personal delivery, in which case notice
shall be deemed delivered upon receipt or refusal of delivery. A party’s address may be changed by
written notice to the other party; provided, however, that no notice of a change of address shall
be effective until actual receipt of such notice. Copies of notices are for informational purposes
only, and a failure to give or receive copies of any notice shall not be deemed a failure to give
notice. The attorney for a party has the authority to send notices on behalf of such party



	 	 	 	 	 
	 

	 	To Landlord:
	 	BMR-Belward Campus Drive LSM LLC
	 

	 	 	 	c/o BioMed Realty, L.P.
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	17140 Bernardo Center Drive, Suite 222
	 

	 	 	 	San Diego, California 92128
	 

	 	 	 	Phone: (858) 485-9840 Fax: (858) 485-9843
	 
	 	 	 	 
	 

	 	To Tenant:
	 	Human Genome Sciences, Inc.
	 

	 	 	 	Attn: James H. Davis, Esq
	 

	 	 	 	Executive V.P. & General Counsel
	 

	 	 	 	14200 Shady Grove Road,
	 

	 	 	 	Rockville, Maryland 20850
	 

	 	 	 	Phone: (301) 251-6039 Fax: (301) 517-8831
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Paley Rothman
	 

	 	 	 	Attn: Alan S. Mark, Esq.
	 

	 	 	 	4800 Hampden Lane, 7th Floor
	 

	 	 	 	Bethesda, Maryland 20814






36









 






	 	 	 	 	 
	 

	 	 	 	Phone:
(301) 951-9337 Fax: (301) 654-0165







     Either party may, with proper notice, at any time designate a different address to which
notices shall be sent.



     31.11. Brokers. Tenant shall pay a commission to Scheer Partners, Inc. (“Scheer”),
pursuant to a separate broker’s commission agreement between Scheer and Tenant. Except as provided
above, Landlord and Tenant each represents to the other that it has had no dealings with any real
estate broker or agent in connection with the negotiation and/or execution of this Lease and agree
to indemnify and defend the other against all liability, costs, expenses and charges arising from
any claims that may be made against them by any real estate broker, agent, finder, or other person,
alleging to have acted on behalf of Landlord or Tenant.



     31.12. Confidentiality. During the course of this Lease the parties may exchange
certain financial statements, accounting records and other documents that are clearly stamped
“confidential” (“Confidential Information”). Landlord and Tenant hereby acknowledge and agree that
the Confidential Information of each party is to be kept strictly confidential. Accordingly,
except as may be required by law or court order, neither Landlord nor Tenant will, without the
prior written consent of the other party, release, publish or otherwise distribute (and shall not
authorize or permit any other person or entity to release, publish or otherwise distribute) any of
the other party’s Confidential Information to any person or entity other than such party’s
prospective lenders and purchasers of the Premises and legal and financial advisors, each of whom
shall agree to hold such information strictly confidential as if such persons were bound by the
provisions of this Section 31.12. The obligations of this Section 31.12 will not
apply to information that the receiving party can establish by written records (a) was known by it
prior to the receipt of the Confidential Information from the disclosing party; (b) was disclosed
to the receiving party by a third party having the right to do so; (c) was, or subsequently became,
in the public domain through no fault of the receiving party, its officers, directors, employees or
agents; or (d) was disclosed by the receiving party pursuant to any judicial, governmental or stock
exchange request, requirement or order, so long as the receiving party provides the disclosing
party with sufficient prior notice in order to allow the disclosing party to contest such request,
requirement or order.



     31.13 Waiver of Jury Trial. The parties hereby waive their respective rights to trial
by jury in any action or proceeding involving the Premises or arising out of this Lease.



     31.14 Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent on Tenant’s specific use of the Premises, Landlord makes no
warranty or representation as to whether or not the Premises comply with the ADA or any similar
legislation. In the event that Tenant’s use of the Premises requires modifications or additions to
the Premises in order to be in ADA compliance, Tenant agrees to make any such necessary
modifications and/or additions at Tenant’s expense.



     31.15 Execution in Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of such counterparts shall



37









 







constitute one agreement. To facilitate execution of this Lease, the parties may execute and
exchange by telephone facsimile counterparts of the signature pages.



     31.16 Attorneys’ Fees. If either party institutes or is made a party to any action or
proceeding to enforce or interpret this Lease, the prevailing party in such action or proceeding
shall be entitled to recover all costs and attorneys’ fees incurred in connection with such action
or proceeding, or any appeal or enforcement of such action or proceeding.



     31.17 Quiet Enjoyment. If Tenant is not in breach under the covenants made in this
Lease, Landlord covenants that Tenant shall have peaceful and quiet enjoyment of the Premises
without hindrance on the part of Landlord during the Lease Term, including any extensions thereof.
Landlord will defend Tenant in the peaceful and quiet enjoyment of the Premises against claims of
all persons claiming through or under Landlord.



     31.18 Successor’s Liability. The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heir, successors, executors,
administrators, and permitted assigns of all the parties hereto and all of the parties hereto shall
be jointly and severally liable for the covenants contained herein.



     31.19 Quitclaim Deed. Tenant shall execute and deliver to Landlord on the expiration
date or earlier termination of this Lease, promptly on Landlord’s request, a quitclaim deed to the
Premises, in recordable form, designating Landlord as transferee.



     31.20 Damages. THE PARTIES WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO PUNITIVE,
SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF STOCK VALUE, IN RESPECT OF ANY
DISPUTE BASED ON THIS LEASE; provided, however, such waiver shall not apply to
disputes arising out of: (a) intentional misconduct or fraud; (b) Tenant’s failure to vacate the
Premises within two (2) months after the expiration of the Lease Term; or (c) any claim for
indemnification pursuant to the terms and conditions of this Lease.



     31.21 Further Assurances. In addition to the acts and deeds recited herein and
contemplated to be performed, executed or delivered by either party, each party agrees to perform,
execute and deliver, any further actions, documents, as may be reasonably necessary or as may be
reasonably requested to fully effectuate the purposes, terms and conditions of this Lease.



[Signature Page Follows]





38









 









     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year set
forth at the beginning hereof.



	 	 	 
	 

	 	LANDLORD:
	 
	 	 
	 

	 	BMR-BELWARD CAMPUS DRIVE LSM LLC,
	 
	 	 
	 

	 	a Maryland limited liability company
	 
	 	 
	 

	 	By:   BioMed Realty, L.P.,
	 

	 	a Maryland limited partnership,
	 

	 	its Member
	 
	 	 
	 

	 	By:   /s/ Gary A. Kreitzer
	 

	 	Title: Executive VP






[Signatures Continue on Next Page]





 









 









	 	 	 
	 

	 	TENANT:
	 
	 	 
	 

	 	HUMAN GENOME SCIENCES, INC.
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	By: /s/ H. Thomas Watkins
	 

	 	Title: CEO